Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Karen McDermott Minster, ) Date: November 24, 2009
)
Petitioner, )
)
-V.- ) Docket No. C-09-652
) Decision No. CR2031
The Inspector General. )
)
DECISION

I sustain the determination of the Inspector General (I.G.) to exclude Petitioner,
Karen McDermott Minster, from participating in Medicare and other federally
funded health care programs for a minimum of five years.

I. Background

Petitioner is a registered nurse. On June 30, 2009 the I.G. notified her that she had
been excluded from participating in Medicare and other federally funded health
care programs for at least five years. The statutory basis for exclusion cited by the
1.G. was section 1128(a)(3) of the Social Security Act (Act).

Petitioner requested a hearing and the case was assigned to me for a hearing and a
decision. I established a schedule for the parties to file briefs and proposed
exhibits. The LG. filed a brief and 10 proposed exhibits which are identified as
1.G. Ex. 1—1.G. Ex. 10. Petitioner filed a brief and six proposed exhibits which
are identified as P. Ex. | — P. Ex. 6. The I.G. filed a reply brief. Neither party has
objected to my admitting any of the proposed exhibits so I receive all of them into
evidence. Neither party requested that I convene an in-person hearing.
II. Issues, findings of fact and conclusions of law
A. Issue

The issue in this case is whether Petitioner was convicted of a criminal offense as
is defined at section 1128(a)(3) of the Act, thereby mandating her exclusion from
Medicare and other federally funded health care programs for a minimum period
of five years.

B. Findings of fact and conclusions of law

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

1. Petitioner was convicted of a criminal offense which is among
those described at section 1128(a)(3) of the Act.

Among other things section 1128(a)(3) mandates the exclusion of any individual
who is convicted of a criminal offense related to fraud, theft, embezzlement,
breach of fiduciary responsibility, or other financial misconduct in connection
with the delivery of a health care item or service.’ The I.G. asserts that Petitioner
was convicted of such a crime because she was convicted of fraud relating to
health care items or services that she perpetrated in the course of employment as a
nurse on the staff of a hospital.

On June 4, 2008, Petitioner entered a plea of nolo contendere in the Court of
Common Pleas of Allegheny County, Pennsylvania to a State felony offense
consisting of the acquisition or obtaining of possession of a controlled substance
by misrepresentation, fraud, forgery, deception or subterfuge, in violation of the
Pennsylvania Controlled Substance, Drug, Device, and Cosmetic Act, 35 P.S.

§ 780-113(a)(12). IG. Ex. 7, at 1; 1.G. Ex. 9, at 2. The charge to which
Petitioner entered her plea grew out of a criminal complaint that was issued
against her on January 31, 2008. I.G. Ex. 5, at 1. In it Petitioner was charged with
unlawfully diverting to her own use Demerol, a controlled substance, from
supplies maintained at the hospital which employed her. /d. at 3.

The evidence relied on by the LG. plainly describes a conviction which falls
within the reach of section 1128(a)(3) of the Act. First, Petitioner’s plea of nolo
contendere to State criminal charges constitutes a conviction for purposes of the

' The section applies only to offenses occurring after August 21, 1996.
There is no dispute in this case that the offense of which Petitioner was convicted
occurred in 2007.
Act. Section 1128(i)(3) states that a person is convicted of a criminal offense if a
court accepts a plea of nolo contendere from that individual.’ The Act also defines
a conviction to include an individual’s entry into a first offender, deferred
adjudication, or other arrangement or program where judgment of conviction has
been withheld. Act § 1128(i)(4).

Second, the crime to which Petitioner pled constitutes the crime of fraud
committed in connection with the delivery of a health care item or service. The
statute defining Petitioner’s crime explicitly applies to:

The acquisition, or obtaining of possession of a controlled substance
by misrepresentation, fraud, forgery, deception or subterfuge.

35 P.S. § 780-113(a)(12). Thus, in entering her plea Petitioner explicitly pleaded
to a crime involving fraud under Pennsylvania State law. The crime related to the
delivery of a health care item or service because of its setting and the nature of
Petitioner’s acts. She diverted controlled substances to her own use from a
hospital supply of those drugs. She would have had no access to the controlled
substances and no opportunity to divert them but for her position as a registered
nurse on the hospital’s staff. These controlled substances were health care items
or services because they were part of the hospital’s supply and because they had
no legitimate purpose other than to provide medical benefit to patients of the
hospital.

Petitioner argues that her conviction is not, in fact, a conviction for fraud,
deception, or subterfuge. Therefore, according to her, there is no basis for
excluding her pursuant to section 1128(a)(3).

Petitioner’s reasoning is, first, that the elements of her crime do not constitute
“fraud” as is commonly used in federal regulations, including regulations which
apply to aspects of the Medicare program or under Pennsylvania State law. See 42
C.F.R. § 455.2. She argues that fraud must include an element of deception or
misrepresentation with the intent to benefit another individual. She contends that
her crime involved no deception or misrepresentation and, therefore, cannot
constitute fraud. According to Petitioner, she never created or altered any
documents, never misled another individual, and did not deceive another or
conceal any information for any personal benefit. Petitioner argues additionally
that, under Pennsylvania law, her crime of diverting controlled substances could

> A person is convicted of a criminal offense for purposes of Section
1128(a)(3) even if his or her State or federal conviction is subsequently expunged.
Act § 1128(i)(1).
not amount to fraud or deception because she did not take her job at the hospital as
part of a scheme to obtain controlled substances.

I find these arguments to be unpersuasive. First, they ignore the fact that
Petitioner was convicted of the crime of fraud, deception or subterfuge under
Pennsylvania law. The I.G.’s authority to exclude Petitioner derives from that
conviction. I have no authority to now reopen it in order to decide whether the
facts of Petitioner’s case would have resulted in a conviction had she gone to trial
and the outcome — if unsuccessful — had been appealed through the Pennsylvania
court system.

Second, Petitioner’s arguments ignore the obvious. Petitioner engaged in acts of
obvious fraud and deception in order to divert controlled substances to her own
use. She misused her position as a registered nurse on the staff of a hospital to
gain access to and to divert controlled substances to her benefit. She could only
have accomplished that diversion by commingling her unlawful actions with the
performance of her official nursing duties and by deceiving her co-workers and
supervisors concerning her true intent and her acts. That is fraud by any definition
of the term.

2. Petitioner’s exclusion for a minimum of five years is
mandatory.

Exclusions that are imposed pursuant to any of the subparts of section 1128(a) of
the Act must be for at least five years. Act § 1128(c)(3)(B). The LG. is required
to exclude Petitioner for at least five years as a consequence of her conviction of
an 1128(a)(3) offense. Consequently, the minimum five-year exclusion that the
1.G. determined to impose against Petitioner is reasonable as a matter of law.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)

Heritage Park Rehabilitation and ) Date: NOV 12 2009
Nursing Center (CCN: 45-5599), )
)
Petitioner, )
)

-V.- ) Docket No. C-09-648

) Decision No. CR 2028
Centers for Medicare & Medicaid )
Services. )
)

DECISION

For the reasons set forth below, I dismiss as untimely the hearing request filed by
Petitioner, Heritage Park Rehabilitation and Nursing Center (hereafter Petitioner or
facility).

I. Background
The following facts are not in dispute.

Petitioner, located in Austin, Texas, dually participates as a long-term care facility in the
Medicare and Medicaid programs. On March 11, 2009, the Texas Department of Aging
and Disability Services (TDADS) completed a complaint and incident investigation of
Petitioner and cited substantial noncompliance with three Medicare participation
requirements. Centers for Medicare & Medicaid Services (CMS) Motion to Dismiss at |;
Petitioner (P.) Response to Motion to Dismiss at 1. On April 7, 2009, CMS sent
Petitioner a letter (CMS Notice Letter) notifying Petitioner that CMS concurred with
TDADS’s findings of substantial noncompliance. CMS Motion to Dismiss at 2; P.
Response to Motion to Dismiss at 2. The CMS Notice Letter informed Petitioner of the
remedies imposed as a result of the noncompliance and further advised Petitioner that if it
disagreed with the determination of noncompliance, Petitioner could make a written
request for a hearing to the Departmental Appeals Board “no later than June 6, 2009 (60
days from the date of the receipt of [the notice] letter via fax).””, CMS Motion to Dismiss
at 2; P. Response to Motion to Dismiss at 2. The letter also pointed out the procedural
rules governing the hearing process, 42 C.F.R. § 498.40 ef seq., and told Petitioner that its
request for hearing should “identify the specific issues, and the findings of fact and
conclusions of law” with which Petitioner disagrees and should specify the bases “for
contending that the findings and conclusion are incorrect.” CMS Ex. 1.

On June 17, 2009, CMS sent Petitioner a letter advising them that the deficiencies cited
during the March 11 survey had been corrected and the facility had come back into
substantial compliance. CMS indicated that the per instance CMP of $2000 was imposed
on April 7, 2009 and remained in effect and that CMS was rescinding the proposed
termination and denial of payment remedies. CMS further informed Petitioner that,

Our records indicate that no appeal (or waiver of appeal rights) had

been filed on your behalf regarding this action by June 6, 2009, the sixtieth day as
referred to in the initial CMS letter for filing of appeals. . .Therefore, the entire
civil money penalty in the amount of $2,000.00 is due-and-payable on July 2,
2009.

CMS Ex. 2 (June 17, 2009 CMS Letter) to Motion to Dismiss at 1; emphasis in original.

By letter dated August 6, 2009, Petitioner sent the Departmental Appeals Board a copy of
the “Request for Formal Hearing,” TDADS Form 3646, which was sent to TDADS
Hearings Department. On August 12, 2009, the Civil Remedies Division acknowledged
the receipt of Petitioner’s letter and docketed this matter as C-09-648. On October 5,
2009, CMS filed this Motion to Dismiss arguing that under the applicable regulations
Petitioner’s hearing request is both untimely and does not meet the content requirements.!
On October 26, 2009, Petitioner filed its response.

' CMS accompanied its Motion and brief with two exhibits (CMS Ex. | and 2).
Those exhibits are copies of the CMS notice letters and the fax transmissions for those
letters. Petitioner submits its response to the Motion to Dismiss together with a Motion
for Leave to File a Request for Hearing and Motion for Leave to Amend Request for
Hearing together with seven exhibits (P. Exs. 1-7). P. Exs. 3 through 7 are documents
relating to counsel for Petitioner’s divorce proceedings. P. Ex. | and 2 are copies of the
April 7 Notice Letter and Petitioner’s August 6, 2009 request for hearing.
II. Discussion

A. Petitioner is not entitled to a hearing because it did not file a hearing
request and no good cause justifies extending the time for filing.’

Petitioner does not dispute that its hearing request was untimely; Petitioner does not
contest that the deadline for filing its hearing request was June 6, 2009.

Section 1866(h) of the Social Security Act authorizes administrative review of
determinations that a provider fails to comply substantially with Medicare program
requirements “to the same extent as is provided in section 205(b) [of the Act].” Under
section 205(b), the Secretary must provide reasonable notice and opportunity for a
hearing “upon request by [the affected party] who makes a showing in writing that his or
her rights may be prejudiced” by the Secretary's decision. The hearing request “must be
filed within sixty days” after receipt of the notice of CMS’s determination (emphasis
added). Act § 205(b). The 60 day time limit is thus a statutory requirement. See Cary
Health and Rehabilitation Center, DAB No. 1771, at 8 - 9 (2001).

Similarly, the regulations mandate that “the affected party or its legal representative must
file the request in writing within 60 days from receipt of the notice . . . unless that period
is extended... .” 42 C.F.R. § 498.40(a). On motion of a party, or on his or her own
motion, the administrative law judge (ALJ) may dismiss a hearing request where that
request was not timely filed and the time for filing was not extended. 42 C.F.R.

§ 498.70(c). Under § 498.40(a)(2) receipt is “presumed to be 5 days after the date on the
notice unless there is a showing that it was, in fact, received earlier or later.”

Here, the language in CMS’s notice letter is clear and unconditional: Petitioner’s appeal
had to be filed within 60 days of receipt, and, because the notice was sent by facsimile
machine, it was, in fact, received on the date it was sent. Thus, to challenge the March
11, 2009 survey findings, Petitioner’s hearing request had to be filed no later than June 6,
2009.

Both parties agree that Petitioner’s August 6, 2009 hearing request was untimely. In fact,
it was filed almost four months after receipt of the CMS Notice letter, and, absent a
showing of good cause for my granting an extension of time in which to file it, it should
be dismissed pursuant to 42 C.F.R. § 498.70. Petitioner, however, contends that I should

2 My findings of fact and conclusions of law are set forth, in italics and bold, in
the discussion captions.

> Not only was Petitioner’s hearing request sent almost four months after
Petitioner received CMS’s April 7, 2009 Notice letter, it was also sent almost two months
after CMS’s letter dated June 17, 2009 to Petitioner. That letter demanded payment of
the CMP of $2000 because no appeal had been filed by the June 6 deadline and the
grant an extension of time for the filing of the hearing request for good cause shown for
its failure. P. Response to Motion to Dismiss at 2. Petitioner acknowledges that “good
cause” has been interpreted under the case law to mean circumstances beyond a party’s
control which intervened to prevent the party from making a timely hearing request. See
Hospicio San Martin, DAB CR387 (1995), aff'd DAB No. 1554 (1996). P. Response to
Motion to Dismiss at 2. Petitioner claims that at the time the CMS notice letter was
received by Petitioner and forwarded to its Attorney (Romano), Attorney Romano was in
the midst of his own personal divorce proceedings and the events of that proceeding
distracted Petitioner’s counsel from filing the request for hearing by the requisite
deadline. Petitioner, therefore, contends that the “personal life events” of its attorney
were beyond the ability of Petitioner to control and should therefore constitute good
cause so that I may grant an extension of time for filing the hearing request. P. Response
to Motion to Dismiss at 2-3.

I disagree. I have reviewed the undisputed facts and find that Petitioner’s reasons do not
constitute good cause under any reasonable definition of that term. Attorney Romano’s
failure was not beyond Petitioner’s ability to control. Rather, the failure of Petitioner’s
attorney to meet the clear and unambiguous filing deadline constitutes avoidable human
error. Petitioner could have filed the hearing request without counsel but it chose to be
represented by counsel and chose its attorney. It received CMS’s notice letter and knew
the filing deadline, and it could have had some oversight over its attorney. Moreover,
Petitioner clearly had notice that an appeal had not been filed by the requisite deadline
when it received the June 17 letter from CMS. Instead of immediately contacting CMS
and this office, Petitioner did nothing. Moreover, it still entrusted its attorney, who did
not timely file the appeal in the first instance, and that attorney took another two months
before filing the hearing request.

The applicable regulations do not define “good cause” but leave that determination to the
discretion of the ALJ. Looking to regulations governing certain Social Security benefit
appeals for guidance, many ALJs have ruled that “good cause” means circumstances
beyond a party’s ability to control. See, e.g., Hillcrest Healthcare, L.L.C., DAB CR976
(2002), aff'd DAB No. 1879 (2003); Hammonds Lane Center, et al., DAB CR913 (2002),
aff'd DAB No. 1853 (2002); Glen Rose Medical Center, DAB CR918 (2002), aff'd, DAB
No. 1852 (2002); Parkview Care Center, DAB CR785 (2001); Hospicio San Martin,
DAB CR387 (1995), aff'd, DAB No. 1554 (1996); 20 C.F.R. § 404.911; 20 C.F.R. §
404.933(c).4 My determination that Attorney Romano’s failure is not good cause is

amount of the CMP, therefore, was due and payable to CMS. Even after it received the
June 17 letter, Petitioner still did not file a hearing request for 50 more days and made no
attempt to contact CMS or the Departmental Appeals Board.

* Under those regulations, to determine whether good cause exists, the ALJ
considers 1) the circumstances that kept Respondent from making the request on time; 2)
whether any SSA action misled him; 3) whether Respondent understood the requirements
supported and consistent with other decisions that found that an attorney’s failure to meet
a filing deadline is avoidable human error and not “good cause.” Nelson Ramirez-
Gonzalez, DAB CR175 (1992); Bruce Franklin, R. Ph., DAB CR1198 (2004);
Community Care Center of Seymour, DAB CR758 (2001); Sedgewick Health Care
Center, DAB CR596 (1998); Jackson Manor Health Care, Inc., DAB CR545 (1998); see
also Karen Kay Parham, DAB CR1600 (2007), aff'd App. Div. Dkt. No. A-07-109
(2007).

TI. Conclusion
Because Petitioner did not timely file its hearing request, and no good cause justifies

extending the time for filing, 1 grant CMS’s motion and order this case dismissed.
42 C-F.R. § 498.70(b).

/s/ Alfonso J. Montafio
Administrative Law Judge

for filing; and 4) whether Respondent had any physical, mental, educational, or linguistic
limitation that prevented him from filing a timely request, or from understanding or
knowing about the need to file a timely request for review. 20 C.F.R. § 404.911. Here,
there were no circumstances that kept Petitioner from making a timely request; there was
no CMS action that was misleading; the requirements for filing were clear and
unambiguous; and since Petitioner is an entity, there were no physical, and mental
limitations that prevented a timely filing.


Department of Health and Human Service
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

)
In the Case of: )
)
Texan Nursing & Rehabilitation of ) Date: November 10, 2009

Amarillo, LLC (CCN: 67-6010), )
)

Petitioner, ) Docket No. C-07-654

) Decision No. CR2024
v. )
)
Centers for Medicare & Medicaid Services. )
)

DECISION

Texan Nursing & Rehabilitation of Amarillo, LLC (Petitioner) was not in substantial
compliance with Medicare participation requirements as alleged by the Centers for
Medicare and Medicaid Services (CMS) based on a survey of Petitioner’s facility
completed on January 5, 2007, and the noncompliance continued through July 16, 2007.
Therefore, CMS was required to impose a statutory denial of payment for new
admissions (DPNA) effective from April 5, 2007 through July 15, 2007.

I. Background

Petitioner, located in Amarillo, Texas, is authorized to participate in Medicare as a skilled
nursing facility (SNF) and in the state Medicaid program as a nursing facility (NF).
Petitioner was subject to surveys by the Texas Department of Aging and Disability
Services (the state agency) completed on January 5, 2007, February 6, 2007, April 19,
2007, and June 22, 2007. Joint Stipulation filed November 21, 2007 (Jt. Stip.).

The state agency sent Petitioner a notice dated January 22, 2007, advising inter alia, of
the finding of noncompliance based on the January 5, 2007 survey; that Petitioner had to
return to substantial compliance within three months of the last day of the survey or a
DPNA pursuant to 42 C.F.R. § 488.417(b)(1)! would be triggered effective April 5, 2007;
and that Petitioner had until March 24, 2007 to request a hearing before an administrative
law judge (ALJ). The notice stated that the DPNA would “be effectuated on [April 5,
2007] unless you demonstrate substantial compliance with an acceptable plan of
correction and subsequent revisit.” Petitioner’s Response to CMS Motion to Partially
Dismiss Petitioner’s Hearing Requests and Motion for Extension of Time to File Request
for Hearing filed October 16, 2007 (P. Response to Motion to Dismiss), Exhibit (Ex.) A.”

The state agency notified Petitioner by letter dated February 21, 2007, that another survey
was completed at Petitioner’s facility on February 6, 2007, which found that Petitioner no
longer met state license requirements and that Petitioner was not in substantial
compliance with federal participation requirements. The state agency advised that it was
recommending that CMS impose alternative remedies including an optional DPNA’ that
would be effective 15 days from the date of a CMS notice of imposition of the remedy, a
per instance civil money penalty (PICMP) related to one deficiency cited by the February
6 survey, and termination of Petitioner’s provider agreement and participation in
Medicare. The state agency specifically stated in its notice that it was not providing
ormal notice of imposition of a remedy and that a formal notice would be issued by
CMS. The state agency did not make any reference to the statutory DPNA that was
going to be triggered effective April 5, 2007, or provide Petitioner any notice of a right to
appeal. P. Response to Motion to Dismiss, Ex. B.

The state agency notified Petitioner by letter dated May 2, 2007, that another survey of
Petitioner’s facility was completed on April 19, 2007, which found that Petitioner did not
meet state license requirements and that Petitioner was not in substantial compliance with
ederal participation requirements. The state agency advised Petitioner that the
recommendations to CMS for enforcement remedies set forth in its January 22, 2007
letter were unchanged. The state agency was in error by its reference to the January 22
letter as that letter only made one recommendation and that was that Petitioner’s provider

' References are to the version of the Code of Federal Regulations (C.F.R.) in
effect at the time of the surveys, unless otherwise indicated.

* The state agency letters dated January 22, February 21, May 2, and July 9, 2007
were also submitted with the CMS Motion to Partially Dismiss Petitioner’s Hearing
Requests filed September 27, 2007, and they were marked as CMS Exhibits (Exs.) 1
through 4, respectively. Transcript (Tr.) 23.

*CMS (administers the federal Medicare program) and the state (administers the
state Medicaid program) have authority to impose an “optional” DPNA pursuant to 42
C.F.R. § 488.417(a), which is not the same as the “mandatory” DPNA required by the
Social Security Act (Act), section 1819(h)(2)(D), and 42 C.F.R. § 488.417(b).
agreement be terminated not later than six months from January 5, 2007, if Petitioner did
not achieve substantial compliance by that date. The state agency did not give Petitioner
notice of the imposition of any enforcement remedies by its letter dated May 2, 2007, or

provide any advice as to appeal rights. P. Response to Motion to Dismiss, Ex. C.

The state agency sent Petitioner another notice letter dated July 9, 2007. Petitioner was
advised that another survey was completed on June 22, 2007. Based upon the survey, the
state agency concluded that Petitioner did not meet state license requirements and that
Petitioner was not in substantial compliance with federal participation requirements. The
state agency advised Petitioner that it was changing its recommendation to CMS
regarding remedies based on four new deficiencies and the seriousness of the
noncompliance found by the June 22, 2007 survey. The state advised in its letter that it
recommended to CMS immediate imposition of termination effective August 6, 2007; an
optional DPNA pursuant to 42 C.F.R. § 488.417(a) effective 15 calendar days after notice
from CMS;* and a PICMP based upon one deficiency from the June 22 survey. The state
agency specifically states in its letter that it was not providing formal notice of imposition
of these remedies and that formal notice, if any, would be given by CMS. The state did
include in its letter advice that Petitioner could request a hearing by an ALJ no later than
September 7, 2007. P. Response to Motion to Dismiss, Ex. D.

There is no dispute that the first notice from CMS to Petitioner was a letter dated August
2, 2007. CMS Ex. 1, at 1-3. CMS advised Petitioner in its letter that the state agency
found Petitioner not in substantial compliance based on the survey of Petitioner’s facility
completed on January 5, 2007. The letter stated further, in bold text as reproduced here:

On February 6, April 19, and June 22, 2007, other visits
(conducted by the Survey Agency) demonstrated that
your facility failed to achieve substantial compliance.*

CMS Ex. 1, at 1. CMS listed the following surveys and the regulatory violations alleged
by the surveyors that had the potential for more than minimal harm:

* The actual language of the notice is “Continue Denial of Payment for New
(Medicare/Medicaid) Admissions . . . .” However, the cited language is clearly in error
as there is no evidence that an optional DPNA was ever started and there is no dispute
that CMS gave no notice of the imposition of an optional DPNA.

* T learned at hearing that this language is extremely misleading. While it suggests
that the surveys that concluded on February 6 and April 19, 2007, were revisit surveys
that determined that Petitioner had not returned to substantial compliance, CMS advised
me at hearing that the two surveys were actually complaint investigations that did not
review whether Petitioner had corrected deficiencies from prior surveys. Tr. 23-26, 28,
32-33, 41.
Survey Completion Date Alleged Regulatory
Violations
42 C.F.R. § 483.25(h)(2)
January 5, 2007 42 C.F.R. § 483.25(i)(1)

42 C.F.R. § 483.35(e)

42 CFR. § 493.10(b)(11)
42 CFR. § 483.13(c)(1)-(4)
42 CFR. § 483.13(c)
February 6, 2007 42 C.F.R. § 483.20(k)(3)(i)
42 CFR. § 483.35(c)
42 C.F.R. § 483.35(i)(2)

42 CFR. § 483.75(1)(1)&(5)
42 CFR. § 483.15(h)(2)

April 19, 2007 42 CFR. § 483.75(
42 CFR. § 483.10(b)(11)
June 22, 2007 42 C.F.R. § 483.13(c)

42 CFR. § 483.13(c)(1)-(4)
42 CFR. § 483.20(k)(3)(i)

The CMS letter advised Petitioner that Petitioner was determined to have returned to
substantial compliance with federal participation requirements effective July 22, 2007;
that the termination of Petitioner’s provider agreement was rescinded; that CMS was
imposing a PICMP of $3000 based upon the alleged violation of 42 C.F.R.

§ 483.20(k)(3)(i) and a PICMP of $3100 based upon the alleged violation of 42 C.F.R.

§ 483.13(c), both of which were cited by both the February 6 and June 22, 2007 surveys;
and that a DPNA was in effect from April 5 through July 21, 2007. CMS Ex. 1, at 2.

Petitioner requested a hearing by letter dated August 15, 2007. In its request for hearing,
Petitioner specifically challenged the deficiency findings from all four surveys and all
enforcement remedies based upon the alleged deficiencies. The case was assigned to me
for hearing and decision on September 7, 2007. A Notice of Case Assignment and
Prehearing Case Development Order (Prehearing Order) was issued at my direction on
September 7, 2007.

CMS notified Petitioner by letter dated September 25, 2007, that after further
administrative review, it was changing the remedies and/or penalties cited in its notice
dated August 2, 2007. The two $3100 PICMPs imposed for the alleged violations of 42
C.F.R. §§ 483.13(c) and 483.20(k)(3)(i) were rescinded. However, CMS advised
Petitioner that it had determined to impose PICMPs totaling $11,750 for the alleged
violations of 42 C.F.R. §§ 483.10(b)(11) ($4025), 483.20(k)(3)(i) ($4725), 483.25(i)(1)
($2000), and 483.75(f) ($1000). CMS advised Petitioner that the proposed termination of
its provider agreement was rescinded. CMS also advised Petitioner that the DPNA in
effect April 5 through July 21, 2007, was unchanged. CMS Ex. 1, at 4. CMS notified
Petitioner by letter dated October 1, 2007, that after further administrative review, it was
changing the remedies and/or penalties cited in its notice dated August 2, 2007, and that
this notice superseded the notice dated September 25, 2007. CMS advised Petitioner that
the two PICMPs imposed for the alleged violations of 42 C.F.R. §§ 483.13(c) and
483.20(k)(3)(i) were rescinded. However, CMS advised Petitioner that it had determined
to impose PICMPs totaling $11,750 for the following alleged violations from the surveys
indicated:

42 C.F.R. § 483.25(i)(1) ($2000) — January 5, 2007 Survey

42 C.F.R. § 483.10(b)(11) ($2000) — February 6, 2007 Survey
42 C.F.R. § 483.20(k)(3)(i) ($2700) — February 6, 2007 Survey
42 C.F.R. § 483.75(f) ($1000) — April 19, 2007 Survey

42 C.F.R. § 483.10(b)(11) ($2025) — June 22, 2007 Survey

42 CFR. § 483.20(k)(3)(i) ($2025) — June 22, 2007 Survey

CMS stated in its notice that the termination action remained rescinded and the DPNA
from April 5 through July 21, 2007 was unchanged. CMS Ex. 1, at 5.

On September 27, 2007, CMS filed a “Motion to Partially Dismiss Petitioner’s Hearing
Request.” CMS requested that I dismiss Petitioner’s request for hearing to the extent that
Petitioner sought review of the deficiencies that were the basis for the imposition of the
statutory DPNA. On October 16, 2007, Petitioner filed its response in opposition and
alternative motion for an extension of time to file its request for hearing. On November
13, 2007, I granted the CMS motion for partial dismissal as to the deficiencies alleged by
the survey of Petitioner’s facility completed on January 5, 2007, to the extent they were
the basis for the imposition of the statutory DPNA. However, I advised the parties that I
would consider whether or not Petitioner returned to substantial compliance on or before
the survey completed on February 6, 2007 or any of the subsequent surveys. I further
concluded in my ruling on the CMS motion that Petitioner’s request for hearing was
timely as to the alleged deficiencies cited by surveys completed on February 6, April 19,
and June 22, 2005, and the enforcement remedies based on those surveys, because the
first notice of an initial determination related to those surveys and remedies was the CMS
letter dated August 2, 2007. My ruling did not dismiss the request for hearing as to one
deficiency from the January 5, 2007 survey, the alleged violation of 42 C.F.R. §
483.25(i)(1) which was the basis for a PICMP, because Petitioner first received notice of
that initial determination on September 25 and October 1, 2007. The alleged violation of
42 C.F.R. § 483.25(i)(1) from the January 5, 2007 survey also happened to be the only
alleged deficiency not found corrected prior to April 5, 2007 (the effective date of the
statutory DPNA), when the state agency finally conducted its revisit

survey on July 22, 2007.° P. Ex. 5, at 2. Thus, the ruling granting partial dismissal did
not preclude my review of the alleged violation of 42 C.F.R. § 483.25(i)(1) as the basis
for an enforcement remedy. Petitioner’s January 11, 2008 motion to reconsider was
denied by a ruling I issued on March 3, 2008, and in which I commented for the benefit
of the parties that review of the alleged violation of 42 C.F.R. § 483.25(i)(1) from the
January 2007 survey was not precluded.

On November 21, 2007, CMS filed a motion for partial summary judgment. Petitioner
filed its response to the CMS motion on December 27, 2007. On January 28, 2008, I
denied the CMS motion for partial summary judgment. On February 20, 2008, I denied
the February 6, 2008 CMS motion for reconsideration.

On March 3, 2008, CMS moved to dismiss Petitioner’s request for hearing in its entirety.
CMS also notified Petitioner by letter dated March 3, 2008, that after further
administrative review, CMS determined to change the remedies and/or penalties cited in
its notices of September 25 and October 1, 2007. CMS advised Petitioner that the
PICMPs based upon the deficiencies cited by the February 6, 2007 survey, the April 19,
2007 survey, and the June 22, 2007 survey were rescinded. CMS advised Petitioner that
the statutory DPNA “imposed and effective from April 5, 2007 through July 21, 2007 is
NOW REVISED to April 5, 2007 through July 16, 2007.” (Emphasis in original.) CMS
advised Petitioner that the proposed termination of Petitioner’s provider agreement was
rescinded and that the PICMP based upon the alleged deficiency from the January 5,
2007 survey remained. CMS Ex. 44. CMS notified Petitioner by letter dated March 4,
2008, that after further administrative review, all PICMPs previously imposed were
rescinded. CMS Ex. 43. CMS filed a revised motion to dismiss on March 4, 2008, at
hearing; Petitioner responded at hearing; and a lengthy discussion of the motion and the
parties’ positions is reflected in the transcript. Tr. 17-71. After considering the
arguments of the parties and the additional evidence presented related to the motion at
hearing, I modified my ruling of November 13, 2007 granting the CMS motion for partial
dismissal and denied the CMS motion to dismiss. Tr. 66-71, 482-85. Although I
modified my prior ruling and denied the CMS motion to dismiss, there was no change to
my earlier conclusion that Petitioner preserved the right of review as to the alleged
violation of 42 C.F.R. § 483.25(i)(1) from the survey that concluded on January 5, 2007.

° The surveyors found that the other two deficiencies cited by the survey
completed on January 5, 2007, were corrected as of February 16, 2007, but that the
violation of 42 C.F.R. § 483.25(i)(1) was not corrected until July 16, 2007. Petitioner’s
Exhibit (P. Ex.) 5, at 1.
The hearing was conducted in Amarillo, Texas on March 4 through 6, 2008. A transcript
was prepared.’ CMS Exs. 1 through 44 were admitted as evidence. Tr. 73, 105, 481. P.
Exs. | through 10 and 14 were admitted as evidence. Tr. 80, 426. CMS called as
witnesses: Barbara Courson, Nutritionist Surveyor; Delbra Edwards, Registered Nurse
(R.N.) Surveyor; Cynthia Mathis, R.N. Surveyor; and Dan Osterweil, M.D. Petitioner
called as witnesses: Jeffrey Reeh, President of Texan Health Care, LLC; Tammy
Sundblom, Licensed Vocational Nurse (L.V.N.); TraJa Alanis, R.N.; Sandra Sweat; and
Kenneth Rice, M.D., Petitioner’s Medical Director. The parties filed post-hearing briefs
and post-hearing response briefs.

Petitioner offered with its post-hearing response brief (P. Response) documents marked

P. Ex. 15, 1-9. Petitioner argues that it assumed prior to hearing that it would not be
permitted to challenge any findings from the January 5, 2007 survey; that it was surprised
by CMS’s proposed findings related to the alleged violation of 42 C.F.R.

§ 483.25(i)(1) (Tag F325); and that CMS did not present the complete record for

Resident | related to the alleged regulatory violation. Petitioner objects specifically to
proposed findings of CMS and requests that if the proposed findings are considered that I
admit and consider P. Ex. 15 as evidence. P. Response at 1-3. Petitioner also attached to
its response brief marked as P. Response Brief Ex. | an article, Stephen Sidney, M.D., et.
al. “COPD and Incident Cardiovascular Disease Hospitalizations and Mortality: Kaiser
Permanente Medical Care Program” 128 Chest 2068-75 (2005), which Petitioner
requests I consider. Petitioner had no reason to assume that it would not be permitted to
present evidence as to the alleged violation of 42 C.F.R. § 483.25(i)(1) from the January
5, 2007 survey, as I specifically stated in my ruling on November 13, 2007 granting the
CMS motion for partial dismissal and my later ruling denying reconsideration that I
would consider the alleged violation. Petitioner was provided the CMS proposed exhibits
through the prehearing exchange process, Petitioner was served with the CMS prehearing
brief, and Petitioner had the Statement of Deficiencies from the January 5, 2007 survey,
thus, Petitioner was on notice of CMS’s theory as to the alleged violation well in advance
of hearing. The fact that Petitioner may not have anticipated all the arguments CMS
might advance, is not justification to permit Petitioner to supplement the record after
hearing. The article offered by Petitioner should have been properly marked and offered
as an exhibit at hearing, not post-hearing. On June 12, 2008, CMS filed a motion to
exclude P. Ex. 15 and P. Response Brief Ex. 1. No response to the CMS motion to

7 The court reporting service advised me post-hearing that the first numbered page
of Volume III, which contains the proceedings from March 6, 2008, bears the number
370 and that is the same number as the “Certification” page of Volume II, which contains
the proceedings from March 5, 2008. The court reporting service offered to renumber the
pages of Volume III to remedy the error. However, as the error is consistent throughout
all copies of the transcript produced and it is unnecessary to cite to a certification page of
the transcript, I determined that no correction was necessary.
exclude was received from Petitioner. Nevertheless, in the interest of having a complete
record, P. Ex. 15 is admitted as evidence. Given my decision on the merits, I find no
undue prejudice to CMS by admitting P. Ex. 15 post-hearing. The article marked as P.
Response Brief Ex. | is not admitted. Petitioner offers the article in support of the
position that a resident’s death from COPD (chronic obstructive pulmonary disease) was
not unusual as many people die from COPD. P. Response at 7-8. I conclude that the
article is not relevant to any issue I may decide and it is excluded as evidence on that
basis.

II. Discussion
A. Issues
The issue in this case is:

Whether there is a basis for the imposition of an enforcement
remedy, including the duration of the statutory DPNA.

There is no issue in this case as to whether the statutory DPNA imposed is
reasonable, for if the statutory DPNA was triggered, it is reasonable as a matter of
law.

B. Applicable Law

The statutory and regulatory requirements for participation by a long-term care facility
are found at sections 1819 (SNF) and 1919 (NF) of the Act and at 42 C.F.R. Part 483.
Section 1819(h)(2) of the Act vests the Secretary of Health and Human Services
(Secretary) with authority to impose enforcement remedies against a SNF for failure to
comply substantially with the federal participation requirements established by sections
1819(b), (c), and (d) of the Act.* Pursuant to 1819(h)(2)(C), the Secretary may continue
Medicare payments to a SNF not longer than six months after the date the facility is first
found not in compliance with participation requirements. Pursuant to 1819(h)(2)(D), ifa
SNF does not return to compliance with participation requirements within three months,
the Secretary must deny payments for all individuals admitted to the facility after that
date — commonly referred to as the mandatory or statutory DPNA. In addition to the
authority to terminate a noncompliant SNF’s participation in Medicare, the Act grants the
Secretary authority to impose other enforcement remedies, including a discretionary
DPNA, CMPs, appointment of temporary management, and other remedies such as a
directed plan of correction. Act § 1819(h)(2)(B).

* Section 1919(h)(2) of the Act gives similar enforcement authority to the states to
ensure that NFs comply with their participation requirements established by sections
1919(b), (c), and (d) of the Act.
The Secretary has delegated to CMS and the states the authority to impose remedies
against a long-term care facility that is not complying substantially with federal
participation requirements. “Substantial compliance means a level of compliance with
the requirements of participation such that any identified deficiencies pose no greater risk
to resident health or safety than the potential for causing minimal harm.” 42 C.F.R.

§ 488.301 (emphasis in original). A deficiency is a violation of a participation
requirement established by sections 1819(b), (c), and (d) of the Act or the Secretary’s
regulations at 42 C.F.R. Part 483, Subpart B. Facilities that participate in Medicare may
be surveyed on behalf of CMS by state survey agencies in order to determine whether the
facilities are complying with federal participation requirements. 42 C.F.R. §§ 488.10-
488.28, 488.300-488.335. The regulations specify the enforcement remedies that CMS
may impose if a facility is not in substantial compliance with Medicare requirements. 42
C.F.R. § 488.406. The statutory DPNA is the only enforcement remedy remaining in this
case.

The Act and regulations make a hearing before an ALJ available to a long-term care
facility against which CMS has determined to impose an enforcement remedy. Act

§ 1128A(c)(2); 1866(h); 42 C.F.R. §§ 488.408(g); 498.3(b)(13). The hearing before an
ALJ is a de novo proceeding. Anesthesiologists Affiliated, et al, DAB CR65 (1990),
aff'd, 941 F.2d 678 (8th Cir. 1991); Emerald Oaks, DAB No. 1800, at 11 (2001);
Beechwood Sanitarium, DAB No. 1906 (2004); Cal Turner Extended Care, DAB No.
2030 (2006); The Residence at Salem Woods, DAB No. 2052 (2006). A facility has a
right to appeal a “certification of noncompliance leading to an enforcement remedy.” 42
C.F.R. § 488.408(g)(1); see also 42 C.F.R. §§ 488.330(e) and 498.3. However, the
choice of remedies by CMS or the factors CMS considered when choosing remedies are
not subject to review. 42 C.F.R. § 488.408(g)(2). A facility may only challenge the
scope and severity level of noncompliance found by CMS if a successful challenge would
affect the range of the CMP that could be imposed by CMS or impact the facility’s
authority to conduct a nurse aide training and competency evaluation program. 42 C.F.R.
§§ 498.3(b)(14) and (d)(10)(i). CMS’s determination as to the level of noncompliance
“must be upheld unless it is clearly erroneous” (42 C.F.R. § 498.60(c)(2)), including the
finding of immediate jeopardy. Woodstock Care Center, DAB No. 1726, at 9, 38 (2000),
aff'd, Woodstock Care Center v. Thompson, 363 F.3d 583 (6th Cir. 2003). The
Departmental Appeals Board (the Board) has long held that the net effect of the
regulations is that a provider has no right to challenge the scope and severity level
assigned to a noncompliance finding, except in the situation where that finding was the
basis for an immediate jeopardy determination. See e.g., Ridge Terrace, DAB No. 1834
(2002); Koester Pavilion, DAB No. 1750 (2000). Review of a CMP by an ALJ is subject
to 42 C.F.R. § 488.438(e).

The standard of proof or quantum of evidence required is a preponderance of the
evidence. CMS has the burden of coming forward with the evidence and making a prima
facie showing of a basis for imposition of an enforcement remedy. Petitioner bears the
burden of persuasion to show by a preponderance of the evidence that it was in
10

substantial compliance with participation requirements or any affirmative defense. See
Hillman Rehabilitation Center, DAB No. 1611 (1997), aff'd, Hillman Rehabilitation Ctr.
v. United States Dep’t of Health and Human Services, Health Care Fin. Admin., No. 98-
3789 (GEB), slip op. at 25 (D.N.J. May 13, 1999); Cross Creek Health Care Center,
DAB No. 1665 (1998); Emerald Oaks, DAB No. 1800; Batavia Nursing and
Convalescent Center, DAB No. 1904 (2004), aff'd, Batavia Nursing & Convalescent Ctr.
v. Thompson, 129 F. App’x. 181 (6th Cir. 2005); Batavia Nursing and Convalescent Inn,
DAB No. 1911 (2004).

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

My conclusions of law are set forth in bold followed by a statement of the pertinent facts
and analysis.

I have set forth in detail the history of the various notices and revisions of the remedies in
the Background section of this decision. As a result of the CMS notice dated March 4,
2008, the only enforcement remedy at issue in this case is the mandatory or statutory
DPNA that was triggered effective April 5, 2007, and ended on July 16, 2007. CMS Ex.
43. Only the alleged violation of 42 C.F.R. § 483.25(i)(1) (Tag F325) remains in issue
from the January 5, 2007 survey. Tr. 341-42; P. Ex. 5, at 2.

I conclude that Petitioner was not in substantial compliance with program participation
requirements based on the violation of 42 C.F.R. § 483.25(i)(1) as found by the January
5, 2007 survey. I further conclude based upon the violation from the January 5, 2007
survey, that Petitioner has failed to show it returned to substantial compliance prior to
July 16, 2007. Accordingly, I need not consider the other surveys and their alleged
deficiencies.

1. Petitioner violated 42 C.F.R. § 483.25(i)(1) (Tag 325) as found by the
survey completed on January 5, 2007.

2. Petitioner did not prove that it corrected the violation of 42 C.F.R.
§ 483.25(i)(1) (Tag 325) prior to July 16, 2007.

3. Petitioner did not return to substantial compliance with program
participation requirements within three months of January 5, 2007,
and the statutory DPNA was triggered on April 5, 2007.

The regulation Petitioner is alleged to have violated requires that, based upon a resident’s
comprehensive assessment, a facility ensure that a resident maintains acceptable
parameters of nutritional status, such as body weight and protein levels, unless the
resident’s clinical condition demonstrates that this is not possible. 42 C.F.R.

§ 483.25(i)(1).
11

The State Operations Manual (SOM)’ instructs surveyors that “[p]arameters of nutritional
status which are unacceptable include unplanned weight loss... .” CMS Ex. 37, at 4.
The SOM cautions surveyors that ideal body weight charts have not been validated for
the institutionalized elderly and weight loss is only a guide for determining nutritional
status. CMS Ex. 37, at 4. The SOM suggests parameters for evaluating the significance
of unplanned and undesired weight loss:

Interval Significant Loss Severe Loss

1 month 5% Greater than 5%

3 months 7.5% Greater than 7.5%
6 months 10% Greater than 10%

CMS Ex. 37, at 4.

The SOM directs that weight loss or gain be analyzed in the context of the resident’s
former life style and current diagnosis, recognizing that weight loss or gain is not
adequate evidence alone of a nutritional problem. CMS Ex. 37, at 4-5. Similarly, the
Board has stated that weight loss alone does not support a deficiency but weight loss does
trigger an inference of inadequate nutrition. Carehouse Convalescent Hospital, DAB No.
1799, at 21-22 (2001). Ifa facility shows by a preponderance of the evidence that it
“provided the resident with adequate nutrition” or that the weight loss was due to non-
nutritive factors, it can rebut a prima facie case based on such an inference. Carehouse,
DAB No. 1799, at 22. The Board’s interpretation of the regulation is that a facility is not
strictly liable for a resident’s weight loss (Carehouse, DAB No. 1799, at 21), but a
“facility is responsible for taking all reasonable steps to ensure that the resident receives
nutrition adequate to his or her needs” (Windsor House, DAB No. 1942, at 18 (2004)).
The “clinical condition exception” is narrow and applies only when a facility
demonstrates that it cannot provide nutrition adequate for the resident’s overall needs so
that weight loss is unavoidable. /d. The Board has indicated that the presence of a
significant clinical condition alone does not prove that maintaining acceptable nutrition is
unavoidable. Jd. In Windsor, the Board found that surveyor observations that a resident
was not properly assisted with eating or that the facility was slow to react to a resident’s
weight loss was sufficient evidence that the facility failed to provide the resident with
adequate nutrition. Jd.

° The SOM does not have the force and effect of law; however, the provisions of
the Act and regulations interpreted clearly do have such force and effect. State of Indiana
by the Indiana Department of Public Welfare v. Sullivan, 934 F. 2d 853 (7th Cir. 1991);
Northwest Tissue Center v. Shalala, \ F.3d 522 (7th Cir. 1993). Thus, while the
Secretary may not seek to enforce the provisions of the SOM, he may seek to enforce the
provisions of the Act or regulations as interpreted by the SOM.
12

The January 5, 2007 Statement of Deficiencies (SOD) alleges that Petitioner violated the
regulation because Petitioner failed to identify and address weight loss for Resident 1.
Resident 1 was an 87 year-old man admitted to Petitioner’s facility on September 20,
2006, with a past medical history of bladder cancer, hypothyroidism, and Alzheimer’s
dementia. He was deaf and unable to communicate. CMS Ex. 6, at 1-4, 11, 14, 27, 48.

On admission to Petitioner’s facility in September 20, 2006, Resident 1 was assessed as
being independent for eating with setup help only, and he was 71 inches tall and weighed
150 pounds with no nutritional problems. CMS Ex. 6, at 13, 15. A subsequent Minimum
Data Set (MDS) with an assessment reference date of October 3, 2006, reflects no change
in weight and reflects no nutritional problems. CMS Ex. 6, at 25, 28.

A certified nursing assistant flow sheet shows that from 21 through 28 September 2006,
Resident 1’s consumption of meals was poor (25-50 %), except for two meals on
September 26 that were rated as good (75-100 %) and fair (50-75 %). P. Ex. 15, at 1.

A care plan conference summary sheet dated October 4, 2006, identified as a dietary
concern that Resident 1 weighed 150 pounds on admission on September 20, 2006 but
that by October 4, 2006, only 14 days later, he weighed 142 pounds, a 5 percent weight
loss. The family also expressed concern about the weight loss and indicated that they
would bring Resident 1 his favorite foods. The plan was for Dietary to give finger foods
and sweets. CMS Ex. 6, at 50.

A nutritional assessment on October 17, 2006 reflects that Resident 1’s weight had
dropped to 142 pounds. His ideal weight was listed as 155 to 189 pounds and he was
assessed to require 1704 calories per day. The dietician noted that he self-fed, he ate
approximately 50 percent of meals, and that his albumin and protein levels were
adequate. The dietician recommended a house supplement three times per day and
referral to his physician. CMS Ex. 6, at 44-45.

An ADL (activities of daily living) work sheet for October 2006 reflects that Resident 1’s
meal consumption was good to poor, with most meals recorded as good and fair, but with
no recording on October 27, 2006. In November 2006, meal consumption was recorded
ranging from refused to good, with four breakfasts refused, no recordings for November
3 and 30, and poor consumption recorded for all meals from November 20 through 25
and 27 through 29. Meal consumption was recorded as poor to good in December 2006,
with all meals on December 1 through 3 and 30 being listed as poor. P. Ex. 15, at 2-4.
13

A height and weight form listed weights of 142 pounds on admission,'° 142 pounds on
October 1, 2006, 142 pounds on November 5, 2006, and 134 pounds on December 2,
2006. P. Ex. 15, at 5.

Resident 1’s physician speculated on examination on November 29, 2006, that Resident 1
had a recurrence of transitional cell carcinoma that was multifocal but further testing was
delayed. CMS Ex. 6, at 3-4; P. Ex. 15, at 7. A CT (Computed Tomography) scan of
Resident 1’s pelvis on December 5, 2006, revealed an abnormality in the urinary bladder
wall that was characterized as “worrisome for malignancy.” CMS Ex. 6, at 54-55.
However, the record before me contains no evidence of a definite diagnosis that Resident
1 was suffering a recurrence of his cancer.

A physician’s progress note dated December 14, 2006, shows that the physician was
aware that Resident 1’s weight had decreased 8 pounds to 134 pounds. However, the
note includes no specific plan to address the resident’s weight loss. P. Ex. 14. A
physician’s progress note dated November 27, 2006, does not list Resident 1’s weight.
CMS Ex. 6, at 2.

In December 2006, Resident 1’s weights were recorded each week as 134, 129, 137 and
137. CMS Ex. 6, at 47. Laboratory results from December 8, 2006, reflect low albumin
and low total protein. CMS Ex. 6, at 42. Low albumin and low protein levels are
indicative of possible malnutrition. Tr. 176-77.

On January 1, 2007, Resident 1 was taken to the emergency room after being found
unresponsive. He was assessed as suffering septic shock with low blood pressure,
tachycardia, and hypoxia (low blood oxygen). CMS Ex. 6, at 70. The plan was for
hospice care and no aggressive treatment or diagnostics as the family understood that he
was dying. CMS Ex. 6, at 72. Resident | died on January 1, 2007, at 8:05 p.m. CMS
Ex. 6, at 56, 61, 73-74. Emergency room records characterize him as thin and cachectic
(physical wasting with loss of weight and muscle mass due to disease). CMS Ex. 6, at
59.

© This weight is not credible based upon other evidence from Resident 1’s clinical
record already discussed, including the MDS and nutritional assessment, which show his
admission weight was 150 pounds.
14

Petitioner’s clinical records recorded weights for Resident | of:

DATE WEIGHT
September 20, 2006 (Admission) 150
October 1, 2006 142
October 17, 2006 (Nutritional Assessment) 142
November 5, 2006 142
December 2, 2006 134
December 2006 (Second Week) 129
December 2006 (Third Week) 137
December 2006 (Fourth Week) 137

Based on this data, Resident 1 lost 8 pounds between admission and October 1, 2006, a
5.3 percent loss. He lost 16 pounds between admission and December 2, 2006, a 10.6
percent weight loss. He lost 21 pounds between admission and the second week of
December 2006, a 14 percent weight loss. The clinical record reflects an increase of 8
pounds between the weighing in the second week of December and the third week of
December, but the recorded weight of 137 pounds reflects a loss after admission of 13
pounds or 8.7 percent. Using the guidance from the SOM, the surveyors were justified
concluding that Resident 1 suffered a severe weight loss during the three months between
his admission in September 2006 and December 2006. The nutritional assessment dated
October 17, 2006 and physician’s progress note dated December 14, 2006, support my
conclusion that the weight loss was unplanned and undesired. According to the SOD, a
surveyor observed Resident 1 being weighed on December 29, 2006, and his weight was
actually 122 pounds. CMS Ex. 3, at 4. Other than the nutritional assessment
recommending house supplements three times per day (CMS Ex. 6, at 44-45) and the care
plan conference summary indicating that Dietary would give Resident | finger foods and
sweets and that the family would bring in Resident 1’s favorite foods (CMS Ex. 6, at 50),
there is no other documentary evidence of a plan to address Resident 1’s weight loss;
there is no specific care plan document; there is no documentary evidence that the
effectiveness of the interventions was assessed in light of Resident 1’s continued weight
loss; and there is no documentation of consultation with Resident 1’s physician that
considered or planned to address the weight loss. Furthermore, the evidence shows that
Petitioner was not following the plan it had developed in early October 2006. The SOD
records that a surveyor observed on December 29, 2006, that Resident 1 was given
cottage cheese and pudding — not finger foods — and when he tried to eat a canned peach
with his fingers, it fell to the floor. The surveyor also observed that Resident 1 was given
a health shake that was not fully opened and he was given no straw. CMS Ex. 3, at 5-6.
Petitioner does not dispute the surveyor’s observations.

15

Petitioner argues that staff did identify Resident 1’s weight loss and a plan to address the
weight loss was made as early as the care planning conference on October 4, 2006.
Petitioner also points out that Resident 1 was weighed weekly in the month of December
2006 when his weight fell. Petitioner asserts that Resident 1’s physician was notified of
the weight loss because the December progress note indicates a weight of 134 pounds and
a decrease of 8 pounds. Petitioner’s Post-Hearing Brief (P. Brief) at 5-7. For the reasons
mentioned above, I find Petitioner’s argument unpersuasive. Although there is evidence
that Petitioner’s staff identified the weight loss, the evidence does not show that Resident
1 was referred to his physician to address his weight loss as recommended by the
dietician; the evidence does not show that his care planning team, which is supposed to
include his physician, developed a specific plan to address his nutritional status and
weight loss; the evidence does not show assessment of the effectiveness of the limited
interventions developed in October, and the further weight loss in December permits an
inference that those interventions were either not effective or not consistently
implemented; the evidence does not show that the limited interventions were consistently
implemented; and the evidence does not show that Resident 1’s nutritional status was
reassessed and new interventions considered to address the possibility of a recurrence of
his cancer when that possibility was identified in late November 2006, just prior to his
further weight loss in December 2006. The evidence shows that Petitioner was aware of
Resident 1's weight loss; assessed his dietary needs; and developed some interventions.
However, Resident 1 began to lose weight again in December and it was incumbent on
Petitioner to follow up with additional interventions in order to ensure maintenance of
adequate nutrition, to the extent that weight loss was not unavoidable. I conclude
Petitioner did not take reasonable steps to ensure that Resident 1 maintained acceptable
parameters of nutrition and thereby violated 42 C.F.R. § 483.25(i)(1). Petitioner has not
shown that the weight loss was unavoidable.

Petitioner argues that, even if there was a violation of 42 C.F.R. § 483.25(i)(1), Petitioner
corrected the violation and returned to substantial compliance on February 16, 2007, the
date it alleged completion on its plan of correction (P. Ex. 1, at 6) and the date on which
the surveyors found that the other two alleged deficiencies from the January 2007 survey
were corrected (P. Ex. 5, at 2). P. Brief at 7-8; P. Response at 5. In support of its
argument, TraJa Alanis, R.N., Petitioner’s Director of Nursing during the January 2007
survey, was called as a witness by Petitioner. Tr. 424. R.N. Alanis testified that she
participated in preparing the plan of correction for the alleged violation of 42 C.F.R.

§ 483.25(i)(1) found at P. Ex. 1, at 4-6. She testified that the plan of correction was fully
implemented by February 16, 2007. Tr. 427-28.

Petitioner argues that:

CMS put on no evidence whatsoever that supports a finding
that F-325 was not corrected as of the date listed in its Plan of
Correction, i.e., 2/16/07. Therefore, [CMS] failed to carry its
burden of putting on a prima facie case that F-325 was not
16

“substantially corrected” by 2/16/07, the date of completion
of corrective action on the 2567 from the January 5, 2007
visit.

P. Brief at 7.

Petitioner misunderstands that it bears the burden to show by a preponderance of the
evidence the date on which it achieved substantial compliance. CMS does not bear the
burden of showing that Petitioner remained out of compliance. Appellate panels of the
Board have held that the burden is on the facility to establish the date on which it came
into compliance. Cal Turner Extended Care Pavilion, DAB No. 2030 (2006); Chicago
Ridge Nursing Center, DAB No. 2151 (2008). Indeed, there is a presumption that the
non-compliance continues until the facility establishes that it has corrected the
deficiencies. Regency Gardens Nursing Center, DAB No. 1858 (2002); 42 C.F.R.

§ 488.308(c). Thus, the burden is with Petitioner to affirmatively establish that it came
into compliance with 42 C.F.R. § 483.25(i)(1) (Tag F325) earlier than the July 16, 2007
date found by the state agency and adopted by CMS. I find that Petitioner failed to rebut
the presumption and show that it returned to substantial compliance prior to July 16,
2007. Petitioner’s reliance upon the testimony of its former Director of Nursing, Traja
Alanis, is misplaced. R.N. Alanis’ testimony is conclusory and I find her mere assertion
that Petitioner’s plan of correction was fully implemented by February 16, 2007 (Tr. 427-
28), to be insufficient evidence to rebut the presumption in favor of the July 16, 2007
date. Petitioner offered me no evidence that shows the specific steps that were taken at
its facility to complete its plan of correction (P. Ex. 1, at 4-6) in order to cure this
deficiency. Accordingly, I conclude that Petitioner did not cure this deficiency prior to
July 16, 2007.

4. CMS’s imposition of the statutory DPNA is reasonable as a matter
of law.

Petitioner was not in substantial compliance with program participation requirements on
January 5, 2007, and Petitioner did not show a return to substantial compliance earlier
than July 16, 2007. The regulations require that the Secretary impose a DPNA against a
facility that fails to return to compliance with all participation requirements within three
months after the date the facility is first found to be out of compliance. Act

§ 1819(h)(2)(D); 42 C.F.R. § 488.417(b). The Secretary and CMS have no discretion not
to effectuate a statutory DPNA. Accordingly, CMS was required to impose a statutory
DPNA effective April 5, 2007 through July 16, 2007, and the statutory DPNA is
reasonable as a matter of law.
17

Il. Conclusion

For the foregoing reasons, I conclude that Petitioner was not in substantial compliance
with program participation requirements from January 5, 2007 through July 16, 2007, and
the statutory DPNA was triggered as a matter of law effective April 5, 2007 and
continued through July 16, 2007.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Janet Elizabeth Despot, M.D., )
(OI File No. 7-05-40142-9). ) Date: October 26, 2009
)
Petitioner, )
)
-Vv.- ) Docket No. C-09-426
) Decision No. CR2023
The Inspector General. )
)
DECISION

I sustain the determination of the Inspector General (1.G.) to exclude Petitioner, Janet
Elizabeth Despot, M.D., from participating in Medicare, Medicaid, and all federal health
care programs for a period of five years. I find that the I.G. is authorized to exclude
Petitioner pursuant to section 1128(a)(1) of the Social Security Act (Act), and that the
five-year exclusion imposed by the I.G. is the minimum period of exclusion mandated by
the Act. Act, section 1128(a)(1).

I. BACKGROUND

Petitioner is a medical doctor specializing in allergies and immunology. Since 1997, she
as operated a practice titled “Cardinal Respiratory, P.C.” located in Springfield, Illinois.
Petitioner Exhibit (P. Ex.) 2, at 1-2. On February 4, 2008, Petitioner entered a plea of
guilty to one misdemeanor count of “Illegal Medicare Balance Billing” in violation of 42
U.S.C. § 1320a-7b(e) in the United States District Court for the Central District of
Illinois. 1.G. Exhibit (1.G. Ex.) 2, at 1. In her plea agreement, Petitioner stipulated to the
factual basis for her plea, admitting,

On or about October 6, 1997, Janet Despot signed a “Medicare Participating
Physician or Supplier Agreement” under Title 42, United States Code, Section
1395u(h)(1). This agreement provided, among other things, that “the approved
charge, determined by the Medicare carrier, shall be the full charge for the service
covered ....” In essence, to get the benefits of being a participating provider
under the Medicare program, Janet Despot agreed to accept the Medicare-
approved amount determined by the carrier as payable for the service as full
payment for the service. Medicare would typically pay 80% percentage of this
amount, and, presuming any deductible had been met, the provider would be able
to collect only the “co-payment” from the patient. The co-payment is the amount
between the “allowed” amount determined by Medicare, and the amount actually
paid by Medicare (typically 20% of the allowed amount). Any additional amount
charged for the service, or “balance,” was required to be “written off” by the
provider and not billed to the patient.

During this same period of time, Janet Despot employed her husband, Rickey E.
Weir, as the “business manager” for Cardinal Respiratory. Weir was allowed to
ave the primary responsibility for submitting claims for Despot’s medical practice
to insurance companies and individuals for payment. Between December, 1997
and October, 2006, Janet Despot was personally notified on several occasions by
patients and representatives of the Illinois Department of Professional Regulation
that insurance companies and her patients were being improperly billed, and, when
the insurance companies did not pay, or did not pay enough, the patients were
“balance billed” for her services, and charged interest and finance charges beyond
the allowed amount.

The abusive billing practices continued from in or about December, 1997 through
October, 2006. During this time, Janet Despot was told that Cardinal Respiratory
repeatedly charged patients for amounts in excess of the amount deemed by the
Medicare carrier to be payable, and knowingly and willfully allowed such to
continue in violation of the Participating Provider agreement. Any inquiries
regarding the billing practices of Cardinal Respiratory were referred to Rickey
Weir.

LG. Ex. 3, at 9-10; P. Ex. 1, at 9-10.
The LG. notified Petitioner by letter dated February 27, 2009, that as a result of her guilty

plea, she was being excluded from Medicare, Medicaid, and all other federal health care
programs for a period of five years. 1.G. Ex. 1. The LG. cited section 1128(a)(1) of the
Act as the basis for her exclusion. By letter dated April 30, 2009, Petitioner requested a
ol
earing.

I held a prehearing conference, by telephone, on May 20, 2009. During that conference, I
noted that there did not appear to be material facts in dispute which might necessitate a
earing at which I would hear witness testimony, but that the dispute instead appeared to
concern legal issues only. The I.G. agreed. Petitioner agreed that there did not appear to
be material facts in dispute, but asserted she wanted an in-person hearing. As neither
party could assert material facts in dispute, and only legal issues appeared to be in
dispute, I set a briefing schedule. I noted that either party was free to request an in-person
earing in their briefing. I informed the parties that if I found material facts in dispute I
would schedule another prehearing conference to discuss scheduling an in-person

earing.

The L.G. submitted a brief (I.G. Br.) accompanied by I.G. Exs. 1-4. Petitioner submitted a
response (P. Br.) accompanied by P. Exs. 1 and 2. The I.G. submitted a reply,
accompanied by LG. Ex. 5. In the absence of objection, I admit IG. Exs. 1-5 and P. Exs.
1 and 2.

Il. CONTROLLING STATUTES AND REGULATIONS

Section 1128(a)(1) of the Act requires the Secretary of Health and Human Services
(Secretary) to exclude from participation in Medicare, Medicaid, and all other federal
health care programs, any individual or entity that has been convicted of a criminal
offense related to the delivery of an item or service under the Medicare or Medicaid
programs. 42 U.S.C. § 1320a-7(a)(1).

An exclusion imposed under section 1128(a)(1) must be for a period of at least five years.
Act, section 1128(c)(3)(B); 42 U.S.C. § 1320a-7(c)(3)(B). Pursuant to 42 C.F.R.

§ 1001.102(b), no exclusion pursuant to section 1128(a)(1) may be for less than five
years.

' On May 15, 2009, Petitioner moved to stay proceedings in this case for six months while
she pursued a waiver of her exclusion with the I.G. During the May 20, 2009 prehearing
conference, I denied Petitioners request, noting that whether or not the I.G. grants a
waiver of the exclusion, the I.G.’s decision-making process has no impact on my decision
as to whether the I.G. had a basis upon which to exclude Petitioner and whether the length
of the exclusion imposed is unreasonable. 42 C.F.R. § 1001.2007(a)(1).
An individual is “convicted” of a criminal offense within the meaning of section 1128(i)
of the Act -

(1) when a judgment of conviction has been entered against the individual or
entity by a Federal, State, or local court;

(2) when there has been a finding of guilt against the individual or entity by a
Federal, State, or local court;

(3) when a plea of guilty or nolo contendere by the individual or entity has been
accepted by a Federal, State, or local court; or

(4) when the individual or entity has entered into participation in a first offender,
deferred adjudication, or other arrangement or program where judgment of
conviction has been withheld.

Act, section 1128(i); 42 U.S.C. § 1320a-7(i).

42 C.F.R. § 1001.2007(a)(1)(i) grants an administrative law judge (ALJ) the authority to
address whether a legal basis for the imposition of an I.G. sanction exists, and 42 C.F.R.
§ 1001.2007(a)(1)(ii) grants an ALJ the authority to address whether the length of the
exclusion imposed is reasonable. However, where the exclusion imposed under section
1128(a)(1) of the Act is for five years, that is the minimum, mandatory period of
exclusion contemplated by the Act, and the ALJ does not have the authority to consider
whether the length of the exclusion is unreasonable. 42 C.F.R. § 1128(c)(3)(B).

II. FINDINGS OF FACT AND CONCLUSIONS OF LAW
A. Issue
The legal issues before me in this case are:

. Whether there is a legal basis for the imposition of the exclusion under
section 1128(a)(1) of the Act.

. Whether summary judgement is appropriate.
B. Findings and Discussion
I make findings of fact and conclusions of law (Findings) to support my decision in this

case. I set forth each Finding in italics and bold below as a separate heading. I discuss
each Finding in detail.
1. Summary disposition is appropriate in this case.

Summary disposition is appropriate where there are either no disputed issues of material
fact and the only questions that must be decided involve application of law to the
undisputed facts, or the moving party must prevail as a matter of law even if all disputed
facts are resolved in favor of the party against whom the motion is made. A party
opposing summary disposition must allege facts which, if true, would refute the facts
relied upon by the moving party. See Fed. R. Civ. P. 56(c); Thomas E. Strebel, DAB
CR1771 (2008); Michael J. Rosen, M.D., DAB No. 2096 (2007).

In her brief, Petitioner requests an in-person hearing. P. Br. at 9-10. Petitioner asserts
that at the time she submitted her brief she did not know whether the I.G. would dispute
material facts raised in Petitioner’s brief and that she was making the request “to preserve
Petitioner’s rights to an in-person hearing should the Inspector General’s reply raise
material facts in dispute.”

Summary disposition is appropriate. Petitioner has not disputed an issue of material fact.
As there are no material facts in dispute, I decide this case based solely on the factual
basis as stated in Petitioner’s Plea Agreement and Stipulation of Facts. P. Ex. 1;

LG. Ex. 3.

2. Petitioner was convicted within the meaning of section 1128(i) of the
Act.

An exclusion under section 1128(a)(1) of the Act requires that two elements be shown:
(1) that the individual or entity has been convicted of a criminal offense as defined at
section 1128(i) of the Act; and (2) that the criminal offense be related to the delivery of
an item or service under title XVIII (Medicare) or under any state health care program
(Medicaid). The I.G. bears the burden of persuasion to prove, by a preponderance of the
evidence, that both elements have been met. 42 C.F.R. §§ 1005.15(b)(1), (d).

There is no dispute that the first element has been met. Petitioner admits she pled guilty
to misdemeanor balance billing under the Act. P. Br. at 2. The I.G. has established that
Petitioner pled guilty to a one-count misdemeanor violation of 42 U.S.C. § 1320s-7b(e),
Illegal Medicare Balance Billing, in the United States District Court for the Central
District of Illinois. I.G. Ex. 2. Petitioner thus was “convicted” of a criminal offense
within the meaning of section 1128(a)(1) of the Act.

Petitioner asserts, however, that the second element of section 1128(a)(1) has not been
met. Specifically, she asserts that her misdemeanor plea is not related to the delivery of
an item or service under the Medicare program. P. Br. at 1.
3. Petitioner’s conviction is related to the delivery of an item or service
under Medicare.

Under section 1128(a)(1) of the Act, the I.G. must exclude an individual if that
individual’s conviction relates to the delivery of an item or service under Medicare or
Medicaid. 42 U.S.C. § 1320a-7(a)(1). ALJs and the Departmental Appeals Board (DAB)
have defined “related to” to mean a “nexus or common sense connection” between the
conviction and the stated basis for exclusion. Scott D. Augustine, DAB No. 2043 (2006);
Timothy Wayne Hensley, DAB No. 2044 (2006). The DAB stated in Augustine that,

Section 1128(a)(1) requires merely that an offense be “related to” the delivery of
an item or service under a covered program. It does not require that the offense
result in a delivery and therefore does not require an actual delivery of an item or
service. Based on the plain meaning of the word “related,” the Board has
repeatedly held that an offense is “related to” the delivery of an item or service
under a covered program if there is a common sense connection or nexus between
the offense and the delivery of an item or service under the program. See, e.g.,
Berton Siegel, D.O., DAB No. 1467 (1994); Thelma Walley, DAB No. 1367
(1992); Niranjana B. Parikh, M.D., DAB No. 1334 (1992). Therefore, the Board
has determined that an offense committed by someone providing billing or
accounting services was related. Jack W. Greene, DAB No. 1078 (1989), aff'd,
Green y. Sullivan, 731 F. Supp. 835 (E.D. Tenn. 1990); Michael Travers, M.D.,
DAB No. 1237 (1991), aff'd, Travers v. Sullivan, 791 F. Supp. 1471, 1481 (E.D.
Wash. 1992) and Travers v. Shalala, 20 F.3d 993 (9" Cir. 1994); that no showing
of harm to a protected program was necessary in order for an offense to be related,
Neil R. Hirsch, M.D., DAB No. 1550 (1995), aff'd, Hirsch v. Shalala, No. 96-
4008 (C.D. Ill. Nov. 4, 1996); Paul R. Scollo, D.P.M., DAB No. 1498 (1994); that
an offense could be related even if the services were actually provided by an entity
different from the individual being excluded, Napoleon S. Maminta, M.D., DAB
No. 1135, at 7 (1990); that an offense could be related even if no service or item
was actually delivered, Francis Shaenboen, R.Ph., DAB No. 1249, at 4 (1991);
that an offense could be related even if it did not directly involve the delivery of
items or services, Salvacion Lee, M.D., DAB No. 1850 (2002); and that an offense
could be related even if the individual did not personally engage in the scheme or
was not aware of the scheme that resulted in the delivery of the mislabeled
pharmaceuticals under a covered program, Lyle Kai, R.Ph., DAB No. 1979 (2005),
aff'd, Kai v. Leavitt, Civ. No. 05-00514 BMK (D. Haw. 2006).

Scott D. Augustine, DAB No. 2043, at 5-6.
Petitioner asserts that there is no common sense connection or “nexus” between the
criminal offense to which she pled guilty and an item or service under the Medicare
program.’ Petitioner asserts that finding an offense is program-related financial
misconduct is insufficient without also finding a nexus to the delivery of items or services
under one of the covered programs, citing Berton Siegel, D.O., DAB No. 1467 (1994).
Petitioner asserts that just because her offense is called “Medicare balance billing” in the
plea documents does not necessarily mean the offense was “related to” the delivery of
Medicare items or services because, citing Paul R. Scollo, D.P.M., DAB No. 1498,
Petitioner asserts that it is not the particular label assigned to the crime that determines
whether an offense is related to the delivery of an item or service under Medicare, but the
actions and circumstances surrounding the offense. /d. Petitioner asserts that a criminal
offense must be related to an item that is actually payable by the Medicare program, and
asserts here that her plea agreement states that her balance billing violation occurred
when insurance companies and patients were billed for non-Medicare allowable items or
services and that therefore the balance billing activities fall outside of the mandatory
exclusion authority. Petitioner asserts that Medicare carrier involvement alone is
insufficient to establish the requisite nexus, as the exclusion authority does not extend to
all matters involving the Medicare program or Medicare patients. P. Br. at 5-7.

Petitioner’s arguments misapprehend the nature of the necessary nexus. Petitioner’s
conviction of “Illegal Medicare Balance Billing” is on its face related to the delivery of an
item or service under Medicare. Petitioner’s criminal offense is a violation of 42 U.S.C.

§ 1320a-7b(e). LG. Ex. 2. That section is entitled “[c]riminal penalties for acts involving
federal health care programs.” The subsection to which Petitioner pled guilty provides,

> Because of that, Petitioner suggests that the case be returned to the I.G. for proceedings
under the permissive exclusion authorities, where the I.G. could forego exclusion or take
into account as a mitigating factor Petitioner’s lack of participation in the billing activities
of her office. As I find Petitioner’s exclusion to be program related, Petitioner’s
exclusion is mandatory. I note that section 1128(b) of the Act is indeed permissive, and it
does apply to certain misdemeanor offenses. However, numerous ALJ and appellate
decisions determined that, in matters where a conviction triggers both the mandatory
(section 1128(a)) and permissive (section 1128(b)) exclusion provisions, the Secretary
does not have discretion as to which provision to impose. The Secretary is required to
implement the mandatory exclusion. See, e.g., Touradj Farhadi, M.D., DAB CR1072
(2003); Boris Lipovsky, M.D., DAB No. 1363 (1992); Kenneth M. Behr, DAB No. 1997
(2005); Lorna Fay Gardner, DAB No. 1733 (2000). Moreover, Petitioner’s lack of
participation in the billing activities of her office would not be a mitigating factor under
any of the permissive exclusion authorities. 42 C.F.R. § 1001 Subpart C — Permissive
Exclusions.

Whoever accepts assignments described in section 1842(b)(3)(B)(ii) [42 U.S.C.
§ 1395a(h)(1)] and knowingly, willfully, and repeatedly violates the term of such
assignments or agreement, shall be guilty of a misdemeanor... .

42 U.S.C. § 1320a-7b(e). The subsection makes it a criminal offense to violate the terms
of a Medicare participating physician or supplier agreement. Under such an agreement, a
physician agrees to accept assignment of the Medicare Part B payment for all services for
which a physician is eligible to accept assignment under Medicare law and regulations
and to refrain from collecting from any Medicare beneficiary reimbursement for covered
services that is greater than the applicable deductible and coinusurance. I.G. Ex. 3, at 9-
10; I.G. Ex. 4, at 1. Because the basis for this offense is a violation of the Medicare
participation agreement, which governs how a physician is to be paid for Medicare
services provided by the physician, the criminal offense has an, as noted above, on its
face nexus or common sense connection to the delivery of an item or service (here
payment for physician services) under the Medicare program. Petitioner’s arguments
above are thus irrelevant. But, moreover, Petitioner’s plea agreement also establishes a
nexus between the criminal offense to which she pled and the delivery of an item or
service under Medicare, because Petitioner’s practice charged Medicare patients for items
or services she provided in amounts that exceeded the amount deemed by the Medicare
carrier to be payable.* LG. Ex. 3, at 10; P. Ex. 1, at 10.

While Petitioner has argued that her excess charges were for non-covered supplies, her
contention that the charges were for non-covered supplies is not supported by the record.
Since the Medicare provider or supplier agreement only applies to services for which a
physician is eligible to accept assignment, it is necessarily a charge for Medicare services.
Otherwise there would not have been a violation of 42 U.S.C. § 1320a-7b(e). Petitioner
‘as also offered no factual support for her contention. The plea agreement is silent
regarding the nature of these supplies. However, her plea agreement does set forth the
precise nature of the excess charges and contradicts her. The plea agreement explains
that the balance billing charges were based on excess, fraudulent charges for Medicare
covered items or services (fraudulently unbundled supplies). IG. Ex. 5, at 17-27.

Petitioner also asserts that mandatory exclusion in her case is inconsistent with the
legislative intent of the Act because it would not further the legislative goal of protecting
the programs from fraud or abuse or protecting Medicare beneficiaries from incompetent
practitioners or inappropriate or inadequate care since her balance billing did not involve
the Medicare program. Moreover, Petitioner asserts that it was her husband who was

3 Medicare pays a participating physician 80% of the approved amount for a service,
assuming the patient’s deductible has been met, and the physician can collect the
remaining 20% from the patient, whether directly or through a secondary insurance
policy. See IB. Ex. 3, at 9.
directly and primarily responsible for the wrongdoing. She asserts that the prosecution in
her criminal case acknowledged that Petitioner is unlikely to pose further harm to the
programs and there “was never even a hint of any allegation regarding [her] quality of
care.” P. Br. at 7-8.

l agree with the I.G. that Petitioner’s argument is essentially irrelevant, because the LG
has no discretion and must exclude Petitioner for five years. However, Petitioner is
mistaken in her belief that exclusion in her case is inconsistent with the legislative intent.
As noted above, Petitioner’s conviction on its face involved the Medicare program.
Petitioner’s argument that her balance billing did not involve Medicare is incorrect — she
was convicted of billing for items or services her provider agreement with Medicare
explicitly forbid her from billing. Petitioner’s inaction, in the face of her husband’s
wrongdoing, and her failure to correct her billing in the face of repeated notification of
improper balance billing by responsible authorities, shows that for a lengthy period she
was not capable of protecting Medicare beneficiaries from inappropriate billing (and
appropriate billing for goods and services is a necessary part of the care that her office
provided her patients). One purpose of exclusion is to protect the Medicare and Medicaid
programs from untrustworthy providers by providing a period of time for that provider to
demonstrate that he or she can be trusted. In the case of mandatory exclusion, Congress
has determined by statute that the period of time necessary is five years.

4. Petitioner’s exclusion for a period of five years is the mandatory
minimum period as a matter of law.

An exclusion under section 1128(a)(1) of the Act must be for a minimum mandatory
period of five years, as set forth in section 1128(c)(3)(B) of the Act:

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

When the I.G. imposes an exclusion for the mandatory five-year period, whether or not
the length of the exclusion is unreasonable is not an issue. 42 C.F.R. § 1001.2007(a)(2).
Aggravating factors that justify lengthening the exclusion period may be taken into
consideration, but the five-year period of exclusion cannot be shortened. Petitioner was
convicted of a criminal offense related to the delivery of an item or service under
Medicare. As a result of Petitioner’s program-related conviction, the 1.G. was required to
exclude her for at least five years.

10

Iv. CONCLUSION

Sections 1128(a)(1) and 1128(c)(3)(B) of the Act mandate that Petitioner be excluded
from Medicare, Medicaid, and all federal health care programs, for a minimum,
mandatory period of five years because of her conviction of a criminal offense related to
the delivery of an item or service under Medicare. I therefore conclude that the I.G.
properly excluded Petitioner from program participation, and I uphold the five-year
exclusion.

/s/
Alfonso J. Montano
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Hilary Saltzman, M.A., LCAT, ATR, ) Date: October 22, 2009

)
Petitioner, )
)

“Vee ) Docket No. C-09-629

) Decision No. CR2022
Centers for Medicare & Medicaid )
Services. )
)

DECISION

I sustain the determination of the Centers for Medicare & Medicaid Services (CMS), as
was affirmed on reconsideration, to deny the request of Petitioner, Hilary Saltzman, to
participate in the Medicare program.

I. Background

In February 2009 Petitioner, a licensed and registered creative arts therapist, applied to
participate in the Medicare program. CMS determined to deny the application. Petitioner
requested reconsideration and reconsideration was denied on June 22, 2009. She then
requested a hearing by letter dated July 26, 2009, and the case was assigned to me for a
earing and a decision.

lissued an Acknowledgment and Pre-Hearing Order on August 6, 2009, directing the
parties to file exchanges of evidence and argument.

CMS filed a brief and five proposed exhibits which it identified as CMS Ex. 1 - CMS Ex.
5. Petitioner filed a letter in reply on October 8, 2009, but did not file any exhibits. CMS
informed me by e-mail dated October 19, 2009 that it would not be submitting a reply.
Neither Petitioner nor CMS requested that I convene an in-person hearing.’ I receive into
the record CMS Ex. 1 - CMS Ex. 5.

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

The issue in this case is whether CMS is authorized to deny Petitioner’s application for
enrollment as a Medicare supplier.

B. Finding of fact and conclusions of law

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

1. Petitioner is not eligible to enroll in the Medicare program as a
supplier and CMS is thus authorized to deny her application for
enrollment.

Petitioner submitted an application for enrollment in Medicare on February 18, 2009.
CMS Ex. 4. Petitioner stated her intent to enroll as a non-physician practitioner and
specified that she wanted to enroll as a licensed creative arts therapist. Id., at 7.
Petitioner attached a copy of a limited permit to practice creative arts therapy issued by
the State of New York, as well as documents regarding her master’s degree in expressive
therapies. Id., at 29-30.

After reviewing Petitioner’s application, National Government Services (NGS), the
Medicare contractor with the initial authority to approve or deny enrollment, denied the
application. CMS Ex. 3. NGS stated as its rationale that “[t]here is no statutory or
regulatory basis which permits a Licensed Creative Arts Therapist to enroll or receive
payment in the Medicare program.” /d., at 1. NGS reaffirmed its decision after Petitioner
requested reconsideration, stating that Petitioner’s “request for enrollment was denied
because there is no statutory or regulatory basis which permits a Licensed Creative Arts

Therapist to enroll or receive payment in the Medicare program.” CMS Ex. 1.

' CMS styled its brief as a motion for summary judgment. I find it unnecessary to
decide whether the criteria for summary disposition are present in this case inasmuch as
neither party has requested that I receive evidence in person.
Part B of the Medicare program is a voluntary supplemental insurance program covering
outpatient services and is the program in which Petitioner seeks to provide her services.
Social Security Act (Act) §§ 1831-1848 [42 U.S.C. §§ 1395j — 1395w-4]. The program
provides reimbursement for physician services and certain “medical and other health
services” provided by non-physician practitioners, including physician assistants, nurse
practitioners, physical therapists, occupational therapists, clinical nurse specialists,
certified nurse-midwives, clinical social workers, clinical psychologists, registered
dietitians or nutrition professionals, anesthesiology assistants, and speech language
pathologists and audiologists. See Act §§ 1861(s) [42 U.S.C. § 1395x(s)]; 1842(b)(18)(C)
[42 U.S.C. § 1395u(b)(18)(C)]; 1861(bb) [42 C.F.R. § 1395x(bb]; 1861 (11) [42 U.S.C. §
1395x(Il)]. The entities or individuals furnishing such health care services are known as
“suppliers.” 42 C.F.R. § 400.202.

The Act requires the Secretary to issue regulations establishing a process for the
enrollment of suppliers. Act § 1866(j) [42 U.S.C. § 1395cc(j)]. To receive payment a
supplier must be enrolled in the Medicare program. 42 C.F.R. § 424.505. The Medicare
Program Integrity Manual (MPIM), Chapter 10, Pub. 100-8, Section 12.4, lists the types
of non-physician practitioners that may be enrolled in the Medicare program as suppliers,
referencing the statutory and regulatory basis for Medicare payment to these suppliers.
CMS Ex. 5. A licensed creative arts therapist is not included among the types of non-
physician practitioners authorized to receive payment for services as a supplier under the
Medicare program. Jd.

Petitioner now recognizes that her profession is not one the Medicare program is
authorized to pay for. Her letter of October 8, 2009 instead requests that “special
permission” or “exceptional authorization” be accorded to her and that she be granted
supplier status. She notes that she provides therapeutic services for a special population
of Holocaust survivors and their descendents and that without her services their care
might be more costly with “the emotional and psychological manifesting itself into
physical problems.”

I do not doubt that Petitioner provides a valuable service to her clients. However, I have
no authority, nor does CMS, to grant Petitioner the remedy she seeks. As CMS notes in
its brief, the decision to allow reimbursement for the services of a licensed creative arts
therapist must be made by Congress through amendment of the Act. CMS Br. at 7.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Cases of: Date: October 21, 2009

Bradley D. Anawalt, M.D., Docket Nos. C-09-546

Jason A. Dominitz, M.D., C-09-547
Trevin Thurman, M.D., C-09-548
Timothy R. Watkins, M.D., C-09-549
Mark Zaros, M.D., C-09-551
Jane H. Buckner, M.D., C-09-552
Sheila B. Dunaway, M.D., C-09-553
Shu Ching Hu, M.D., C-09-554
Sarita A. Lobo, M.D., C-09-555
Jan L. Hillson, M.D., C-09-556

Decision No. CR2021
Petitioners,

- Wwe

The Centers for Medicare & Medicaid
Services.

Vee He SH HS YS SS Se Se SS SS OS SY

DECISIONS DISMISSING REQUESTS FOR HEARING

I dismiss the hearing requests of the 10 Petitioners whose names are recited in the caption
of these decisions. None of these individuals has a right to a hearing before me.'

' Lam consolidating my decisions in these 10 cases into a single document
because the issue is the same in each of them and because it is more efficient that I do so
rather than to issue 10 separate decisions. However, each of these Petitioners has an
individual and independent right to appeal my decision in his or her case.
I. Background

Each of the Petitioners filed a hearing request in which he or she contends that he or she
should be assigned a “retro effective date of enrollment” in the Medicare program.” The
cases were assigned to me for a hearing and a decision. The Centers for Medicare &
Medicaid Services (CMS) moved that I dismiss these hearing requests. None of the
Petitioners replied to the motion.

CMS attached one exhibit to its motion which it designated as CMS Ex. |. I receive that
exhibit into the record.

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

These cases all have the identical issue, that being whether the Petitioner in each of them
has a right to a hearing before me.

B. Findings of fact and conclusions of law

I make findings of fact and conclusions of law (Findings) to support my decisions in
these cases. I set forth my Findings below as separate headings.

1. The Petitioners do not have a right to a hearing.

The Petitioners in these cases, all of whom are physicians, have not provided me with a
detailed explanation of the specific issues that they are raising in their hearing requests.
Nor have they made any arguments in response to CMS’s motion to dismiss. However, it
appears that they have requested hearings because they, or the entity which filed hearing
requests on their behalf, are dissatisfied with the policy of the Medicare program
governing payment for claims for services generated prior to the dates of their enrollment
or re-enrollment in Medicare.

It appears that each of Petitioners either is newly enrolled in Medicare or has re-enrolled
in the program. CMS Ex. |. Evidently, each of them may have provided a service or
services to one or more Medicare beneficiaries prior to the date of his or her enrollment
or re-enrollment in the program and seeks to claim reimbursement for that service or
those services. Petitioners, or the entity which filed hearing requests on their behalf, have

> The hearing request in each case appears to have been filed on behalf of the
Petitioner by an entity known as “UW Physicians” in Washington State. This entity is
not a party to these cases.
concluded that Medicare regulations will bar reimbursement for claims for services that
Petitioners provided prior to the effective dates of their enrollment and they are
dissatisfied with that likely outcome.

At its heart, then, each of these cases appears to involve a challenge to regulations which
govern the time frame for which Medicare will retrospectively reimburse items or
services provided prior to the effective dates of enrollment by physicians who are newly
enrolled in the Medicare program (or re-enrolled at a point in time after enrollment has
lapsed). The regulations are 42 C.F.R. §§ 424.520(d) and 424.521(a). These are
relatively newly enacted regulations which became effective in January 2009.

The regulations provide, first, that the effective date for Medicare billing privileges for
physicians and certain other practitioners is the later of the date of filing of a Medicare
enrollment application that was subsequently approved by a Medicare contractor or the
date that an enrolled physician or other practitioner first began furnishing services at a

new practice location. 42 C.F.R. § 424.520(d). This regulation establishes the point in
time (effective date) from which Medicare may determine to reimburse retrospectively
claims for services provided by an enrolled physician.

Medicare will reimburse retrospectively a claim for services by an enrolled physician for
up to 30 days prior to the effective date of enrollment “if circumstances precluded
enrollment in advance of providing services to Medicare beneficiaries.” 42 C.F.R.

§ 424.521 (a)(1). It will reimburse retrospectively for up to 90 days prior to the effective
date of enrollment in the event that a Presidentially-declared disaster precluded
enrollment in advance of providing services. 42 C.F.R. § 424.521(a)(2). There are no
other circumstances under which retrospective reimbursement is permitted.°

Petitioners’ challenge of the regulations and the policies that they embody is not
something that I have the authority to hear and decide. As a delegate of the Secretary of
this Department I must apply her policies as are stated in regulations. I have no authority
to declare a regulation to be unlawful or ultra vires. Consequently, I may not hear
Petitioners’ challenge to the lawfulness of 42 C.F.R. §§ 424.520(d) and 424.521(a). Nor
do I have the authority to grant exceptions to this policy. Consequently, I may not direct
that it be waived in the case of any of these Petitioners.

* Each of Petitioners avers that the Medicare program previously gave newly
enrolled physician a 23-month grace period during which claims would be reimbursed
retrospectively. Petitioners complain that it is unreasonable for the Medicare program to
change its policy from the 23-month period to the periods that are now permitted, under
defined circumstances, by 42 C.F.R. § 424.521(a)(1) and (2).
Furthermore, none of the Petitioners makes allegations that address issues that I do have
authority to hear and decide. None of them, for example, assert that they should have
been given an earlier effective date of enrollment. See 42 C.F.R. § 498.3(b)(15). Nor do
Petitioners allege that their Medicare enrollment was improperly denied or revoked. See
42 C.F.R. § 498.3(b\(17).!

2. I must dismiss Petitioners’ hearing requests.

I may dismiss a hearing request in the circumstance where a party requesting a hearing
has no right to a hearing. 42 C.F.R. § 498.70(b). None of these Petitioners has
established a right to a hearing. Consequently, I dismiss these cases.

/s/ Steven T. Kessel
Administrative Law Judge

* In its motion CMS argues that some of the Petitioners may be attempting to
challenge their deactivation as enrolled providers. CMS argues that a provider has no
right to challenge deactivation of provider status. I do not disagree. However, there is
nothing in any of the hearing requests that suggests that any of the Petitioners is alleging
that he or she was improperly deactivated. Rather, all of Petitioners are protesting the
regulations’ policy that limits retrospective enrollment for newly enrolled physicians or
for those physicians who re-enroll after a lapse in their enrollment.