Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Inspector General,
U.S. Department of Health & Human Services,
Petitioner,

Vv.

Mohammad Siddique, M.D.
and Shoals Medical Group, LLC,
Respondents. !

Docket No. C-15-4156
Decision No. CR4692
Date: August 29, 2016
DECISION

From April 3, 2011 through September 27, 2012, Respondents, Mohammad Siddique,
M.D. and Shoals Medical Group, LLC, submitted 17,104 claims for payment to the
Centers for Medicare & Medicaid Services (CMS) contractors using Healthcare Common
Procedure Coding System (HCPCS) code G0434; the claims were excess and false in that
they were claims for multiple tests or procedures related to a single patient encounter or a
single urine sample; further, filing a claim for more than one test or procedure related to a

' The parties refer to Mohammad Siddique, M.D. and Shoals Medical Group, LLC, as
Petitioners and that was the way the case was initially docketed. Pursuant to 42 C.F.R.

§ 1005.2(b), in an exclusion case the parties are the petitioner and the Inspector General
of the U.S. Department of Health and Human Services (1.G.). However, in a case
involving a civil money penalty (CMP), the parties are the I.G. and the respondent.
Because a CMP is involved in this case, the style of the case was corrected by the
Prehearing Scheduling Order dated November 19, 2015, para. X.A., to refer to the parties
as the I.G. versus Respondents.
single patient encounter or a single urine sample violated the published policy of the
Secretary of Health and Human Services (the Secretary). There is a basis for the
imposition of sanctions pursuant to section 1128A(a)(1)(A) and (B) of the Social Security
Act (the Act) (42 U.S.C. §§ 1320a-7(a)(1)(A) and (B)). A CMP of $1,710,400, an
assessment of $1,057,251.67, and exclusion of Respondents from Medicare, Medicaid,
and all federal health care programs for ten years are reasonable sanctions.”

I. Background

The LG. notified Respondents by letter dated August 21, 2015 (Proposed Determination),
that he intended to impose against Respondents an assessment of $1,195,215.13 and a
CMP of $1,710,400.00, for a total penalty of $2,905,615.13. The I.G. also advised
Respondents that he intended to exclude them from participation in all federal health care
programs for a minimum of ten years.* The I.G. cited as authority sections
1128A(a)(1)(A) and (B) of the Act. The I.G. alleged that between October 13, 2011 and
November 6, 2012, Respondents submitted 17,104 claims for payment under HCPCS
code G0434 totaling $505,521.30, where each claim was for more than one urine test per
patient encounter when only one such test was generally allowed to be billed under
HCPCS code G0434. The LG. alleged that Respondents’ conduct amounted to the
knowing presentation to an agent of Medicare, claims for services that Respondents knew
or should have known were either not provided as claimed or were false or fraudulent.
The LG. further alleged that Respondents avoided claim reviews by appending a modifier
to each claim that indicated that the claim was for a separate patient encounter. The I.G.
proposed an assessment of three times the amount billed in lieu of damages due to the
false claims, a total of $1,516,563.90, which was reduced to $1,195,215.13 by crediting a
prior payment made by Respondents. The I.G. proposed a CMP of $100 for each of the
17,104 excess claims filed by Respondents.

Petitioner timely requested a hearing through counsel on September 15, 2015 (RFH). On
October 26, 2015, the case was assigned to me to hear and decide. I convened a

> The term “sanctions” refers collectively to the penalties involved, including the CMP,
assessment, and exclusion authorized by the Act and 42 C.F.R. pt. 1003.

> Pursuant to 42 C.F.R. § 1003.135, Respondents may apply for reinstatement only after
the period of exclusion expires. Reinstatement is not automatic upon completion of the
period of exclusion and any request for reinstatement will be considered in accordance
with 42 C.F.R. §§ 1001.3001 through 1001.3004. Citations are to the 2014 revision of
the Code of Federal Regulations (C.F.R.), unless otherwise stated.
telephone prehearing conference on November 18, 2015, the substance of which is
memorialized in my Prehearing Scheduling Order dated November 19, 2015.

On April 18, 2016, the L.G. filed his witness and exhibit lists and LG. exhibits (1.G. Exs.)
1 through 35. Respondents filed their exhibits (R. Exs.) 1 through 3 on April 18, 2016.
On May 5, 2016, the I.G. filed a motion for leave to file LG. Ex. 36 and an unmarked
audio recording that I treat as I.G. Ex. 37. On May 16, 2016, Respondents filed a motion
to exclude evidence offered by the I.G. that I discuss hereafter. The I.G. responded to the
motion on May 25, 2016.

On May 17, 2016, the parties filed a joint status report and request to resolve this case on
the documents (JSR & Waiver of Hearing), with both parties affirmatively waiving an
oral hearing. I conclude that the parties who are represented by counsel knowingly
waived the right to cross-examine witnesses by their waivers of oral hearing. The parties
filed their briefs on May 17, 2016 (I.G. Br. and R. Br., respectively). The L.G. filed a
reply brief on June 9, 2016 (I.G. Reply) and Respondents filed a reply brief on July 1,
2016 (R. Reply). The I.G. failed to mark and file a copy of the Proposed Determination
as an exhibit. Petitioner filed a copy of the I.G. notice with the request for hearing (DAB
E-File Item #1a) and that document is treated as if marked Court Exhibit (Ct. Ex.) 1,
which is admitted as evidence.*

On May 16, 2016, Respondents filed a “Motion to Exclude Redundant and Irrelevant
Information” (Motion to Exclude) that referred to both proposed witnesses and
documentary evidence. Respondents argue that the only issue in this case is
Respondents’ scienter, that is, state of mind, and they further argue that there are no
issues of fact related to the filing of claims or that the claims were improperly filed,
rendering irrelevant many of the I.G.’s offered documents and witnesses. Respondents
correctly acknowledge that I am tasked to determine the admissibility of evidence. The
Federal Rules of Evidence are not binding but may be applied where appropriate. I am
required to exclude irrelevant or immaterial evidence. I may exclude evidence that is
more prejudicial than probative or that may cause confusion, needless delay, or the
presentation of cumulative evidence. Privileged evidence must be excluded even if
relevant. Evidence of offers in compromise is generally inadmissible. Evidence of
crimes, wrongs, or acts other than those for which Respondents are charged may be
considered for limited purposes. 42 C.F.R. § 1005.17(a)-(g). Respondents’ objections to

* Generally, the I.G. should, out of an abundance of caution, anticipate possible notice
issues and, recognizing the need to prove adequate notice, offer as exhibits copies of any
notices required to be issued by regulation or the Act.
witnesses are moot based on the parties’ waivers of oral hearing in this case. JSR &
Waiver. Respondents argue that I.G. Exs. 24, 25, 27, 28, 29, 30, and 31, which include
detailed claims data, are irrelevant because they are not disputing the claims or that they
were improperly filed. The objection is overruled. Although Respondents concede the
filing of the claims, the claims data may nevertheless be relevant to the issue of the
reasonableness of the sanctions proposed by the L.G. if liability is found. Petitioner has
not specifically waived the issue of whether the proposed sanctions are reasonable and
has characterized the sanctions in various pleadings as being unreasonable. Respondents
object to .G. Exs. 14 and 16. Respondents argue that these exhibits — which tend to
show agency between Respondents and its billing companies — are not relevant to
scienter and may be more prejudicial than probative. Whether or not Respondent
Siddique was pleasant in his dealings with his billing companies is completely irrelevant
and not appropriate to consider, and I do not consider that aspect of the documents. The
existence of agency with billing companies may have some minimal relevance to both
scienter and the reasonableness of the sanctions, if liability is found. Accordingly,
Respondents’ objections are overruled. Respondents object to I.G. Exs. 4, 5, 6, 7, 8, and
10, on grounds they are not relevant to scienter. While I.G. Exs. 4, 5, 6, 7, 8, and 10 may
not be relevant to show Respondents’ state of mind, they certainly are relevant to show
the state of Respondents’ knowledge and are admissible. Respondents in their reply brief
acknowledged that, to the extent the I.G.’s evidence may be considered on the issue of
the reasonableness of the proposed sanctions, Respondents withdrew the relevancy
objection. P. Reply at 21.

The LG. did not specifically object to R. Exs. 1,2, and 3. The I.G. argued that R. Ex. 1, a
transcript of an audio recording, was not reliable or accurate. Therefore, the I.G. offered
the actual audio recording (DAB E-File Item #20), which I treat as LG. Ex. 37. Ihave
compared R. Ex. | and I.G. Ex. 37 and find only non-substantive differences between the
transcript and the actual recording. The conversation recorded in R. Ex. 1 and I.G. Ex. 37
clearly occurred after Respondent Siddique filed the claims in issue and he was on notice
that he was under investigation. While the recording is arguably self-serving, that
argument goes to the weight of the evidence and not its admissibility. The recording is
not sworn testimony and may not be treated as such. 42 C.F.R. § 1005.16(a). The
recording and transcript is relevant to scienter and knowledge and the issue of the
reasonableness of the sanctions proposed. The LG. argues that R. Exs. 2 and 3 are not in
the form of declarations or otherwise supported by a declaration or affidavit. R. Exs. 2
and 3 are merely attempts to authenticate the recording as transcribed. Because the L.G.
offered the recording as evidence, the I.G. waived any objection as to the authenticity of
the recording and R. Exs. 2 and 3 are unnecessary. Accordingly, I.G. Exs. 1 through 37
and R. Ex. | are admitted as evidence.

The issues have been joined and this case is now ripe for decision.
IL. Discussion
A. Applicable Law and Jurisdiction

Congress granted the Secretary authority to impose CMPs in varying amounts,
assessments in lieu of damages, damages, and to exclude from Medicare any person,
organization, agency, or other entity who committed any of the acts described in section
1128A(a) or (b) of the Act. Act § 1128A(a), (b) (42 U.S.C. § 1320a—7a(a), (b)).
Pursuant to 1128A(c)(1), the Secretary may initiate a proceeding to determine whether or
not to impose a CMP, assessment, or exclusion pursuant to section 1128A(a) or (b) only
as authorized by the Attorney General. Respondents do not question whether the
Attorney General has authorized the imposition of sanctions against them. The Secretary
may not initiate an action more than six years after the date of the claim, request for
payment, or other occurrence that is the basis for the action under section 1128A(a) or
(b). Act § 1128A(c)(1). Respondents do not argue that this action is time-barred.

The Secretary may not make an adverse determination to impose a CMP, assessment, or
exclusion under section 1128A(a) or (b) until the target of the action has been given
written notice and an opportunity for a hearing on the record. Act § 1128A(c)(2). In
determining the amount of any CMP, assessment or exclusion, the Secretary must
consider: (1) the nature of the claims and the circumstances under which they were
presented; (2) the degree of culpability, history of prior offenses, and financial condition
of the target; and (3) such other matters as justice may require. Act § 1128A(d).

A person, organization, agency, or other entity subject to an adverse action pursuant to
section 1128A(a) or (b) of the Act has a right to review in the U.S. Circuit Court of
Appeals in the circuit where the person resides or the organization, agency, or other entity
is located or in which the claims that are the basis for the action were presented. Act

§ 1128A(e).

Congress authorized the Secretary to delegate the authority granted by section 1128A(a)
and (b) of the Act to the I.G. Act §1128A(j)(2). The Secretary has promulgated
regulations implementing section 1128A of the Act at 42 C.F.R. pt. 1003 and delegated
authority under the Act to the LG. 42 C.F.R. § 1003.102.

A person subject to a proposed penalty, assessment, or exclusion has a right to review by
an administrative law judge (ALJ) and appeal to the Departmental Appeals Board (the
Board) in accordance with 42 C.F.R. pt. 1005. 42 C.F.R. § 1003.109(b). Absent a timely
request for hearing, a proposed penalty, assessment, or exclusion becomes final and not
subject to further review. 42 C.F.R. §§ 1003.109(c) —.110.

A person sanctioned under 42 C.F.R. pt. 1003 has a right to request a hearing before an
ALJ. 42 C.F.R. § 1005.2(a). Pursuant to 42 C.F.R. § 1005.15(a), a hearing on the record
is required to determine whether a respondent is subject to a sanction, unless both parties
waive appearance at an oral hearing and elect to submit only documentary evidence and
written argument as authorized by 42 C.F.R. § 1005.6(b)(5). In a CMP case under 42
C.F.R. pt. 1003, a respondent bears the burden of going forward and the burden of
persuasion with respect to affirmative defenses and any mitigating factors, and the I.G.
bears the burden with respect to all other issues. 42 C.F.R. § 1005.15(b). The burden of
proof in an exclusion case that also involves a CMP is the same. 42 C.F.R. § 1005.15(c).
A preponderance of the evidence is necessary to meet the burden of persuasion. 42
C.F.R. § 1005.15(d).

B. Issues
Whether there is a basis for the imposition of a CMP;
Whether there is a basis for the imposition of an assessment;

Whether there is a basis for excluding Respondents from participating in
Medicare, Medicaid, and all other federal health care programs; and

Whether the sanctions proposed by the I.G. are reasonable or adjustment of the
sanctions is necessary.

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

My conclusions of law are set forth in bold followed by the pertinent findings of fact and
analysis. I have carefully considered all the evidence and the arguments of both parties,
though not all may be specifically discussed in this decision. I discuss in this decision the
credible evidence given the greatest weight in my decision-making.” I also discuss any
evidence that I find is not credible or worthy of weight. The fact that evidence is not
specifically discussed should not be considered sufficient to rebut the presumption that I
considered all the evidence and assigned such weight or probative value to the credible
evidence that I determined appropriate within my discretion as an ALJ. There is no
requirement for me to discuss the weight given every piece of evidence considered in this
case, nor would it be consistent with notions of judicial economy to do so. Charles H.
Koch, Jr., Admin. L. and Prac. § 5:64 (3d ed. 2013).

> “Credible evidence’ is evidence that is worthy of belief. Black's Law Dictionary 596
(8" ed. 2004). The “weight of evidence” is the persuasiveness of some evidence
compared to other evidence. Id. at 1625.
1. Between April 3, 2011 and September 27, 2012, Respondents
submitted 17,104 claims under HCPCS code G0434, which were
improper claims because each exceeded the limit of one claim
authorized under HCPCS code G0434 per patient encounter or one test
per urine sample collected on a date of service.°

2. Respondents were improperly paid $351,666.78 on claims for the
excess units that totaled $459,533.48.

3. Respondents are liable for the acts of their agents, including their
coding and billing specialists, whose acts are within the scope of their
agency.

4. Respondents had actual notice’ of the limitation on filing claims
under HCPCS code G0434 based on the Secretary’s publication of the
adoption of that HCPCS code in the Federal Register as required by
section 1871 of the Act (42 U.S.C. § 1395hh) and 44 U.S.C. § 1507.

5. Respondents’ purported ignorance of the limitations on filing claims
under HCPCS code G0434 is no defense because the notice of the
adoption of that code was published in the Federal Register as required
by section 1871 of the Act and 44 U.S.C. § 1507.

6. Respondents committed upon enrolling in Medicare to comply with
the provisions of applicable statutes, regulations, and program
instructions of the Secretary, which includes the coding definition for
HCPCS code G0434.

On August 21, 2015, the I.G. gave Respondents notice of the proposed determination to
impose a CMP, assessment, and ten-year exclusion. Notice is required by section

® These claims are referred to by the parties and in this decision as “excess claims” due
to the fact that they exceed the limitation of one claim per encounter under HCPCS code
G0434.

7 This is referred to as “constructive notice” in the title of 44 U.S.C. § 1507 of the
Federal Register Act (44 U.S.C. chap. 15). That section states that, unless otherwise
provided by law, filing with the Office of the Federal Register for publication and public
inspection is sufficient to give notice of the contents of the document to affected persons.
1128A(c)(2) of the Act and 42 C.F.R. § 1003.109(a). Ct. Ex. 1. Respondents have not
challenged the sufficiency of the notice.

The I.G. advised Respondents by the Proposed Determination that he intended to impose
a CMP, an assessment, and to exclude both Respondents from participation in all federal
health care programs for ten years. Ct. Ex. 1. The I.G. cited sections 1128A(a)(1)(A)
and (B) of the Act as the basis for the proposed sanctions. Sections 1128A(a)(1)(A) and
(B) subject a person to a CMP, assessment, and exclusion for the following conduct:

(a) Any person (including an organization, agency, or other
entity, but excluding a beneficiary, as defined in subsection

(i)(5)) that—

(1) knowingly presents or causes to be presented to an
officer, employee, or agent of the United States, or of
any department or agency thereof, or of any State
agency (as defined in subsection (i)(1)), a claim (as
defined in subsection (i)(2)) that the Secretary
determines—

(A) is for a medical or other item or service that the
person knows or should know was not provided as
claimed, including any person who engages in a
pattern or practice of presenting or causing to be
presented a claim for an item or service that is
based on a code that the person knows or should
know will result in a greater payment to the person
than the code the person knows or should know is
applicable to the item or service actually provided,

(B) is for a medical or other item or service and the
person knows or should know the claim is false or
fraudulent.

Act § 1128A(a)(1)(A) and (B). Section 1128A(a)(1)(A) authorizes a sanction against a
person who submits a claim or caused a claim to be submitted and the person knew or
should have known:

e Acclaim is for an item or service that was not actually provided; or
e He or she is engaging in a pattern or practice of up-coding, i.e., filing a

claim using a code that will cause a payment higher than the code that is
actually applicable to the item or service actually furnished.
Section 1128A(a)(1)(B) authorizes a sanction against a person who submits a claim or
causes a claim to be submitted and the person knows or should know that the claim is
false or fraudulent. A “claim” is “an application for payments for items and services”
under a federal health care program and includes Medicare, Medicaid, and other health
care programs funded in whole or in part by the federal government. Act § 1128(h),
1128(A)(i)(2), 1128B(f). Section 1128A(a)(1) requires that a person knowingly submit
or cause to be submitted a claim. The Act defines “should know” as follows:

The term “should know” means that a person, with respect to
information—

(A) acts in deliberate ignorance of the truth or falsity of
the information; or

(B) acts in reckless disregard of the truth or falsity of the
information,

and no proof of specific intent to defraud is required.
Act §1128A(i)(7). The Secretary has defined the term “knowingly” by regulation:

[T]he term “knowingly” is defined consistent with the
definition set forth in the Civil False Claims Act (31 U.S.C.
§ 3729(b)), that is, a person, with respect to information, has
actual knowledge of information, acts in deliberate
ignorance of the truth or falsity of the information, or acts in
reckless disregard of the truth or falsity of the information,
and that no proof of specific intent to defraud is required.

42 C.F.R. § 1003.102(e) (emphasis added). Fraud and fraudulent are not defined under
either section 1128A of the Act or 42 C.F.R. pt. 1003. Fraud has several definitions
depending upon the context. A general legal definition for fraud is a “knowing
misrepresentation of the truth or concealment of a material fact to induce another to act to
his or her detriment.” Black’s Law Dictionary 685 (8th ed. 2004). Fraud may also be a
“misrepresentation made recklessly without belief in its truth to induce another person to
act.” Id. Fraudulent is the adjectival form of the term fraud. “A principal is liable for
penalties, assessments, and an exclusion under this section for the actions of the
principal’s agent acting within the scope of the agency.” Act § 1128A(/).

Respondents do not dispute that the claims at issue in this matter were submitted to the
CMS Medicare contractor for payment by various agents that Respondents used for
billing and collections. IG. Exs. 12-17; R. Br. at 2,6. Respondents do not dispute that

10

they knowingly caused the 17,104 claims to be submitted by their billing agents. R. Br.
at 2,4. Respondents argue, rather, that they did not know they could not submit claims
using HCPCS code G0434 for multiple tests conducted from a single urine sample. RFH;
R. Br. at 3-7. As discussed in greater detail hereafter, Respondents’ purported “ignorance
of the law furnishes no excuse for any mistake or wrongful act.” Hawkins v. United
States, 96 U.S. 689, 691 (1877).

a. Facts

It is not disputed that prior to January 1, 2011, Respondents were permitted to file
multiple claims for multiple tests or procedures, including separate tests for multiple
drugs of abuse, conducted upon a single urine sample obtained during a single patient
encounter. I.G. Exs. 4-5.

It is not disputed that on November 19, 2010, CMS posted to its website the 2011
Calendar Year “New Clinical Laboratory Fee Schedule Test Codes and Final Payment
Determinations,” which listed new HCPCS code G0434 and explained that for any
“patient encounter, no matter how many drugs of abuse tests are performed . . . proper
billing would be one time per patient.” LG. Exs. 7 at 5; 35 at 2 7.

Ten days later, on November 29, 2010, the Secretary published the annual update of the
list of CPT’/HCPCS codes in the Federal Register, giving notice that HCPCS code
G0434 was added to the list of CPT/HCPCS Codes. 75 Fed. Reg. 73,170, 73,584 (Nov.
29, 2010).

On February 14, 2011, CMS issued a Medicare Learning Network “MLNMatters,””
#SE1105, which explained that: “[o]nly one unit of service for code G0434 can be billed

® Common Procedural Terminology (CPT®) codes are maintained by the American
Medical Association. HCPCS (commonly referred to as “hick picks”) codes are
established and maintained by CMS and used primarily to identify products, supplies, and
services not included under the CPT codes.

° At the bottom of each page of the MLNMatters appears the following disclaimer:

This article was prepared as a service to the public and is not
intended to grant rights or impose obligations. This article
may contain references or links to statutes, regulations, or
other policy materials. The information provided is only

intended to be a general summary. It is not intended to take
(Footnote continued next page.)
11

per patient encounter regardless of the number of drug classes tested and irrespective of
the use or presence of the QW modifier on claim lines.” I.G. Exs. 10 at 3; 34 at 2 47.

The L.G. alleges in the Proposed Determination and his briefs that Respondents submitted
more than one claim related to one patient encounter for urine testing under HCPCS code
G0434. The I.G. alleges that only one claim may be billed using HCPCS code G0434 per
patient encounter and urine sample, subject to limited exceptions not applicable in this
case, regardless of the number of drugs the urine is tested for. The I.G. alleges that
between October 13, 2011 and November 6, 2012, Respondents submitted claims for
multiple tests under HCPCS code G0434 related to single patient encounters. The L.G.
alleges that Respondents submitted 17,104 excess claims totaling $505,521.30 during the
period October 13, 2011 and November 6, 2012. The LG. also alleges that Respondents
avoided automated claim reviews by appending Modifier 59 to many of the 17,104
excess claims for units of HCPCS code G0434. The I.G. alleges that the use of Modifier
59 indicates that each unit claimed was related to a separate patient encounter, office
visit, or injury, when in fact, the claims submitted by Respondents or their agents were
not related to separate patient encounters. Ct. Ex. | at 2-3; 1.G. Br. at 2-4, 8-9.

The allegations in the Proposed Determination and in the I.G.’s briefs before me do not
conform to the proof offered by the I.G. or the analysis of the I.G.’s Senior Auditor,
Clarissa J. Yu. Senior Auditor Yu’s analysis of the I.G.’s records shows that
Respondents’ billing or claims agents submitted 17,104 claims with dates of service
between April 3, 2011 and September 27, 2012, for excess units of HCPCS code G0434.
Auditor Yu treated as an excess claim any additional claim beyond one per patient per

(Footnote continued.)

the place of either the written law or regulations. We
encourage readers to review the specific statutes, regulations
and other interpretive materials for a full and accurate
statement of their contents.

The disclaimer clearly reflects that the MLNMatters publication is not enforceable as a
statement of law, regulation, interpretive rule, or policy. The copy of MLNMatters is,
nevertheless, relevant as evidence of the CMS action adopting G0434 and efforts to
communicate billing limitations to providers and suppliers. MLNMatters could be
evidence of actual notice to Respondents if there was some additional evidence that
Respondents actually received and read the MLNMatters, or if they conceded those facts,
which they have not.
12

date of service.'° Auditor Yu’s data analysis shows that Respondents were paid
$351,666.78 on claims for the excess units totaling $459,533.48. IG. Exs. 24 at 8, 21;
and 36. I find the declaration of Senior Auditor Yu, who is with the Office of Audit
Services, Office of the I.G. (I.G. Ex. 36), to be reliable and credible evidence that is
consistent with and supported by the claims data in I.G. Ex. 24 at 8, 21; I.G. Ex. 25 at 9,
28, 52, 99; I.G. Ex. 30 at 38-39; and IG. Ex. 31 at 60-62. The data supports Auditor
Yu’s testimony that the claims at issue began with the date-of-service April 3, 2011. LG.
Ex. 36. Further, the claim summary data (I.G. Exs. 25 and 31) supports a finding that
Respondents filed multiple claims under HCPCS code G0434 for single patient
encounters with single urine samples, only through the date of service September 27,
2012, consistent with Auditor Yu’s conclusion (I.G. Ex. 36), and not November 6, 2012
as asserted by the LG. in briefing. I.G. Br. at 3-4, 9. The claims analysis of Senior
Auditor Yu is not disputed by Respondents.

Respondents do not dispute that multiple claims were improperly filed using HCPCS
code G0434, as alleged in the Proposed Determination. Respondents assert that the
improper filings were identified by Respondents long before the I.G. action to impose
sanctions; Respondents did a self-audit; and Respondents repaid all known improper
claims at that time. RFH at 3; R. Br at 2; R. Reply at 10, 11. Following is a statement
from Respondents’ prehearing brief, set forth verbatim due to the significance of the
admissions made:

'° Trely upon the evidence presented by the I.G. rather than the assertions of counsel in
briefs and the allegations of the Proposed Determination. The data actually show
multiple claims under HCPCS code G0434 with dates of service as early as January 15,
2011 and February 13, 2011. I.G. Ex. 24 at 12, 16-17. However, those claims are for
dates of service prior to February 25, 2011, when CMS issued guidance regarding the
limitation of HCPCS code G0434 to one claim per patient encounter. I.G. Ex. 34 at 2 9§
7-10. Citations to exhibits are unclear or not specific throughout the I.G. brief and those
errors and the use of the short-form “id.” make it extremely difficult to follow the I.G.’s
arguments. There is also a lack of clarity as to whether references are to the date of
service, date of the claim, date the claim was received, or some other date. The
organization of the data in the various I.G. exhibits makes it extremely difficult to
identify and analyze the 17,104 claims at issue. Counsel are encouraged to use great care
in preparing their cases so as not to make the fact finder’s job more difficult. A hearing
may have made the fact finder’s job easier in this case; however, because the dispositive
facts are undisputed by Respondents and this case turns on an issue of law, the time and
expense of a hearing, even just for receiving oral arguments, would not have been
justified where the sole purpose would have been to ease the fact finder’s burden.

13

During the time of these events, Dr. [Siddique] operated in
rural Alabama a small pain clinic named Shoals Medical
Group, LLC that was closed in late 2016.

When Dr. [Siddique] saw patients, he usually would take a
urine sample for testing. A large number of tests can be run
on urine. These include specific gravity, pH, existence of
proteins, level of glucose, presence of nitrites, Leukocyte
esterase (tells the white blood cell count), ketones, existence
of casts, or crystals, bacteria, yeast cells or parasites. There is
a long list of possible tests, but all we need to know is that Dr.
[Siddique] almost always did eleven (11) tests on each
patient, and charged Medicare for each test.

Medicare allowed this until January 2011 when it
acknowledged that technology had changed. More advanced
testing machines could perform eleven tests from a single
urine sample. So Medicare decided to pay once for a single
test having eleven results, instead of continuing to allow itself
to be charged for each test result derived from a single patient
urine sample.

After this rule change, a provider such as Dr. [Siddique]
could legitimately charge only once for each urine test, no
matter how many results were obtained.

But instead of following these rules, Dr. [Siddique] billed a
large number [sic] claims representing separate charges to
Medicare for each test resu/t from the same patient. That is,
Dr. [Siddique] continued to charge Medicare eleven times for
urine testing on each patient.

A recovery audit contractor (RAC) soon identified this
problem. Dr. [Siddique] followed the guidance of the RAC,
discontinued this discredited practice of billing, and paid back
all of the money the RAC claimed was owed for improperly
filed claims.

R. Br. at 2 (emphasis in original). Respondents state in their reply brief that prior to
January 2011, billing for multiple tests on a single urine sample from a single patient
encounter was the practice. CMS does not dispute this assertion by Respondents.
Respondents do not dispute that for an unspecified time after the change in CMS policy
in January 2011, Respondents billed only once for each urine sample regardless of the
14

number of tests performed on that sample. CMS Br. at 16. However, Respondents
concede that at some unspecified time after January 2011, Respondents reverted to billing
for each separate test performed on a single urine sample. Respondents admit that “many
urine tests were [improperly] broken down and a separate claim was made for each
result.” Respondents concede that all the multiple claims were improper. R. Reply at 11.

b. Analysis

Section 1831 of the Act (42 U.S.C. § 1395j) establishes the supplementary medical
insurance benefits program for the aged and disabled known as Medicare Part B.
Payment under the program for services rendered to Medicare-eligible beneficiaries may
only be made to eligible providers of services and suppliers. Act §§ 1835(a) (42 U.S.C.
§ 1395n(a)); 1842(h)(1) (42 U.S.C. § 1395(u)(h)(1)). Administration of the Part B
program is through contractors. Act § 1842(a) (42 U.S.C. § 1395u(a)). The Act requires
the Secretary to issue regulations that establish a process for the enrollment in Medicare
of providers and suppliers. Act § 1866(j) (42 U.S.C. § 1395cc(j)). Pursuant to 42 C.F.R.
§ 424.505, providers and suppliers must be enrolled in the Medicare program to be
reimbursed for services provided to Medicare beneficiaries. Many clinical laboratory
services are covered by Medicare, when properly ordered. Act §§ 1832 (42 U.S.C.

§ 1395k); 1834 (42 U.S.C. § 1395m(k); 1861 (42 U.S.C. § 1395x(s)(1)). The Medicare
program authorizes Medicare Part B payments for clinical laboratory services furnished
in accordance with the provisions of the Act and regulations. 42 C.F.R. §§ 410.10(e) and
32(d).

Participation in Medicare imposes obligations upon suppliers such as Respondents.
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 of the Medicare program. 42 C.F.R. § 424.510(d)(3). The
Board has recognized that by enrolling in Medicare, a provider or supplier agrees to be
bound by Medicare program instructions. Proteam Healthcare, Inc., DAB No. 2658 at
11-12 (2015); Realhab, Inc., DAB No. 2542 at 17, (2013). When filing claims for health
care services and supplies under Medicare, providers and suppliers are required to use the
applicable medical data code set, such as the HCPCS, that was valid at the time the health
care was provided. 45 C.F.R. §§ 162.1000 -.1011.

15

There is no issue in this case that Respondents were enrolled in Medicare as suppliers of
clinical laboratory services with a CLIA certificate and a certificate of waiver'! issued in
accordance with 42 C.F.R. pt. 493. IG. Exs. 1, 2. Respondent Siddique admits that
during the period in question he operated Respondent Shoals Medical Group, LLC as a
pain clinic providing physician services (R. Br. at 2), though the LG. has presented no
specific evidence of Medicare enrollment other than the CLIA certificate or the date of
Respondents’ enrollment. The requirements for enrolling in Medicare and the obligations
related to participating in Medicare have been substantially the same since 2006. 71 Fed.
Reg. 20,776 (Apr. 21, 2006); 73 Fed. Reg. 36,461 (June 27, 2008); 75 Fed. Reg. 50,418
(Aug. 16, 2010); 75 Fed. Reg. 70,464 (Nov. 17, 2010); 75 Fed. Reg. 73,628 (Nov. 29,
2010); 77 Fed. Reg. 29,030 (July 16, 2012).

The gist of the I.G.’s theory is that Respondents either knew or should have known that
after January 2011, billing or claiming under HCPCS code G0434 for more than one test
from a single urine sample and a single patient encounter using G0434 was false or
fraudulent and subject to sanctions under section 1128A(a)(1)(B). The I.G. has not
attempted to establish a violation of section 1128A(a)(1)(A) by showing and arguing that
the multiple tests for which claims were submitted were not actually performed as
claimed. The sanctionable conduct according to the I.G. is Respondents’ filing claims for
more than one test run on one urine sample. It is undisputed that, for over a year,
Respondents submitted 17,104 claims billing for more than one test run on a single
sample from a single patient encounter, which is, arguably, a pattern of such claims.
Filing multiple claims when only a single claim is authorized also fits roughly within the
concept of up-coding under section 1128A(a)(1)(A) to the extent that the coding practice
resulted in a higher payment to Respondents for the multiple tests separately claimed than
is permitted under HCPCS code G0434. Accordingly, either section 1128A(a)(1)(A) or
(B) could be the basis for sanctions in this case.

The 1.G.’s primary argument that Respondents knew or should have known it was wrong
to file multiple claims for multiple tests on a single urine sample is the fact that
Respondents correctly filed claims under HCPCS code G0434 when the change in CMS
policy first occurred in January 2011. I.G. Br. at 2-3, 6-9, 16-18. The LG. urges me to
conclude, based on Respondents’ conduct that not only did Respondents have actual

"| The tests a laboratory may perform under a certificate of waiver are simple laboratory
examinations and procedures which use test systems cleared by the Food and Drug
Administration for home use; employ methodologies that are so simple and accurate that
the risk for error is negligible; or pose no reasonable risk of harm to the patient if the test
if performed incorrectly. 42 C.F.R. § 493.15(b).
16

knowledge of the change to HCPCS code G0434, but that Respondents had actual
knowledge of the limitation of one claim per urine sample. The fact that Respondents
correctly filed claims after January 1, 2011, clearly shows that Respondents and their
billing agents had knowledge of the change by CMS to using HCPCS code G0434.
Respondents do not deny actual knowledge of the change. Respondents do deny actual
knowledge of the limitation to one claim per urine sample per patient encounter. The fact
that Respondents properly filed several claims that billed for only one test per urine
sample between January and April 2011, does not support an inference that Respondents
had actual knowledge of the limitation of billing for only one test per sample under
HCPCS code G0434. Indeed, the fact that Respondents claimed only one test per urine
sample may reflect that only one test was actually performed on those samples. There is
no evidence derived from interviews of Respondent Siddique or Respondents’ billing
agents or documentary evidence that shows it was more likely than not that Respondents
and their agents had actual knowledge of the limitations on claims under HCPCS code
G0434. Given the government’s limited evidence, I will not infer based on a few single
claims under HCPCS code G0434, that Respondent had actual knowledge of the limits of
HCPCS code G0434. However, it is not necessary to rely upon evidence of Respondents’
conduct to show actual knowledge of the limitation on claims filed using HCPCS code
G0434.

Respondents argue that the issue to be decided in this case is whether Respondent
Siddique had the scienter required for the I.G. to impose a CMP, assessment, and
exclusion. R. Br. at 3. Respondents argue that it has not been shown that they had the
requisite scienter to be sanctioned under section 1128A(a)(1) of the Act. Scienter is a
“degree of knowledge that makes a person legally responsible for the consequences of his
or her act or omission. ...”” Black’s Law Dictionary 1373. The scienter requirement of
section 1128A(a) for the imposition of a CMP, assessment, and exclusion is whether or
not Respondents either knew or should have known that the claims and conduct, i.e., the
facts related to those claims, were sanctionable under section 1128A(a)(1)(A) and (B).
Respondents argue that the I.G. must show by a preponderance of the evidence that
Respondents acted with “deliberate ignorance” when they “allowed the wrongful claims
to be filed” or they acted with “reckless disregard of whether or not the claims were
proper.” R. Br. at 5. Respondents argue they did not act with deliberate ignorance or
careless disregard for whether or not the claims were proper. Respondents argue that
they relied upon coding and billing specialists for the proper way to bill Medicare. R. Br.
at 5. Respondents reason that because they sought and relied upon the advice of experts
there was no reckless disregard or deliberate ignorance of the truth or falsity of claims.
RFH; R. Br. at 6. Respondents also argue that as soon as the problem was identified they
did a self-audit; identified improper claims; and promptly repaid $350,000, which
resulted in the Recovery Audit Contractor closing the audit. R. Reply at 1. Respondents
argue that I should not infer, but must find from the evidence that Respondents either
knew or should have known that the claims were improper. Respondents assert that I
may not infer reckless disregard from circumstantial evidence. R. Reply 4-5, 7, 19. In

17

short, Respondents’ defense is that they neither knew nor should have known that the
practice of billing under HCPCS code G0434 for multiple tests on a single urine sample
and a single patient encounter was improper, wrong, false, or fraudulent. R. Br.
Respondents’ argument in this case is really an argument that they were “ignorant of the
law” as it related to HCPCS code G0434. Respondents’ defense fails as a matter of law.

Respondents state in their brief: “[i]f the trier of fact finds that [Respondents] ‘knew or
should have known’ that the filing of approximately 17,000 improper claims was wrong,
then this appeal is lost.” R. Br. at 4. I conclude that the Respondents and their agents
had actual knowledge that after January 2011 and through September 2012, submitting
multiple claims for multiple tests on a single urine sample from a single patient encounter
using HCPCS code G0434 was prohibited. It is not necessary to resolve issues related to
the use of Modifier 59, as the improper claims are a basis for sanctions with or without
consideration of the alleged improper use of Modifier 59.

Executive branch agencies are required to make available to the public “substantive rules
of general applicability adopted as authorized by law, and statements of general policy or
interpretations of general applicability formulated and adopted by the agency; and each
amendment, revision, or appeal of the foregoing.” 5 U.S.C. § 552(a)(1)(D)-(E).'”

Except to the extent that a person has actual and timely notice
of the terms thereof, a person may not in any manner be
required to resort to, or be adversely affected by, a matter
required to be published in the Federal Register and not so
published. For the purpose of this paragraph, matter
reasonably available to the class of persons affected thereby is
deemed published in the Federal Register when incorporated
by reference therein with the approval of the Director of the
Federal Register.

5 U.S.C. § 552(a)(1).

The Act requires that the Secretary “prescribe such regulations as may be necessary to
carry out the administration of [Medicare].” Act § 1871(a)(1). The Act further provides:

This section of the Administrative Procedure Act (5 U.S.C. §§ 551-59) is popularly
known as the Freedom of Information Act.
18

No rule, requirement, or other statement of policy (other than
a national coverage determination) that establishes or changes
a substantive legal standard governing the scope of benefits,
the payment for services, or the eligibility of individuals,
entities, or organizations to furnish or receive services or
benefits under this title shall take effect unless it is
promulgated by the Secretary by regulation under paragraph
(1)[Act § 1871(a)(1)].

Act § 1871(a)(2). The Secretary is required to publish in the Federal Register, “not less
frequently than every 3 months, a list of all manual instructions, interpretative rules,
statements of policy, and guidelines of general applicability” that are not promulgated as
regulations. Act § 1871(c)(1).

On November 29, 2010, the Secretary published the annual update of the list of
CPT/HCPCS codes in the Federal Register, giving notice that G0434 was added to the
list of CPT/HCPCS Codes. 75 Fed. Reg. 73,170, 73,584 (Nov. 29, 2010). Respondents
ave not disputed the adequacy of the notice or that it fully complied with the
requirements of 5 U.S.C. § 442 and Act § 1871(a) and (c). By virtue of publication in the
Federal Register, Respondents had actual knowledge of the adoption of HCPCS code
G0434. 44 U.S.C. §§ 1505(a), 1507; 1 Admin. L. & Prac. § 4:46 (3d ed. 2016).
Although the limitations on claims under HCPCS code G0434 were not explained in
detail in the Federal Register notice, CMS published the limitations both before and after
the publication of the adoption of HCPCS code G0434 in the Federal Register.
Respondents have not disputed the I.G.’s evidence which shows that the full description
for HCPCS code G0434 was published on the CMS website so that it was available to
Respondents and their agents for accurate coding. Respondents have also not disputed
that the limitations upon claims under HCPCS code G0434 were also provided to
suppliers through MLNMatters. 1.G. Exs. 7 at 5; 10 at 2-3; 34 at 2 97; 35 at 2 7.
Respondents have not denied their regulatory duty to comply with pertinent statutes,
regulations, and program instructions.

I conclude that Respondents conceded knowledge of the facts related to the 17,104
claims. I conclude that Respondents had actual knowledge of the adoption of HCPCS
code G0434 through publication as required by the Act in the Federal Register. Further,
the limitations related to using HCPCS code G0434 were provided by CMS through other
resources such as the CMS website and MLNMatters. Accordingly, I conclude that
Respondents had all the knowledge required to be subject to sanction pursuant to section
1128A(a) of the Act.

7. A CMP of $1,710,400, an assessment of $1,057,251.67, and exclusion
of Respondents for a minimum of ten years are reasonable sanctions.
19

I have concluded that there is a basis for the impositions of sanctions against
Respondents. Therefore, it is necessary to determine reasonable sanctions.

The Act authorizes a CMP of $10,000 for each claim subject to section 1128A(a)(1); an
assessment in lieu of damages of no more than three times the amount claimed; and
exclusion from participation of federal health care programs as defined by section
1128B(f)(1) of the Act. The Secretary has delegated authority to the L.G. by regulation to
impose a CMP of $10,000 for each claim subject to 1128A(a) of the Act and 42 C.F.R.

§ 1003.102(a). 42 C.F.R. § 1003.103(a)(2). The Secretary authorized the I.G. to impose
an assessment in lieu of damages of three times the amount for each item or service
wrongfully claimed that is subject to section 1128A(a) of the Act and 42 C.F.R.

§ 1003.102(a). 42 C.F.R. § 1003.104(a)(2). Additionally, the Secretary has authorized
exclusion from participation in Medicare, Medicaid, and all federal health care programs
of a person or entity subject to a CMP or assessment under 42 C.F.R. § 1003.102(a). 42
CER. § 1003.105(a)(1)(i).

Section 1128A(d) of the Act requires consideration of the following factors in
determining the amount of CMP or assessment and the duration of an exclusion:

1. Nature of claims and circumstances under which they were presented;

2. Degree of culpability, history of prior offenses, and financial condition of the
person presenting the claims; and

3. Other matters as justice may require.

The Secretary has required by regulation the consideration of certain factors, and the
following are applicable to this case:

1. Nature of the claims or other wrongdoing;

2. Degree of culpability;

3. History of prior offenses;

4. Financial condition; and

5. Such other matters as justice may require.
42 C.F.R. § 1003.106(a)(1). In 42 C.F.R. § 1003.106(b), the Secretary has established
guidelines for considering the factors established by 42 C.F.R. § 1003.106(a)(1). The

factors established by 42 C.F.R. § 1003.106(a) are also considered with respect to
whether to exclude and the duration of such exclusion. 42 C.F.R. § 1003.107(a).
20

The LG. notified Respondents in the Proposed Determination that he intended to impose
an assessment of $1,195,215.13 and a CMP of $1,710,400, a total of $2,905,615.13, and
to exclude them for ten years. Ct. Ex. 1. The LG. proposed an assessment of three times
the amount billed for each service in lieu of damages due to the false claims, a total of
$1,516,563.90, which was reduced to $1,195,215.13 by crediting a prior payment of
$321,348.77 made by Respondents. The I.G. proposed a CMP of $100 for each of the
17,104 excess claims filed by Respondents. The I.G. stated in the Proposed
Determination that he considered, pursuant to 42 C.F.R. §§ 1003.106 and 1003.107, that
Respondents’ clams were submitted over a lengthy period of time and that the amount
claimed was substantial. The period that the I.G. found was October 13, 2011 to
November 6, 2012, just less than 13 months. The I.G. found that the claims totaled
$505,521.30. Ct. Ex. 1.

Respondents have not specifically challenged the reasonableness of the CMP, the
assessment, the exclusion, or the duration of the exclusion. Respondents have generally
alleged that the sanctions proposed by the I.G. are unreasonable. RFH, P. Br. at 4, P.
Reply at 5, 20.

Respondents appear to have misconstrued 42 C.F.R. § 1005.4(c)(7) to preclude my
review of the reasonableness of the CMP, assessment, and exclusion. P. Br. at 4. The
regulation actually provides only that I may not review the exercise of discretion by the
1.G. to impose a CMP, assessment, or exclusion under 42 C.F.R. pt. 1003. Section
1005.4(c)(7) of 42 C.F.R. does not preclude ALJ review as provided by section
1128A(c)(2) of the Act and 42 C.F.R. § 1003.109(b) of the proposed CMP, the
assessment, and exclusion pursuant to 42 C.F.R. pt. 1005. Section 1005.4(c)(7) of 42
C.F.R. does not affect my authority under 42 C.F.R. § 1005.20(b) to affirm, increase, or
reduce the penalties, assessment, or exclusion proposed by the I.G.

The I.G. evidence shows that some adjustment of the assessment is required. According
to Senior Auditor Yu, Respondents:

1. Filed 17,104 claims for excess units under HCPCS code G0434;

2. During the period from April 3, 2011 through September 27, 2012, just less
than 18 months; and

3. The improper claims submitted totaled $459,533.48.
LG. Ex. 36 at 1.

The L.G. proposed an assessment of three times the amount of the improper claims.
Three times the amount of the improperly filed claims proven by the LG. before me
21

yields $1,378,600.44, which when reduced by Respondents’ prior payment of
$321,348.77, amounts to $1,057,251.67, rather than $1,195,215.13 as determined by the
1.G. in the Proposed Determination.

The filing of improper claims occurred over a period of just less than 18 months rather
than 13 months as found by the LG. in the Proposed Determination. My finding that the
total number of improper claims was 17,104 is no different from the I.G.’s finding. A
CMP of $100 per improper claim amounts to a total CMP of $1,710,400, which is the
CMP proposed by the LG.

I have considered the factors required by section 1128A(d) of the Act and 42 C.F.R.

§§ 1003.106(a)(1) and 1003.107(a); and the guidelines under 42 C.F.R. § 1003.106(b). I
conclude that the adjusted assessment, CMP, and ten-year exclusion are reasonable
sanctions. Respondents do not dispute that their agents filed 17,104 claims using HCPCS
code G0434 for multiple tests of single urine samples based on single patient encounters.
Respondents offer no excuse for the improper claims except that they were ignorant of
the law, i.e., the prohibition on filing multiple claims for multiple tests on one urine
sample from a single patient encounter under HCPCS code G0434. The Secretary
properly published the adoption of HCPCS code G0434 in the Federal Register which
constituted actual knowledge for providers and suppliers of the requirements and
limitation of HCPCS code G0434. Therefore, Respondents’ asserted ignorance is no
excuse. Respondents as enrolled suppliers are responsible to comply with the statutes,
regulations, and properly published program directives. 42 C.F.R. § 424.510(d)(3);
Proteam Healthcare, Inc., DAB No. 2658; Realhab, Inc., DAB No. 2542. Respondents
are culpable for filing thousands of claims over nearly 18 months without ensuring that
their agents were filing correct claims. It is undisputed that Respondents did a self-audit
and made a voluntary pay back, but only after it was apparent that CMS was examining
Respondents’ claims. There is no evidence of any prior offenses by Respondents. I do
not consider allegations related to use of Modifier 59. Respondents have presented no
financial information for my consideration.

III. Conclusion

For the foregoing reasons, Respondents are liable for a CMP of $1,710,400, an
assessment of $1,057,251.67, and exclusion from Medicare, Medicaid, and all federal
health care programs for a minimum of ten years, all of which are reasonable sanctions.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Superior Oxygen & Medical Equipment, Inc.,
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-16-452
Decision No. CR4691

Date: August 26, 2016

DECISION

The Centers for Medicare & Medicaid Services (CMS), through its administrative
contractor, Palmetto GBA National Supplier Clearinghouse (NSC), revoked the Medicare
enrollment and billing privileges of Superior Oxygen & Medical Equipment, Inc.
(Superior Oxygen or Petitioner) because Superior Oxygen failed to inform CMS that it
opened a second location from which it was providing items to Medicare beneficiaries
and failed to enroll that new location in the Medicare program. Superior Oxygen
requested a hearing before an administrative law judge (ALJ) to dispute the revocation,
arguing that Superior Oxygen ceased providing items to Medicare beneficiaries from the
second location before CMS revoked Petitioner’s Medicare enrollment and billing
privileges. As explained below, I affirm CMS’s determination to revoke Superior
Oxygen because the undisputed facts establish that Petitioner provided items to Medicare
beneficiaries from a second location that was not yet enrolled in the Medicare program.

I. Background and Procedural History
Superior Oxygen was enrolled in the Medicare program as a supplier of durable medical

equipment, prosthetics, orthotics, and supplies (DMEPOS). In an October 22, 2015
initial determination, NSC revoked Superior Oxygen’s Medicare enrollment and billing
privileges for violations of 42 C.F.R. § 424.57(c)(1) and (2). CMS Exhibit (Ex.) 2.
Specifically, NSC alleged that Petitioner “failed to enroll and disclose to the NSC
additional locations used to service Medicare beneficiaries,” and NSC identified one of
these “additional locations” as “438 W. Duke St., Lancaster, PA 17602.”! CMS Ex. 2 at
2. NSC barred Superior Oxygen from re-enrolling in the Medicare program for one year.
CMS Ex. 2 at 3.

Superior Oxygen submitted a corrective action plan (CAP) to NSC, asserting that it had
submitted an enrollment application for its second location and was now in compliance
with all regulatory requirements. CMS Ex. 3. NSC denied the CAP stating that “NSC
was unable to verify receipt of a CMS 855S [enrollment] application for the location 438
[N.] Duke Street, Lancaster, PA.” CMS Ex. 5 at 2.

Superior Oxygen timely requested reconsideration of the revocation. CMS Ex. 4. In the
reconsideration request, Petitioner stated that in 2015 it had been operating from a second
location (438 North Duke Street, Lancaster, PA) based on the mistaken belief that it
could service Medicare beneficiaries using Superior Oxygen’s Medicare provider number
associated with its main practice location until CMS enrolled the second practice location
in the Medicare program. On July 9, 2015, during an inspection of Superior Oxygen’s
main practice location (545 Penn Avenue, West Reading, PA), an accreditation
“Compliance Team” informed Superior Oxygen that it needed to cease serving Medicare
beneficiaries from the 438 North Duke Street location until that location was accredited
and enrolled in the Medicare program. Petitioner asserted that it immediately stopped
serving Medicare beneficiaries at the 438 North Duke Street location and sought to obtain
accreditation. CMS Ex. 4 at 1-2. As it had stated in the CAP, Petitioner asserted that it
had filed a Medicare enrollment application for the 438 North Duke Street location (CMS
Ex. 4 at 1), but in an email to NSC, Petitioner clarified that it had not yet filed the
enrollment application because the new location was still in the process of being
accredited. CMS Ex. 7 at I.

' The record is inconsistent as to whether the address of Petitioner’s second location is
West Duke Street (CMS Ex. 2 at 2; CMS Ex. 3 at 4; CMS Ex. 5 at 2) or North Duke
Street (CMS Ex. | at 1, 3-7; CMS Ex. 4 at 1-3; CMS Ex. 7; CMS Ex. 10 at 1-3). In two
documents, both addresses are referred to interchangeably. CMS Ex. 8 at 2; CMS Ex. 9
at 3-6. I conclude that all references to Petitioner’s location on West Duke Street and
North Duke Street are to the same address. Further, I conclude that the correct address is
North Duke Street because almost all references to West Duke Street appear in NCS-
created documents, whereas North Duke Street appears on most of Petitioner’s
documents, including its enrollment application for that location, and on documents
proving the existence of that location. CMS Ex. 1 at 3-7; CMS Ex. 4 at 1-3; CMS Ex. 7;
CMS Ex. 10 at 1-3. Therefore, for the rest of this decision, I will refer to North Duke
Street as the correct address for Petitioner’s second location.
On March 11, 2016, an NSC hearing officer issued an unfavorable reconsidered
determination in which she concluded that Petitioner had violated 42 C.F.R.
§ 424.57(c)(1) and (2). CMS Ex. 9.

On April 1, 2016, Petitioner timely requested a hearing. On April 12, 2016, I issued an
Acknowledgement and Pre-hearing Order (Order). In response to the Order, CMS filed a
motion for summary judgment and brief (CMS Br.) with 10 exhibits (CMS Exs. 1-10).
Petitioner filed a brief in response (P. Br.). CMS then filed a reply brief (CMS Reply).

II. Decision on the Record

I admit CMS Exs. 1-10 into the record without objection. Order § 7; Civil Remedies
Division Procedures (CRDP) § 14(e).

The parties neither identified any proposed witnesses nor submitted any written direct
testimony for witnesses. Order § 8; CRDP §§ 16(b), 19(b). Therefore, I issue this
decision based on the written record. Order J 10-11; CRDP § 19(d).

III. Issue

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

IV. Jurisdiction

I have jurisdiction to hear and decide this case. 42 C.F.R. §§ 405.803, 498.3(b)(17),
498.5(1)(2); see also 42 U.S.C. § 1395ec(j)(8).

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

Exercising statutory authority, the Secretary of Health and Human Services (Secretary)
established both requirements for providers and suppliers to enroll in the Medicare
program and DMEPOS supplier standards. 42 U.S.C. §§ 1395m(j)(1)(B)(i), 1395¢ec(j);
42 C.F.R. §§ 424.57, 424.505-530. CMS revokes the Medicare billing privileges of a
DMEPOS supplier that violates the DMEPOS standards. 42 C.F.R. § 424.57(e)(1).

I. Superior Oxygen furnished items to Medicare beneficiaries from at least
May 2015, to July 9, 2015, from its location at 438 North Duke Street,
Lancaster, Pennsylvania; however, that location was not enrolled in the
Medicare program during that time period.

> My numbered findings of fact and conclusions of law appear in bold and italics.
In or about 2006, CMS enrolled Superior Oxygen in the Medicare program as a
DMEPOS supplier. Superior Oxygen’s enrolled physical location was at 545 Penn
Avenue, West Reading, Pennsylvania. CMS Ex. | at 2; see also CMS Ex. 2 at 1.

In May 2015, NSC received an anonymous complaint alleging that Superior Oxygen was
serving Medicare beneficiaries from its new second location at 438 North Duke Street,
Lancaster, Pennsylvania, but that Superior Oxygen’s Medicare billing for those
beneficiaries showed that the beneficiaries were being serviced from Superior Oxygen’s
address in West Reading, Pennsylvania. The complaint further stated that a review of
CMS’s National Plan & Provider Enumeration System (NPPES) showed that CMS did
not have a record of Superior Oxygen’s 438 North Duke Street location. CMS Ex. | at 1.
Enclosed with the complaint were the following documents: the NPPES entry for
Superior Oxygen, printed from the internet on April 14, 2015, showing its 545 Penn
Avenue address; a Whitepages entry for Superior Oxygen listing its address as 438 North
Duke Street, printed from the internet on April 14, 2015; a Yellow Pages advertisement
for Superior Oxygen’s 438 North Duke Street location, printed from the internet on April
14, 2015; an entry for Superior Oxygen’s 438 North Duke Street offices on
ttp://businessfinder.pennlive.com, printed from the internet on April 14, 2015; a sheet
showing search results on the internet search engine Bing for “Superior Oxygen in
Lancaster, Pennsylvania,” printed from the internet on April 14, 2015; and photographs
allegedly showing Superior Oxygen’s offices at 438 North Duke Street. CMS Ex. 1 at 2-
10.

Superior Oxygen did not dispute the truth of the statements in the May 2015 complaint.
On the contrary, Superior Oxygen admitted that it had been operating from 438 North
Duke Street, but ceased serving Medicare beneficiaries from that location on July 9,
2015. P. Br. at 1-2; CMS Ex. 3 at 4; CMS Ex. 4 at 1. Petitioner sought and obtained
accreditation of the 438 North Duke Street location, and then ultimately filed an
application in March 2016 to enroll that location in Medicare. CMS Ex. 7 at 1; CMS Ex.
10.

2. Superior Oxygen violated 42 C.F.R. § 424.57(c)(1) when it failed to operate
its business and furnish items under Medicare in compliance with
42 C.F.R. § 424.57(b)(1), which requires a DMEPOS supplier to enroll in the
Medicare program each physical location it uses to furnish Medicare-
covered items.

A DMEPOS supplier must operate its business and furnish Medicare-covered items in
compliance with “[f]ederal regulatory requirements that specify requirements for the
provision of DMEPOS ....” 42 C.F.R. § 424.57(c)(1)(i). In order for a DMEPOS
supplier to be eligible to receive payment for Medicare-covered items, it must submit an
enrollment application to CMS for each “separate physical location[] it uses to furnish
Medicare-covered DMEPOS ....” 42 C.F.R. § 424.57(b)(1). CMS issues a Medicare
billing number after CMS enrolls the supplier. 42 C.F.R. § 424.505. CMS issues one
supplier billing number per physical location that a DMEPOS supplier enrolls, and a
DMEPOS supplier may only receive payment for an “item furnished on or after the date
CMS issued to the supplier a DMEPOS supplier number conveying billing privileges.”
42 C.F.R. § 424.57(b)(2). CMS is prohibited from paying a DMEPOS supplier for
Medicare-covered items unless the supplier obtained billing privileges. 42 C.F.R.

§ 424.555(a).

The facts in this case are clear that Petitioner was enrolled as a DMEPOS supplier at its
545 Penn Avenue location, but opened a second location to serve Medicare beneficiaries
at 438 North Duke Street. Petitioner commenced using this second location no later than
May 2015 (i.e., the date of the complaint), but probably did so earlier than that given it
ad internet listings in place in mid-April 2015. CMS Ex. 1. Further, the complaint
against Petitioner asserted, and Petitioner admitted, that it served Medicare beneficiaries
at the 438 North Duke Street location, but billed using its supplier number from the 545
Penn Avenue location. CMS Ex. | at 1; CMS Ex. 7 at 2 (“Initially we were under the
assumption that we could bill at our secondary location under our main # until all
paperwork was submitted and processed for the second location to have its own provider
#.”); see also CMS Ex. 4 at 1 (“We were servicing Medicare patients at the second
location .... At that moment [on July 9, 2015], a phone call was made to our secondary
location to immediately stop dispensing any and all equipment to Medicare
beneficiaries.”). Therefore, I conclude that Petitioner failed to enroll its 438 North Duke
Street location in the Medicare program before furnishing Medicare-covered items to
beneficiaries in violation of 42 C.F.R. § 424.57(b)(1). Lalso conclude that 42 C.F.R.

§ 424.57(b)(1) is a DMEPOS regulatory requirement and that Petitioner’s violation of
that regulation necessarily means Petitioner violated 42 C.F.R. § 424.57(c)(1).°

Petitioner argues that CMS illegitimately revoked its Medicare billing privileges under
42 C.F.R. § 424.57(c)(1). Specifically, Petitioner asserts that it ceased selling Medicare-

> Although a violation of 42 C.F.R. § 424.57(b)(1) is sufficient grounds to revoke billing
privileges (42 C.F.R. § 424.57(e)(1)), the initial determination revoked Petitioner’s
Medicare enrollment and billing privileges based on Petitioner’s violation of 42 C.F.R.

§ 424.57(c)(1), due to a violation of 42 C.F.R. § 424.57(b)(1). CMS Ex. 2 at 1. The NSC
earing officer upheld this theory on reconsideration. CMS Ex. 9 at 4 (“The supplier
states that they were unclear as to when they were to submit the CMS 855S enrollment
application for the location of 438 W. Duke St., Lancaster, PA 17602, however, that does
not exclude them from following and adhering to federal regulations found in 42 C.F.R.
Section 424.57(c)(1). The application should have been submitted for the location
servicing Medicare patients at 438 W. Duke St., Lancaster, PA 17602.”). Although
unnecessary, NSC’s use of 42 C.F.R. § 424.57(c)(1) as the basis for revocation is not
erroneous.

covered items to beneficiaries on July 9, 2015, which was more than 3 months before
NSC issued the initial determination to revoke Petitioner’s Medicare enrollment and
billing privileges. Petitioner avers that it was in compliance with the regulations on the
date of the initial determination. Petitioner relies on text from a federal register notice,
73 Fed. Reg. 36,448, 36,452 (June 27, 2008), which states that “appeal rights are limited
to provider or supplier eligibility at the time the Medicare contractor made the adverse
determination.” P. Br. at 5-8.

As an initial matter, the context of the quoted material comes from public comments
received on a proposed regulatory requirement that providers and suppliers submit all
evidence in an enrollment case at the reconsideration stage of the appeals process, rather
than permit providers or suppliers to submit new evidence to an ALJ. The Secretary’s
response, which Petitioner quoted, is primarily aimed at indicating that providers and
suppliers cannot submit evidence of later compliance in order to obtain a reversal of an
adverse decision, but instead must prove that the basis for the adverse decision was
incorrect at the time the decision was made. As an example, the Secretary indicated that:

[I]f a Medicare contractor determines that a provider or supplier does not
meet State licensure requirements on June 1, 2007, it is the provider’s
responsibility to demonstrate during the appeals process that State licensure
requirements were met on June 1, 2007. Conversely, if a provider only can
demonstrate that State licensure requirements were met on a later date; such
as, August 16, 2007, we believe that the contractor made the correct
determination ....

73 Fed. Reg. at 36,452.

In the present case, Petitioner needs to show that its 438 North Duke Street location was
enrolled in the Medicare program on or before the date Petitioner commenced selling
Medicare-covered items to beneficiaries, or show that it did not sell Medicare-covered
items to beneficiaries from that location. However, Petitioner did not do this. Rather,
Petitioner asserted that it cured its violation of the regulations when it ceased furnishing
Medicare-covered items to beneficiaries.

The cessation of Petitioner’s conduct that violated the regulations provides no defense to
revocation. It may, however, provide Petitioner with the possibility that CMS will accept
its efforts to correct its past conduct as part of a CAP. In fact, Petitioner filed such a CAP
(CMS Ex. 3), but NSC denied the CAP. CMS Ex. 5. That denial is not subject to review
in this forum. 42 C.F.R. § 405.809(b)(2); see also 42 C.F.R. § 498.3(b); DMS Imaging,
Inc., DAB No. 2313 at 5-8 (2010). Therefore, Petitioner’s efforts to stop violating the
regulations in July 2015 play no part in my decision.
For the reasons stated above, I reject Petitioner’s argument that CMS could not revoke
Petitioner’s Medicare enrollment and billing privileges because Petitioner ceased to
violate 42 C.F.R. § 424.57(c)(1) by the time CMS issued its initial determination.

3. It is unnecessary for me to decide whether Superior Oxygen violated 42 C.F.R.
§ 424.57(c)(2).

As indicated above, I have concluded that Superior Oxygen violated 42 C.F.R.

§ 424.57(c)(1). One violation of the DMEPOS supplier standards is sufficient to require
CMS to revoke Medicare billing privileges. See 42 C.F.R. § 424.57(e)(1);
1866I1CPayday.com, L.L.C., DAB No. 2289 at 13 (2009) (“[F]ailure to comply with even
one supplier standard is a sufficient basis for revoking a supplier’s billing privileges.”).
Therefore, I need not determine whether a second violation of the DMEPOS supplier
standards occurred.

VI. Conclusion

1 affirm CMS’s revocation of Superior Oxygen’s Medicare enrollment and billing
privileges based on a violation of 42 C.F.R. § 424.57(c)(1).

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
St. Anthony’s Nursing and Rehabilitation Center,
(CCN: 14-5387),
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-16-203
Decision No. CR4690

Date: August 29, 2016

DECISION

I enter summary judgment in favor of the Centers for Medicare & Medicaid
Services (CMS) and against Petitioner, St. Anthony’s Nursing and Rehabilitation
Center. I sustain the imposition of civil money penalties against Petitioner of $750
per day for each day that runs from October 2, 2015 through November 18, 2015.

I. Background

Petitioner requested a hearing to challenge CMS’s determination. The case was
assigned originally to another administrative law judge and then transferred to me.
CMS moved for summary judgment. With its motion it filed a brief plus proposed
exhibits, which it identified as CMS Ex. 1-CMS Ex. 29. Petitioner filed a brief in
opposition to CMS’s motion plus proposed exhibits, which it identified as P. Ex.
1-P. Ex. 10. I receive all of the parties’ exhibits into the record for purposes of
deciding the motion for summary judgment.
II. Issues, Findings of Fact and Conclusions of Law
A. Issues

The issues in this case are whether undisputed material facts establish that
Petitioner failed to comply substantially with Medicare participation requirements
and whether CMS’s remedy determination is reasonable.

B. Findings of Fact and Conclusions of Law

CMS alleges that Petitioner failed to comply substantially with two Medicare
conditions of participation. First, CMS asserts that Petitioner failed to comply
with the requirements of 42 C.F.R. § 483.25. This section requires, among other
things, that a skilled nursing facility must provide each of its residents with the
necessary care and services to attain or maintain the highest practicable physical,
mental, and psychosocial well-being in accordance with that resident’s
comprehensive assessment and plan of care.

Second, CMS contends that Petitioner did not comply substantially with the
requirements of 42 C.F.R. § 483.60(b). In relevant part this regulation requires a
skilled nursing facility to employ a pharmacist who establishes a system of receipt
and disposition of all controlled drugs in sufficient detail to enable an accurate
reconciliation of the drugs. The pharmacist must also determine that drug records
are in order and that an account of all controlled drugs is maintained and
periodically reconciled.

CMS alleges that Petitioner failed to comply with the requirements of 42 C.F.R.
§ 483.25 in that it failed to provide incontinence care to a resident (R3) in
accordance with that resident’s comprehensive assessment and plan of care. The
undisputed material facts unequivocally support CMS’s contentions.

As a matter of law, a facility’s failure to follow a resident’s plan of care in
providing care to that resident is, on its face, substantial noncompliance with the
requirements of 42 C.F.R. § 483.25. Life Care Ctr. of Bardstown, DAB No. 2479
(2012) and decisions cited therein; Spring Meadows Health Care Ctr., DAB No.
1966, at 17 (2005). The first question that I consider in evaluating CMS’s
allegations is whether Petitioner adhered to the plan of care that it developed for
R3. I find that it did not.

The resident had a brief stay — from September 15 through September 23, 2015 —
at Petitioner’s facility. R3 was highly dependent on nursing staff to take care of
even the most basic of his daily needs. He was an elderly, extremely debilitated
individual whose illnesses and impairments included advanced dementia, chronic
kidney disease, peripheral neuropathy, dysphagia, and odynophagia (painful
swallowing). CMS Ex. 13 at 1. He was non-ambulatory and disoriented, with
poor/impaired memory and attention span, and had difficulty making choices.
CMS Ex. 18 at 6, 12-14.

Petitioner’s staff assessed R3 on admission to the facility. The staff noted that the
resident had a history of urinary tract infections and found him to be bladder
incontinent, needing assistance to reach the bathroom, and to manage his clothing.
CMS Ex. 18 at 9. Staff assessed him as only being sometimes aware of his
toileting needs and found him to be confused and needing physical assistance with
his toileting needs. Jd. The staff found the resident to be an appropriate candidate
for being put on a toileting schedule with timed voiding. Id.

The staff prepared an interim plan of care for R3 on September 15, 2015, that,
among other things, addressed the resident’s obvious incontinence issues. The
plan required that the resident receive timed toileting every two hours and as
needed and required also that he be checked for incontinence every two hours and
as needed. CMS Ex. 16 at 1. Also, on September 15, the staff received an order
from the resident’s treating physician, transmitted by telephone, that authorized
the resident to receive straight catheterization as needed. The order specifically
referred to urine retention as a problem that might justify catheterization. CMS
Ex. 15 at 3, 8.

Therefore, the undisputed facts of this case establish that Petitioner’s staff had
specific and clearly defined duties concerning R3’s incontinence and urinary
retention issues. The staff was obligated to check resident at least once every two
hours and they were required to toilet him at least every two hours pursuant to a
schedule. They were also under a doctor’s orders to assure that the resident did
not retain urine and to catheterize him as necessary.

The undisputed facts show that Petitioner’s staff failed to perform these duties.
The staff assessed the resident’s urinary tract issues sporadically at best during the
nine days that the resident was at Petitioner’s facility. On September 16 and 17
nursing notes show that the resident was continent of bowel and bladder. Another
note, on September 22, 2015, made reference to the resident wearing an
incontinence brief. CMS Ex. 17 at 2-3. There is one more note on September 20
in which a nurse observed that the resident had not urinated during her entire
eight-hour shift. /d. at 3. The nurse requested that the resident be monitored
during the next shift. However, there is nothing in Petitioner’s records showing
follow-up monitoring or assessments of the resident’s possible urine retention.
There is also nothing in the facility’s records showing that staff routinely assisted
R3 with timed voiding or that it checked him for incontinence at two-hour
intervals. Nor is there anything in the records showing that the staff ever
evaluated the resident for possible catheterization.

The plan of care for R3 specifically called for checking the resident for
incontinence at two-hour intervals and also for timed voiding every two hours.
The staff’s failure to document that it was providing these services to R3 is a clear
violation of the resident’s plan of care. The staff’s failure to evaluate R3 for
possible catheterization after the resident was reported not to have passed any
urine during an entire nursing shift contravened the resident’s physician’s order.
These violations of the plan of care and a physician’s order are on their face
noncompliance with 42 C.F.R. § 483.25.

But, more than that, they are omissions that put the resident at risk. That is the
second basis for me to find noncompliance with the requirements of 42 C.F.R.

§ 483.25, because in this case the undisputed material facts establish that
Petitioner’s omissions in providing care caused harm to R3. On September 23,
2015, R3 was transferred to another skilled nursing facility whose staff assessed
the resident. The staff found the resident to be in pain with an extremely distended
abdomen. CMS Ex. 10 at 9. That staff transferred the resident to an emergency
room where he was found to be suffering from acute urinary retention. Acute
urinary retention is a potentially life-threatening condition consisting of inability
to urinate despite having a full bladder. National Kidney and Urologic Diseases
Information Clearinghouse, Urinary Retention,
https://www.niddk.nih.gov/health-information/health-topics/urologic-
disease/urinary-retention/Documents/UrinaryRetention_508.pdf.

In excess of 2000 ml of urine was withdrawn from the resident at the emergency
room. CMS Ex. 10 at 1. That is equivalent to the amount of urine a person would
produce in a period ranging from one to three days. Medline Plus, Urine 24-hour
volume, https://www.nlm.nih.gov/medlineplus/ency/article/003425.htm (last
visited Aug. 24, 2016). The resident was suffering from acute renal failure, the
consequence of his urine retention. Jd.

The only reasonable inference that I can draw from the undisputed facts pertaining
to R3’s condition as of his transfer is that he had retained a massive quantity of
urine as a consequence of Petitioner’s staff’s failure to assess and treat the resident
for urinary retention, in contravention of the resident’s physician’s order. There is
no other possible explanation for the fact that the resident was found to be
retaining so much urine at the time of his transfer to another facility. That is
plainly a violation of the quality of care requirement of 42 C.F.R. § 483.25.
Alexandria Place, DAB No. 2245 (2009).

Petitioner offers several contentions and arguments intended to rebut CMS’s case
for summary judgment. I find these to be without merit. Petitioner argues first,
that its staff’s assessment of R3 and its plan of care for that resident did not require
the staff to monitor strictly the resident’s fluid intake and voiding because there is
nothing in the care plan that explicitly requires the staff to do so. Petitioner’s pre-
hearing brief at 4. That may be so, but the argument is a red herring. Petitioner’s
deficiencies do not consist of the staffs failure monitor the resident’s fluid intake
and voiding, but of the staff’s failure to comply with the plan of care’s explicit
requirement that the resident be toileted at two-hour intervals, and its failure to
comply with a doctor’s order to monitor the resident for signs of urinary retention
and to catheterize the resident as may have been necessary.

Second, Petitioner contends that there was no valid order for catheterization of R3
on an as needed basis during most of his stay at Petitioner’s facility, arguing that a
draft order for catheterization was not signed by the resident’s physician until
September 21, 2015. Petitioner’s pre-hearing brief at 4-5. That assertion begs the
question. There was a verbal order for catheterization issued on September 15 and
Petitioner’s staff recorded that order in their notes. CMS Ex. 15 at 3, 8.
Petitioner’s staff was authorized by a physician to catheterize R3 as needed during
his entire stay at Petitioner’s facility. And, of course, that order implicitly required
the staff to monitor the resident for signs of urinary retention.

Petitioner argues that this order merely reflects a nurse’s misunderstanding of
what the physician intended and was not the physician’s actual order. But, that
order — however it was generated — was plainly recorded in Petitioner’s staff notes.
The staff was obligated to follow that order or to at the least verify it. They did
neither.

Petitioner argues also that there is nothing in the resident’s record that suggests
that he ever needed to be catheterized during his stay. Petitioner’s pre-hearing
brief at 5. That is completely belied by the undisputed facts. First, and as I have
discussed, during at least one nursing shift, the resident failed to produce any
urine. That should have been a signal to the staff to consider catheterizing him
and yet, staff did nothing. CMS Ex. 10 at 3; CMS Ex. 17 at 2. Indeed,
Petitioner’s own director of nursing conceded that catheterization should have
been considered. CMS Ex. 10 at 3; CMS Ex. 17 at 12. Second, the resident
arrived at his new facility on September 23, 2015 with his abdomen swollen with
retained urine. The only reasonable inference that I can draw from that fact is that
the resident had been retaining urine for a prolonged period prior to his transfer.
Had the staff monitored the resident for urinary retention it should have observed
the resident’s condition. The only reasonable inference that I can draw from the
resident’s condition as of his transfer is that the staff did not monitor him.

Petitioner argues that its staff documented residents’ care “by exception,”
meaning, apparently, that the staff made no notations unless problems were
identified. Petitioner’s pre-hearing brief at 5-6. From that, Petitioner contends
that R3 must not have had problems during his stay because his record has few
notations.

That is obviously a self-serving argument. In evaluating a motion for summary
judgment I am obligated to assume that all facts alleged by a party are true and I
also required to give that party the benefit of all reasonable inferences that one
may draw from its alleged facts. But, that obligation does not impose on me the
duty to make flights of fancy. I am under no requirement to draw inferences that
are so far-fetched as to be completely unrealistic.

The undisputed facts establish this: the resident’s record is virtually devoid of
evidence showing that Petitioner’s staff provided him with the incontinence care
directed by the plan of care; there is nothing in his record showing that the staff
monitored him for urinary retention even in the face of evidence showing that a
nurse was concerned that he was retaining urine; and at the time of his transfer the
resident was found to be retaining a massive quantity of urine, with a distended
abdomen and in acute renal failure. Against these undisputed facts Petitioner
asserts that I should draw an inference that its staff provided all prescribed care
because they never recorded anything showing that they either did or did not
provide such care. That is a suggested inference that borders on fantasy and I
decline to draw it here.

Furthermore, it would be impossible to carry out the requirements of R3’s plan of
care if Petitioner’s staff did not faithfully chart the care that they gave to him. The
plan of care required documentation of interventions even if Petitioner’s general
policy was to document by exception. That is because the plan required that care
be delivered pursuant to a timed routine and it would have been impossible to
carry out that routine according to the plan without recording when care was
delivered.

How would anyone know whether the resident was checked for incontinence and
toileted at two-hour intervals if staff didn’t record their interventions? How would
a nurse at the beginning of a shift know whether the resident received the required
care in the previous shift if there was no record of him having received that care?
How would staff know when to toilet the resident next if no record were made of
the previous intervention? Documenting by exception — if that’s what Petitioner’s
staff did — clearly put the resident at peril because no one on staff would ever
know when previous interventions occurred or if someone simply forgot to
provide care.
I would be inclined to find Petitioner’s assertion that it charts “by exception” to be
utterly incredible were I to hold a hearing on the record. I make no such finding
here. Rather, my conclusion is that if the staff charts “by exception” they surely
missed overwhelming evidence showing that the resident was retaining massive
amounts of urine during his stay, so much so that he needed to be treated for urine
retention at a hospital immediately after his discharge from Petitioner’s facility.
Furthermore, the staff clearly missed signs of a serious problem when they failed
to react to the resident’s nonproduction of urine over an eight hour nursing shift.
Even Petitioner’s director of nursing admitted that. CMS Ex. 10 at 3; CMS Ex. 17
at 12.

Petitioner argues also its staff recorded no problems with R3 just prior to his
transfer. Petitioner’s pre-hearing brief at 7. From that argument it suggests that I
could infer that any problems that the resident had with urinary retention occurred
after he left Petitioner’s facility. But, that is not a reasonable inference. First,
there is nothing in the record to show that Petitioner’s staff actually checked R3
for urinary retention prior to his departure. Furthermore, upon his arrival at his
new facility, the resident was found to have retained a massive amount of urine,
more than 2 liters, in fact. That is up to as much as a three-days’ production of
urine. Given that, it is simply not reasonable to infer that the resident’s urinary
retention was a post-discharge development.

Finally, Petitioner contends that there was a gap of several hours between R3’s
transfer from its facility and his arrival at an emergency room for treatment of
urinary retention. From this, it asserts that it is speculative to conclude that the
resident was retaining urine as of his discharge from Petitioner’s facility, because
unknown intervening events could be the cause of his urinary retention. I find that
not to be a reasonable assumption. The quantity of urine retained by R3 was
massive — a quantity that consisted of up to three days’ production of urine — and
that cannot be explained by unknown intervening events. The only reasonable
inference that I can draw is that the resident retained urine while still at
Petitioner’s facility.

CMS predicates its assertion that Petitioner failed to comply substantially with the
requirements of 42 C.F.R. § 483.60(b) on allegedly undisputed facts showing that
Petitioner failed to comply with its own policy governing destruction of unused
controlled substances.

Petitioner has a policy covering destruction of unused controlled substances.
There must be two witnesses present when controlled substances are destroyed, in
order to assure that these drugs are not diverted. CMS Ex. 29, § 16. The
medication must be crushed and placed into a sharps container where it is mixed
with cat litter. CMS Ex. 25 at 1. Two licensed nurses must sign any record of
medication disposal. Id.

CMS asserts that on September 6, 2015, a nurse consultant asked a licensed
practical nurse to assist her in destroying some controlled substances. CMS Ex.
23 at 3. In the course of that activity, the nurse consultant asked the licensed
practical nurse to sign several controlled substance disposal account sheets, which
attested that a variety of controlled substances had been destroyed. CMS Ex. 26;
CMS Ex. 29, § 18. The licensed practical nurse did so, but in fact, she had not
witnessed the destruction of the medications listed on the account sheets. CMS
Ex. 29, § 18. In fact, only a small quantity of liquid Ativan was destroyed on
September 6. CMS Ex. 23 at 3.

These facts plainly establish noncompliance with the requirements of 42 C.F.R.
§ 483.60(b). The regulation requires a facility to have and to utilize a pharmacist-
designed plan for destruction of drugs. Here, Petitioner had a plan but it did not
follow it.

Petitioner concedes the facts alleged by CMS. Petitioner’s pre-hearing brief at 10.
However, it asserts that nothing that its staff did on September 6, 2015
contravened regulatory requirements. It argues that CMS does not allege that
Petitioner failed to employ the services of a pharmacist, failed to label drugs
correctly, or failed to store drugs correctly. /d. It argues, effectively, that
employing a pharmacist, labeling drugs, and storing them are all that is covered by
the regulation.

However, that argument avoids the explicit language of 42 C.F.R. § 483.60(b).
The regulation expressly requires a facility to have a system of records for receipt
and disposition of controlled substances. That language implicitly requires a
facility to implement any system that it develops. Otherwise the regulation’s
requirement would be meaningless.

Here, Petitioner failed to implement its own policy governing destruction of
controlled substances. Petitioner admits that. That is sufficient to establish
noncompliance with the regulation’s requirements.

Petitioner argues that, if it was noncompliant with regulatory requirements, I
should lower CMS’s scope and severity findings. I have no authority to do that.
See 42 C.F.R. § 498.3(b)(14).

I find to be reasonable CMS’s determination to impose civil money penalties of
$750 for each day of a period that began on October 2, 2015 and that ran through
November 18, 2015. Petitioner has challenged the daily amount of these penalties
but has not asserted that, if it was deficient it attained compliance on dates that are
earlier than those found by CMS. Consequently, there is no dispute as to the
duration of remedies.

As to amount, I find that penalties of $750 per day are entirely consistent with the
severity of Petitioner’s noncompliance and I uphold them for that reason. CMS
may impose penalties in a range of from $50 to $3000 per day to remedy
deficiencies that do not cause immediate jeopardy for residents, as is the case with
the deficiencies here. 42 C.F.R. § 488.438(a)(1)(ii). Daily penalties of $750 are
actually quite modest, comprising only 25 percent of the maximum amount that
CMS may impose for non-immediate jeopardy level noncompliance.

In determining penalty amount I may consider factors that include: the
seriousness of a facility’s noncompliance; its compliance history; its culpability;
and its financial condition. 42 C.F.R. §§ 488.438(f)(1)-(4), 488.404 (incorporated
by reference into 42 C.F.R. § 488.438(f)(3)). It is unnecessary that every factor be
present in a given case in order to justify a penalty amount.

The seriousness of Petitioner’s noncompliance, based on undisputed facts, is
sufficient to justify the modest penalties of $750 per day. I have found that
Petitioner’s noncompliance caused harm to R3. Not only was this helpless
individual in pain when he was discharged from Petitioner’s facility, but his
urinary retention — a potentially dangerous condition — had caused him to suffer
acute renal failure. That is more than enough to support the penalty amount.

Petitioner does not assert that it lacks the wherewithal to pay the penalties. It
contends, however, that its noncompliance (if it occurred) is of insufficient gravity
to justify the penalty amount. I disagree, for the reasons I have stated. It also
argues that it does not have a compliance history that would support penalties of
this magnitude. However, the undisputed facts show that Petitioner has a history
of noncompliance found at a survey that occurred also in 2015. CMS Ex. 4 at 1.
Finally, Petitioner asserts that there is no evidence showing that its staff was
culpable for its noncompliance.

I find it unnecessary to address the issues of compliance history and culpability in
order to affirm the penalty determination. As I have stated, the seriousness of
Petitioner’s noncompliance is sufficient to sustain the penalty amount.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Tara Lyn Justin,
(OI File No. H-15-43513-9)
Petitioner,
v.

The Inspector General.
Docket No. C-16-555
Decision No. CR4689

Date: August 19, 2016

DECISION

I sustain the determination of the Inspector General to exclude Petitioner, Tara Lyn
Justin, from participating in Medicare, State Medicaid, and all federally funded health
care programs for a minimum of five years.

I. Background

Petitioner requested a hearing in order to challenge the I.G.’s exclusion determination.
The L.G. filed a brief (I.G. Br.) in support of his determination, plus four proposed
exhibits that are identified as I.G. Ex. 1 —I.G. Ex. 4. Petitioner filed a brief (P. Br.) in
opposition. Neither the LG. nor Petitioner asked for an in-person hearing. I.G. Br. at 5;
P. Br. at 3. I receive into evidence I.G. Ex. 1 —I.G. Ex. 4 and decide the case based on
the parties’ written exchanges.
II. Issue, Findings of Fact and Conclusions of Law
A. Issue

The issue is whether Petitioner was convicted of a criminal offense as is defined by
section 1128(a)(1) of the Social Security Act (Act), thereby mandating that she be
excluded for at least five years.

B. Findings of Fact and Conclusions of Law

Section 1128(a)(1) of the Act mandates the exclusion of any individual who is convicted
of a criminal offense relating to the delivery of an item or service under Medicare or a
State Medicaid program. The minimum exclusion that must be imposed for a mandatory
exclusion is five years. Act § 1128(c)(3)(B).

The facts of this case establish unequivocally that Petitioner was convicted of an offense
within the meaning of section 1128(a)(1). Consequently, the law mandates that Petitioner
must be excluded for at least five years.

Petitioner was charged originally with felony and misdemeanor crimes in the State of
New York, specifically, with one felony count of falsifying business records and one
misdemeanor count of theft. She was charged with intent to defraud and to steal property
by making or causing false entries in her employer’s business records. 1.G. Ex. 2 at 1-2.
More specifically, she was charged with making false entries in notes regarding the care
that her employer, a home health agency, gave to a Medicaid beneficiary. Allegedly,
Petitioner falsified records in order to make it appear that she made visits to the
beneficiary’s home to supervise the providing of care to that beneficiary when, in fact,
she did not make those visits. I.G. Ex. 2 at 2. Petitioner eventually pled guilty to a
reduced charge of disorderly conduct, in violation of New York penal law, and was
sentenced to pay restitution. IG. Ex. 3; I.G. Ex. 4 at 4-5, 7.

Petitioner plainly was convicted of an offense relating to the delivery of items or services
reimbursable by the New York Medicaid program. Her crime was to defraud Medicaid
into paying for services that Petitioner did not provide. As part of the disposition of her
case, Petitioner paid restitution to the New York Medicaid Fraud Restitution Fund, a fact
that in and of itself demonstrates that Petitioner’s offense was related to the delivery of
health care items and services. I.G. Ex. 3; I.G. Ex. 4 at 4-5. Thus, Petitioner’s crime
does not just “relate to” Medicaid items or services, but it consists of actual fraud against
New York’s program. Such fraud is the essence of a section 1128(a)(1) offense.

Petitioner argues, however, that she was not convicted of a “criminal offense.” She
contends that the offense that she pled guilty to is not a crime under New York law but is
merely a “violation” within the meaning of that State’s law. P. Br. at 1-2. But,
Petitioner’s conviction is for a criminal offense within the meaning of section 1128(a)(1)
of the Act no matter how the State of New York may label it. What controls in
determining whether an individual is convicted of a criminal offense within the meaning
of section 1128(a)(1) is federal and not State law. Carolyn Westin, DAB No. 1381
(1993), aff'd, Westin v. Shalala, 845 F. Supp. 1446 (D. Kan. 1994); cf: U.S. v. Flores-
Rodriguez, 237 F.2d 405, 409-10 (2d Cir. 1956).

The offense of which Petitioner was convicted has all of the earmarks of a crime even if
the State of New York calls it something else. She pled guilty to an offense that carries
with it the potential of criminal penalties, including imprisonment. N.Y. Penal Law

§§ 240.20; 70.15(4). “Violations” under New York law are considered “offenses.” Jn re
W., 312 N.Y.S.2d 544, 546 (1970), aff'd sub nom. W. v. D., 28 N.Y.2d 589 (1971). “An
offense is in the nature of a crime and the same rules of law and procedure are to be
followed as where the defendant is charged with a crime[.] They are tried like
misdemeanors . . . and to them, as to offenses, there should be applicable the criminal-law
tules of presumption of innocence and necessity of proof of guilt beyond a reasonable
doubt.” People v. Marsh, 260 N.Y.S.2d 893, 896 (1965) (citations and internal quotation
marks omitted); People v. Hildebrandt, 308 N.Y. 397 (1955); People v. Gilbert, 12
N.Y.S.2d 632, 635 (1939). Indeed, the offense to which Petitioner pled guilty is codified
as a penal violation under New York Law. She was charged and her case was docketed
in a criminal court.

Petitioner argues that this case is distinguishable from the Westin decision because that
case involved charges of patient abuse under section 1128(a)(2) of the Act whereas this
one involves charges of fraud pursuant to section 1128(a)(1). That is a distinction
without a difference. Both sections of the Act are sections that provide for mandatory
exclusions based on criminal convictions for specified offenses. There is nothing in the
Act or in its history that suggests that Congress intended that something that is a crime
under section 1128(a)(2) might be something else under section 1128(a)(1).

/s/
Steven T. Kessel
Administrative Law Judge