Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Dumitru O. Sandulescu, M.D. and Dumitru Medical Center P.C.
(PTANs: 54760001; 0P54760),
(NPIs: 1104981695; 1770768879),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-15-537
Decision No. CR3891

Date: May 22, 2015

DECISION

The Centers for Medicare & Medicaid Services (CMS), through its administrative
contractor, Wisconsin Physicians Service (WPS), revoked the Medicare billing privileges
of Dr. Dumitru O. Sandulescu (Petitioner) and, separately, Dumitru Medical Center P.C.
(Medical Center) based on a determination that Petitioner failed to comply with Medicare
enrollment requirements and misused his Medicare billing number, and the Medical
Center abused its Medicare billing privileges. Petitioner and the Medical Center jointly
filed a request for hearing (RFH) to dispute the revocation. For the reasons stated below,
I dismiss the RFH as it pertains to the Medical Center for lack of jurisdiction and affirm
CMS’s determination to revoke Petitioner’s Medicare billing privileges.

I. Background

CMS first revoked Petitioner’s Medicare billing privileges in an initial determination
letter dated May 20, 2014. CMS Exhibit (Ex.) 1. Also on May 20, 2014, CMS revoked
the Medical Center’s Medicare billing privileges. RFH Ex. 1(B). On June 5, 2014,
Petitioner and the Medical Center jointly requested reconsideration of the revocation and
submitted a corrective action plan (CAP). CMS Ex. 2; see also CMS Ex. 3. CMS
revised the initial determination revoking Petitioner on June 27, 2014. CMS Ex. 4.
Petitioner and the Medical Center again jointly requested reconsideration and submitted a
CAP after the June 27, 2014 revision. CMS Ex. 5. On July 17, 2014, CMS revised the
initial determination revoking Petitioner for the second time. CMS Ex. 6. On August 8,
2014, CMS revised the initial determination revoking Petitioner for the last time and this
version of the initial determination superseded all prior versions. CMS Ex. 7.

In the August 8 initial determination, CMS revoked Petitioner’s Medicare billing
privileges and imposed a three year re-enrollment bar. The determination specified the
Provider Transaction Access Number (PTAN) involved as P54760001 and the National
Provider Identifier involved as 1104981695, numbers assigned to Dr. Sandulescu. RFH
at 1. CMS revoked Petitioner’s billing privileges because Petitioner failed to comply
with Medicare requirements (42 C.F.R. § 424.535(a)(1)) and misused his Medicare
billing number (42 C.F.R. § 424.535(a)(7)). The August 8 initial determination provided
the following facts regarding Petitioner’s alleged violation of 42 C.F.R. § 424.535(a)(1):

With his signature on Medicare enrollment application 855,
Dr. Dumitru Sandulescu, agreed to abide by Medicare laws,
regulations, and program instructions. However, based on
claims data with dates of service from January 1, 2013
through December 31, 2013, Dr. Dumitru Sandulescu did not
abide by Medicare laws, regulations and program instructions
when submitting claims when using the Q6 modifier,
indicating that services were rendered by a locum tenens
physician. Dr. Dumitru Sandulescu is in violation of the
Section 125(b) of the Social Security Act Amendments of
1994, the regulatory definition of locum tenens physician at
42 CFR §411.351, and Chapter 1, Section 30.2.11 of the CMS
Medicare Claims Processing Manual, Publication 100-04 that
all relate to physician payment under locum tenens
arrangements. These locum tenens laws, regulations, and
program instructions require the regular physician be
unavailable to provide the visit services. CMS has identified
237 dates of service in 2013 where Dr. Sandulescu billed for
a service and on the same date services were billed under his
provider number using the Q6 modifier indicating that locum
tenens physician rendered services.

CMS Ex. 7 at 1.

Petitioner requested reconsideration and included the reconsideration requests and CAPs
that he previously submitted. CMS Ex. 8; see also CMS Exs. 2, 5. In those documents,
Petitioner admitted that he submitted claims through the Medical Center, where he served
as President, for the services of newly-hired physicians who did not yet have Medicare
credentials using the Q6 (locum tenens) modifier. CMS Ex. 2 at 1; CMS Ex. 5 at 1-2.

A WPS hearing officer issued a reconsidered determination on October 13, 2014. The
hearing officer upheld Petitioner’s revocation pursuant to 42 C.F.R. § 424.535(a)(1) and
(a)(7). CMS Ex. 10. The hearing officer determined that Petitioner admitted in his
request for reconsideration that “the Medicare billing number for Dumitru O. Sandulescu,
MD was misused and the Q6 modifier was used incorrectly . .. Dumitru O. Sandulescu,
MD did submit these claims and the contractor correctly revoked the Medicare billing
number.” CMS Ex. 10 at 1. Therefore, the hearing officer found that “Dumitru O.
Sandulescu, MD has not provided evidence to show [he has] fully complifed] with the
standards for which [he was] revoked.” CMS Ex. 10 at 1.

Petitioner and the Medical Center jointly requested a hearing to dispute the reconsidered
determination. In response to my Acknowledgment and Pre-hearing Order (Order), CMS
filed a motion for summary judgment and motion to dismiss the RFH with regard to the
Medical Center, a brief (CMS Br.), and 14 exhibits (CMS Exs. 1-14) as its pre-hearing
exchange. Petitioner and the Medical Center jointly filed a brief in opposition to the
motion for summary judgment and motion to dismiss (P. Br.). Petitioner and the Medical
Center also proposed to call 12 witnesses, but did not file written direct testimony for any
of the witnesses.

II. Decision on the Record

In their prehearing exchange, Petitioner and the Medical Center did not object to any of
CMS’s proposed exhibits. Therefore, I admit CMS Exs. 1-14 into the record. See Order
47. Petitioner and the Medical Center did not submit any proposed exhibits.

My Order advised the parties that they must submit written direct testimony for each
proposed witness and that an in-person hearing would only be necessary if the opposing
party requested an opportunity to cross-examine a witness. Order fj 8-10. Because
Petitioner and the Medical Center submitted a witness list and not written direct
testimony for the proposed witnesses, on February 25, 2015, at my direction, the
attorney-advisor assisting me with this case contacted counsel for the parties and advised
them that Petitioner and the Medical Center failed to comply with the requirement to
submit written direct testimony for their proposed witnesses. The attorney-advisor gave
Petitioner and the Medical Center until March 4, 2015, to submit testimony for their
proposed witnesses. See Feb. 25 2015 email re omissions from Pet.’s prehearing
exchange. No response to this correspondence was received.

Because the parties did not submit written direct testimony, I will not hold an in-person
earing in this matter and I decide this matter based on the written record. Order § 11.

III. Issues
1. Whether the Medical Center has a right to a hearing.

2. Whether CMS had a legitimate basis to revoke Petitioner’s Medicare billing
privileges.

IV. Jurisdiction

I have jurisdiction to hear and decide Petitioner’s appeal of CMS’s reconsidered
determination (CMS Ex. 10) to revoke his Medicare billing privileges. 42 C.F.R.

§§ 498.3(b)(17), 498.5(1)(2); see also 42 U.S.C. § 1395cc(j)(8). However, I do not have
jurisdiction to hear and decide the Medical Center’s appeal because CMS has not issued a
reconsidered determination upholding the revocation of the Medical Center’s Medicare
billing privileges.

As mentioned above, CMS filed a motion to dismiss the hearing request as it pertains to
the Medical Center. CMS argues in that motion that although Petitioner and the Medical
Center requested reconsideration of CMS’s separate initial determinations revoking the
billing privileges of Petitioner and the Medical Center, CMS has only issued a
reconsidered determination with respect to Petitioner. CMS Br. at 2 n.1, 22. Therefore,
CMS argues, because there is no reconsidered determination for the Medical Center, I
lack the jurisdiction to consider an appeal of the Medical Center’s revocation. CMS Br.
at 21-22.

Petitioner’s prehearing brief did not address CMS’s argument or present an opposition to
CMS’s motion. However, the joint RFH indicates that CMS has abandoned its
revocation of the Medical Center, an assertion consistent with CMS’s position that WPS
has not yet issued a reconsidered determination for the Medical Center. RFH at 3.
Further, the RFH only included a copy of the reconsidered determination for Petitioner
and not one for the Medical Center. See RFH Ex. 8.

My jurisdiction is limited to those matters delegated to me by the Secretary of Health and
Human Services (Secretary). Appeals from CMS’s determination to revoke billing
privileges are adjudicated under the provisions in 42 C.F.R. Part 498. 42 C.F.R.

§§ 405.803(a); 424.545(a). As a general matter, only CMS decisions that are considered
initial determinations are subject to further review. 42 C.F.R. § 498.3(a)(1). Decisions to
revoke billing privileges are initial determinations. 42 C.F.R. § 498.3(b)(17). However,
before a provider or supplier may seek administrative law judge (ALJ) review of a
revocation, he must first request that CMS reconsider the initial determination to revoke
billing privileges. 42 C.F.R. §§ 405.803(b), 498.5(/)(1), 498.20(b)(1). A provider or
supplier dissatisfied with the reconsidered determination has a right to a hearing before
an ALJ. 42 C.F.R. §§ 498.5(/)(2), 498.40(a)(2). Therefore, in provider and supplier
revocation cases, I only have jurisdiction to review CMS’s actions following the issuance
of a reconsidered determination. See Ramaswamy v. Burwell, 2015 Medicare &
Medicaid Guide (CCH) § 305,177, 2015 WL 75359, at *7-8 (E.D. Mo. Jan. 6, 2015).

I may dismiss the hearing request of a party that does not have a right to a hearing.

42 C.F.R. § 498.70(b). Because CMS has not issued a reconsidered determination related
to its revocation of the Medical Center’s billing privileges, the Medical Center does not
have a right to a hearing. Accordingly, I dismiss, without prejudice, the hearing request
as it relates to the Medical Center. When CMS issues a reconsidered determination in
response to the Medical Center’s reconsideration request, as it is obligated to do

(42 C.F.R. § 498.24(c)), the Medical Center will have the right to request a hearing
before an ALJ if the Medical Center is not satisfied with the reconsidered determination.
42 CFR. § 498.25(a)(3).

V. Findings of Fact, Conclusions of Law, and Analysis!

The Social Security Act (Act) authorizes the Secretary to promulgate regulations
governing the enrollment process for providers and suppliers. 42 U.S.C. §§ 1302,
1395cc(j). Under the regulations, a provider or supplier that seeks billing privileges
under the Medicare program must “submit enrollment information on the applicable
enrollment application. Once the provider or supplier successfully completes the
enrollment process ... CMS enrolls the provider or supplier into the Medicare program.”
42 C.F.R. § 424.510(a). CMS may revoke a provider or supplier’s Medicare billing
privileges for a variety of reasons, including if “[t]he provider or supplier is determined
not to be in compliance with the enrollment requirements described in [section 424.535],
or in the enrollment application applicable for its provider or supplier type... .”

42 CFR. § 424.535(a)(1).

Physicians are suppliers for Medicare purposes. 42 C.F.R. § 400.202 (definition of
“Supplier’). Under the Act, the Medicare program may only pay either the beneficiary or
treating physician for any services provided to a beneficiary; however, there is an
exception to this requirement called the “locum tenens” exception:

No payment under this part for a service provided to

any individual shall . . . be made to anyone other than
such individual or . . . the physician or other person
who provided the service, except . . . (D) payment

may be made to a physician for physicians’ services (and
services furnished incident to such services) furnished

' My numbered findings of fact and conclusions of law are set forth in italics and bold
font.
by a second physician to patients of the first physician
if (i) the first physician is unavailable to provide the
services; (ii) the services are furnished pursuant to
an arrangement between the two physicians that
(1) is informal and reciprocal, or (II) involves per diem or
other fee-for-time compensation for such _ services;
(iii) the services are not provided by the second physician
over a continuous period of more than 60 days or are
provided over a longer continuous period during all of which
the first physician has been called or ordered to active duty as
a member of a reserve component of the Armed Forces; and
(iv) the claim form submitted to the carrier for such services
includes the second physician’s unique identifier (provided
under the system established under subsection (r)) and
indicates that the claim meets the requirements of this
subparagraph for payment to the first physician.

42 U.S.C. § 1395u(b)(6)(D).

1. Petitioner submitted claims for Medicare reimbursement in which he billed,
under his own billing number, for the services other physicians and non-
physicians provided by using the Q6 billing modifier to indicate that these
individuals had provided the services in locum tenens to Petitioner when, in
actuality, the individuals were either newly-hired physicians who did not yet
have Medicare billing privileges or ineligible non-physicians.

Petitioner concedes the fundamental issue in this case: Petitioner, individually and as
President of the Medical Center, submitted Medicare claims for services that newly-hired
physician employees of the Medical Center and non-physicians provided using his billing
number and the Q6 modifier. CMS Ex. 2 at 1, 6-9. Specifically, Petitioner submitted
claims for services he performed on the same day that an alleged locum tenens physician
also performed services, which he billed under his provider number using the Q6
modifier. CMS Ex. 2 at 5 (“This data is sorted by claim line from date and includes all
dates of service where Dr. Dumitru Sandulescu submitted a claim with and without a Q6
modifier.”). CMS identified 237 dates on which Petitioner billed for a service the same
day as a service was billed under his billing number using the Q6 modifier. CMS Ex. 7 at
1, 4-5. Petitioner did not dispute the claims CMS identified. Instead, when seeking
reconsideration of the revocation, Petitioner identified at least 32 claims that he submitted
using his billing number and the Q6 modifier for services that physician assistants and
nurse practitioners provided. CMS Ex. 2 at 6-9.

Petitioner concedes that the Medical Center “had hired new physician employees and
began the credentialing process after the date of hire for each. Instead of holding the
billings until these physicians were credentialed as physicians of [the Medical Center, the
Medical Center] billed the services of these physicians as locum tenens physicians.”
CMS Ex. 2 at 1. In requesting reconsideration of the first initial determination CMS
issued, Petitioner explained that both his billing company and the Medical Center’s
administrative staff:

made inquiry of the [Medicare Administrative Contractor]
personnel to determine if and how physicians with pending
credentials could be billed. The [Medicare Administrative
Contractor] personnel advised that the services could be
billed using the Q6 modifier. It is significant that [the
Medical Center] did not attempt to conceal the nature of the
billings as Dr. Sandulescu was identified on the claims
together with the new physician. This was the result of an
error in communication and poor judgment on the part of the
[Medical Center] employees and agents responsible for
billing matters.

CMS Ex. 2 at 1. Petitioner offers no explanation for why he submitted claims using the
Q6 modifier for the services that physician assistants and nurse practitioners provided.

Therefore, I find that Petitioner submitted at least 237 Medicare claims in which he billed
for services under the Q6 (locum tenens) modifier that newly-hired physicians provided.”
I further find that Petitioner submitted at least 32 claims for services using the Q6
modifier that nurse practitioners and physician assistants provided.

2. CMS had a legitimate basis to revoke Petitioner’s Medicare billing privileges
because Petitioner’s claims for reimbursement failed to comply with the
requirements stated in the Social Security Act and the Medicare claims manual
where Petitioner billed under his own Medicare billing number using the 06
modifier to indicate that other physicians provided services in locum tenens to
Petitioner when, in actuality, they were newly-hired physicians awaiting
Medicare billing privileges and non-physician employees.

CMS may revoke a provider or supplier who has failed to comply with enrollment
requirements in section 424.535 of the regulations or in the supplier’s enrollment

> Because CMS identified only dates on which Petitioner both billed for a service and
billed for a service using his billing number and the Q6 modifier, I assume that Petitioner
and the newly-hired physician allegedly acting in locum tenens each billed for no more
than one service per day on those dates. In actuality, both Petitioner and the alleged
locum tenens physician could have billed for numerous services on each of the 237 dates
CMS identified.
application. 42 C.F.R. § 424.535(a)(1). On the Medicare enrollment application that
physicians must sign, Petitioner had to certify that he “meets, and continues to meet, and
CMS verifies that it meets, and continues to meet, all of the following requirements: (1)
Compliance with title XVIII of the Act and applicable Medicare regulations.” 42 C.F.R.
§ 424.516(a)(1). Specifically, as part of the additional enrollment requirements in the
certification statement section on the enrollment form, Petitioner had to certify that he:

[A]gree[s] to abide by the Medicare laws, regulations and
program instructions that apply to [physicians]. The
Medicare laws, regulations, and program instructions are
available through the fee-for-service contractor. I understand
that payment of a claim by Medicare is conditioned upon the
claim and the underlying transaction complying with such
laws, regulations, and program instructions (including, but
not limited to, the Federal anti-kickback statute and the Stark
law), and on the supplier’s compliance with all applicable
conditions of participation in Medicare.

Form CMS-855] at 25 available at http://www.cms.gov/Medicare/CMS-Forms/CMS-
Forms/downloads/cms855i.pdf.

The present matter involves the submission of Medicare claims billed under Petitioner’s
Medicare billing number for services provided by other physicians newly- employed by
Petitioner’s practice, nurse practitioners, and physician assistants. By using the Q6
modifier in the claims, Petitioner indicated that he could bill for the services provided by
other physicians and medical professionals because those physicians were acting in
locum tenens for Petitioner. However, the Q6 modifier is used to identify services that a
locum tenens physician has provided in place of the billing physician. A locum tenens
physician is “a physician who substitutes (that is, ‘stands in the shoes’) in exigent
circumstances for a physician” in accordance with applicable rules. 42 C.F.R. § 411.351
(definition of Locum tenens physician). The Act sets forth the locum tenens exception to
the general rule that Medicare may only pay the beneficiary who receives a medical
service or the physician who performs the service. See 42 U.S.C. § 1395u(b)(6)(D). The
Medicare Claims Processing Manual (MCPM), CMS Pub. 100-04, ch. 1, § 30.2.11,
further clarifies the use of the locum tenens exception. Both state that the physician must
be a substitute physician who is providing services because the treating physician is
unavailable. The MCPM states that locum tenens is used “to retain substitute physicians
to take over [a physician’s] professional practices when the regular physicians are absent
for reasons such as illness, pregnancy, vacation, or continuing medical education ... .”
MCPM, CMS Pub. 100-04, ch. 1, § 30.2.11(A.). WPS also provides clarifying guidance
stating that a newly-hired physician who is in the process of enrolling in Medicare cannot
be billed as a locum tenens physician. CMS Ex. 13 at 2. Finally, WPS provided notice
that the locum tenens modifier cannot be used at all to bill for services provided by nurse
practitioners and physician assistants. CMS Ex. 14.

Petitioner does not dispute that he incorrectly billed for the services newly-hired
physicians provided using the Q6 modifier, but he asserts that the billing company
Petitioner hired and his administrative staff are to blame for the mistake in billing. CMS
Ex. 2 at 1. Petitioner’s explanation does not address why he used the Q6 modifier to bill
for services that nurse practitioners and physician assistants provided. Petitioner states
that the incorrect billing practices were “the result of [his] staff’s misunderstanding of the
Medicare rules.” P. Br. at 2. However, even an unintentional error with regard to claims
may serve as a basis for revocation if the relevant regulation does not require fraudulent
or dishonest intent. See Louis J. Gaefke, D.P.M., DAB No. 2554 at 7 (2013).

Further, Petitioner argues that CMS’s administrative contractor told both the billing
company and his staff that Petitioner could bill for the newly-hired physicians’ services
under his billing number using the Q6 modifier. CMS Ex. 2 at 1. Petitioner does not
offer any evidence as to who his staff and billing company spoke with, on what dates, and
at what times. Nevertheless, Petitioner’s assertions amount to an argument that CMS
should be equitably estopped from revoking his billing privileges based on the
misinformation WPS allegedly provided his staff and billing company. However, even if
I accept that WPS representatives misinformed Petitioner’s staff and billing company
regarding the use of the Q6 modifier, Petitioner does not allege that either WPS or its
representatives engaged in affirmative misconduct. It is well-settled that:

[T]he government cannot be estopped absent, at a minimum,
a showing that the traditional requirements for estoppel are
present (i.e., a factual misrepresentation by the government,
reasonable reliance on the misrepresentation by the party
seeking estoppel, and harm or detriment to that party as a
result of the reliance) and that the government’s employees or
agents engaged in ‘affirmative misconduct.’

Citadel Cmty. Dev. Corp., DAB No. 2596, at 7 (2014) (quoting Oaks of Mid City Nursing
& Rehab. Ctr., DAB No. 2375, at 31 (2011)); Office of Pers. Mgmt. v. Richmond,

496 U.S. 414 (1990). Because Petitioner has not alleged that WPS engaged in
affirmative misconduct, any misinformation that WPS or its representatives may have
provided to Petitioner’s staff or billing company cannot prevent CMS from exercising its
authority to revoke his Medicare billing privileges.

Finally, Petitioner argues that because he submitted a CAP, CMS lacked the authority to
revoke his billing privileges pursuant to 42 C.F.R. § 424.535(a)(1). P. Br. at 2. This
argument is based on the text of section 424.535(a)(1) that makes it appear that
revocation can only occur if a supplier fails to comply with enrollment requirements and
10

fails to submit a plan of correction. Petitioner’s interpretation of this text means that a
provider or supplier may avoid revocation under section 424.535(a)(1) by merely
submitting a timely plan of correction. Such an interpretation fails to take into account
the following additional text from section 424.535(a)(1): “All providers and suppliers are
granted an opportunity to correct the deficient compliance requirement before a final
determination to revoke billing privileges... .” 42 C.F.R. 424.535(a)(1) (emphasis
added). Consistent with this is the following regulatory provision:

If a provider or supplier completes a corrective action plan
and provides sufficient evidence to the CMS contractor that it
has complied fully with the Medicare requirements, the CMS
contractor may reinstate the provider’s or supplier’s billing
privileges ... A CMS contractor’s refusal to reinstate a
supplier’s billing privileges based on a corrective action plan
is not an initial determination under Part 498 of this chapter.

42 C.F.R. § 405.809 (emphasis added). This regulation not only states that CMS has
authority to accept or refuse to accept a supplier’s CAP, but also that such a decision is
not subject to further review. See 42 C.F.R. § 498.3(a)(1), (d) (indicating that only initial
determinations are subject to additional review and that decisions that are not initial
determinations are not subject to additional review).

In the present case, Petitioner was given the opportunity to submit a CAP, Petitioner
submitted the CAP, and CMS declined to accept the CAP. CMS Ex. | at 2; CMS Ex. 2;
CMS Ex. 7 at 2; CMS Ex. 8; RFH Exs. 3, 9. I have no authority to review that decision.

Therefore, based on the record in this case, I conclude that CMS had a legitimate basis to
revoke Petitioner’s Medicare billing privileges because Petitioner failed to comply with
Medicare enrollment requirements.” 42 C.F.R. § 424.535(a)(1).

VI. Conclusion

For the reasons stated above, I affirm CMS’s determination to revoke Petitioner’s
Medicare billing privileges.

/s/
Scott Anderson
Administrative Law Judge

> Because I uphold CMS’s revocation based on 42 C.F.R. § 424.535(a)(1), I need not
consider the other basis for revocation that CMS relied on in its reconsidered
determination.


Petitioner, Jenni

Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Jennifer Waldron Brown,

(OI File No. H-14-41174-9),
Petitioner,

v.

The Inspector General.

Docket No. C-15-145
Decision No. CR3887

Date: May 22, 2015

DECISION

er Waldron Brown, worked as a medical secretary in an Arizona

physician’s office. She was convicted on one felony count of solicitation to commit
possession of a dangerous drug. Pursuant to section 1128(a)(3) of the Social Security Act
(Act), the Inspector General (I.G.) has excluded her from participating in the Medicare,
Medicaid, and all federal health care programs for a period of five years.

For the reasons

iscussed below, I find that the I.G. is authorized to exclude Petitioner,

and that the statute mandates a minimum five-year exclusion.

Background

Ina letter dated

convicted of a fe
responsibility or
care item or serv:

uly 31, 2014, the I.G. advised Petitioner that, because she had been

ony offense related to fraud, theft, embezzlement, breach of fiduciary
other financial misconduct in connection with the delivery of a health
ice, the I.G. was excluding her from participation in Medicare, Medicaid,

and all federal health care programs for a period of five years. I.G. Ex. 1. Petitioner
requested review.
The parties have submitted their written arguments (I.G. Br.; P. Br.), and replies (LG.
Reply; P. Reply). With his brief, the IG. submitted eight exhibits (IG. Exs. 1-8);
Petitioner submitted two exhibits (P. Exs. 1-2). In the absence of any objections, I admit
into evidence I.G. Exs. 1-8 and P. Exs. 1-2.

I directed the parties to indicate in their briefs whether an in-person hearing would be
necessary, and, if so, to “describe the testimony it wishes to present, the names of the
witnesses it would call, and a summary of each witnesses’ proposed testimony.”

I specifically directed the parties to explain why the testimony would be relevant. Order
and Schedule for Filing Briefs and Documentary Evidence at 2 § 3, Attachment 1
(Informal Brief of Petitioner § III) and Attachment 2 (Informal Brief of I.G. { I)
(December 4, 2014). The I.G. indicates that an in-person hearing is not necessary.

1.G. Br. at 9. Petitioner, on the other hand, indicates that an in-person hearing is
necessary, but she lists no potential witnesses and does not explain what an in-person
hearing would accomplish. P. Br. at 2-3. Because there are no witnesses to examine or
cross-examine, I decline to schedule a hearing that would serve no purpose.

Discussion

Petitioner must be excluded from program participation for
a minimum of five years because she was convicted of
felony fraud in connection with the delivery of a health care
item or service.

Section 1128(a)(3) provides that an individual or entity convicted of felony fraud, theft,
embezzlement, breach of fiduciary responsibility, or other financial misconduct in
connection with the delivery of a health care item or service must be excluded from
participation in federal health care programs for a minimum of five years. See 42 C.F.R.
§ 1001.101(c).

While working in a physician’s office, Petitioner Brown called the pharmacy and placed
prescription drug orders for herself, without the physician’s knowledge or authorization.
1.G. Ex. 4. A Grand Jury indicted her on four felony counts: fraudulent schemes and
artifices; acquisition of a dangerous drug by fraud (two counts); and taking the identity of
another person. I.G. Ex. 5. She pled guilty to one felony count of solicitation to commit
possession of a dangerous drug. I.G. Ex. 6. On March 7, 2014, the Arizona court entered
judgment against her, sentenced her to six months’ probation, and ordered her to pay
investigative costs to the Medicaid Fraud Control Unit. I.G. Ex. 2.

' [make this one finding of fact/conclusion of law.
Petitioner’s felony conviction was thus plainly related to fraud in connection with the
delivery of a health care item (drugs). She “knowingly” obtained a dangerous drug “by
fraud, deceit, misrepresentation or subterfuge.” I.G. Ex. 5 at 2; see I.G. Ex. 2 at 1; 1.G.
Ex. 3 at 1; LG. Ex. 4 at 3. She is therefore subject to exclusion.

Petitioner, however, points out that her conviction has been reduced to a misdemeanor
and is pending dismissal by the Arizona court. P. Br. at 5-6; P. Reply at 2; see I.G. Ex. 7
(Petition for Early Termination of Probation). Apparently, Arizona law allows a court to
reduce to a misdemeanor the felony conviction of a qualifying criminal defendant who
as completed her probation. However, until the court enters an order designating the
conviction a misdemeanor, it is “treated as a felony for all purposes. ...” A.R.S. § 13-
604(A).

Under the Act and regulations, a person is “convicted” when “a judgment of conviction
as been entered” regardless of whether that judgment has been expunged or otherwise
removed. Act § 1128(i)(1); 42 C.F.R. § 1001.2(a)(2). Further, individuals who
participate in “deferred adjudication, or other arrangement or program where judgment of
conviction has been withheld” are also “convicted” within the meaning of the statute.

Act § 1128(i)(4); 42 C.F.R. § 1001.2(d). Based on these provisions, the Departmental
Appeals Board (Board) characterizes as “well established” the principle that a
“conviction” includes “diverted, deferred and expunged convictions regardless of
whether state law treats such actions as a conviction.” Henry L. Gupton, DAB No. 2058,
at 8 (2007), aff'd sub nom. Gupton v. Leavitt, 575 F. Supp. 2d 874 (E.D. Tenn. 2008).

The Board explained why, in these I.G. proceedings, the federal definition of
“conviction” must apply. That definition differs from many state criminal law
definitions. For exclusion purposes, Congress deliberately defined “conviction” broadly
to ensure that exclusions would not hinge on the state criminal justice policies. Quoting
the legislative history, the Board explained:

The rationale for the different meanings of “conviction” for
state criminal law versus federal exclusion law purposes
follows from the distinct goals involved. The goals of
criminal law generally involve punishment and rehabilitation
of the offender, possibly deterrence of future misconduct by
the same or other persons, and various public policy goals.
[footnote omitted] Exclusions imposed by the I.G., by
contrast, are civil sanctions, designed to protect the
beneficiaries of health care programs and the federal fisc, and
are thus remedial in nature rather than primarily punitive or
deterrent. ... In the effort to protect both beneficiaries and
funds, Congress could logically conclude that it was better to
exclude providers whose involvement in the criminal system
raised serious concerns about their integrity and
trustworthiness, even if they were not subjected to criminal
sanctions for reasons of state policy.

Gupton, at 7-8.

Petitioner was convicted of a felony, which, after she completed probation, was treated as
a misdemeanor. Because her conviction falls squarely within the statutory and regulatory
definition of “conviction,” she is subject to exclusion. An exclusion brought under
section 1128(a)(3) must be for a minimum period of five years. Act § 1128(c)(3)(B); 42
C.F.R. § 1001.2007(a)(2).

Conclusion

For these reasons, I conclude that the I.G. properly excluded Petitioner from participation
in Medicare, Medicaid and all federal health care programs, and I sustain the five-year
exclusion.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Crestview Health and Rehabilitation,
(CCN: 44-5409),

Petitioner,
v.
Centers for Medicare & Medicaid Services
Docket No. C-13-433
Decision No. CR3886

Date: May 21, 2015

DECISION

Petitioner, Crestview Health and Rehabilitation, is a long-term care facility located in
Nashville, Tennessee, that participates in the Medicare program. Based on a Life Safety
Code (LSC) survey, completed December 4, 2012, the Centers for Medicare & Medicaid
Services (CMS) determined that the facility was not in substantial compliance with
multiple LSC provisions, including those related to emergency egress and fire alarm
procedures, and that its deficiencies posed immediate jeopardy to resident health and
safety. CMS imposed an $8,000 per-instance civil money penalty (CMP). Petitioner
appeals.

For the reasons set forth below, I find that the facility was not in substantial compliance
with Life Safety Code requirements and that the penalty imposed is reasonable. I have no
authority to review the immediate jeopardy determination.
I. Background

The Social Security Act (Act) sets forth requirements for nursing facility participation in
the Medicare program and authorizes the Secretary of Health and Human Services to
promulgate regulations implementing those statutory provisions. Act § 1819. The
Secretary’s regulations are found at 42 C.F.R. Part 483, and include the requirement that
facilities comply with all applicable provisions of the 2000 edition of the Life Safety
Code of the National Fire Protection Association (NFPA). 42 C.F.R. § 483.70(a). To
participate in the Medicare program, a nursing facility must maintain substantial
compliance with these and all other program requirements. To be in substantial
compliance, a facility’s deficiencies may pose no greater risk to resident health and safety
than “the potential for causing minimal harm.” 42 C.F.R. § 488.301.

The Secretary contracts with state survey agencies to conduct periodic surveys to
determine whether skilled nursing facilities are in substantial compliance. Act § 1864(a);
42 C.F.R. § 488.20. The regulations require that each facility be surveyed annually, with
no more than fifteen months elapsing between surveys. 42 C.F.R. § 488.308(a).
Facilities must be surveyed more often, if necessary, to ensure that identified deficiencies
are corrected. Act § 1819(g)(2)(A); 42 C.F.R. §§ 488.20(a), 488.308.

Here, surveyors from the Tennessee Department of Health (state agency) completed
ealth and LSC surveys on December 6, 2012.' Based on the survey findings, CMS
determined that the facility was not in substantial compliance with the following LSC
provisions:

e K018 (LSC § 19.3.6.3) — which regulates corridor doors — at scope and severity
level D (isolated instance of noncompliance that causes no actual harm, with the
potential for more than minimal harm);

e K025 (LSC § 19.3.7) — which regulates smoke barriers — at scope and severity
level D;

¢ K038 (LSC §§ 7.1 and 19.2.1) — which includes means of egress requirements — at
scope and severity level L (widespread immediate jeopardy);

¢ K050 (LSC § 19.7.1.2) — which governs fire drills — at scope and severity level L;

© K064 (L.S.C. §§ 9.7.4.1 and 19.3.5.6) — which governs fire extinguishers — at
scope and severity level D;

' The LSC survey was completed on December 4, and the health survey was completed
on December 6. The findings from the health survey are not included in this appeal.
¢ K067 (L.S.C. §§ 9.2 and 19.5.2) — which governs heating, ventilating, and air
conditioning — at scope and severity level E (pattern of noncompliance that causes
no actual harm with the potential for more than minimal harm);

e K130(L.S.C. §§ 8.2.3.2.4.2 and 8.3.4.1) — which include miscellaneous
requirements for smoke/fire barriers and penetrations and openings in those
barriers — at scope and severity level D;

e K147(LS.C. § 9.1.2) — which governs electrical wiring and equipment — at scope
and severity level D; and

e K211 (LS.C. §§ 8.4.3 and 19.3.2.7 )— which addresses alcohol-based hand-rub
solutions — at scope and severity level D.

CMS Exs. 1, 10. Based on these findings, CMS has imposed a per-instance CMP of
$8,000. CMS Ex. 8-9.

Petitioner timely requested a hearing.

The parties have filed pre-hearing briefs (CMS Br.; P. Br.), closing briefs (CMS Cl. Br.;
P. Cl. Br.); and CMS filed a reply brief (CMS Reply). I have admitted into evidence
CMS exhibits (CMS Exs.) 1-12 and Petitioner’s exhibits (P. Exs.) 1-4. The parties
submitted the direct testimony of their witnesses in the form of affidavits. Because
neither party elected to cross-examine any of the witnesses, we did not convene an in-
person hearing. Order Following Prehearing Conference (Nov. 7, 2013); Order (Dec. 13,
2013).

IL. Issues
The issues before me are:
1. Was the facility in substantial compliance with Medicare LSC requirements; and

2. If the facility was not in substantial compliance, is the penalty imposed — $8,000
per-instance — reasonable.

Initially, Petitioner also challenged the immediate jeopardy findings. An administrative
law judge may review CMS’s scope and severity findings (which include a finding of
immediate jeopardy) only if a successful challenge would affect the range of the CMP or
if CMS has made a finding of substandard quality of care that results in the loss of
approval of a facility’s nurse aide training program. 42 C.F.R. § 498.3(b)(14), (d)(10);
Cedar Lake Nursing Home, DAB No. 2344 at 9 (2010); Evergreen Commons, DAB No.
2175 (2008); Aase Haugen Homes, DAB No. 2013 (2006). For a per-instance penalty,

the regulations provide only one range ($1,000 to $10,000), so the level o
noncompliance here does not affect the range of the CMP. 42 C.F.R. § 488.438(a)(2).

The facility does not claim that it risks losing approval of a nurse aide training program.
Even if it did, CMS’s scope and severity finding would not affect approval of such a
program. By statute and regulation, if, as here, CMS imposes a penalty of $5,000 or
more, the state agency cannot approve the program, so the facility would lose its approval
without regard to the immediate jeopardy finding. Act § 1819(f)(2)(B); 42 C.F.R.

§ 483.151(b)(2)(iv).

Thus, because the immediate jeopardy finding does not affect the range of the CMP or
cause the facility to lose approval of its nurse aide training program (if it has one), the
finding is not reviewable, which Petitioner conceded in its closing brief. P. Cl. Br. at 4.

III. Discussion

A. The uncontested evidence establishes that the facility was not in substantial
compliance with the requirements of the LSC cited at Tags K018, K025,
K064, K067, K130, K147, and K211.”

In addition to the two immediate jeopardy deficiencies, the surveyors cited the following:

K018 (LSC § 19.3.6.3) — Among other requirements, corridor doors must “be provided
with a means suitable for keeping the door closed... .” L.S.C. § 19.3.6.3.2; CMS Ex. 10
at 14. The surveyors observed that a corridor door to one of the clean utility rooms did
not fully close and latch in its frame. CMS Ex. | at 2; CMS Ex. 2 at 12; CMS Ex. 11 at
2, 6 (Byrd Decl. §§ 3, 11); CMS Ex. 12 at 2, 6-7 (Hart Decl. ff 2, 11). The surveyors,
Richard Byrd and Caleb Hart, are fire safety specialists. They explain that, because the
door could not be closed (creating a barrier), smoke and fire would not be contained in
the utility room if a fire broke out there. Smoke and fire could spread through the facility
corridors. CMS Ex. 11 at 6 (Byrd Decl. § 11); CMS Ex. 12 at 6-7 (Hart Decl. ¥ 11).

K025 (LSC § 19.3.7) — Smoke barriers must have a fire resistance rating of at least a half
hour. L.S.C. § 19.3.7.3; CMS Ex. 10 at 14. The surveyors observed a missing ceiling tile
in the facility’s mechanical room. CMS Ex. | at 3; CMS Ex. 2 at 15; CMS Ex. 11 at 2, 6

(Byrd Decl. § 3, 11); CMS Ex. 12 at 7 (Hart Decl. ff 2, 11). As Fire Safety Specialists

> My findings of fact/conclusions of law are set forth, in bold and italics, as captions in
the discussion section of this decision.
Byrd and Hart point out, an electrical fire can begin in the facility’s mechanical room,
and, with the ceiling tile missing, the fire would not be contained in that room. CMS Ex.
11 at 6-7 (Byrd Decl. ¥ 11); CMS Ex. 12 at 6-7 (Hart Decl. § 11).

K064 (LSC §§ 9.7.4.1 and 19.3.5.6) — Portable fire extinguishers must be provided in all
health care occupancies, and they must be inspected at least monthly. LSC §§ 9.7.4.1,
19.3.5.6; NFPA 10; CMS Ex. 10 at 11, 13. The surveyors noted that the fire extinguisher
in the basement mechanical room had not been inspected since June 2012, six months
earlier. CMS Ex. | at 12; CMS Ex. 2 at 25; CMS Ex. 11 at 2, 7 (Byrd Decl. {§ 3, 11);
CMS Ex. 12 at 2, 7 (Hart Decl. 2, 11). Because the extinguisher had not been
inspected in such a long time, the facility risked its being inoperable if needed. CMS Ex.
11 at 7 (Byrd Decl. § 11); CMS Ex. 12 at 7 (Hart Decl. 11).

K067 (LSC §§ 9.2 and 19.5.2) — Heating, ventilation, and air conditioning systems must
be installed properly and must comply with NFPA standards. LSC §§ 9.2, 19.5.2; NFPA
90 A and B; CMS Ex. 10 at 10, 15. The surveyors noted that the vents in six of the
resident bathrooms were not functioning. CMS Ex. | at 13; CMS Ex. 11 at 2, 7 (Byrd
Decl. ff 3, 11); CMS Ex. 12 at 2, 7 (Hart Decl. §§ 11). An inoperable bathroom vent can
cause moisture to build up, leading to mold or water damage; it may expose residents to
noxious fumes and unpleasant odors. CMS Ex. 11 at 7 (Byrd Decl. J 11); CMS Ex. 12 at
7 (Hart Decl. ¥ 11).

K130 (LSC §§ 8.2.3.2.4.2 and 8.3.4.1) — Doors in smoke barriers must close with
minimal clearance (the amount necessary for proper operation) and must not have
undercuts, louvers, or grills. LSC § 8.3.4.1; CMS Ex. 10 at 8. Similarly, pipes, conduits,
cables, wires, air ducts, pneumatic tubes and ducts, and similar equipment that passes
through fire barriers must be protected. LSC § 8.2.3.2.4.2; CMS Ex. 10 at 7. The
surveyors observed a door leading to the kitchen that did not close within its frame; they
also observed a hole near a light fixture in a janitor’s closet. That closet contained
chemicals, which could ignite. CMS Ex. 1 at 14-15; CMS Ex. 2 at 30; CMS Ex. 11 at 2,
7 (Byrd Decl. 9 3, 11); CMS Ex. 12 at 2, 7 (Hart Decl. { 2, 11). The fire specialists
explained that these breaches in the smoke barriers meant that any smoke or fire
originating in the kitchen or janitor’s closet could not be contained, but would spread.
CMS Ex. 11 at 7 (Byrd Decl. § 11); CMS Ex. 12 at 7 (Hart Decl. ¥ 11).

K147 (LSC § 9.1.2) — Electrical wiring and equipment must comply with NFPA 70. LSC
§ 9.1.2; CMS Ex. 10 at 10. The surveyors observed unsecured and overloaded power
strips, which created the risks of the strips overheating, sparking, and/or igniting a fire.
Several outlets were in disrepair, creating risks of accidental electrocution and outlet
sparking, which could start an electrical fire. CMS Ex. | at 15-16; CMS Ex. 2 at 30;
CMS Ex. 11 at 7 (Byrd Decl. § 11); CMS Ex. 12 at 7 (Hart Decl. ¥ 11).
K211 (LSC §§ 8.4.3 and 19.3.2.7) — Alcohol-based hand rubs must be installed properly.
They may not be installed over or adjacent to an ignition source. LSC §§ 8.4.3, 19.3.2.7;
CMS Ex. | at 16; CMS Ex. 10 at 9. The surveyors observed alcohol-rub dispensers
mounted above a night light and an electrical outlet in the first floor physical therapy
room. CMS Ex. | at 17; CMS Ex. 11 at 7 (Byrd Decl. § 11); CMS Ex. 12 at 7 (Hart
Decl. § 11). The highly flammable alcohol could spill or leak into the electrical source,
igniting a fire. CMS Ex. 11 at 7 (Byrd Decl. J 11); CMS Ex. 12 at 7 (Hart Decl. ¥ 11).

Petitioner does not directly challenge any of these survey findings. Rather, it complains
that, because CMS’s December 14, 2012 notice letter did not specify “that the facility
was not in substantial compliance due to any certain tag,” CMS did not provide proper
notice that the non-immediate jeopardy tags contributed to the finding of substantial
noncompliance. P. Cl. Br. at 7; see CMS Ex. 8.

Referring to the December surveys, CMS’s notice letter advises Petitioner: that the
facility was not in substantial compliance with federal requirements for nursing homes
participating in the Medicare and Medicaid programs; that, on December 3 and 4, the
facility’s deficiencies posed immediate jeopardy to resident health and safety; and that
the facility remained out of substantial compliance thereafter. The letter refers the
facility to the statement of deficiencies (CMS form 2567) provided by the state agency
(CMS Ex. 1). CMS Ex. 8 at 1. The letter is explicit: CMS based the $8,000 per-instance
CMP on “your facility’s noncompliance as evidenced by the findings of the December 4,
2012 LSC survey. ...” CMS Ex. 8 at 2. Thus, the notice letter advised Petitioner that
CMS imposed the CMP because of all the deficiencies cited at scope and severity level D
or greater. See Act § 1819(h); 42 C.F.R. § 488.400 (authorizing the Secretary to impose
remedies when a facility is not in substantial compliance with program requirements);

42 C.F.R. § 488.301 (defining substantial compliance as a level of compliance such that
deficiencies pose no greater risk than the potential for causing minimal harm). Nothing
in the letter suggests that the CMP was limited to the immediate jeopardy findings.
Moreover, Petitioner well understood this, as evidenced by its hearing request, which
appeals “all deficiencies and findings of noncompliance in this matter[,]” including “each
tag cited in the survey.” Hearing Request at 2.

Citing 42 C.F.R. § 488.301, Petitioner also maintains that the non-immediate jeopardy
tags did not “serve as bases for the CMP because they posed no greater risk to resident
health or safety than the potential for causing minimal harm.” P. Cl. Br. at 7. The
undisputed evidence establishes otherwise. The non-immediate jeopardy deficiencies
were cited at scope and severity levels D and E — levels considered substantial
noncompliance. As the fire specialists’ testimony establishes, each of these deficiencies
have the potential for more than minimal harm. CMS Ex. 11 at 6-7 (Byrd Decl. § 11);
CMS Ex. 12 at 6-7 (Hart Decl. § 11). Petitioner offers no evidence challenging that
testimony.

Indeed, except to dismiss the significance of a door that does not latch properly or a
missing ceiling tile (P. Cl. Br. at 7), Petitioner does not discuss the particular findings.
But doors must close properly and ceilings must be intact because they are smoke and
fire barriers. If breached, smoke and fire would not be contained, but would spread,
putting facility residents and staff at risk of very serious harm. CMS Ex. 11 at 6-7 (Byrd
Decl. § 11); CMS Ex. 12 at 6-7 (Hart Decl. § 11). If smoke and fire breach the ceiling,
the breach is especially serious because the fire can spread undetected until the ceiling
collapses.

Thus, CMS has presented compelling and unchallenged evidence establishing that the
facility was not in substantial compliance with the non-immediate jeopardy deficiencies
cited. I therefore conclude that the facility was not in substantial compliance with
Medicare requirements, and CMS may impose a penalty.

B. The facility was not in substantial compliance with requirements of K050
because staff were not able to activate the fire-alarm system.

Facility staff must conduct quarterly fire drills on each shift to familiarize facility
personnel with the alarm signals and how they should respond to them. LSC § 19.7.1.2;
CMS Ex. 10 at 16. Personnel must respond promptly and effectively in order to protect
residents. Among other requirements, all staff must know how to: 1) transmit an
appropriate fire alarm signal to warn other building occupants; 2) summon staff; 3)
confine the fire by closing doors; and 4) relocate residents. LSC § 19.7.2.1. Staff must
be instructed in the use of and response to fire alarms. LSC § 19.7.2.3.

At the time of the survey, the facility had eighty residents. Only thirteen were able to
ambulate independently. Twelve required assistance or an assistive device to ambulate.
Fifty-five spent all or most of their time in chairs. Two were bedfast. CMS Ex. 4 at 1.

On December 3, the surveyors, with the assistance of the facility’s maintenance director,
staged a fire drill. Surveyor Hart pulled a resident’s call-bell. When a staff member
responded, he told her that the surveyors were conducting a fire drill. That staff member
told a nurse aide to activate the nearest fire alarm. But the nurse aide did not activate the
alarm; she lifted the cover but did not pull the handle to trigger the fire-alarm system.
Seeing her error, another employee (either the maintenance director or the director of
nursing) pulled the handle. CMS Ex. 12 at 2 (Hart Decl. 4 3); but see P. Ex. 3 at 1
(McKinnon Decl. { 3).

Petitioner excuses the nurse aide’s inability to activate the alarm, arguing that the facility
is not required to execute every fire drill without incident. P. Cl. Br. at 2. Petitioner
claims that the nurse aide had been properly trained and knew how to activate a fire
alarm, but thought, “momentarily” and mistakenly, that she had activated the alarm.

Under an earlier system, someone could set off the alarm by simply lifting the plastic
casing. P. Cl. Br. at 2-3. The nurse aide justifies her error by explaining that she was
“really nervous” because the surveyor was watching her. P. Ex. 3 at 1 (McKinnon Decl.

43).

Notwithstanding its employee’s inability to activate the fire alarm, Petitioner argues that
it complied with the LSC requirements because it trained its staff and conducted fire
drills. P. Cl. Br. at 3. But all the training sessions in the world will not satisfy the LSC
requirements unless staff learn how to respond in an emergency. I have no doubt that the
presence of a surveyor could be nerve-wracking, but that pales when compared to the
stress induced by a rapidly expanding fire. Staff must be so well-trained that they can set
off an alarm no matter how nervous they are. Lives may depend on it. Because the
facility’s employee was not able to activate the fire alarm as required, the facility was not
in substantial compliance with the requirements of K050.

C. The facility was not in substantial compliance with the requirements of K038
because residents and staff could not immediately leave the facility in an
emergency.

Residents and staff must be able to leave the facility in case of an emergency. To ensure
this, the means of egress (i.e., way to get out) must be “free of all obstructions or
impediments to full instant use in the case of fire or other emergency.” LSC § 7.1.10.1;
CMS Ex. 10 at 4. (emphasis added). Any device or alarm that restricts the “improper use
of a means of egress” must be designed and installed so that it cannot impede or prevent
the emergency use of the means of egress. LSC § 7.1.9; CMS Ex. 10 at 4. Exit doors
may be equipped with an approved access control system, but that system must meet
certain criteria. Among those criteria, if the part of the access control system that locks
the doors loses power, the doors must unlock automatically in the direction of egress.
LSC § 7.2.1.6.2(b); CMS Ex. 10 at 6. That way, residents and staff have a “safe and
accessible escape route.” CMS Ex. 11 at 4 (Byrd Decl. § 7); CMS Ex. 12 at 3 (Hart Decl.

46).

Petitioner concedes that, during the December 3 fire drill, the system malfunctioned, and
the exit doors did not unlock. P. Br. at 2. When the fire alarm went off, staff were not
able to leave the building because the doors remained locked. CMS Ex. 11 at 2-3 (Byrd
Decl. {| 4).

The facility’s eight exit doors were equipped with magnetic locks, which the state agency
approved, with the caveats that (among other requirements): 1) all staff have the exit
code for the locking devices; and 2) the doors unlock if the power controlling the lock is
lost or the fire detection/sprinkler system is activated. CMS Ex. 6 at 2; see LSC

§ 7.2.1.6.2(b). These conditions comport with LSC requirements and are designed to
make sure that facility residents and staff are not trapped in a burning building. CMS Ex.
11 at 3 (Byrd Decl. § 7); CMS Ex. 12 at 3 (Hart Decl. 6).

Each of the exit doors had a card-reading device in place. To override or disable the
magnetic locks, staff could manually swipe a card through the reader, that is, if staff had
such a card. It seems that the facility initially complied with this condition and gave
functional key cards to everyone, but staff misused the cards by propping the doors open
at night. Without the state agency’s knowledge or approval, the facility disabled most of
the cards. P. Ex. 1 at 1-2 (Blaylock Decl. | 6). At the time of the survey, only two key
cards were equipped to disable the locks, one for the maintenance director and one for the
facility’s director of nursing. Understandably, during the fire drill, the surveyors did not
observe any staff member using a card-reader to unlock the exit doors. CMS Ex. 11 at 4
(Byrd Decl. ¥ 8); CMS Ex. 12 at 4 (Hart Decl. 47). Thus, as the surveyors opined, the
card-reader system was virtually worthless. To unlock any doors, the maintenance
director or director of nursing had to be physically present in the facility and in
possession of his/her key card. He or she would have to go to each of the eight exit doors
to swipe the card and disable the locks. Considering that the smoke and fire would likely
impede their ability to move through the facility, they would not be able to do it
(assuming they were even present in the facility). CMS Ex. 11 at 5 (Byrd Decl. § 9);
CMS Ex. 12 at 4 (Hart Decl. § 8). In the meantime, residents and staff would be trapped.

I reject Petitioner’s claim that it was not required to provide exit codes to all staff because
the state had approved, as failsafe, its alternative to the key card system — kill-switches.
See P. Br. at 9; P. Ex. 1 at 3 (Blaylock Decl. 4 9). First, the state agency’s approval letter
unambiguously required that all staff be able to unlock the doors. CMS Ex. 6 at 2.
Second, the kill-switches proved inadequate during the December 3 fire drill. The
facility had only two such kill-switches. They were located far from the exit doors — at
the nursing stations, which are in the centers of the facility’s first and second floors. If
smoke or fire blocked access to the nursing stations, the switches would be inaccessible.
CMS Ex. 5; CMS Ex. 11 at 4 (Byrd Decl. § 7); CMS Ex. 12 at 3 (Hart Decl. ¥ 6).

During the fire drill, a kill-switch did not immediately unlock the doors because it took
time for someone to realize that the facility had an exit problem, then get to one of the
kill-switches, and to activate it. When he realized that the facility’s unlocking system had
malfunctioned, the maintenance director — who had been on the second floor with
Surveyor Hart — joined Surveyor Byrd on the first floor and, together, they went to the
closest nurses’ station and pushed the kill-switch. According to Surveyor Byrd, the doors
began to unlock slowly and sequentially. Surveyor Byrd estimated that two to three
minutes elapsed between the time the maintenance director pushed the button and the
time the final door unlocked. CMS Ex. 11 at 3 (Byrd Decl. 45); CMS Ex. 12 at 2-3 (Hart
Decl. § 4). Petitioner concedes that the doors “are set at different time intervals,” but

10

then says that they “immediately unlocked as soon as the kill switch button was pushed.”
P. Br. at 3; P. Ex. 2 at 2 (Santana Decl. ¥ 6). If set at different intervals, I do not
understand how all could have opened “immediately,” but, even assuming that the final
door opened within a short time of the kill-switch activation, the system fell short.
Surveyor Hart began the drill at 1:05 p.m. CMS Ex. 12 at 2 (Hart Decl. § 3). The doors
were finally unlocked at about 1:15 p.m. CMS Ex. 1 at 4. This can be a very long time
when smoke and fire are bearing down on the aged and infirm.

Petitioner claims that the system is nevertheless failsafe because any staff member can
push the kill-switch, and staff are almost always at or near the nurses’ stations. P. Ex. 1
at 2-3 (Blaylock Decl. § 9). The problem with this argument is that it did not happen
during the December 3 fire drill. For whatever reason, no staff person activated a kill-
switch button until the maintenance director went from the second to the first floor and
did so.* I agree with the fire safety specialists. Having only two kill-switches in place to
disable the locks was wholly inadequate.

The surveyors also tested the facility’s smoke alarm system. The smoke detector
activated facility-wide alarms, but the exit doors remained locked. CMS Ex. 11 at 3
(Byrd Decl. | 6); CMS Ex. 12 at 3 (Hart Decl. 5).

Citing LSC § 19.2.2.2.5, Petitioner argues that the facility needed just one means of
rapidly removing locks. P. Cl. Br. at 2. That provision says that each door may have
only one locking device (i.e., doors may not have multiple locks), and lists potentially
acceptable means for allowing building occupants to leave a locked building — remote
control of locks, staff carrying exit keys “at all times,” or other reliable means of
unlocking the doors. But those means must be adequate and reliable. Here, the facility’s
means of unlocking exit doors was neither adequate nor reliable. The automatic
unlocking system failed; the card-readers were virtually nonexistent; and the kill-switch
was inadequate. It took too long for someone to realize that it had to be activated and
then to get to one of the switches.

Thus, the facility did not meet LSC requirement that the means of egress be free of
obstructions and that doors automatically unlock in case of an emergency. Nor did the
facility comply with the state agency’s conditions that all staff have the exit code for the
locking devices and that doors automatically unlock in case of an emergency. The
facility was therefore not in substantial compliance with Tag K038, LSC §§ 7.1 and
19.2.1.

> No one has explained why the maintenance director activated the first floor kill switch,
given that he was on the second floor when the alarm went off.
11

D. The penalty imposed is reasonable.

To determine whether a CMP is reasonable, I apply the factors listed in 42 C.F.R.

§ 488.438(f): (1) the facility’s history of noncompliance; (2) the facility’s financial
condition; (3) factors specified in 42 C.F.R. § 488.404; and (4) the facility’s degree of
culpability, which includes neglect, indifference, or disregard for resident care, comfort
or safety. The absence of culpability is not a mitigating factor. The factors in 42 C.F.R.
§ 488.404 include: (1) the scope and severity of the deficiency; (2) the relationship of the
deficiency to other deficiencies resulting in noncompliance; and (3) the facility’s prior
istory of noncompliance in general and specifically with reference to the cited
deficiencies.

I consider whether the evidence supports a finding that the amount of the CMP is at a
level reasonably related to an effort to produce corrective action by a provider with the
ind of deficiencies found, and in light of the section 488.438(f) factors. I am neither
bound to defer to CMS’s factual assertions nor free to make a wholly independent choice
of remedies without regard for CMS’s discretion. Barn Hill Care Ctr., DAB No. 1848 at
21 (2002); Cmty. Nursing Home, DAB No. 1807 at 22 et seg. (2002); Emerald Oaks,
DAB No. 1800 at 9 (2001); CarePlex of Silver Spring, DAB No. 1638 at 8 (1999).

Here, CMS imposed a penalty of $8,000 per-instance, which is in the higher range for a
per-instance CMP ($1,000-$10,000), but is modest considering what CMS might have
imposed. 42 C.F.R. § 488.408(e)(1)(iv); see Plum City Care Ctr., DAB No. 2272 at 18-
9 (2009) (observing that even a $10,000 per-instance CMP can be “a modest penalty
when compared to what CMS might have imposed”).

Except to argue that it was in substantial compliance so no penalty should have been
imposed, Petitioner does not challenge the amount of the CMP, so it has arguably waived
the issue. In any event, the December survey was a “Special Focus Certification
Survey,” which shows that the facility had a significant history of substantial
noncompliance. A facility becomes subject to special focus surveys if it “has consistently
demonstrated failure to maintain compliance,” and its practices have caused harm to
residents. A special focus facility must be surveyed at least once every six months. Act

§ 1819(£)(8).

Petitioner has not suggested that its financial condition affects its ability to pay this
relatively small CMP.

Applying the remaining factors, I find that the facility’s LSC deficiencies were
significant, putting the entire facility — residents and staff — at risk. The facility was at
heightened risk of fire spreading because not all staff knew how to activate the fire
alarms, and the smoke/fire barriers were compromised. Even more frightening, residents
and staff attempting to evacuate the building were likely to find themselves locked in. In
12

approving magnetic locks for the exit doors, the state agency had insisted that all staff be
capable of unlocking the doors. Yet, without the state agency’s knowledge or approval,
the facility cancelled staff’s means for disabling the locks, for which I find the facility
culpable.

For these reasons, | find this relatively small CMP reasonable.
IV. Conclusion

The facility was not in substantial compliance with multiple Life Safety Code
requirements, and the $8,000 per-instance penalty is reasonable.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Vijendra Dave, M.D.,
(NPI: 1669565305; PTAN: 110179005),
Petitioner,
Vv.
Centers for Medicare & Medicaid Services,

Respondent.

Docket No. C-15-723
Decision No. CR3871

Date: May 20, 2015

DECISION

Wisconsin Physicians Service Insurance Corporation (WPS), an administrative contractor
acting for the Centers for Medicare & Medicaid Services (CMS), revoked Petitioner’s
Medicare enrollment and billing privileges for no longer meeting Medicare enrollment
requirements because a Kansas state licensing board suspended Petitioner’s license to
practice medicine. I sustain CMS’s determination and find that WPS had a legal basis to
revoke Petitioner’s Medicare enrollment. I do not have authority to review the re-
enrollment bar that WPS imposed on Petitioner based on the revocation.

I. Background

Petitioner was enrolled in Medicare and had a Kansas medical license. P. Br., passim;

P. Ex. 6, at 2. On May 30, 2014, the Kansas State Board of Healing Arts (State Licensing
Board), a state medical licensing board, entered an Ex Parte Emergency Order of
Suspension and Protective Order in which it suspended Petitioner’s license to practice
medicine. CMS Exhibit (Ex.) 3. Ina letter dated June 24, 2014, WPS informed
Petitioner that it was revoking his Medicare enrollment and billing privileges because
Medicare enrollment requirements require physicians to be legally authorized to practice
by the state in which the physician performs services. The notice revoked Petitioner’s
enrollment effective May 30, 2014, the date that Petitioner’s license to practice in Kansas
was suspended. WPS also imposed a three-year re-enrollment bar on Petitioner. CMS
Ex. 1. Petitioner timely requested a reconsidered determination on August 25, 2014.
CMS Ex. 6.

WPS issued a reconsidered determination on October 7, 2014. WPS concluded Petitioner
failed to comply with the Medicare enrollment requirement that he was authorized to
practice in the state where he practiced, and accordingly it was authorized to revoke
Petitioner’s enrollment. WPS also upheld the three-year re-enrollment bar. CMS Ex. 8.

Petitioner requested review of the reconsidered determination before an administrative
law judge. The matter was assigned to me for hearing and decision, and I issued an
Acknowledgment and Prehearing Order (Prehearing Order) that established a briefing
schedule requiring the parties to submit all of their arguments and proposed exhibits in a
prehearing exchange that included any witness direct testimony as a sworn exhibit and
any motions for summary judgment. CMS timely filed its prehearing exchange including
a motion for summary judgment (CMS Br.) and CMS Exs. 1-9. Petitioner timely filed

is prehearing exchange including a brief in opposition to the motion for summary
judgment (P. Br.) and Petitioner’s Exhibits (P. Exs.) 1-6.

Neither party objected to the opposing party’s exhibits, therefore I admit CMS Exs. 1-9
and P. Exs. 1-6. Petitioner submitted affidavits of direct testimony from two proposed
witnesses as P. Exs. 4 and 5. CMS did not request to cross-examine either witness. CMS
did not propose any witness testimony. I informed the parties that I would only conduct a
hearing if either party submitted affidavits of direct testimony from a witness, and the
opposing party wished to cross-examine that witness. Prehearing Order 410. Because
CMS did not seek to cross-examine Petitioner’s witnesses, an in-person hearing is not
necessary, and I will decide this matter on the written record. Prehearing Order 411;
Marcus Singel, D.P.M., DAB No. 2609, at 5-6 (2014).

II. Issues

1. Whether CMS had a legal basis to revoke Petitioner’s Medicare
enrollment and billing privileges; and, if so,

2. Whether I have the authority to consider the three year re-enrollment bar
CMS imposed on Petitioner.
III. Findings of Fact and Conclusions of Law

1. CMS properly revoked Petitioner’s Medicare enrollment and billing
privileges because Petitioner’s medical license was suspended.

A provider or supplier must be enrolled in the Medicare program and have a billing
number in order to be eligible to receive payment for services rendered to a Medicare-
eligible beneficiary. 42 C.F.R. § 424.505. “Suppliers” include physicians, other
practitioners, and “entities (other than providers of services) that furnish[] items or
services... .”' 42 U.S.C. § 1395x(d). In order for physicians to enroll as Medicare
suppliers, they must comply with relevant state licensing requirements and be legally
authorized to practice in the state in which they perform services. 42 C.F.R.
§§ 410.20(b), 424.516(a)(2). CMS may revoke a supplier’s enrollment in the Medicare
program if it finds a supplier not to be in compliance with enrollment requirements.

42 CFR. § 424.535(a)(1).

There is no dispute that the State Licensing Board issued an emergency suspension of
Petitioner’s medical license that became effective immediately, on May 30, 2014. CMS
Ex. 3 at 5, 7. Because his license was suspended, CMS properly revoked Petitioner’s
enrollment and billing privileges. A physician’s “inability to practice medicine for any
length of time due to the disciplinary actions imposed against him trigger[s] his
noncompliance with the Medicare enrollment requirements and authorize[s] revocation of
is billing privileges.” See Akram A. Ismail, M.D., DAB No. 2429, at 8 (2011).

2. CMS properly identified May 30, 2014 as the effective date to revoke
Petitioner’s enrollment because the Licensing Board suspended his medical
license on that date.

Petitioner requests that his effective date of revocation be May 31, 2014, the date he
received a mailed suspension notification, because he did not become aware of the May
30, 2014 suspension until he received an email notification at 3:13 p.m. on May 30, after
he had already treated multiple Medicare beneficiaries during the day. P. Br. at 6-8;

P. Ex. 4; CMS Ex. 4 at 1. Petitioner also asks me to apply the effective date relating to a
revocation based on a non-operational finding. P. Br. at 8. However, the relevant
regulation is unequivocal that “[w]hen a revocation is based ona... license suspension .
. ., the revocation is effective with the date of . . . license suspension... .” See 42 C.F.R.
§ 424.535(g). The State Licensing Board issued the emergency suspension of

' “Providers” include hospitals, critical access hospitals, skilled nursing facilities,
comprehensive outpatient rehabilitation facilities, home health agencies, and hospice
programs. 42 U.S.C. § 1395x(u); 42 C.F.R. § 400.202.
Petitioner’s license on May 30, 2014, effective the same date. CMS Ex. 3 at 5, 7.
Because Petitioner’s license was suspended on May 30, 2014, CMS correctly revoked
Petitioner’s enrollment on that same date. I am aware of no authority that would allow
me to waive that regulatory requirement.

3. CMS is authorized to bar Petitioner from re-enrolling for a three-year
period.

CMS must bar a revoked supplier from re-enrollment for a one to three-year period,
depending on the severity of the basis for the revocation. 42 C.F.R. § 424.535(c).
Petitioner argues that the three-year re-enrollment bar is excessive and contrary to
regulation and Medicare guidelines. P. Br. at 9-11, 14-15. Instead of the three year re-
enrollment bar that CMS imposed, Petitioner argues that a one year bar would be more
appropriate because “[a]part from his failure to maintain Medicare enrollment due to
license suspension, Dave’s only violation in the instant proceeding was his failure to
timely report to contractor WPS within 30 days. ...” P. Br. at 5.

My review authority in this matter is limited to certain enumerated initial determinations
listed at 42 C.F.R. § 498.3(b). CMS’s selection of a re-enrollment bar is not a
determination subject to ALJ review because it is not a reviewable initial determination
under 42 C.F.R. § 498.3(b)(17), which only enumerates the revocation action. See David
Tolliver, D.O., DAB CR2281, at 10 (2010). Therefore, I am not authorized to adjust the
re-enrollment bar that CMS determined to impose.

IV. Conclusion

I find CMS and its contractor had a legal basis to revoke Petitioner’s Medicare
enrollment and billing privileges because he was noncompliant with Medicare
requirements due to his medical license suspension in Kansas. CMS acted within its
authority to institute a three-year re-enrollment bar, which became effective as of the date
of Petitioner’s license suspension on May 30, 2014.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Ferdinand Echavia
(O.1. File No. 5-09-4-1027-9),

Petitioner,
v.
The Inspector General.
Docket No. C-15-968
Decision No. CR3864

Date: May 15, 2015

DECISION

The Inspector General (IG) of the United States Department of Health and Human
Services notified Ferdinand Echavia (Petitioner) that he was being excluded from
participation in Medicare, Medicaid, and all other federal health care programs for a
minimum period of five years based on his conviction for a crime under the Anti-
Kickback Statute. Petitioner requested a hearing to dispute the exclusion. For the
reasons stated below, I conclude that the IG has a basis for excluding Petitioner from
program participation and that the five-year exclusion is mandated by law.

I. Background

By letter dated November 28, 2014, the IG notified Petitioner that he was being excluded
from participation in Medicare, Medicaid, and all federal health care programs for the
minimum statutory period of five years pursuant to 42 U.S.C. § 1320a-7(a)(1) because of
his conviction in the United States District Court, Northern District of Illinois, of a
criminal offense related to the delivery of an item or service under the Medicare program
or a state health care program, including the performance of management or
administrative services relating to the delivery of items or services, under any such
program. IG Exhibit (Ex.) 4. On January 14, 2015, Petitioner, through counsel, filed a
request for a hearing (RFH) to dispute the exclusion.

On February 12, 2015, the IG moved for dismissal of the RFH arguing that Petitioner
failed to raise any appealable issue. The IG filed four exhibits (IG Exs. 1-4) with the
motion. During a February 18, 2015 prehearing conference, I granted Petitioner two
weeks to respond to the IG’s motion to dismiss. My February 18, 2015 Order and
Schedule for Filing Briefs and Documentary Evidence (Order) summarizes what was said
at the prehearing conference.

Following receipt of Petitioner’s response, I denied the IG’s motion to dismiss. In
compliance with the prehearing submission dates I established at the prehearing
conference, the IG timely submitted a brief (IG Br.) and three additional exhibits (IG Exs.
5-7). Petitioner timely filed a brief (P. Br.). The IG filed a reply brief (IG Reply Br.).

II. Decision on the Record

Petitioner did not object to any of the IG’s proposed exhibits. Therefore, I admit IG Exs.
1-7 into the record. See Order 5. Petitioner did not submit any proposed exhibits.

Because both parties indicated in their briefs that they did not have any witnesses to offer
and that an in-person hearing was not necessary, I decide this case on the basis of the
written record. IG Br. at 6; P. Br. at 6; Civil Remedies Division Procedures § 19(d) (eff.
Jan. 1, 2015).

II. Issue

Whether the IG has a basis for excluding Petitioner from participating in Medicare,
Medicaid, and all other federal health care programs for five years pursuant to 42 U.S.C.
§ 1320a-7(a)(1). See 42 C.F.R. § 1001.2007(a)(1)-(2).

IV. Findings of Fact, Conclusions of Law, and Analysis!

The IG must exclude an individual from participation in Medicare, Medicaid, and all
other federally-funded health care programs if that individual has been convicted of a
criminal offense related to the delivery of an item or service under Medicare or a state
health care program. 42 U.S.C. § 1320a-7(a)(1); 42 C.F.R. § 1001.101(a).

' My findings of fact and conclusions of law are set forth in italics and bold font.
A. Petitioner pled guilty in the United States District Court for the Northern
District of Illinois (District Court) to one count of Conspiracy to Solicit and
Receive Remuneration for Patient Referrals, and the District Court issued a
Judgment in Criminal Case adjudging Petitioner guilty of that crime.

Petitioner is a Registered Nurse licensed to practice in the state of Illinois. IG Ex. 5. On
August 9, 2012, a federal grand jury indicted Petitioner, several other individuals, and
Goodwill Home Healthcare, Inc. (Goodwill). IG Ex. 1. Count I of the Indictment, in
relevant part, alleged that Petitioner and the other individuals conspired to:

[KJnowingly and willfully solicit and receive remuneration,
including kickbacks and bribes, directly and indirectly,
overtly and covertly, from GOODWILL in return for
referring patients to GOODWILL for furnishing and
arranging for the furnishing of services for which payment
may be made in whole and in part under Medicare, in
violation of Title 42, United States Code, Section 1320a-
7b(b)(1)(A).

IG Ex. | at 4-5.
Count I of the Indictment provided the following allegations against Peittioner:

It was further a conspiracy that in or about August 2009,
shortly after [Petitioner] began treating patients on behalf of
GOODWILL, [two other defendants] and Individual G,
agreed to cause GOODWILL to pay, and [Petitioner] agreed
to receive, kickback payments for the referral and
recertification of patients for the provision of home health
care services to be reimbursed under Medicare. From
approximately August 2009 to approximately July 2010 [two
other defendants] and Individual G, paid kickbacks to
[Petitioner] for each patient that [Petitioner] referred to
GOODWILL for a Start of Care cycle and recertification for
additional cycles of home health care services. In total, [two
other defendants] and Individual G, paid approximately
$28,000 in kickbacks directly to [Petitioner] through
GOODWILL. In addition, [two other defendants] and
Individual G, paid approximately $56,000 in kickbacks to
Care Specialist, Inc., a company owned and controlled by
[Petitioner].

IG Ex. | at 7-8.
On October 30, 2013, Petitioner entered into a plea agreement in which he agreed to
plead guilty to Count I of the Indictment and admit he violated 42 U.S.C. § 1320a-
7b(b)(1)(A). IG Ex. 2.

On June 17, 2014, the District Court entered a Judgment in a Criminal Case in which the
District Court acknowledged that Petitioner pled guilty to Count I of the Indictment and
indicated Petitioner was “adjudicated guilty” of violating 42 U.S.C. § 1320a-7b(b)(1)(A).
IG Ex. 3 at 1. The District Court sentenced Petitioner to six months of home detention
and three years of probation, and ordered Petitioner to pay a $100 assessment as well as
forfeit $84,509. IG Ex. 3 at 2, 4-5; IG Ex. 6 at 112-113.

B. Petitioner was convicted of a felony for the purposes of 42 U.S.C. § 1320a-
7(a)(1).

Under 42 U.S.C. § 1320a-7(a)(1), Petitioner must be “convicted of a criminal offense”
before he can be excluded. An individual is considered “convicted” when a judgment of
conviction has been entered by a federal, state, or local court, or a plea of guilty or no
contest has been accepted in a federal, state, or local court. 42 U.S.C. § 1320a-7(i)(1),
(3). In the present matter, Petitioner entered a plea of guilty to a charge of violating

42 U.S.C. § 1320a-7b(b)(1)(A), and the District Court “adjudicated [Petitioner] guilty” of
that crime. IG Ex. 2 at 2; IG Ex. 3 at 1. I conclude, based on these facts and Petitioner’s
admission that he was convicted of a criminal offense (P. Br. at 1), that Petitioner was
convicted of a criminal offense.

C. Petitioner’s criminal offense of receiving kickbacks for referring and
recertifying patients for home health services that Goodwill billed to
Medicare is a criminal offense related to the delivery of an item or service
under Medicare.

An individual must be excluded from participation in any federal health care program if
the individual was convicted of a criminal offense related to the delivery of an item or
service under Medicare. 42 U.S.C. § 1320a-7(a)(1); 42 C.F.R § 1001.101(a). The
requirement that the conviction be “related to” the delivery of health care items or
services simply means that there must be a nexus or common sense connection. See
Quayum v. U.S. Dep’t of Health & Human Servs., 34 F. Supp. 2d 141, 143 (E.D.N.Y.
1998); see also Friedman v. Sebelius, 686 F.3d 813, 820 (D.C. Cir. 2012) (describing the
phrase “related to” in another part of section 1320a-7 as “deliberately expansive words,”
“the ordinary meaning of [which] is a broad one,” and one that is not subject to “crabbed
and formalistic interpretation” (internal quotes omitted)).
Petitioner was convicted of violating the following provision of the Anti-Kickback
Statute:

Whoever knowingly and willfully solicits or receives any
remuneration (including any kickback, bribe, or rebate)
directly or indirectly, overtly or covertly, in cash or in kind—
in return for referring an individual to a person for the
furnishing or arranging for the furnishing of any item or
service for which payment may be made in whole or in
part under a Federal health care program .. . shall be
guilty ofa felony....

42 U.S.C. § 1320a-7b(b)(1)(A) (emphasis added). Therefore, based on the statute,
Petitioner’s criminal conduct has a nexus to furnishing an item or service under a federal
health care program. Petitioner’s criminal conduct also has a nexus to the delivery of an
item or service under the Medicare program because he engaged in a criminal conspiracy
to refer his patients for home health services, provided by Goodwill and paid for by
Medicare, in order to receive a payment from Goodwill for the referral. Petitioner
admitted the following in his plea agreement:

Between in or about August 2009 and continuing through in
or about May 2010, [Petitioner] conspired with [a co-
defendant] and others to knowingly and willfully solicit and
receive remuneration, directly and indirectly, overtly and
covertly, from Goodwill Home Healthcare, Inc., in return
for referring patients to Goodwill for the furnishing and
arranging for the furnishing of services for which
payment may be made in whole and in part under
Medicare, in violation of [42 U.S.C. § 1320a-7b(b)(1)(A)],
all in violation of Title 18, United States Code, Section 371.

Specifically, as [Petitioner] knew, Medicare provided free and
below-cost health care benefits, including medically
necessary in-home health care services for persons who were
deemed homebound due to illness or injury that restricted
their ability to leave their place of residence. In addition, as
Petitioner] knew, Goodwill . . . was a licensed provider of
ome health services purportedly provided to its clients.
Petitioner] was a nurse licensed in Illinois. [Petitioner]
provided home health care services to patients through
Goodwill. [Petitioner] also owned and controlled Care
Specialist, Inc., a corporation in Illinois that received
payments from Goodwill.

It was part of the conspiracy that, beginning in or about
August 2009 and continuing through in or about May 2010,
[Petitioner] agreed with [one of the co-defendants] and
others to receive kickback payments from Goodwill in
exchange for [Petitioner’s] referral of patients to Goodwill
for home health services for which Goodwill sought
reimbursement from Medicare. Goodwill made these
kickback payments to [Petitioner] through Care Specialist.

In furtherance of the conspiracy, on or about November 27,
2009, [Petitioner] received a check from Goodwill made out
to Care Specialist in the amount of $7,000, as a kickback for
referring ten patients to Goodwill for home health
services for which Goodwill sought reimbursement from
Medicare. [Petitioner] received $700 for each of these
patients, knowing, it was illegal to receive such kickbacks.

In addition, on numerous other occasions [Petitioner]
received checks from Goodwill, through Care Specialist, as
kickback payments for referring additional patients to
Goodwill for home health services for which Goodwill
sought reimbursement from Medicare, knowing that it was
illegal to receive such kickbacks. In total, [Petitioner]
received approximately $56,300 in kickback payments from
Goodwill, through Care Specialists.

IG Ex. 2 at 2-4 (emphasis added). Indeed, the nexus between Petitioner’s misconduct
and the delivery of items or services under the Medicare program is sufficiently clear that
Petitioner did not dispute this in his RFH or brief.

Petitioner’s primary argument is that the IG has not properly applied the exclusion statute
in this matter. The IG proceeded under a mandatory exclusion based on Petitioner’s
conviction under 42 U.S.C. § 1320a-7b(b)(1)(A); however, Petitioner asserts that his
misconduct falls under the permissive exclusion provision in 42 U.S.C. § 1320a-7(b)(7),
which permits exclusion when the Secretary of Health and Human Services determines
that an individual violated 42 U.S.C. § 1320a-7b. P. Br. at 1. Petitioner then argues, at
length, that he should not be excluded under 42 U.S.C. § 1320a-7(b)(7) because he did
not violate 42 U.S.C. § 1320a-7b. P. Br. at 1-6; RFH 2-6.

Petitioner’s argument is fundamentally flawed because the IG’s exclusion under
42 U.S.C. § 1320a-7(a)(1) is derivative of Petitioner’s conviction, whereas a permissive
exclusion under 42 U.S.C. § 1320a-7(b)(7) is an original action in which the IG would
need to prove that Petitioner violated 42 U.S.C. § 1320a-7b by a preponderance of the
evidence. Because Petitioner was already convicted of violating 42 U.S.C. § 1320a-7b,
the IG no longer needs to prove such a violation in order to exclude Petitioner.

A federal court addressed this issue in detail.

Plaintiff first contends the ALJ’s imposition of a period of
exclusion under the mandatory exclusion provision of
42 U.S.C. § 1320a—7(a)(1) was an erroneous application of
law, and the ALJ should have applied the permissive
exclusion provisions of 42 U.S.C. § 1320a—7(b)(7).

Plaintiff was convicted of conspiracy to commit kickback
violations, in violation of 18 U.S.C. § 371 and offering and
paying bribes in violation of 42 U.S.C. § 1320a—7b(b), one of
the statutes expressly referenced in the permissive exclusion
provision of 42 U.S.C. § 1320a—7(b)(7).

Pursuant to the plain language of 42 U.S.C. § 1320a—7(a)(1),
the mandatory exclusion provision applies to individuals
convicted of program-related crimes, that is crimes related to
the delivery of an item or service. On the other hand,
42 U.S.C. § 1320a-7(b)(7) provides that the permissive
exclusion provision Plaintiff references applies to individuals
that the Secretary determines has committed an act described
in certain statutes, including the Anti—Kickback Statute.
Obviously, if a jury has convicted an individual of
committing a program-related crime, the Secretary need not
make a determination that the individual has engaged in the
underlying conduct; a jury has found beyond a reasonable
doubt that the person has committed the conduct. Mandatory
exclusion thus applies to those convicted of program-related
crimes, while permissive exclusion applies to those the
Secretary has determined (in an administrative proceeding)
have committed certain acts described in specific statutes.

If legislative intent was not apparent from the plain language
of the statute, the ALJ could have resorted to legislative
history. But the legislative history does not support the
interpretation urged by Plaintiff. The legislative history
explains that § 1320a—7(b)(7) is a very different exclusion
authority than the exclusion authority of § 1320a—7(a)(1) for
program-related convictions. Exclusion authority under
§ 1320a—7(b)(7) rests on a determination by the Secretary that
the individual has committed an act described in §§ 1320a—
7a, 1320a-7b, or 1320a-8. A permissive exclusion
proceeding under § 1320a—7(b)(7) is initiated by Defendant’s
Office of Inspector General, and the respondent has the right
to a pre-exclusion hearing in which the Office of Inspector
General must introduce evidence to establish, by a
preponderance of the evidence, that a violation of any of the
enumerated sections has occurred. The legislative history of
section 1320a—7(b)(7) indicates it was enacted as an
alternative to criminal prosecution or where a program-related
conviction does not exist.

Anderson v. Thompson, 311 F. Supp. 2d 1121, 1124-1127 (D. Kan. 2004). Based on this
analysis, I must reject Petitioner’s argument.

Although Petitioner asserts that he is not disputing that he was convicted of conspiring to
violate the Anti-Kickback Statute (P. Br. at 1), to the extent that any of his arguments
appear to claim that Petitioner did not violate that statute, any such arguments are
impermissible collateral attacks on his conviction because Petitioner cannot re-litigate his
criminal offense before me. 42 C.F.R. § 1001.2007(d); see also Travers v. Shalala,

20 F.3d 993, 998 (9th Cir. 1994); Anderson, 311 F. Supp. 2d at 1128.

Petitioner also argues that exclusion under 42 U.S.C. § 1320a-7(a)(1) is not appropriate
because Petitioner did not commit fraud. RFH at 1-2. Although it is true that the District
Court determined that Petitioner only violated marketing rules and did not engage in
more egregious conduct, such as referring patients for unnecessary health services (see
IG Ex. 6 at 32-34, 98-99), 42 U.S.C. § 1320a-7(a)(1) does not require that Petitioner be
convicted of a criminal offense involving fraud. Therefore, Petitioner’s argument is not
relevant.

As Petitioner points out, the District Court did not consider Petitioner’s crime to be of the
most egregious character. However, Petitioner’s crime makes him untrustworthy for
participation in federal health care programs. As the District Court recognized: “The
crimes that [Petitioner and the other defendants] have pled guilty to in this case arise
from a statute which is, in essence, a prophylactic statute. Payment for referrals on a
patient-by-patient basis creates bad incentives and increases risk of fraud.” IG Ex. 6 at
98. The District Court also noted that “[Petitioner] was both an employee and a
contractor [of Goodwill], received very substantial amount of payments in both roles, and
I think received more payment than anyone outside of the ownership group.” IG Ex. 6 at
106. In fact, this led to Petitioner acknowledging that he was liable to the United States
for a significant forfeiture of money related to the proceeds from his illegal behavior. IG
Ex. 2 at 9; IG Ex. 3 at 5; IG Ex. 6 at 20; IG Ex. 7. Petitioner’s criminal misconduct
evidences a threat to federal health care programs; therefore, exclusion under 42 U.S.C.
§ 1320a-7(a)(1) is warranted.

D. Petitioner must be excluded for the statutory minimum of five years under
42 U.S.C. § 1320a-7(c)(3)(B).

Because I have concluded that a basis exists to exclude Petitioner pursuant to 42 U.S.C.
§ 1320a-7(a)(1), Petitioner must be excluded for a minimum period of five years.
42 US.C. § 1320a-7(c)(3)(B); 42 C.F.R. §§ 1001.102(a), 1001.2007(a)(2).

V. Conclusion

For the foregoing reasons, I affirm the IG’s determination to exclude Petitioner from
participating in Medicare, Medicaid, and all other federal health care programs for the
statutory five-year minimum period pursuant to 42 U.S.C. §§ 1320a-7(a)(1), (c)(3)(B).

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Vinay Kumar Bararia,
(OI File No.: H-14-4-1075-9),
Petitioner,
v.
The Inspector General
Docket No. C-15-1108
Decision No. CR3863

Date: May 14, 2015

DECISION

I sustain the determination of the Inspector General (I.G.) to exclude Petitioner, Vinay
Kumar Bararia, from participating in Medicare and other federally funded health care
programs for a period of at least ten years.

I. Background

The L.G. excluded Petitioner, a physician, for a minimum period of ten years pursuant to
the requirements of section 1128(a)(4) of the Social Security Act (Act). This section
mandates the exclusion of any individual who is convicted of a felony occurring after
August 21, 1996, relating to the unlawful manufacture, distribution, prescription, or
dispensing of a controlled substance. The I.G. based the minimum ten-year exclusion
period on the presence of certain aggravating factors that I shall describe.

Petitioner requested a hearing. The LG. filed a brief and a reply brief, plus exhibits that
are identified as I.G. Ex. 1 — .G. Ex. 7. Petitioner filed a brief plus two exhibits. I
identify these exhibits as P. Ex. 1 and P. Ex. 2. I receive the parties’ exhibits into the
record. Neither party requested that I convene a hearing in person and so I am deciding
this case based on the parties’ written filings.

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

The issues are whether: the I.G. is mandated to exclude Petitioner; and, the ten-year
minimum exclusion is reasonable.

B. Findings of Fact and Conclusions of Law

There is no dispute as to the I.G.’s mandate to exclude Petitioner. In his brief Petitioner
admits that he was convicted of a felony as is described at section 1128(a)(4) of the Act.
Petitioner’s Brief at 1. Indeed, the evidence establishes that Petitioner was convicted of
such an offense. On December 18, 2013, Petitioner pled guilty to a single felony offense
under federal law consisting of unlawful distribution of a controlled substance. I.G. Ex.
5. In pleading guilty Petitioner explicitly admitted to selling unlawfully 500
hydrocodone pills (hydrocodone is a controlled substance) to an agent of the United
States Drug Enforcement Administration. Jd. at 4. The crime of which Petitioner was
convicted falls squarely within the reach of section 1128(a)(4). It is a felony committed
after August 21, 1996, consisting of the unlawful distribution of a controlled substance.

All that is left in dispute is whether the minimum ten-year exclusion imposed by the LG.
is reasonable. Exclusions imposed pursuant to section 1128(a) of the Act must be for a
minimum period of five years. Act § 1128(c)(3)(B). Here, the I.G. opted to exclude for a
term that is longer than the minimum period.

The I.G. has discretion to do so where there is evidence that proves that an excluded
individual is so untrustworthy as to necessitate an exclusion that is for a longer period
than the five-year statutory minimum. Evidence of untrustworthiness is admissible if it
relates to one of the aggravating factors that is described at 42 C.F.R. § 1001.102(b).

In this case the I.G. asserts the presence of two aggravating factors. First, Petitioner was
sentenced to a period of incarceration. 42 C.F.R. § 1001.102(b)(5). He was sentenced to
44 months’ imprisonment. IG. Ex. 2. Second, Petitioner was subject to another adverse
action by a State government agency based on the same facts and circumstances that are
the basis for his exclusion. 42 C.F.R. § 1001.102(b)(9). Petitioner voluntarily
surrendered his license to practice medicine in the State of Nevada on March 13, 2013,
after the Investigative Committee of the Nevada State Board of Medical Examiners
(Nevada Board) had suspended his license. 1G. Exs. 6, 7. In suspending his license the
Nevada Board cited Petitioner’s “blatant violation” of federal laws regulating controlled
substances. I.G. Ex. 6 at 2.
Evidence relating to the two aggravating factors is sufficient to justify a ten-year
exclusion because it establishes Petitioner to be highly untrustworthy. Most damaging is
evidence cited by the Nevada Board, which found that Petitioner had engaged in repeated
unlawful sales of controlled substances. I.G. Ex. 6 at 2. This undisputed evidence proves
that Petitioner was systematically selling controlled substances unlawfully. Moreover,
the lengthy term of incarceration that the sentencing judge imposed on Petitioner — 44
months — is strong evidence of his untrustworthiness.

Evidence of aggravation may be offset by evidence of mitigation if it relates to one of the
factors set forth at 42 C.F.R. § 1001.102(c). Petitioner argues that there is mitigating
evidence in this case. I have examined Petitioner’s arguments and the evidence that he
offered in support, and I find no evidence relating to one of the regulatory mitigating
factors.

Petitioner argues that a ten-year exclusion will have a devastating effect on him,
personally, as well as on his family. That is not permissible mitigating evidence. The fact
that Petitioner and his family may be affected personally by his exclusion simply cannot
be considered in deciding whether the exclusion is reasonable. Adverse personal impact
is not a mitigating factor nor should it be. It is likely that any period of exclusion may
have an adverse financial impact on the excluded individual. But, that is the collateral
consequence of a remedy that is designed to protect programs and their beneficiaries
from untrustworthy individuals.

Petitioner also suggests that his culpability is diminished in this case by virtue of the fact
that he suffers from a mental illness. Petitioner’s Request for Hearing; Petitioner’s Brief
at 3. To that end, he offered two exhibits consisting of psychiatric evaluations of his
mental state that discuss Petitioner’s bipolar disorder. P. Exs. 1, 2.

The regulations governing exclusions recognize that a mitigating factor may exist where
the sentencing judge determines that the excluded individual’s culpability is reduced by
virtue of mental illness. 42 C.F.R. § 1001.102(c)(2). The finding of diminished
culpability must be memorialized in the record of the sentencing proceeding. Id.
Petitioner has not offered evidence to prove that the sentencing judge in his case made
such a finding. I cannot find the presence of a mitigating factor in the absence of such
evidence. Indeed, what evidence exists suggests that the judge did not find diminished
culpability. As I.G.’s counsel notes in her reply brief, the sentencing judge apparently
denied Petitioner’s argument of diminished mental capacity. 1.G.’s Reply Brief at 4.

/s/
Steven T. Kessel
Administrative Law Judge