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

UpturnCare Co., d/b/a/Accessible Home Health Care,
(NPI: 196272996),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-839
Decision No. CR3386
Date: September 24, 2014
DECISION

The Medicare enrollment of Petitioner, UpturnCare Co., d/b/a Accessible Home Health
Care, is denied pursuant to 42 C.F.R. § 424.530(a)(10),' because a temporary moratorium
pursuant to 42 C.F.R. § 424.570 applied to Petitioner’s new home health agency practice
location.
I. Procedural History and Jurisdiction
Palmetto GBA (Palmetto), a Medicare administrative contractor (MAC), notified
Petitioner by letter dated February 3, 2014, that Petitioner’s application to enroll in
Medicare as a home health agency was denied. Palmetto advised Petitioner that its
application was denied pursuant to 42 C.F.R. §§ 424.530(a)(10) and 424.570(c), because

the Centers for Medicare & Medicaid Services (CMS) had imposed a six-month
moratorium on enrolling new home health agencies and subunits in the area where

' The 2013 revision of the Code of Federal Regulations (C.F.R.) is cited, unless
otherwise stated.
Petitioner’s practice was located. The notice advised that the moratorium began on July
30, 2013; that it may be extended in six-month increments; and that it applied to the
county in which Petitioner was attempting to enroll a practice location. CMS Exhibit
(Ex.) 4.

On March 3, 2014, Petitioner requested reconsideration of the enrollment denial. CMS
Ex. 5. The reconsidered determination, dated April 1, 2014, concluded that Petitioner
was subject to the moratorium and that Petitioner’s application to enroll as a home health
agency was properly denied. The reconsidered determination reflects that the
moratorium was extended for six months effective January 31, 2014. CMS Ex. 7. An
amended notice of reconsidered determination was issued on April 14, 2014. The
amended notice added the information that Petitioner’s application was denied based on
the moratorium that took effect on January 31, 2014, for Tarrant County, Texas. CMS
Ex. 8.

Petitioner filed a request for hearing before an administrative law judge (ALJ) on March
27, 2014, with six supporting documents (RFH).” The case was assigned to me for
hearing and decision on April 2, 2014, and an Acknowledgement and Prehearing Order
(Prehearing Order) was issued at my direction. No issue has been raised as to the
timeliness of Petitioner’s request for hearing; the parties do not challenge my authority to
decide this case; and I conclude that I have jurisdiction.

On May 2, 2014, CMS file a combined prehearing brief and motion for summary
disposition, which I construe to be a motion for summary judgment (CMS Br.), with
CMS Exs. | through 9. On May 28, 2014, Petitioner submitted its brief (P. Br.) together
with Petitioner’s exhibits (P. Exs.) A through P and SM A through SM E.* On June 16,
2014, CMS filed its reply brief (CMS Reply) with an amended exhibit list and a second
document marked CMS Ex. 9. I treat CMS’s filing of a new document identified as CMS

> Petitioner filed six documents with its request for hearing, identified on the
Departmental Appeals Board (DAB) Electronic Filing (Efile) System as Items la-1f. On
April 15, 2014, Petitioner filed additional documents designated in DAB Efile as Items 7,
7a-7c, apparently in response to my Order to Show Cause issued on April 2, 2014. On
April 16, 2014, Petitioner submitted with its Notice of Appearance four additional
documents listed as Items 9a - 9c and Item 10 and 11a in DAB Efile

> Petitioner’s exhibits were not marked as required by the Prehearing Order and the Civil
Remedies Division Procedures § 9. However, I did not require Petitioner to correct the
exhibits, because to do so would further confuse the record and delay the decision. The
documents are readily identifiable by the markings Petitioner used and there is little risk
of confusion.
Ex. 9 as a substitution for and withdrawal of the offer of the document previously filed
marked as CMS Ex. 9, which will remain with the record but not be considered as
substantive evidence. On July 21, 2014, Petitioner filed a reply brief (P. Reply).* The
parties have not objected to my consideration of the offered exhibits and CMS Exs. 1
through 9 and P. Exs. A through P and SM A through SM E are admitted as evidence.
Documents filed by Petitioner that were not specifically marked as exhibits and not listed
on Petitioner’s exhibit list filed on May 28, 2014, are not considered as substantive
evidence.

II. Discussion
A. Applicable Law

Section 1831 of the Social Security Act (the Act) (42 U.S.C. § 1395j) establishes the

supplementary medical insurance benefits program for the aged and disabled known as
Medicare Part B. Administration of the Part B program is through contractors, such as
Palmetto. Act § 1842(a) (42 U.S.C. § 1395u(a)). Payment under the program for
services rendered to Medicare-eligible beneficiaries may only be made to eligible
providers of services and suppliers.> Act §§ 1835(a) (42 U.S.C. § 1395n(a)); 1842(h)(1)
(42 U.S.C. § 1395(u)(h)(1)). A home health agency enrolls in Medicare as a provider.

The Act requires the Secretary to issue regulations that establish a process for the
enrollment of providers and suppliers, including the right to a hearing and judicial review
in the event of denial or non-renewal. Act § 1866(j) (42 U.S.C. § 1395cc(j)). Pursuant to
42 C.F.R. § 424.505, a provider must be enrolled in the Medicare program and be issued a
billing number to have billing privileges and to be eligible to receive payment for services
rendered to a Medicare eligible beneficiary.

* On August 11, 2014, Petitioner filed another copy of its reply in a different electronic
format (Item 61) in DAB Efile. Item 61 is identical in all respects to Item 60, the copy of
the reply filed on July 21, 2014.

> A “supplier” furnishes services under Medicare. The term supplier applies to
physicians or other practitioners and facilities that are not included within the definition of
the phrase “provider of services.” Act § 1861(d) (42 U.S.C. § 1395x(d)). A “provider of
services,” commonly shortened to “provider,” includes hospitals, critical access hospitals,
skilled nursing facilities, comprehensive outpatient rehabilitation facilities, home health
agencies, hospice programs, and a fund as described in sections 1814(g) and 1835(e) of
the Act. Act § 1861(u) (42 U.S.C. § 1395x(u)). The distinction between providers and
suppliers is important because they are treated differently under the Act for some
purposes.
Congress authorized the Secretary to impose temporary moratoria on the enrollment of
new Medicare and Medicaid providers and suppliers, including categories of providers
and suppliers, if the Secretary determines such moratoria is necessary to prevent or
combat fraud, waste or abuse under the programs. Act § 1866(j)(7)(A) (42 U.S.C.

§ 1395cc(j)(7)(A)). Under the applicable regulations, CMS may deny a supplier’s
enrollment in the Medicare program if the supplier submits an enrollment application for
a practice location in a geographic area where CMS has imposed a temporary
moratorium. 42 C.F.R. § 424.530(a)(10); 42 C.F.R. § 424.570. Congress has provided
that there will be no judicial review of the Secretary’s determination to impose a
temporary moratorium. Act § 1866(j)(7)(B). The scope of review by an ALJ of denials
related to a temporary moratorium is limited to the issue of whether the temporary
moratorium applied to the denied provider. The basis for imposing a temporary
moratorium is not subject to review by an ALJ. 42 C.F.R. § 498.5(1)(4).

B. Issues
Whether summary judgment is appropriate; and

Whether the temporary moratorium that was cited as the basis for denial of
Petitioner’s enrollment as a provider applied to Petitioner.

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

My conclusions of law are set forth in bold text followed by my findings of fact and
analysis.

1. Summary judgment is appropriate.

CMS has requested summary judgment. A provider or supplier denied enrollment in
Medicare or whose enrollment has been revoked has a right to a hearing and judicial
review pursuant to section 1866(h)(1) and (j) of the Act and 42 C.F.R. §§ 498.3(b)(1),
(5), (6), (8), (15), (17), 498.5. A hearing on the record, also known as an oral hearing, is
required under the Act. Act §§ 205(b), 1866 (h)(1) and (j)(8); Crestview Parke Care Ctr.
v. Thompson, 373 F.3d 743, 748-51 (6th Cir. 2004). A party may waive appearance at an
oral hearing, but must do so affirmatively in writing. 42 C.F.R. § 498.66. In this case,
Petitioner has not waived the right to oral hearing or otherwise consented to decision
based only upon the documentary evidence or pleadings. Accordingly, disposition on the
written record alone is not permissible, unless the CMS motion for summary judgment
has merit.

Summary judgment is not automatic upon request but is limited to certain specific
conditions. The Secretary’s regulations that establish the procedure to be followed in
adjudicating Petitioner’s case are at 42 C.F.R. pt. 498. 42 C.F.R. §§ 424.545(a),
498.3(b)(5), (6), (15), (17). The regulations do not establish a summary judgment
procedure or recognize such a procedure. However, the Board has long accepted that
summary judgment is an acceptable procedural device in cases adjudicated pursuant to 42
C.F.R. pt. 498. See, e.g., Ill. Knights Templar Home, DAB No. 2274, at 3-4 (2009);
Garden City Med. Clinic, DAB No. 1763 (2001); Everett Rehab. & Med. Ctr., DAB No.
1628, at 3 (1997). The Board also has recognized that the Federal Rules of Civil
Procedure (Fed. R. Civ. Pro.) do not apply in administrative adjudications such as this,
but the Board has accepted that Fed. R. Civ. Pro. 56 and related cases provide useful
guidance for determining whether summary judgment is appropriate. Furthermore, a
summary judgment procedure was adopted as a matter of judicial economy within my
authority to regulate the course of proceedings and made available to the parties in the
litigation of this case by my Prehearing Order. The parties were given notice by the
Prehearing Order that summary judgment is an available procedural device and that the
law as it has developed related to Fed. R. Civ. Pro. 56 will be applied.

Summary judgment is appropriate when there is no genuine dispute as to any issue of
material fact for adjudication and/or the moving party is entitled to judgment as a matter
of law. In determining whether there are genuine issues of material fact for trial, the
reviewer must view the evidence in the light most favorable to the non-moving party,
drawing all reasonable inferences in that party’s favor. The party requesting summary
judgment bears the burden of showing that there are no genuine issues of material fact for
trial and/or that it is entitled to judgment as a matter of law. Generally, the non-movant
may not defeat an adequately supported summary judgment motion by relying upon the
denials in its pleadings or briefs but must furnish evidence of a dispute concerning a
material fact, i.e., a fact that would affect the outcome of the case if proven. Mission
Hosp. Reg’! Med. Ctr., DAB No. 2459, at 4 (2012) (and cases cited therein); Experts Are
Us, Inc., DAB No. 2452, at 4 (2012) (and cases cited therein); Senior Rehab. & Skilled
Nursing Ctr., DAB No. 2300, at 3 (2010) (and cases cited therein); see also Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

The standard for deciding a case on summary judgment, and an ALJ’s decision-making in
deciding a summary judgment motion, differs from that used in resolving a case after a
hearing. On summary judgment, the ALJ does not make credibility determinations,
weigh the evidence, or decide which inferences to draw from the evidence, as would be
done when finding facts after a hearing on the record. Rather, on summary judgment, the
ALJ construes the evidence in a light most favorable to the non-movant and avoids
deciding which version of the facts is more likely true. Holy Cross Vill. at Notre Dame,
Inc., DAB No. 2291, at 5 (2009). The Board also has recognized that on summary
judgment it is appropriate for the ALJ to consider whether a rational trier of fact could
find that the party’s evidence would be sufficient to meet that party’s evidentiary burden.
Dumas Nursing & Rehab., L.P., DAB No. 2347, at 5 (2010). The Secretary has not
provided in 42 C.F.R. pt. 498 for the allocation of the burden of persuasion or the
quantum of evidence required to satisfy the burden. However, the Board has provided
some persuasive analysis regarding the allocation of the burden of persuasion in cases
subject to 42 C.F.R. pt. 498. Batavia Nursing & Convalescent Ctr., DAB No. 1904

(2004), aff'd, Batavia Nursing & Convalescent Ctr. v. Thompson, 129 Fed. App’x 181
(6th Cir. 2005).

I conclude, after reviewing the evidence before me in the light most favorable to
Petitioner and drawing all inferences in Petitioner’s favor, that there is no genuine dispute
as to any material fact in this case that requires a trial. The issues in this case that require
resolution are issues of law related to the interpretation and application of the regulations
that govern enrollment and billing privileges in the Medicare program and application of
the law to the undisputed facts of this case. The issue in this case must be resolved
against Petitioner as a matter of law because the undisputed evidence shows that the
temporary moratorium did apply to Petitioner’s application to enroll in Medicare.
Accordingly, I conclude summary judgment is appropriate.

2. The temporary moratorium applies to Petitioner’s enrollment
application because the application was pending but not
approved when the moratorium became effective.

3. There was a basis for denying Petitioner’s Medicare
enrollment pursuant to 42 C.F.R. § 424.530(a)(10).

There is no genuine dispute as to the pertinent facts.

On December 8, 2011, Petitioner’s Owner and President, Zinaida Boltan, signed an
application to enroll Petitioner in Medicare as a new home health agency. CMS Ex. 9.
The practice location listed in the application was 803 Forest Ridge Drive, Suite 205,
Bedford, Texas. CMS Ex. 9 at 29. Petitioner does not dispute that its practice location is
in Tarrant County, Texas, and that it seeks to operate in Tarrant and Denton Counties,
Texas. RFH at 1; P. Br. at 1. The application was received by Palmetto on December 12,
2011. Palmetto completed processing the application on August 9, 2012, and
recommended approval of Petitioner to participate in Medicare as a provider. CMS Ex.

1. Petitioner was advised of the Palmetto recommendation on August 9, 2012, and that
the application was forwarded to the state agency and CMS for further action, including a
survey. CMS Ex. 2. The survey of Petitioner was completed and Petitioner received
accreditation and a recommendation for Medicare certification by The Joint Commission
effective October 1, 2013. CMS Ex. 3.

Effective January 30, 2014, CMS imposed a temporary moratorium on the enrollment of
home health agencies in Dallas County, Texas (which includes the city of Dallas) and the
six surrounding Texas Counties, which include Collin, Denton, Ellis, Kaufman,
Rockwell, and Tarrant. The notice in the Federal Register specified:
Beginning on the effective date of this document, no new
HHAs will be enrolled into Medicare, Medicaid or CHIP with
a practice location in the Texas Counties of Dallas, Denton,
Ellis, Kaufman, Rockwall, and Tarrant unless their
enrollment application has already been approved but not yet
entered into PECOS or the State Provider/Supplier
Enrollment System at the time the moratorium is imposed.

79 Fed. Reg. 6475, 6479 (Feb. 4, 2014); CMS Ex. 6 (press release). The regulation also
provides that a “temporary enrollment moratorium does not apply to any enrollment
application that has been approved by the enrollment contractor but not yet entered into
PECOS at the time the moratorium is imposed.” 42 C.F.R. § 424.570(1)(a)(iv).

Home health agencies are subject to a rigorous multi-tiered screening process for initial
enrollment applications because CMS has designated these providers as high risk. 42
C.F.R. § 424.518(c); CMS Pub. 100-08, Medicare Program Integrity Manual (PIM),

§ 15.19.2.1C (May 7, 2012). Because of the potential for fraud, the enrollment process
for new home health agency providers includes an additional step for a second review of
enrollment criteria performed by either the Regional Home Health Intermediary or the
MAC after the CMS regional office’s review process is completed. CMS PIM § 15.26.3
(Jan. 7, 2014); CMS Survey and Certification Letter (S&C) 12-15-HHA, Revised Initial
Certification Process for Home Health Agencies (HHA) (Dec. 23, 2011).° This review
by the contractor occurs once CMS notifies the contractor by email to perform this
second review. The contractor then re-reviews certain Medicare enrollment
requirements, such as determining if the home health agency has the required amount of
capitalization and checking to make sure that each entity and individual listed in the
enrollment application is reviewed again against the Medicare Exclusion Database and
the System for Award Management. The contractor then performs a site visit. It is only
after successful completion of this final re-review by the contractor that the home health
agency will be certified by CMS for enrollment and entered into PECOS.

Petitioner argues that it is not subject to the moratorium because all required steps had
been completed in processing its enrollment; its enrollment application had been
approved; and Petitioner was only waiting for the approval to be entered into PECOS and
to receive its provider number from Palmetto. RFH at 1, 3; P. Br. at 1, 4; P. Reply at 2-3.
CMS argues that Petitioner did not meet the exception to application of the moratorium,

° CMS Survey and Certification letters are available at:
http://www.cms.gov/Medicare/Provider-Enrollment-and-
Certification/SurveyCertificationGenInfo/.

because Petitioner’s application had not received the second review by Palmetto. CMS
Br. at 1; CMS Reply at 10. CMS states that Palmetto had not approved the enrollment
application because it had not conducted its “re-review of Petitioner’s Medicare
enrollment requirements (e.g., site visit verification, capitalization requirements and
Medicare exclusion checks)” prior to the moratorium being extended on January 30,
2014. CMS Reply at 10. The steps to which CMS refers are required by the PIM

§ 15.26.3 (Jan. 7, 2014).

Petitioner does not dispute and acknowledges that CMS did not notify Palmetto until
January 8, 2014, that Palmetto should proceed with its “‘pre-tie-in review,” that is, the
final re-reviews and site visit. P. Br. at 2 4 10; P. Ex. E. Petitioner also does not dispute
that Palmetto had not yet performed the additional re-review required and had 45 days to
do so. P. Br at 2; CMS Reply at 3-4. However, before the re-reviews and site visit could
be performed by Palmetto, CMS announced the moratorium. Therefore, Petitioner’s
application was not “approved” because not every step required to be fully approved and
accepted into the Medicare program had been completed prior to 12:00 a.m. on January
30, 2014, when the moratorium became effective.

To the extent Petitioner’s arguments may be construed as a request for equitable relief, I
ave no authority to grant equitable relief. US Ultrasound, DAB No. 2302, at 8 (2010)
(“[nJeither the ALJ nor the Board is authorized to provide equitable relief by reimbursing
or enrolling a supplier who does not meet statutory or regulatory requirements.”). I am
bound to follow the Act and regulations and have no authority to declare statutes or
regulations invalid. 1866/CPayday.com, L.L.C., DAB No. 2289, at 14 (“[a]n ALJ is
bound by applicable laws and regulations and may not invalidate either a law or
regulation on any ground.”).

There is no genuine dispute as to any material fact. Petitioner’s application had not been
processed through all required steps for approval prior to the moratorium going into
effect. Accordingly, summary judgment is appropriate and Petitioner’s application must
be denied due to the moratorium.

III. Conclusion

For the foregoing reasons, I conclude that Petitioner’s enrollment application was subject
to the temporary moratorium imposed pursuant to 42 C.F.R. § 424.570(c), and the
application is properly denied pursuant to 42 C.F.R. §§ 424.530(a)(10).

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2014-H-1043)

Complainant
v.

Veedersburg Star Market Inc.
d/b/a Veedersburg Food Basket,

Respondent.
Docket No. C-14-1537
Decision No. CR3385

Date: September 24, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Veedersburg Star Market Inc. d/b/a Veedersburg Food Basket,
at 300 North Main Street, Veedersburg, Indiana 47987, and by filing a copy of the
complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The complaint alleges that Veedersburg Food Basket impermissibly sold
smokeless tobacco to a minor and failed to verify, by means of photo identification
containing a date of birth, that the purchaser was 18 years of age or older, thereby
violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and
its implementing regulations, 21 C.F.R. pt. 1140. The complaint likewise alleges that
Respondent Veedersburg Food Basket previously admitted to three violations of
regulations found at 21 C.F.R. pt. 1140 and, therefore, CTP seeks to impose a $5,000
civil money penalty against Respondent Veedersburg Food Basket.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on July 24, 2014, CTP served the
complaint on Respondent Veedersburg Food Basket by United Parcel Service. In the

complaint and accompanying cover letter, CTP explained that, within 30 days,
Respondent should pay the penalty, file an answer, or request an extension of time in
which to file an answer. CTP warned Respondent that, if it failed to take one of these
actions within 30 days, the Administrative Law Judge could, pursuant to 21 C.F.R.

§ 17.11, issue an initial decision ordering it to pay the full amount of the proposed
penalty.

Respondent Veedersburg Food Basket has neither filed an answer within the time
prescribed, nor requested an extension of time within which to file an answer. Pursuant
to 21 C.F.R. § 17.11, l assume that the facts alleged in the complaint (but not its
conclusory statements) are true. Specifically:

e CTP previously issued a warning letter to Respondent Veedersburg Food Basket
on December 20, 2012, citing a violation of 21 C.F.R. pt. 1140 on November 2,
2012, at Respondent’s business establishment, 300 North Main Street,
Veedersburg, Indiana 47987;

e On September 16, 2013, CTP initiated a previous civil money penalty action, CRD
Docket Number C-13-1311, FDA Docket Number FDA-2013-H-1114, against
Respondent for three violations of 21 C.F.R. pt. 1140 within a twenty-four month
period. CTP alleged those violations to have occurred on November 2, 2012, and
March 4, 2013;

e The previous action concluded when Steve Simko, Respondent’s authorized
representative, settled the claims on Respondent’s behalf. On September 18,
2013, Mr. Simko signed an Acknowledgment Form in which he “admitt[ed] that
the violations . . . occurred, waiv[ed] his ability to contest the violations in the
future, and stat[ed] that he understood that that violations may be counted in
determining the total number of violations for purposes of future enforcement
actions.” The Administrative Law Judge closed the case on October 17, 2013;

e At approximately 8:08 p.m. on January 30, 2014, at Respondent’s business
establishment, 300 North Main Street, Veedersburg, Indiana 47987, FDA-
commissioned inspectors documented Respondent’s staff selling a package of
Grizzly Long Cut Premium Wintergreen smokeless tobacco to a person younger
than 18 years of age. The inspectors also documented that staff failed to verify, by
means of photographic identification containing a date of birth, that the purchaser
was 18 years of age or older.

These facts establish Respondent Veedersburg Food Basket’s liability under the Act. The
Act prohibits misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product
is misbranded if sold or distributed in violation of regulations issued under section 906(d)
of the Act. 21 U.S.C. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b).
The Secretary of the U.S. Department of Health and Human Services issued the
regulations at 21 C.F.R. pt. 1140 under section 906(d) of the Act. 21 U.S.C. § 387a-1;
see 21 U.S.C. § 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). Under 21
C.F.R. § 1140.14(a), no retailer may sell smokeless tobacco to any person younger than
18 years of age. Under 21 C.F.R. § 1140.14(b)(1), retailers must verify, by means of
photographic identification containing a purchaser’s date of birth, that no smokeless
tobacco purchasers are younger than 18 years of age.

Under 21 C.F.R. § 17.2, a $5,000 civil money penalty is permissible for five violations of the
regulations found at 21 C.F.R. pt. 1140 within a thirty-six month period.

Order

For these reasons, | enter default judgment in the amount of $5,000 against Respondent
Veedersburg Star Market Inc. d/b/a Veedersburg Food Basket. Pursuant to 21 C.F.R.

§ 17.11(b), this order becomes final and binding upon both parties after 30 days of the
date of its issuance.

/s/
Catherine Ravinski
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Tifany A. Vanalen
(OI File No. H-13-42319-9),

Petitioner,
v.
The Inspector General.
Docket No. C-14-1136
Decision No. CR3383

Date: September 23, 2014

DECISION

I sustain the determination of the Inspector General (I.G.) to exclude Petitioner, Tiffany
A. Vanalen, from participating in Medicare and Medicaid programs, and all other
federally funded health care programs for a period of three years.

I. Background

Petitioner is a nurse. The I.G. determined to exclude her for a period of three years,
alleging that she had been convicted of a crime as is defined by section 1128(b)(1) of the
Social Security Act (Act). Section 1128(b)(1) permits the LG. to exclude any individual
who is convicted of, among other things, a misdemeanor relating to fraud, theft,
embezzlement, breach of fiduciary responsibility, or other financial misconduct.

Petitioner requested a hearing and the case was assigned to me. I directed the parties to
file briefs and exhibits. The LG. filed a brief, a reply brief, and eight proposed exhibits
that are identified as I.G. Ex. | — LG. Ex. 8. Petitioner filed a brief and one proposed
exhibit identified as P. Ex. 1. Neither party requested that I convene an in-person
hearing. I receive the parties’ exhibits into the record.
IL. Issues, Findings of Fact and Conclusions of Law
A. Issue

Petitioner concedes that she was convicted of an offense as is described at section
1128(b)(1) and that the LG. has authority to exclude her. The only issue remaining to be
decided is whether the three-year exclusion that the I.G. imposed is reasonable.

B. Findings of Fact and Conclusions of Law

The length of an exclusion imposed pursuant to section 1128(b)(1) is governed by federal
regulations at 42 C.F.R. § 1001.201. An exclusion imposed pursuant to section
1128(b)(1) should be for a period of three years unless there is evidence relating to
regulatory factors described as “aggravating” or “mitigating” that militates in favor of a
longer or shorter period of exclusion. 42 C.F.R. § 1001.201(b)(1). The regulation lists
the factors that may be either aggravating or mitigating and only evidence that relates to
these potential factors may be considered in deciding whether an exclusion should be
longer or shorter than the three-year benchmark. 42 C.F.R. § 1001.201(b)(2), (3).

The aggravating and mitigating factors identified by the regulation effectively are rules of
evidence. The presence of evidence relating to one or more of these factors does not
mean that an exclusion period necessarily must be increased above the benchmark or
reduced below the benchmark. That evidence must be weighed in order to answer a
critical question: what does the evidence show about an individual’s trustworthiness to
provide care?

In this case there is evidence that relates to both an aggravating and a mitigating factor.
Aggravating evidence consists of Petitioner’s exclusion from the New York State
Medicaid program based on the identical facts that led to her conviction. 42 C.F.R.

§ 1001.201(b)(2)(vi). Mitigating evidence consists of Petitioner’s conviction of only one
misdemeanor offense that had a financial impact of less than $1500 to a government
program or to other individuals or entities. 42 C.F.R. § 1001.201(b)(3)(i).

But, merely reciting the presence of these factors does not answer the question of
Petitioner’s level of trustworthiness. It is what the evidence relating to the factors says
about Petitioner that answers that question. And, that evidence shows that Petitioner
engaged in conduct that was potentially extremely harmful to patients under her care,
establishing a high level of untrustworthiness on her part.

Petitioner’s crime consisted of falsifying medical records. Petitioner’s falsification of
records and her underlying neglect of her duties as a nurse were the basis for her
conviction and the reasons for her exclusion from the New York Medicaid program. LG.
Ex. 2. Inher role as a nurse employed by a nursing facility, Petitioner failed to

administer a prescribed medication — Synthroid — to five of her patients, and then,
covered up her failure by falsely stating on the patients’ medication administration record
(MAR) that she had administered the medication. I.G. Ex. 5. She deprived her patients
of medication that their physicians had determined was necessary and she compounded
that act by lying about having administered the medication. These acts potentially
endangered Petitioner’s patients, not only because they were deprived of necessary
medication, but also because the falsified MARs could have misled other health care
providers into interacting with the patients based on incorrect assumptions about what
medications the patients had been receiving.

The evidence relating to a mitigating factor does not show Petitioner to be trustworthy to
provide care — at least not to the extent that reduction of her exclusion beyond the three-
year benchmark would be appropriate. It is true that Petitioner was convicted of only a
single misdemeanor and that the misdemeanor had a financial impact of $1500 or less.
But, that does not gainsay the fact that Petitioner engaged in conduct that jeopardized the
welfare of her patients. The potential harm of Petitioner’s actions is not minimized at all
by the fact that she ultimately pled guilty only to a misdemeanor offense.

Ultimately, the decision of whether to modify the I.G.’s exclusion determination comes
down to whether or not the exclusion imposed by the LG. falls within a reasonable range.
Here, the evidence clearly proves that the I.G.’s exclusion determination is reasonable.
When all is said and done, the evidence does not suggest a reason for reducing the
exclusion below the three-year regulatory benchmark. Petitioner’s conduct establishes
her to be untrustworthy to provide care. Three years is certainly a reasonable length of
time to provide protection to program beneficiaries and recipients.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Nexus Lab Inc.,!
(NPI: 1447581558; PTAN: 01467),
and
Nexus Lab 2.0, LLC, Inc.
(NPI: 1679861678; PTANs: K044771, K044772),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-787
Decision No. CR3382
Date: September 23, 2014
DECISION

The Medicare enrollment and billing privileges of Petitioners, Nexus Lab Inc. (Nexus)
and Nexus Lab 2.0, LLC , Inc. (Nexus 2.0), are revoked pursuant to 42 C.F.R.
§ 424.535(a)(1),” effective October 24, 2013.

' This case was docketed as Nexus Lab, Inc. The request for hearing, however, states
that Nexus Lab, Inc. was merged into Nexus Lab 2.0, LLC, and Nexus Lab 2.0, LLC is
the correct name for the surviving entity that filed the request for hearing. The assertion
is consistent with the CMS evidence. CMS Ex. 4 at 5. I treat the request for hearing to
cover both entities as CMS and its contractor took action against both and the request for
hearing was timely as to both.

> Citations are to the 2013 revision of the Code of Federal Regulations (C.F.R.), unless
otherwise stated.
I. Background

CGS Administrators, LLC (CGS), the Centers for Medicare & Medicaid Services (CMS)
Medicare contractor, notified Petitioner Nexus 2.0 by letter dated September 24, 2013,
that its Medicare billing number and billing privileges were revoked effective October
24, 2013. CGS cited 42 C.F.R. § 424.535(a)(1) and (a)(8) as the bases for the revocation.
CGS also notified Petitioner that it was subject to a three-year bar to re-enrollment
pursuant to 42 C.F.R. § 424.535(c). CMS Ex. | at 8-9. On November 22, 2013,
Petitioner Nexus 2.0 submitted a request for reconsideration that Petitioner supplemented
on January 17, 22, and 27, 2014. CMS Ex. | at 11-196. On February 11, 2014, a
contractor hearing officer issued a reconsidered determination in which she upheld
revocation based on 42 C.F.R. § 424.535(a)(1) and (a)(8). CMS Ex. | at 1-4.

On October 15, 2013, CGS sent a notice of initial determination to Petitioner Nexus,
advising that its Medicare billing privileges and enrollment were revoked effective
September 10, 2013. CMS Ex. 1 at 271-72. The bases cited were 42 C.F.R.

§§ 424.535(a)(1) and (5). Petitioner Nexus requested reconsideration on December 12,
2013. CMS Ex. 1 at 270, 273-416. On February 11, 2014, the reconsidered
determination upheld revocation based on violations of 42 C.F.R. §§ 424.535(a)(1) and
(5)(ii). CMS Ex. 1 at 262-66.

Petitioners filed a request for hearing (RFH) before an administrative law judge (ALJ) on
March 12, 2014. On March 27, 2014, the case was assigned to me for hearing and
decision and an Acknowledgement and Prehearing Order (Prehearing Order) was issued
at my direction.

On April 28, 2014, CMS filed a motion for summary judgment (CMS Br.), with CMS
Exs. | through 4. On May 26, 2014, Petitioner filed its opposition to CMS’s motion for
summary judgment (P. Br.), accompanied by an unmarked exhibit, a document titled
“Corporate Integrity Agreement Between the Office of Inspector General of the
Department of Health and Human Services and PremierTox 2.0 LLC” (CIA) dated
February 7, 2014. Petitioner failed to mark this document as an exhibit as required by the
Prehearing Order §j II.D.2 and the Civil Remedies Division Procedures (CRDP) § 9. The
CIA is listed in the Departmental Appeals Board Electronic Filing System (DAB e-File)
as “Petitioner’s Exhibit 1” (P. Ex. 1). Because there is little risk for confusion when
referring to Petitioner’s exhibits, Petitioner was not required to file a corrected exhibit
and Petitioner’s exhibit is referred to as it is listed in DAB e-File. On June 10, 2014,
CMS filed a reply (CMS Reply).

On July 8, 2014, Petitioner moved to supplement the record with additional argument
(P. Supp. Br.). CMS filed a response to Petitioner’s supplemental filing on July 16, 2014
(CMS Supp. Response). Petitioner filed a reply on July 18, 2014 (P. Supp. Reply).

With its reply, Petitioner submitted an exhibit “Medicare Learning Network, MLN
Matters®” Article SE1305 (rev. Feb. 6, 2014) published by CMS. Petitioner also failed
to properly mark this document as an exhibit. I treat the document as if it were marked
P. Ex. 2. The parties’ supplemental briefings are accepted.

In the CMS Reply, CMS objected to the admission of the CIA (P. Ex. 1) on the grounds
that the document was not relevant. CMS Reply at 3 n.1. The CMS objection is
sustained. Petitioner has not shown that the CIA is relevant to any issue that I may
decide. No objections have been made to the other offered exhibits and CMS Exs. |
through 4 and P. Ex. 2 are admitted as evidence. P. Ex. | remains part of the record
though it is not admitted and considered as substantive evidence.

II. Discussion
A. Applicable Law

Section 1831 of the Social Security Act (the Act) (42 U.S.C. § 1395j) establishes the
supplementary medical insurance benefits program for the aged and disabled known as
Medicare Part B. Administration of the Part B program is through contractors, such as
CGS. Act § 1842(a) (42 U.S.C. § 1395u(a)). Payment under the program for services
rendered to Medicare-eligible beneficiaries may only be made to eligible providers of
services and suppliers.> Act §§ 1835(a) (42 U.S.C. § 1395n(a)), 1842(h)(1) (42 U.S.C.
§ 1395u(h)(1)). Petitioner, a clinical laboratory, is a supplier.

The Act requires the Secretary of Health and Human Services (Secretary) to issue
regulations that establish a process for the enrollment in Medicare of providers and
suppliers, including the right to a hearing and judicial review of certain enrollment
determinations, such as revocation of enrollment and billing privileges. Act § 1866(j)
(42 U.S.C. § 1395cc(j)). Pursuant to 42 C.F.R. § 424.505, a supplier such as Petitioner

> A “supplier” furnishes services under Medicare and includes physicians or other
practitioners and facilities that are not included within the definition of the phrase
“provider of services.” Act § 1861(d) (42 U.S.C. § 1395x(d)). A “provider of services,”
commonly shortened to “provider,” includes hospitals, critical access hospitals, skilled
nursing facilities, comprehensive outpatient rehabilitation facilities, home health
agencies, hospice programs, and a fund as described in sections 1814(g) (42 U.S.C.

§ 1395f(g)) and 1835(e) (42 U.S.C. § 1395n(e)) of the Act. Act § 1861(u) (42 U.S.C.

§ 1395x(u)). The distinction between providers and suppliers is important because they
are treated differently under the Act for some purposes.
must be enrolled in the Medicare program and be issued a billing number to have billing
privileges and to be eligible to receive payment for services rendered to a Medicare-
eligible beneficiary.

Suppliers must submit complete, accurate, and truthful responses to all information
requested in the enrollment application. 42 C.F.R. § 424.510(d)(2). Pursuant to

42 C.F.R. §§ 424.502 and 424.510(d)(3), a supplier’s application to enroll in Medicare
must be signed by an authorized official, i.e., one with authority to bind the provider or
supplier both legally and financially. The regulation provides that the signature attests to
the accuracy of information provided in the application. The signature also attests to the
fact that the provider or supplier is aware of and abides by all applicable statutes,
regulations, and program instructions. 42 C.F.R. § 424.510(d)(3). Suppliers must meet
basic requirements depending on their type of service. 42 C.F.R. §§ 424.505, 424.516,
424.517. Suppliers are also subject to additional screening requirements depending upon
the type of service they provide. 42 C.F.R. § 424.518.

The Secretary has delegated the authority to revoke enrollment and billing privileges to
CMS. 42 C.F.R. § 424.535. CMS or its Medicare contractor may revoke an enrolled
supplier’s Medicare enrollment and billing privileges and supplier agreement for any of
the reasons listed in 42 C.F.R. § 424.535. Pursuant to 42 C.F.R. § 424.535(a)(1), CMS
may revoke a supplier’s enrollment and billing privileges if the supplier is determined not
to be in compliance with enrollment requirements. If CMS revokes a supplier’s Medicare
billing privileges, the revocation becomes effective 30 days after CMS or one of its
contractors mails the revocation notice to the supplier, subject to some exceptions not
applicable in this case. After a supplier’s Medicare enrollment and billing privileges are
revoked, the supplier is barred from reenrolling in the Medicare program for one to three
years. 42 C.F.R. § 424.535(c).

A supplier whose enrollment and billing privileges have been revoked may request
reconsideration and review as provided by 42 C.F.R. pt. 498. 42 C.F.R. § 424.545(a). A
supplier submits a written request for reconsideration to CMS or its contractor. 42 C.F.R.
§ 498.22(a). CMS or its contractor must give notice of its reconsidered determination to
the supplier, giving the reasons for its determination and specifying the conditions or
requirements the supplier failed to meet, and the right to an ALJ hearing. 42 C.F.R.

§ 498.25. If the decision on reconsideration is unfavorable to the supplier, the supplier
has the right to request a hearing by an ALJ and further review by the Departmental
Appeals Board (the Board). Act § 1866(j)(8) (42 U.S.C. § 1395ce(j)(8)); 42 C.F.R.

§§ 424.545, 498.3(b)(17), 498.5. A hearing on the record, also known as an oral hearing,
is required under the Act. Crestview Parke Care Ctr. v. Thompson, 373 F.3d 743, 748-51
(6th Cir. 2004). The supplier bears the burden to demonstrate that it meets enrollment
requirements with documents and records. 42 C.F.R. § 424.545(c).

B. Issues
Whether summary judgment is appropriate; and

Whether there was a basis for the revocation of Petitioner’s billing
privileges and enrollment in Medicare.

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

My conclusions of law are set forth in bold text followed by my findings of fact and
analysis.

1. Summary judgment is appropriate.

CMS has requested summary judgment. A provider or supplier denied enrollment in
Medicare or whose enrollment has been revoked has a right to a hearing and judicial
review pursuant to section 1866(h)(1) and (j) of the Act and 42 C.F.R. §§ 498.3(b)(1),
(5), (6), (8), (15), (17), 498.5. A hearing on the record, also known as an oral hearing, is
required under the Act. Act §§ 205(b), 1866 (h)(1) and (j)(8); Crestview, 373 F.3d at
748-51. A party may waive appearance at an oral hearing, but must do so affirmatively
in writing. 42 C.F.R. § 498.66. In this case, Petitioner has not waived the right to oral
hearing or otherwise consented to decision based only upon the documentary evidence or
pleadings. Accordingly, disposition on the written record alone is not permissible, unless
the CMS motion for summary judgment has merit.

Summary judgment is not automatic upon request but is limited to certain specific
conditions. The Secretary’s regulations that establish the procedure to be followed in
adjudicating Petitioner’s case are at 42 C.F.R. pt. 498. 42 C.F.R. §§ 424.545(a),
498.3(b)(5), (6), (15), (17). The regulations do not establish a summary judgment
procedure or recognize such a procedure. However, the Board has long accepted that
summary judgment is an acceptable procedural device in cases adjudicated pursuant to 42
C.F.R. pt. 498. See, e.g., Ill. Knights Templar Home, DAB No. 2274, at 3-4 (2009);
Garden City Med. Clinic, DAB No. 1763 (2001); Everett Rehab. & Med. Ctr., DAB No.
1628, at 3 (1997). The Board also has recognized that the Federal Rules of Civil
Procedure (Fed. R. Civ. Pro.) do not apply in administrative adjudications such as this,
but the Board has accepted that Fed. R. Civ. Pro. 56 and related cases provide useful
guidance for determining whether summary judgment is appropriate. Furthermore, a
summary judgment procedure was adopted as a matter of judicial economy within my
authority to regulate the course of proceedings and made available to the parties in the
litigation of this case by my Prehearing Order. The parties were given notice by the
Prehearing Order that summary judgment is an available procedural device and that the
law as it has developed related to Fed. R. Civ. Pro. 56 will be applied.

Summary judgment is appropriate when there is no genuine dispute as to any issue of
material fact for adjudication and/or the moving party is entitled to judgment as a matter
of law. In determining whether there are genuine issues of material fact for trial, the
reviewer must view the evidence in the light most favorable to the non-moving party,
drawing all reasonable inferences in that party’s favor. The party requesting summary
judgment bears the burden of showing that there are no genuine issues of material fact for
trial and/or that it is entitled to judgment as a matter of law. Generally, the non-movant
may not defeat an adequately supported summary judgment motion by relying upon the
denials in its pleadings or briefs but must furnish evidence of a dispute concerning a
material fact, i.e., a fact that would affect the outcome of the case if proven. Mission
Hosp. Reg’! Med. Ctr., DAB No. 2459, at 4 (2012) (and cases cited therein); Experts Are
Us, Inc., DAB No. 2452, at 4 (2012) (and cases cited therein); Senior Rehab. & Skilled
Nursing Ctr., DAB No. 2300, at 3 (2010) (and cases cited therein); see also Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

The standard for deciding a case on summary judgment and an ALJ’s decision-making in
deciding a summary judgment motion differs from that used in resolving a case after a
hearing. On summary judgment, the ALJ does not make credibility determinations,
weigh the evidence, or decide which inferences to draw from the evidence, as would be
done when finding facts after a hearing on the record. Rather, on summary judgment, the
ALJ construes the evidence in a light most favorable to the non-movant and avoids
deciding which version of the facts is more likely true. Holy Cross Vill. at Notre Dame,
Inc., DAB No. 2291, at 5 (2009). The Board also has recognized that on summary
judgment it is appropriate for the ALJ to consider whether a rational trier of fact could
find that the party’s evidence would be sufficient to meet that party’s evidentiary burden.
Dumas Nursing & Rehab., L.P., DAB No. 2347, at 5 (2010). The Secretary has not
provided in 42 C.F.R. pt. 498, for the allocation of the burden of persuasion or the
quantum of evidence required to satisfy the burden. However, the Board has provided
some persuasive analysis regarding the allocation of the burden of persuasion in cases
subject to 42 C.F.R. pt. 498. Batavia Nursing & Convalescent Ctr., DAB No. 1904
(2004), aff'd, Batavia Nursing & Convalescent Ctr. v. Thompson, 129 Fed. App’x 181
(6th Cir. 2005).

There is no genuine dispute as to any material fact pertinent to revocation under 42
C.F.R. § 424.535(a)(1) that requires a trial. The issues in this case raised by Petitioner
related to revocation under 42 C.F.R. § 424.535(a)(1) are issues of law. The issues in this
case must be resolved against Petitioner as a matter of law. The undisputed evidence
shows that there is a basis for revocation of Petitioner’s Medicare enrollment and billing
privileges. Accordingly, summary judgment is appropriate.

The notices of the initial and reconsidered determinations advised Petitioner Nexus 2.0
that its enrollment and billing privileges were also revoked pursuant to 42 C.F.R.
§ 424.535(a)(8). Petitioner Nexus was advised that its enrollment and billing privileges
were also revoked pursuant to 42 C.F.R. § 424.535(a)(5). Summary judgment is not
appropriate for revocation pursuant to 42 C.F.R. §§ 424.535(a)(5) or (8), because the
alternative bases involve genuine disputes as to material fact that would require a trial. If
CMS desires a hearing to attempt to prove that revocation should be effective September
10, 2013, based on revocation pursuant to 42 C.F.R. § 424.535(a)(5), CMS will file an
appropriate motion to reopen and revise pursuant to 42 C.F.R. § 498.100-.103, so that the
record may be reopened and a hearing convened to receive evidence on that issue.

2. There is a basis for revocation of Petitioners’ Medicare enrollment
and billing privileges pursuant to 42 C.F.R. § 424.535(a)(1).

3. Petitioners’ enrollment in Medicare and its billing privileges are
revoked effective October 24, 2013.

a. Facts
The facts are not disputed and any inferences are drawn in favor of Petitioner.

Petitioners operated clinical laboratories in Kentucky.’ Petitioner Nexus submitted a
Medicare enrollment application (Form CMS-855B) to the Medicare contractor, CGS,
dated January 31, 2011. CMS Ex. 2 at 38-51. The application’s “Certification
Statement” was signed by Robert L. Bertram, Petitioner’s President, on January 31, 2011.
CMS Ex. 2 at 49-51. As part of the application, Petitioner agreed to abide by Medicare
laws, regulations, and program instructions. Petitioner acknowledged that the payment of
a claim was conditioned upon the underlying transaction being compliant with Medicare
law and regulations. CMS Ex. 2 at 50. Petitioner was assigned National Provider
Identifier (NPI) 11447581558. CMS Ex. 2 at 44. Petitioners acknowledge they are
ultimately responsible for claims submitted on their behalf. CMS Ex. | at 12; P. Br. at 6,

Petitioner Nexus 2.0 submitted a Medicare enrollment application (Form CMS-855B) to
the Medicare contractor, CGS, dated January 3 and February 17, 2012. CMS Ex. 2 at
1-37. The application’s “Certification Statement” was signed by Eric Duncan,

* Nexus Lab 2.0, LLC, was organized as a Kentucky limited liability corporation in July
2011, by W. Bradford Boone. Robin Peavler was listed as a member in the corporate
papers. CMS Ex. 4 at 2. Nexus Lab, Inc. was organized as a Kentucky corporation in
January 2010, by Robert L. Bertram, Jr. Robert L. Bertram, Jr. was the President, Robert
L. Bertram, Sr. was the Vice President, Bryan Wood was the Secretary, and Robin
Peavler was the Treasurer. CMS Ex. 4, at 5.

Chief Executive Officer. CMS Ex. 2 at 30-31. Petitioner indicated in the application that
it would be submitting its claims for Medicare payment through a billing agency, Liberty
Billing, 2.0, LLC (Liberty). Section 8 of the application clearly informed Petitioner that
if it used a billing agency, it was responsible for claims submitted on Petitioner’s behalf.
CMS Ex. 2 at 25. As part of the application, Petitioner agreed to abide by Medicare laws,
regulations, and program instructions. Petitioner acknowledged that the payment of a
claim was conditioned upon the underlying transaction being compliant with Medicare
law and regulations. CMS Ex. 2 at 29. The application reflects Petitioner Nexus 2.0’s
NPI 1679861678. CMS Ex. | at 5; 2 at 3.

CGS notified Petitioner Nexus on October 15, 2013, that from November 1, 2010 through
July 1, 2012, 1920 Medicare claims for clinical laboratory services provided by Petitioner
Nexus for Medicare-eligible beneficiaries were submitted by Liberty without the NPI of

the physician who ordered the services. It is alleged that the claims were submitted with

Petitioner’s own NPI listed as both the “rendering” and the “referring” NPI. CMS Ex. |

at 268, 271. CMS submitted a list of 1885 individual claims from February 1, 2011
through December 29, 2011, that list Petitioner Nexus’s NPI 1447581558 as both the
rendering and the referring NPI. I note that the list reflects multiple claims for individual
beneficiaries. CMS Ex. 1 at 434-68. Petitioner does not dispute that claims were
submitted on which its NPI was listed as both the rendering and referring NPI.

CGS notified Petitioner Nexus 2.0 on September 24, 2013, that from July 1, 2012 through
July 1, 2013, 1343 Medicare claims for clinical laboratory services provided by Petitioner
for Medicare-eligible beneficiaries were submitted by Liberty without the NPI of the
physician who ordered the services. It is alleged that the claims were submitted with
Petitioner’s own NPI listed as both the “rendering” and the “referring” NPI. CMS Ex. |
at 6, 8. CMS submitted a list of 2972 individual claims from January 2012 through July
2013, that lists Petitioner’s NPI 1679861678 as both the rendering and the referring NPI.
I note that the list reflects multiple claims for individual beneficiaries. CMS Ex. | at 201-
59. Petitioner Nexus 2.0 has not disputed that claims were submitted on which its NPI
was listed as both the rendering and the referring NPI.

Petitioners admit that Liberty submitted claims on their behalf to Medicare for payment
that omitted the NPI for the physician or other authorized individual who ordered
laboratory services. Petitioners allege that they had no knowledge of the errors of Liberty
until they were notified of the revocation of their billing privileges and Medicare
enrollment. RFH at 6-7; P. Br. at 3-7, 8-9; P. Supp. Br. at 1. Petitioners submitted a
Corrective Action Plan that was not accepted by CMS. RFH at 5, 7; P. Br. at 4, 9, 14-15,
20-22; CMS Br. at 8 n.6.
b. Analysis

The requirements for establishing and maintaining Medicare billing privileges are found
in 42 C.F.R. pt. 424, subpt. P. Pursuant to 42 C.F.R. § 424.535(a)(1), CMS may revoke
an enrolled supplier’s Medicare billing privileges and supplier agreement if:

(1) Noncompliance. The provider or supplier is determined
not to be in compliance with the enrollment requirements
described in this section, or in the enrollment application
applicable for its provider or supplier type... .

42 C.F.R. § 424.535(a)(1). Petitioners were entitled to receive payment for clinical
laboratory services provided to Medicare-eligible beneficiaries if the services were
ordered by a physician or another eligible provider. 42 C.F.R. § 424.507(a)(1)(i). The
claim for payment for clinical laboratory services must include the legal name and the
NPI of the physician or eligible professional who ordered the services. 42 C.F.R.

§ 424.507(a)(1)(ii). To enroll and maintain enrollment in Medicare, Petitioners had to
comply with all regulatory requirements applicable to a supplier that is a clinical
laboratory. 42 C.F.R. § 424.516(a)(2). As clinical laboratories, Petitioners were required
to maintain documents related to services provided to Medicare-eligible beneficiaries for
seven years, including written and electronic documents showing the NPI of the ordering
physician or other eligible professional relating to orders and certifications and requests
for payments. 42 C.F.R. § 424.516(f)(1).

Section 8 of Petitioners’ Medicare enrollment applications (Form CMS-855B) clearly
informed Petitioners that, if they used a billing agency, they were responsible for claims
submitted on their behalf. Petitioners also agreed in the application to abide by Medicare
laws, regulations, and program instructions. Petitioners also acknowledged in the
application that the payment of a claim was conditioned upon the underlying transaction
being compliant with Medicare law and regulations.

It is undisputed that Liberty submitted claims to Medicare on Petitioners’ behalf and
those claims violated the regulatory requirement to list the ordering physician’s or
eligible professional’s NPI on the claim. Therefore, the claims violated Medicare
regulations which govern Medicare enrollment and requirements for Medicare payment,
requirements with which Petitioners agreed to comply upon enrollment.

Section 424.535(a)(1) of Title 42 C.F.R. requires that Petitioners be permitted to submit a
plan of corrective action. The regulation provides that “[a]ll providers and suppliers are
granted an opportunity to correct the deficient compliance requirement before a final
determination to revoke billing privileges” except for certain bases for revocation not
implicated in this case. 42 C.F.R. § 424.535(a)(1). The notices of initial determination
advised Petitioners of the right to submit a CAP and to request reconsideration.
Petitioners submitted a CAP and request for reconsideration. The revocations were
upheld on reconsideration and the CAP was apparently found not acceptable inasmuch as
CMS persists with the revocation action before me.

Petitioners argue that the failure of CGS and CMS to accept Petitioners’ CAP was in
error. RFH at 5, 7. However, the refusal of CMS or its contractor to accept Petitioners’
CAP is not an initial determination subject to my review. 42 C.F.R. §§ 405.809,
424.545(a), 498.3(b); Conchita Jackson, M.D., DAB No. 2495 at 5-7 (2013); Pepper Hill
Nursing & Rehab. Ctr., LLC, DAB No. 2395 at 9 (2011); DMS Imaging, Inc., DAB No.
2313 at 5-8 (2010). Petitioners cite no authority to the contrary.

Petitioners argue that the billing errors involved were solely the fault of Liberty, and
should not be attributed to Petitioners, who were unaware of the company’s misconduct.
P. Br. at 3-10. Petitioners contend that “issues of material fact exist with regard to
provider control over the billing company and knowledge of any billing company
wrongdoing.” P. Br. at 24. I accept as true for purposes of summary judgment that
Petitioners had no actual knowledge of Liberty’s erroneous listing of Petitioners’ NPI as
the referring NPI. However, Petitioners are nevertheless ultimately responsible, both as a
matter of law and under the terms of their participation agreements, for ensuring that their
claims for Medicare reimbursement were accurate and for any errors in those claims.
Louis J. Gaefke, D.P.M., DAB No. 2554 at 5-6 (2013). Petitioners cannot avoid
responsibility for their claims by the simple expedient of shifting responsibility and
liability by contracting with a billing agent. I also accept as true for purpose of summary
judgment Petitioners’ assertions that there was no evidence of fraud. P. Br. at 7. But
Petitioners cite no authority for the proposition that the absence of fraud or fraudulent
intent relieves Petitioners of their responsibility for their Medicare claims. Petitioners
also argue that they were in substantial compliance citing 42 C.F.R. § 488.301. P. Br. at
12. Petitioners have not shown that the concept of “substantial compliance” as defined in
42 C.F.R. § 488.301, has any application in this case. The cited regulation is found in 42
C.F.R. pt. 488, subpt. E, which sets forth the procedures for the survey and certification
of long-term care facilities. Petitioners are clinical laboratories not long-term care
facilities. Furthermore, the revocation in this case is not based on survey and
certification, which for clinical laboratories is governed by 42 C.F.R. pt. 493.

Petitioners argue that “[f]undamental fairness and due process requires [sic] the
revocation be set aside.” P. Br. at 22. Further, Petitioners argue that they should be
treated the same as PremierTox 2.0, which was permitted to enter a CIA with the
Inspector General (IG) for the Department of Health and Human Services (HHS) and
continues to operate as a laboratory. P. Supp. Br. My authority is limited to determining
whether there is a basis for revocation of Petitioners’ Medicare enrollment and billing
privileges. I have no authority to review the exercise of discretion by CMS to revoke
where there is a basis for revocation. Abdul Razzaque Ahmed, M.D., DAB No. 2261,
at 19 (2009). To the extent Petitioners’ arguments are construed as a request for
equitable relief, I have no authority to grant equitable relief. US Ultrasound, DAB No.
2302, at 8 (2010) (“[nJeither the ALJ nor the Board is authorized to provide equitable
relief by reimbursing or enrolling a supplier who does not meet statutory or regulatory
requirements.”). I am also required to follow the Act and regulations and have no
authority to declare statutes or regulations invalid. 1866/CPayday.com, L.L.C., DAB No.
2289, at 14 (2009) (“[a]n ALJ is bound by applicable laws and regulations and may not
invalidate either a law or regulation on any ground.”).

Petitioners do not deny the material facts and any favorable inferences are drawn for
Petitioners in this decision. Applying the law to the undisputed facts, I conclude that
there was a basis for revocation of Petitioners’ billing privileges and enrollment pursuant
to 42 C.F.R. § 424.535(a)(1), effective October 24, 2013.

CMS argues additional bases for revocation under 42 C.F.R. §§ 424.535(a)(5) and (8).
But, it is not necessary for me to consider the additional alleged bases for revocation
because I conclude that there is a basis for revocation of Petitioners’ Medicare enrollment
and billing privileges pursuant to 42 C.F.R. § 424.535(a)(1). CMS only needs a single
basis under 42 C.F.R. § 424.535(a) to revoke Medicare billing privileges and enrollment.
Furthermore, the evidence before me on the alternate grounds is insufficient for summary
judgment and a hearing on the merits would be required prior to a determination on the
alternate grounds.

III. Conclusion

For the foregoing reasons, I conclude that Petitioners’ Medicare enrollment and billing
privileges are properly revoked effective October 24, 2013.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Recovery Laboratory, LLC,
(NPI: 1003166224; PTAN: K089620),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-794
Decision No. CR3381
Date: September 23, 2014
DECISION

The Medicare enrollment and billing privileges of Petitioner, Recovery Laboratory, LLC,
are revoked pursuant to 42 C.F.R. § 424.535(a)(1),' effective October 24, 2013.

I. Background

CGS Administrators, LLC (CGS), the Centers for Medicare & Medicaid Services (CMS)
Medicare contractor, notified Petitioner by letter dated September 24, 2013, that its
Medicare billing number and billing privileges were revoked effective October 24, 2013.
CGS cited 42 C.F.R. § 424.535(a)(1) as the basis for revocation. CMS Exhibit (CMS
Ex.) 1 at 4-5, 25-26. CGS also notified Petitioner that it was subject to a three-year bar to
re-enrollment pursuant to 42 C.F.R. § 424.535(c). CMS Ex. | at 5, 26.

' Citations to the 2013 revision of the Code of Federal Regulations (C.F.R.), unless
otherwise stated.
On November 22, 2013, Petitioner submitted a request for reconsideration. CMS Ex. | at
11-62. On February 11, 2014, a contractor hearing officer issued a reconsidered
determination in which she upheld the revocation pursuant to 42 C.F.R. § 424.535(a)(1).
CMS Ex. | at 7-10.

Petitioner filed a request for hearing (RFH) before an administrative law judge (ALJ) on
March 16, 2014. On March 27, 2014, the case was assigned to me for hearing and
decision and an Acknowledgement and Prehearing Order (Prehearing Order) was issued
at my direction.

On April 28, 2014, CMS filed a motion to dismiss, or in the alternative, for summary
judgment (CMS Br.), with CMS Exs. | through 5. On May 27, 2014, Petitioner filed its
opposition to CMS’s motions (P. Br.). On June 10, 2014, CMS filed a reply. Petitioner
did not object to CMS Exs. | through 5 and they are admitted as evidence.

IL. Discussion
A. Applicable Law

Section 1831 of the Social Security Act (the Act) (42 U.S.C. § 1395j) establishes the
supplementary medical insurance benefits program for the aged and disabled known as
Medicare Part B. Administration of the Part B program is through contractors, such as
CGS. Act § 1842(a) (42 U.S.C. § 1395u(a)). Payment under the program for services
rendered to Medicare-eligible beneficiaries may only be made to eligible providers of
services and suppliers.” Act $§ 1835(a) (42 U.S.C. § 1395n(a)), 1842(h)(1) (42 U.S.C.
§ 1395u(h)(1)). Petitioner, a clinical laboratory, is a supplier.

The Act requires the Secretary of Health and Human Services (Secretary) to issue
regulations that establish a process for the enrollment in Medicare of providers and
suppliers, including the right to a hearing and judicial review of certain enrollment

> A “supplier” furnishes services under Medicare and includes physicians or other
practitioners and facilities that are not included within the definition of the phrase
“provider of services.” Act § 1861(d) (42 U.S.C. § 1395x(d)). A “provider of services,”
commonly shortened to “provider,” includes hospitals, critical access hospitals, skilled
nursing facilities, comprehensive outpatient rehabilitation facilities, home health
agencies, hospice programs, and a fund as described in sections 1814(g) (42 U.S.C.

§ 1395f(g)) and 1835(e) (42 U.S.C. § 1395n(e)) of the Act. Act § 1861(u) (42 U.S.C.

§ 1395x(u)). The distinction between providers and suppliers is important because they
are treated differently under the Act for some purposes.
determinations, such as revocation of enrollment and billing privileges. Act § 1866(j)
(42 U.S.C. § 1395cc(j)). Pursuant to 42 C.F.R. § 424.505, a supplier such as Petitioner
must be enrolled in the Medicare program and be issued a billing number to have billing
privileges and to be eligible to receive payment for services rendered to a Medicare-
eligible beneficiary.

Suppliers must submit complete, accurate, and truthful responses to all information
requested in the enrollment application. 42 C.F.R. § 424.510(d)(2). Pursuant to

42 C.F.R. §§ 424.502 and 424.510(d)(3), a supplier’s application to enroll in Medicare
must be signed by an authorized official, i.e., one with authority to bind the provider or
supplier both legally and financially. The regulation provides that the signature attests to
the accuracy of information provided in the application. The signature also attests to the
fact that the provider or supplier is aware of and abides by all applicable statutes,
regulations, and program instructions. 42 C.F.R. § 424.510(d)(3). Suppliers must meet
basic requirements depending on their type of service. 42 C.F.R. §§ 424.505, 424.516,
424.517. Suppliers are also subject to additional screening requirements depending upon
the type of service they provide. 42 C.F.R. § 424.518.

The Secretary has delegated the authority to revoke enrollment and billing privileges to
CMS. 42 C.F.R. § 424.535. CMS or its Medicare contractor may revoke an enrolled
supplier’s Medicare enrollment and billing privileges and supplier agreement for any of
the reasons listed in 42 C.F.R. § 424.535. Pursuant to 42 C.F.R. § 424.535(a)(1), CMS
may revoke a supplier’s enrollment and billing privileges if the supplier is determined not
to be in compliance with enrollment requirements. If CMS revokes a supplier’s Medicare
billing privileges, the revocation becomes effective 30 days after CMS or one of its
contractors mails the revocation notice to the supplier, subject to some exceptions not
applicable in this case. After a supplier’s Medicare enrollment and billing privileges are
revoked, the supplier is barred from reenrolling in the Medicare program for one to three
years. 42 C.F.R. § 424.535(c).

A supplier whose enrollment and billing privileges have been revoked may request
reconsideration and review as provided by 42 C.F.R. pt. 498. 42 C.F.R. § 424.545(a). A
supplier submits a written request for reconsideration to CMS or its contractor. 42 C.F.R.
§ 498.22(a). CMS or its contractor must give notice of its reconsidered determination to
the supplier, giving the reasons for its determination and specifying the conditions or
requirements the supplier failed to meet, and the right to an ALJ hearing. 42 C.F.R.

§ 498.25. If the decision on reconsideration is unfavorable to the supplier, the supplier
has the right to request a hearing by an ALJ and further review by the Board. Act

§ 1866(j)(8) (42 U.S.C. § 1395cc(j)(8)); 42 C.F.R. §§ 424.545, 498.3(b)(17), 498.5. A
hearing on the record, also known as an oral hearing, is required under the Act.
Crestview Parke Care Ctr. v. Thompson, 373 F.3d 743, 748-51 (6th Cir. 2004). The
supplier bears the burden to demonstrate that it meets enrollment requirements with
documents and records. 42 C.F.R. § 424.545(c).

B. Issues
Whether summary judgment is appropriate; and

Whether there was a basis for the revocation of Petitioner’s billing
privileges and enrollment in Medicare.

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

My conclusions of law are set forth in bold text followed by my findings of fact and
analysis.

CMS filed a motion to dismiss or in the alternative for summary judgment. The CMS
motion to dismiss is denied. The CMS theory for dismissal is that Petitioner conceded in
its request for hearing that it ceased operations months before it was notified of the
revocation. RFH at 8. CMS contends that Petitioner’s enrollment could also be revoked
pursuant to 42 C.F.R. § 424.535(a)(5) because Petitioner is no longer operational. CMS
also argues that Petitioner’s request for hearing is “moot” but CMS fails to explain why
Petitioner would not have a right to review of a revocation based on 42 C.F.R.

§ 424.535(a)(5). CMS Br. at 2-3. Petitioner disputes CMS’s claim that it was not
operational when it received the revocation notice, stating that it “was a current services
provider for Medicare” at the time the revocation was issued. P. Br. at 1. CGS did not
cite 42 C.F.R. § 424.535(a)(5) as a ground for revocation in either the initial
determination or the reconsidered determination. CMS has not requested remand to
consider and develop a proper record related to the alternative basis. The Departmental
Appeals Board (Board) has concluded in prior cases that only the regulatory basis for
CMS action articulated in the initial and reconsidered determinations are properly before
an ALJ and the Board for review. Neb Group of Arizona LLC, DAB No. 2573, at 7
(2014); Benson Ejindu, d/b/a Joy Medical Supply, DAB No. 2572, at 8-9 (2014). Lalso
conclude that the only basis for revocation properly before me is 42 C.F.R.

§ 424.535(a)(1). CMS’s motion to dismiss is denied, and I decide this case on CMS’s
summary judgment motion. If counsel for CMS had authority to add a basis for
revocation at this stage without according Petitioner the process required by the
regulations; summary judgment would not be appropriate related to 42 C.F.R.

§ 424.535(a)(5) as I would conclude that there are genuine disputes of material fact
related to that basis.

1. Summary judgment is appropriate.

CMS has requested summary judgment. A provider or supplier denied enrollment in
Medicare or whose enrollment has been revoked has a right to a hearing and judicial
review pursuant to section 1866(h)(1) and (j) of the Act and 42 C.F.R. §§ 498.3(b)(1),
(5), (6), (8), (15), (17), 498.5. A hearing on the record, also known as an oral hearing, is

required under the Act. Act §§ 205(b), 1866 (h)(1) and (j)(8); Crestview, 373 F.3d at
748-51. A party may waive appearance at an oral hearing, but must do so affirmatively
in writing. 42 C.F.R. § 498.66. In this case, Petitioner has not waived the right to oral
hearing or otherwise consented to decision based only upon the documentary evidence or
pleadings. Accordingly, disposition on the written record alone is not permissible, unless
the CMS motion for summary judgment has merit.

Summary judgment is not automatic upon request but is limited to certain specific
conditions. The Secretary’s regulations that establish the procedure to be followed in
adjudicating Petitioner’s case are at 42 C.F.R. pt. 498. 42 C.F.R. §§ 424.545(a),
498.3(b)(5), (6), (15), (17). The regulations do not establish a summary judgment
procedure or recognize such a procedure. However, the Board has long accepted that
summary judgment is an acceptable procedural device in cases adjudicated pursuant to 42
C.F.R. pt. 498. See, e.g., Ill. Knights Templar Home, DAB No. 2274, at 3-4 (2009);
Garden City Med. Clinic, DAB No. 1763 (2001); Everett Rehab. & Med. Ctr., DAB No.
1628, at 3 (1997). The Board also has recognized that the Federal Rules of Civil
Procedure (Fed. R. Civ. Pro.) do not apply in administrative adjudications such as this,
but the Board has accepted that Fed. R. Civ. Pro. 56 and related cases provide useful
guidance for determining whether summary judgment is appropriate. Furthermore, a
summary judgment procedure was adopted as a matter of judicial economy within my
authority to regulate the course of proceedings and made available to the parties in the
litigation of this case by my Prehearing Order. The parties were given notice by the
Prehearing Order that summary judgment is an available procedural device and that the
law as it has developed related to Fed. R. Civ. Pro. 56 will be applied.

Summary judgment is appropriate when there is no genuine dispute as to any issue of
material fact for adjudication and/or the moving party is entitled to judgment as a matter
of law. In determining whether there are genuine issues of material fact for trial, the
reviewer must view the evidence in the light most favorable to the non-moving party,
drawing all reasonable inferences in that party’s favor. The party requesting summary
judgment bears the burden of showing that there are no genuine issues of material fact for
trial and/or that it is entitled to judgment as a matter of law. Generally, the non-movant
may not defeat an adequately supported summary judgment motion by relying upon the
denials in its pleadings or briefs but must furnish evidence of a dispute concerning a
material fact, i.e., a fact that would affect the outcome of the case if proven. Mission
Hosp. Reg’! Med. Ctr., DAB No. 2459, at 4 (2012) (and cases cited therein); Experts Are
Us, Inc., DAB No. 2452, at 4 (2012) (and cases cited therein); Senior Rehab. & Skilled
Nursing Ctr., DAB No. 2300, at 3 (2010) (and cases cited therein); see also Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

The standard for deciding a case on summary judgment and an ALJ’s decision-making in
deciding a summary judgment motion differs from that used in resolving a case after a
hearing. On summary judgment, the ALJ does not make credibility determinations,
weigh the evidence, or decide which inferences to draw from the evidence, as would be
done when finding facts after a hearing on the record. Rather, on summary judgment, the
ALJ construes the evidence in a light most favorable to the non-movant and avoids
deciding which version of the facts is more likely true. Holy Cross Vill. at Notre Dame,
Inc., DAB No. 2291, at 5 (2009). The Board also has recognized that on summary
judgment it is appropriate for the ALJ to consider whether a rational trier of fact could
find that the party’s evidence would be sufficient to meet that party’s evidentiary burden.
Dumas Nursing & Rehab., L.P., DAB No. 2347, at 5 (2010). The Secretary has not
provided in 42 C.F.R. pt. 498, for the allocation of the burden of persuasion or the
quantum of evidence required to satisfy the burden. However, the Board has provided
some persuasive analysis regarding the allocation of the burden of persuasion in cases
subject to 42 C.F.R. pt. 498. Batavia Nursing & Convalescent Ctr., DAB No. 1904
(2004), aff'd, Batavia Nursing & Convalescent Ctr. v. Thompson, 129 Fed. App’x 181
(6th Cir. 2005).

There is no genuine dispute as to any material fact pertinent to revocation under 42
C.F.R. § 424.535(a)(1) that requires a trial.> The issues in this case raised by Petitioner
related to revocation under 42 C.F.R. § 424.535(a)(1) are issues of law. The issues in this
case must be resolved against Petitioner as a matter of law. The undisputed evidence
shows that there is a basis for revocation of Petitioner’s Medicare enrollment and billing
privileges. Accordingly, summary judgment is appropriate.

2. There is a basis for revocation of Petitioner’s Medicare enrollment
and billing privileges pursuant to 42 C.F.R. § 424.535(a)(1).

3. Petitioner’s enrollment in Medicare and its billing privileges are
revoked effective October 24, 2013.

a. Facts

The facts are not disputed and any inferences are drawn in favor of Petitioner.

> In its brief, CMS erroneously states that Petitioner’s Medicare enrollment and billing
privileges were also revoked pursuant to 42 C.F.R. § 424.535(a)(8), based on Petitioner’s
abuse of billing privileges. CMS Br. at 1. The only basis for revocation cited by the
Medicare contractor in the initial notice of revocation and the reconsideration decision is
42 C.F.R. § 424.535(a)(1). CMS Ex. 1, at 4-5, 7-10, 25-26.
Petitioner operates a clinical laboratory in Kentucky.’ CMS Ex. 2 at 4. Petitioner
submitted a Medicare enrollment application (Form CMS-855B) to the Medicare
contractor, CGS, signed and dated by Jamie Durham, Chief Financial Officer, on
December 29, 2012. CMS Ex. 2 at 27. Petitioner indicated in the application that it
would be submitting claims for Medicare payment through a billing agency, Liberty
Billing 2.0, LLC (Liberty).> CMS Ex. 2 at 20. The following NPI was assigned to
Petitioner: 1003166224. CMS Ex. 2 at 32.

CMS and CGS alleged that between July 1, 2012 and July 1, 2013, 42 unique Medicare
claims for clinical laboratory services provided by Petitioner for Medicare-eligible
beneficiaries were submitted by Liberty without the NPI of the physician who ordered the
services. CMS and CGS allege that the claims were submitted with Petitioner’s own NPI
listed as both the “rendering” and the “referring” NPI. CMS Ex. | at 3, 4,25. CMS
submitted a list of 38 claims from January 11, 2013 through August 2, 2013, that list
Petitioner’s NPI 1003166224 as both the rendering and referring NPI. I note that the list
reflects multiple claims for individual beneficiaries. CMS Ex. 1 at 64-66.

Petitioner does not dispute that Medicare claims were filed by Liberty on Petitioner’s
behalf without the referring physician or eligible professional’s NPI and with Petitioner’s
NPI listed as both the rendering and referring NPI. It is not necessary to resolve the exact
number of such claims that were filed by Liberty with this error. Petitioner alleges no
nowledge of the errors of Liberty until it was notified of the revocation of its billing
privileges and Medicare enrollment. RFH at 1, 4-6; P. Br. at 2-5, 7, 9-10; CMS Ex. | at
12-13, 15-16, 18. Petitioner submitted a Corrective Action Plan (CAP) that was not
accepted by CMS. RFH at 4, 6; P. Br. at 1, 11, 14; CMS Ex. | at 19-20, 22-24; CMS Br.
at 8 n.3.

b. Analysis

The requirements for establishing and maintaining Medicare billing privileges are found
in 42 C.F.R. pt. 424, subpt. P. Pursuant to 42 C.F.R. § 424.535(a)(1), CMS may revoke
an enrolled supplier’s Medicare billing privileges and supplier agreement if:

* Petitioner is a Kentucky limited liability company (LLC) formed in September 2012,
by James Durham. CMS Ex. 4. Petitioner’s application to enroll in Medicare lists as
owners: Jonathan Meyer, Robert Durham, J. Todd Clark, and Jamie Durham. CMS Ex.
2 at 12-15.

> Liberty is a Kentucky LLC organized in August 2011. Members of Liberty were Bryan
Wood, Robin Peavler, Brian Walters, James Bottom, and Robert Bertram. CMS Ex. 3 at
1,5.
(1) Noncompliance. The provider or supplier is determined
not to be in compliance with the enrollment requirements
described in this section, or in the enrollment application
applicable for its provider or supplier type... .

42 C.F.R. § 424.535(a)(1). Petitioner is entitled to receive payment for clinical
laboratory services it provided to Medicare-eligible beneficiaries if the services were
ordered by a physician or another eligible provider. 42 C.F.R. § 424.507(a)(1)(i). The
claim for payment for clinical laboratory services must include the legal name and the
NPI of the physician or eligible professional who ordered the services. 42 C.F.R.

§ 424.507(a)(1)(ii). To enroll and maintain enrollment in Medicare, Petitioner had to
comply with all regulatory requirements applicable to a supplier that is a clinical
laboratory. 42 C.F.R. § 424.516(a)(2). Asa clinical laboratory, Petitioner was required
to maintain documents related to services provided to Medicare-eligible beneficiaries for
seven years, including written and electronic documents showing the NPI of the ordering
physician or other eligible professional relating to orders and certifications and requests
for payments. 42 C.F.R. § 424.516(f)(1).

Section 8 of Petitioner’s Medicare enrollment application (Form CMS-855B) clearly
informed Petitioner that, if it used a billing agency, it was responsible for claims
submitted on Petitioner’s behalf. CMS Ex. 2 at 20. Petitioner agreed in the application
to abide by Medicare laws, regulations, and program instructions. CMS Ex. 2, at 24-27.
Petitioner also acknowledged in the application that the payment of a claim was
conditioned upon the underlying transaction being compliant with Medicare law and
regulations. CMS Ex. 2 at 25.

It is undisputed that Liberty submitted claims to Medicare on Petitioner’s behalf and
those claims violated the regulatory requirement to list the ordering physician’s or
eligible professional’s NPI on the claim. Therefore, the claims violated Medicare
regulations which govern Medicare enrollment and requirements for Medicare payment,
requirements with which Petitioner agreed to comply upon enrollment.

Section 424.535(a)(1) of Title 42 C.F.R. requires that Petitioner be permitted to submit a
plan of corrective action. The regulation provides that “[a]ll providers and suppliers are
granted an opportunity to correct the deficient compliance requirement before a final
determination to revoke billing privileges” except for certain bases for revocation not
implicated in this case. 42 C.F.R. § 424.535(a)(1). The September 24, 2013 notice of
initial determination advised Petitioner of the right to submit a CAP and to request
reconsideration. CMS Ex. | at 4-5, 25-26. Petitioner submitted a CAP and request for
reconsideration. CMS Ex. | at 11-24, 27-59. Revocation was upheld on reconsideration
and the CAP was apparently found not acceptable inasmuch as CMS persists with the
revocation action before me. CMS Ex. 1 at 7-10; CMS Br. at 8 n.3.

Petitioner argues that the failure of CGS and CMS to accept Petitioner’s CAP was in
error. RFH at 4, 6; P. Br. at 1, 11, 14. However, the refusal of CMS or its contractor to
accept Petitioner’s CAP is not an initial determination subject to my review. 42 C.F.R.
§§ 405.809, 424.545(a), 498.3(b); Conchita Jackson, M.D., DAB No. 2495 at 5-7 (2013);
Pepper Hill Nursing & Rehab. Ctr., LLC, DAB No. 2395 at 9 (2011); DMS Imaging,
Inc., DAB No. 2313 at 5-8 (2010). Petitioner cites no authority to the contrary.

Petitioner argues that the billing errors involved were solely the fault of Liberty, and
should not be attributed to Petitioner, who was unaware of the company’s misconduct. P.
Br. at 2-5, 7, 9-10. Petitioner contends that issues of material fact exist. P. Br. at 15-17.
I accept as true for purposes of summary judgment that Petitioner had no actual
knowledge of Liberty’s erroneous listing of Petitioner’s NPI as the referring NPI.
However, Petitioner is nevertheless ultimately responsible, both as a matter of law and
under the terms of its participation agreement, for ensuring that its claims for Medicare
reimbursement were accurate and for any errors in those claims. Louis J. Gaefke,
D.P.M., DAB No. 2554 at 5-6 (2013). Petitioner concedes that it is ultimately
responsible for its claims. CMS Ex. | at 12. Petitioner cannot avoid responsibility for its
claims by the simple expedient of shifting responsibility and liability by contracting with
a billing agent. I also accept as true for purpose of summary judgment Petitioner’s
assertion that there was no evidence of fraud. P. Br. at 5-7; CMS Ex. 1 at 12. But
Petitioner cites no authority for the proposition that the absence of fraud or fraudulent
intent relieves Petitioner of its responsibility for its Medicare claims. Petitioner also
argues that it was in substantial compliance citing 42 C.F.R. § 488.301. Petitioner has
not shown that the concept of “substantial compliance” as defined in 42 C.F.R.

§ 488.301, has any application in this case. The cited regulation is found in 42 C.F.R. pt.
488, subpt. E, which sets forth the procedures for the survey and certification of long-
term care facilities. Petitioner is a clinical laboratory not a long-term care facility.
Furthermore, the revocation in this case is not based on survey and certification, which
for clinical laboratories is governed by 42 C.F.R. pt. 493.

Petitioner contends further that “[f]undamental fairness and due process requires the
revocation be set aside.” P. Br. at 17. My authority is limited to determining whether
there is a basis for revocation of Petitioner’s Medicare enrollment and billing privileges.
I have no authority to review the exercise of discretion by CMS to revoke where there is
a basis for revocation. Abdul Razzaque Ahmed, M.D., DAB No. 2261, at 19 (2009). To
the extent that Petitioner is seeking equitable relief, I have no authority to grant equitable
relief. US Ultrasound, DAB No. 2302, at 8 (2010) (“[nJeither the ALJ nor the Board is
authorized to provide equitable relief by reimbursing or enrolling a supplier who does not
meet statutory or regulatory requirements.”). I am also required to follow the Act and
regulations and have no authority to declare statutes or regulations invalid.
1866I1CPayday.com, L.L.C., DAB No. 2289, at 14 (2009) (“[a]n ALJ is bound by
applicable laws and regulations and may not invalidate either a law or regulation on any
ground.”).
10

Petitioner does not deny the material facts and any favorable inferences are drawn for
Petitioner in this decision. Applying the law to the undisputed facts, I conclude that there
was a basis for revocation of Petitioner’s billing privileges and enrollment pursuant to 42
CFR. § 424.535(a)(1), effective October 24, 2013.

HI. Conclusion
For the foregoing reasons, I conclude that Petitioner’s Medicare enrollment and billing

privileges are properly revoked effective October 24, 2013.

/s/
Keith W. Sickendick
Administrative Law Judge