Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

The Forum at Lincoln Heights,
(CCN: 45-5870),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-11-275
Decision No. CR2359
Date: April 20, 2011
DECISION DISMISSING REQUEST FOR HEARING

This matter is before me on the Motion to Dismiss filed by the Centers for Medicare

& Medicaid Services (CMS) on March 21, 2011. The Forum at Lincoln Heights,
Petitioner, opposes the CMS Motion. For the reason set out below, I GRANT the Motion
to Dismiss.

I. Background

The Texas Department of Aging and Disability Services (TDADS) completed a survey of
Petitioner’s facility on November 18, 2010. By notice letter dated December 9, 2010,
CMS advised Petitioner that it was not in substantial compliance with federal
requirements that govern participation of nursing homes in Medicare and Medicaid. The
notice letter informed Petitioner that CMS would impose the following remedies:
termination of Petitioner’s provider agreement if substantial compliance was not achieved
by April 18, 2011; two per-instance civil money penalties (CMPs) of $3,750 each for
deficiency tags F-224 and F-323, for a total of $7,500; a denial of payment for new
admissions (DPNA); and withdrawal of approval of a nurse aide training and competency
evaluation program (NATCEP). Significantly, the parties now agree that Petitioner
neither operated a NATCEP during relevant times nor sought approval to do so.
By notice letter dated December 21, 2010, CMS informed Petitioner that it had rescinded
the two per-instance CMPs but that the termination of Petitioner’s provider agreement,
the DPNA, and the withdrawal of NATCEP approval would remain in effect.

Petitioner’s Request for Hearing was filed February 4, 2011. Then, by notice letter dated
February 17, 2011, CMS informed Petitioner that it had achieved substantial compliance
with participation requirements as of February 8, 2011. The notice advised Petitioner
that CMS was rescinding the proposed enforcement actions of the DPNA and termination
of Petitioner’s provider agreement.

Petitioner’s Request for Hearing was received and docketed by the Civil Remedies
Division on February 17, 2011. My Acknowledgment and Initial Docketing Order of that
date, at Paragraph 2, gave the parties 30 days to submit Reports of Readiness or file
dispositive motions. Petitioner filed a timely Report of Readiness. CMS filed a timely
Motion to Dismiss and an incorporated memorandum of law. CMS filed three exhibits
(CMS Exs. A-C). Petitioner filed a response opposing the CMS Motion along with two
exhibits (P. Exs. | and 2). All proffered exhibits are admitted as designated.'

II. Discussion

CMS asserts that all enforcement remedies it sought to impose against Petitioner have
been rescinded. Petitioner does not contest this assertion. Thus, the issue before me is
whether a long-term care facility has a right to a hearing when CMS withdraws the
enforcement remedies provided for in 42 C.F.R. § 488.406. This is an issue that has been
addressed many times by the Administrative Law Judges (ALJs) of the Civil Remedies
Division, and without exception each has come to the same resolution of that issue that I
announce here. I find and conclude that The Forum at Lincoln Heights is not entitled to a
hearing, and on the basis of 42 C.F.R. § 498.70(b), I grant CMS’s Motion to Dismiss.

The hearing rights of a long-term care facility are established by federal regulations at
42 C.F.R. Part 498. A provider dissatisfied with CMS’s initial determination is entitled
to further review, but administrative actions that do not constitute initial determinations
are not subject to appeal. 42 C.F.R. § 498.3(d). The regulations specify which actions
are “initial determinations” and set forth examples of actions that are not. A finding of
noncompliance that results in the imposition of a remedy specified in 42 C.F.R.

"Tt is not immediately clear why CMS chose to mark its three exhibits CMS Ex. A, CMS
Ex. B, and CMS Ex. C. In my Order of February 17, 2011, the parties were “encouraged
to review the CRDP (Civil Remedies Division Procedures) carefully, because they
govern the form and content of all filings made subject to Paragraphs 2, 3, 4, and 5 of this
Order ....” CRDP § 9 specifies a different system for marking exhibits, e.g. CMS Ex. 1,
CMS. Ex. 2, CMS Ex. 3, ete.
§ 488.406 is an initial determination for which a facility may request a hearing.

42 C.F.R. § 498.3(b)(13). Unless the finding of noncompliance results in the actual
imposition of a specified remedy the finding is not an initial determination. 42 C.F.R.

§ 498.3(d)(10)(ii). Where, as here, CMS rescinds all proposed remedies, a facility has no
hearing right because no determination properly subject to a hearing exists. It is the final
imposition of an enforcement remedy or sanction and not the citation of a deficiency that
triggers a facility’s right to a hearing pursuant to 42 C.F.R. Part 498. Golden Living
Center-Grand Island Lakeview, DAB No. 2364 (2011); Fountain Lake Health and
Rehabilitation, Inc., DAB No. 1985 (2005); Lakewood Plaza Nursing Center, DAB No.
1767 (2001); The Lutheran Home-Caledonia, DAB No. 1753 (2000); Schowalter Villa,
DAB No. 1688 (1999); Arcadia Acres, Inc., DAB No. 1607 (1997).

Petitioner resists the CMS Motion maintaining that not permitting it to appeal the
underlying survey findings or the scope and severity of the deficiencies as cited could
leave it subject to inclusion in CMS’s Special Focus Facility program? which Petitioner
claims would adversely affect its reputation, and thus potentially would limit its ability to
compete in the marketplace, and would jeopardize its income. Although Petitioner seeks
to use this forum to protect its reputation by attempting to refute the citations of
deficiencies, there simply is no relief that I can afford Petitioner. The potential for
Petitioner to be included in the Special Focus Facility program list is neither an
enforcement remedy nor an initial determination subject to my review. 42 C.F.R.

§§ 488.406, 498.3(b). See, e.g., Golden Living Center-Grand Island Lakeview, DAB No.
2364, at 5-6.

Petitioner also asserts that it would be denied its due process rights if not allowed to
appeal the deficiencies and scope and severity ratings determined by CMS. However,
similar arguments have not found success when they have been raised in this forum or
before the Departmental Appeals Board (Board). Neither the ALJs of this forum nor the
Board may consider such challenges to CMS actions. Carrington Place of Muscatine,
DAB No. 2321, at 24 (2010); Columbus Park Nursing and Rehabilitation Center, DAB
No. 2316, at 10 (2010).

The regulations and prior decisions in this forum and before the Board uniformly adhere
to the doctrine that there is no right to a hearing where deficiencies are identified, but
where CMS had thereafter rescinded the initial determination to impose enforcement
sanctions or remedies. Here, the two CMPs, the DPNA, and the termination of
Petitioner’s provider agreement were all rescinded, and the purported disapproval of

> Long-term care facilities that have a record of substandard quality of care may be
selected by their respective state for inclusion in CMS’s Special Focus Facility program
list. Upon placement on the list, a facility would be subject to twice the number of
standard surveys. P. Ex. 1.
Petitioner’s NATCEP was a nullity because Petitioner did not operate one in the first
place. After the CMS letter of February 17, 2011 Petitioner faced no sanctions or
remedies.* The authority delegated to me by the Secretary of this Department in cases
involving CMS is specified at 42 C.F.R. §§ 498.3 and 498.5. The regulations limit my
authority to hear and decide only cases involving specified initial determinations by
CMS, and since February 17, 2011 none have been present in this case.

Section 498.70(b) authorizes me to dismiss a hearing request when a petitioner does not
have a right to a hearing, and, for that reason I do so now in this matter. Petitioner’s
February 4, 2011 Request for Hearing must be, and it is, DISMISSED. The parties may
request that an order dismissing a case be vacated pursuant to 42 C.F.R. § 498.72.

/s/
Richard J. Smith
Administrative Law Judge

> A substandard quality of care citation provides a facility with an independent basis to
appeal the remedy of withdrawal of approval of its NATCEP, but here review is not
available to Petitioner as it was neither operating a NATCEP nor seeking approval to
operate one. 64 Fed. Reg. at 39,934 (July 23, 1999); 42 C.F.R. § 498.3(b)(16). Petitioner
does not dispute the essential nugatory character of CMS’s proposed disapproval of a
program Petitioner never operated.


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Christian Community Health Center,
(CCN: 14-1120),

Petitioner
v.

Centers for Medicare and Medicaid Services.
Docket No. C-11-61
Decision No. CR2358

Date: April 20, 2011

DECISION

For the reasons set forth below, I grant the motion of the Centers for Medicare and
Medicaid Services (CMS) for summary judgment. Petitioner, Christian Community
Health Center (CCHC), submitted an enrollment application for a new practice location
as a Federally Qualified Health Center (FQHC), and I find CMS properly determined that
Petitioner’s effective date of participation for the new practice location was May 26,
2010.

I. Background
Petitioner was certified as a FQHC in 1996.’ On January 4, 2010, Petitioner acquired

another entity that provided psychotherapy services and started operating a mental and
behavioral health program known as the CCHC Day Program. On January 6, 2010,

' Petitioner qualifies as an FQHC under section 1861(aa)(4) of the Social Security
Act because it receives a grant under section 330 of the Public Health Service (PHS)
Act (42 U.S.C. § 254b). Section 330 grants are administered by the Health Resources
and Services Administration (HRSA), a component of the Department of Health and
Human Services.
Petitioner submitted an application to HRSA that sought to change the scope of its grant
award. On March 18, 2010, HRSA issued a Notice of Grant Award Authorization,
approving Petitioner’s change in scope of its grant award to include the site housing the
CCHC Day Program, effective January 6, 2010. CMS Ex. 4, at 49-51. On March 24,
2010, Petitioner submitted an enrollment application for a new practice location as a
FQHC to National Government Services (NGS), its fiscal intermediary.” NGS received
Petitioner’s enrollment application on March 29, 2010. NGS forwarded the application
to CMS on May 26, 2010. CMS Ex. 4, at 1. NGS advised CMS that it processed
Petitioner’s enrollment application and found no evidence to indicate that the application
should be denied. /d. On June 14, 2010, CMS notified Petitioner that its request for
enrollment as a FQHC was approved with an effective date of participation of May 26,
2010. CMS Ex. 3, at 1. Petitioner requested reconsideration, seeking to have the
effective date changed to January 6, 2010, the date HRSA approved the change of scope
of the grant. CMS Ex. 2. A CMS contractor issued a reconsideration decision affirming
the May 26, 2010 effective date determination on August 23, 2010. CMS Ex. 1.

Pursuant to 42 C.F.R. § 498.40, Petitioner timely filed a request for an Administrative
Law Judge (ALJ) hearing by letter dated October 25, 2010. Petitioner’s hearing request
was accompanied by two exhibits (P. Exs. A and B). I issued an Acknowledgement and
Pre-Hearing Order on November 10, 2010. On December 10, 2010, CMS filed a motion
for summary judgment and exchange of evidence and argument (CMS Br.). CMS
accompanied its submission with six exhibits (CMS Exs. 1-6). On January 27, 2010,
Petitioner filed its response to CMS’ motion for summary judgment (P. Br.). In the
absence of objection, I receive into the record of this case P. Exs. A and B and CMS Exs.
1-6.

II. Relevant Authority

A FQHC is defined as:

An entity that has entered into an agreement with CMS to meet Medicare program
requirements under § 405.2434 and —

> Fiscal intermediaries are CMS contractors that process Medicare Part A claims; carriers
are CMS contractors that process Part B claims. Generally, Part A “provides basis
protection against the costs of hospital, related post-hospital, home health services, and
hospice care... .” 42 U.S.C. § 1395c. FQHC services are funded under Medicare Part
B. 42 U.S.C. § 1395k(a) (2) (D). However, “[s]ince payment for services covered under
the FQHC benefits is made on a cost-related basis, [FQHC] claims are processed by a
fiscal intermediary.” 61 Fed. Reg. 14,640, 14,656 (April 3, 1996).
(1) Is receiving a grant under section 329, 330, or 340 of the Public Health Service
Act, or is receiving funding from such a grant under a contract with a recipient of
such a grant and meets the requirements to receive a grant under section 329,330,
or 340 of the Public Health Service Act;

(2) Based on the recommendation of the Public Health Service, is determined by
CMS to meet the requirements for receiving such a grant;

(3) Was treated by CMS, for purposes of part B, as a comprehensive federally funded
health center (FFHC) as of January 1, 1990; or

(4) Is an outpatient health program or facility operated by a tribe or tribal organization
under the India Self-Determination Act or by an Urban Indian organization
receiving funds under title V of the Indian Health Care Improvement Act.

42 C.F.R. § 405.2401.

To be enrolled in the Medicare program as a FQHC, an entity must meet the definition of
a FQHC and file a complete enrollment application that includes a signed attestation
statement and the notice of its grant award from HRSA. In the attestation statement, the
FQHC agrees to comply with the FQHC requirements set out in 42 C.F.R. subpart X and
42 C.F.R. Part 491 and to promptly report any noncompliance to CMS. 42 C.F.R.

§ 405.2434(a). If CMS approves the FQHC’s enrollment application, the attestation
statement acts as the Medicare participation agreement. State Operations Manual (SOM),
Ch. 2, § 2826C.

The fiscal intermediary will review the completed application and other documents that
the applicant submitted to ensure the receipt of all required information and
documentation necessary to meet enrollment requirements. In addition, the fiscal
intermediary verifies whether an owner or managing employee has been convicted of a
crime, subjected to a civil money penalty, or excluded from the Medicare or Medicaid
programs. 42 C.F.R. § 420.204(a). Ifthe fiscal intermediary recommends approval, it
will forward its recommendation of approval to the CMS regional office (RO). Upon
receipt of the recommendation for approval, the RO verifies that the application is
complete and satisfies the necessary requirements. Thereupon, the RO signs the
applicant’s attestation statement.

The effective date of participation of a FQHC is the date that “CMS accepts the signed
agreement, which assures that all Federal requirements are met.” 42 C.F.R. §
405.2434(b)(1), see also 42 C.F.R. § 489.13(a)(2). If the application is complete when
reviewed by the RO, CMS uses the date of the fiscal intermediary’s recommendation
letter as the effective date so that any delay by CMS in reviewing the application will not
delay the FQHC’s admission into the Medicare program. SOM, Ch. 2, § 2826F.
III. Issue

The sole issue in this case is whether CMS properly determined that Petitioner’s new
practice location was eligible for participation in the Medicare program as of May 26,
2010 as a FQHC.

IV. Applicable Standard
The Departmental Appeals Board (Board) stated the standard for summary judgment:

Summary judgment is appropriate when the record shows that there is no
genuine issue as to any material fact, and the moving party is entitled to
judgment as a matter of law. . . . The party moving for summary judgment
bears the initial burden of showing that there are no genuine issues of
material fact for trial and that it is entitled to judgment as a matter of

law. ... To defeat an adequately supported summary judgment motion, the
non-moving party may not rely on the denials in its pleadings or briefs, but
must furnish evidence of a dispute concerning a material fact — a fact that, if
proven, would affect the outcome of the case under governing law. . . . In
determining whether there are genuine issues of material fact for trial, the
reviewer must view the evidence in the light most favorable to the non-
moving party, drawing all reasonable inferences in that party’s favor.

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

V. Findings of Fact, Conclusions of Law, and Discussion

CMS properly determined that the effective date of Petitioner’s enrollment
application for its new practice location as a FQHC is May 26, 2010.

Petitioner, in its request for reconsideration and its hearing request, argued that its
effective date for participation as a FQHC should be January 6, 2010, the date it
submitted its application to HRSA. Subsequently, when Petitioner filed its response
brief, Petitioner stated that “in light of the facts presented in CMS’s motion for summary
judgment and the arguments presented below, CCHC is hereby requesting an effective
date of March 29, 2010,” the date NGS received Petitioner’s enrollment application.

P. Br. at 1.
The effective date of participation of a FQHC is the date that “CMS accepts the signed
agreement, which assures that all Federal requirements are met.” 42 C.F.R.

§ 405.2434(b)(1) (emphasis added), see also 42 C.F.R. § 489.13(a)(2). The plain
language of this regulation mandates that enrollment cannot occur until CMS formally
accepts a signed agreement from an applicant, assuring CMS that the applicant has met
all federal requirements. On March 29, 2010, Petitioner had not yet met all federal
requirements as a FQHC because CMS had not yet verified its information. NGS
initially processes documents for FQHC approval requests and reviews the application to
determine if the information is complete and accurate, as well as confirming that the
officers or owners have not been excluded from the Medicare program. NGS verified
Petitioner’s documentation and, on May 26, 2010, informed CMS that it “found no
evidence to indicate the application should be denied.” CMS Ex. 4. CMS accepted
Petitioner’s assurances of compliance with FQHC requirements with an effective date of
May 26, 2010, the date that NGS determined that Petitioner’s application was complete.’
CMS formally accepted Petitioner’s assurances when its representative signed
Petitioner’s attestation statement on June 14, 2010. CMS Ex. 3, at 3. An applicant
cannot be deemed to have enrolled at a date earlier than the acceptance date.

Petitioner does not dispute the facts surrounding the timeline of its application
processing. However, because NGS received Petitioner’s enrollment application on
March 29, 2010, and completed its review of Petitioner’s application on May 26, 2010,
Petitioner argues that NGS’s almost “two month time period to verify CCHC’s
qualifications to meet the Medicare certification standards . . . [were] under the
circumstances . . . excessive and should be rejected as it unfairly harmed CCHC.” P. Br.
at 4. Petitioner claims that it continued to provide services to the disadvantaged persons
seeking its assistance during this time period. Petitioner also claims that NGS should not
have taken almost two months to verify the accuracy of its application given that
Petitioner had already qualified as a FQHC.

The effective date provisions of 42 C.F.R. § 405.2434(b)(1) and § 489.13(a)(2) are clear.
Ihave no authority to grant Petitioner’s request of an earlier effective date than that
which the regulations allow. My review is limited to whether CMS has established a
legal basis for its determination to approve an effective date for Petitioner’s enrollment.
Petitioner points to no source of authority for me to overturn, based on equitable
considerations it raises, CMS’s determination that it is in compliance with applicable law
and regulations. It is well-established that ALJs are bound by statute and regulations.

> CMS determined that Petitioner had provided adequate assurances of compliance with
all FQHC requirements on June 14, 2010. CMS Ex. 3, at 3. CMS used the date that NGS
completed its review as the effective date of Petitioner’s enrollment as a FQHC so that
Petitioner’s participation in the Medicare program would not be delayed by the time it
took NGS to forward the application to CMS and for CMS to review the application.
CMS Ex. 5, at 9; SOM, Ch. 2, § 2826F.
Restwell Mattress Co. d/b/a Restwell Mattress Factory, DAB CR2194, at 6 (2010) (citing
Sentinel Med. Labs., Inc., DAB No. 1762, at 9 (2001)). Where a regulation speaks
clearly on its face and applies to the question before me, I am bound to follow it. See US
Ultrasound, DAB No. 2302, at 8 (2010) (“Neither the ALJ nor the Board is authorized to
provide equitable relief by reimbursing or enrolling a supplier who does not meet
statutory or regulatory requirements.”). I am without authority to address considerations
of equity.

In conclusion, CMS properly determined that the effective date of Petitioner’s enrollment
application as a FQHC is May 26, 2010, the undisputed date that CMS accepted the
signed agreement assuring Petitioner’s new location met all federal requirements of a
FQHC.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Kevin Wayne Maniece, a.k.a Kevin Wayne William, a.k.a. William Maniece,
Petitioner,
v.

The Inspector General.

Docket No. C-11-40

Decision No. CR2357

Date: April 15, 2011

DECISION

This matter is before me on the Inspector General’s (1.G.’s) Motion for Summary
Disposition affirming the I.G.’s determination to exclude Petitioner pro se Kevin Wayne
Maniece from participation in Medicare, Medicaid, and all other federal health care
programs for a period of five years. The I.G.’s Motion and determination to exclude
Petitioner are based on section 1128(a)(1) of the Social Security Act (Act), 42 U.S.C. §
1320a-7(a)(1). The undisputed material facts in this case require the imposition of a five-
year exclusion. Accordingly, I grant the I.G.’s Motion for Summary Disposition.

I. Procedural Background

On July 22, 2009 the Grand Jury sitting for the United States District Court for the
Central District of California handed up an Indictment charging Petitioner with a felony,
Bribery Concerning a Program Receiving Federal Funds, in violation of 18 U.S.C. §
666(a)(1)(B). Petitioner and his attorney reached a plea agreement with federal
prosecutors in mid-October 2009, and on March 8, 2010 he appeared with counsel in the
United States District Court and pleaded guilty to that charge. The District Court
accepted Petitioner’s guilty plea, found him guilty on that plea, entered its judgment of
conviction, and in due course imposed a sentence that included a six-month term of home
detention and a two-year term of probation.
2

Section 1128(a)(1) of the Act mandates the exclusion of “[a]ny individual or entity that
has been convicted of a criminal offense related to the delivery of an item or service
under [Medicare] or . . . any State health care program” for a period of not less than five
years. On August 31, 2010 the LG. notified Petitioner that he was to be excluded
pursuant to the terms of section 1128(a)(1) of the Act for a period of five years.

Acting pro se, Petitioner timely sought review of the L.G.’s action by his undated letter
mailed on October 12, 2010.

I convened a prehearing conference by telephone on November 10, 2010, pursuant to 42
C.F.R. § 1005.6, in order to discuss procedures best suited for addressing the issues
presented by the case. By Order of November 12, 2010 I established a schedule for the
submission of documents and briefs, and at Petitioner’s request amended that schedule by
letter on December 29, 2010. The record in this case closed for purposes of 42 C.F.R. §
1005.20(c) on April 15, 2011, in circumstances set out in my Order of that date.

The evidentiary record on which I decide the issues before me contains the four exhibits
proffered by the I.G. marked I.G. Exhibits 1-4 (1.G. Exs. 1-4). Petitioner proffered no
exhibits of his own. In the absence of objection, I have admitted all proffered exhibits.

II. Issues

The legal issues before me are limited to those set out at 42 C.F.R. § 1001.2007(a)(1). In
the context of this record, they are:

a. Whether the LG. has a basis for excluding Petitioner from participating
in Medicare, Medicaid, and all other federal health care programs pursuant
to section 1128(a)(1) of the Act; and

b. Whether the five-year length of the proposed period of exclusion is
unreasonable.

The controlling authorities require that these issues be resolved in favor of the I.G.’s
position. Section 1128(a)(1) of the Act mandates Petitioner’s exclusion, for his predicate
conviction has been established. A five-year period of exclusion is the minimum period
established by section 1128(c)(3)(B) of the Act, 42 U.S.C. § 1320a-7(c)(3)(B), and is
therefore as a matter of law not unreasonable.
Ill. Controlling Statutes and Regulations

Section 1128(a)(1) of the Act, 42 U.S.C. § 1320a-7(a)(1), requires the exclusion from
participation in Medicare, Medicaid, and all other federal health care programs of any
individual or entity convicted of a criminal offense related to the delivery of an item or
service under title XVIII of the Act (the Medicare program) or any state health care
program. The terms of section 1128(a)(1) are restated in similar language at 42 C.F.R.
§ 1001.101(a).

The Act defines “conviction” as including those circumstances “when a judgment of
conviction has been entered against the individual . . . by a Federal . . . court, regardless
of... whether the judgment of conviction or other record relating to criminal conduct has
been expunged,” section 1128(i)(1) of the Act; “when there has been a finding of guilt
against the individual . . . by a Federal . . . court,” section 1128(i)(2) of the Act; “when a
plea of guilty or nolo contendere by the individual . . . has been accepted by a Federal .. .
court,” section 1128(i)(3) of the Act; or “when the individual . . . has entered into
participation ina... deferred adjudication ... program where judgment of conviction
has been withheld,” section 1128(i)(4) of the Act, 42 U.S.C. §§ 1320a-7(i)(1)-(4). These
definitions are repeated at 42 C.F.R. § 1001.2.

An exclusion based on section 1128(a)(1) is mandatory and the I.G. must impose it for a
minimum period of five years. Section 1128(c)(3)(B) of the Act, 42 U.S.C. § 1320a-
7(c)(3)(B). The regulatory language of 42 C.F.R. § 1001.102(a) affirms the statutory
provision.

IV. Findings and Conclusions
I find and conclude as follows:

1. On his accepted plea of guilty on March 8, 2010, in the United States District Court
for the Central District of California, Petitioner pro se Kevin Wayne Maniece was found
guilty of one count of Bribery Concerning a Program Receiving Federal Funds, in
violation of 18 U.S.C. § 666(a)(1)(B). LG. Exs. 2, 3, 4.

2. The accepted plea of guilty, finding of guilt, and judgment of conviction described
above constitute a “conviction” within the meaning of sections 1128(a)(1) and 1128(i)(1),
1128(i)(2), and 1128(i)(3) of the Act, and 42 C.F.R. § 1001.2.
3. A nexus and a common-sense connection exist between the criminal offense to which
Petitioner pleaded guilty and of which he was convicted, as noted above in Findings 1
and 2, and the delivery of an item or service under the Medicare program. I.G. Exs. 2, 3,
4; Berton Siegel, D.O., DAB No. 1467 (1994).

4. Petitioner’s conviction constitutes a basis for the I.G.’s exclusion of Petitioner from
participation in Medicare, Medicaid, and all other federal health care programs, pursuant
to section 1128(a)(1) of the Act, 42 U.S.C. § 1320a-7(a)(1).

5. Because the five-year period of Petitioner’s exclusion is the mandatory minimum
period provided by law, it is therefore not unreasonable. Section 1128(c)(3)(B) of the
Act, 42 U.S.C. § 1320a-7(c)(3)(B); 42 C.F.R. §§ 1001.102(a) and 1001.2007(a)(2).

6. There are no disputed issues of material fact and summary disposition is
therefore appropriate in this matter. Michael J. Rosen, M.D., DAB No. 2096 (2007);
Thelma Walley, DAB No. 1367 (1992); 42 C.F.R. § 1005.4(b)(12).

V. Discussion

The essential elements necessary to support an exclusion based on section 1128(a)(1) of
the Act are: (1) the individual to be excluded must have been convicted of a criminal
offense; and (2) the criminal offense must have been related to the delivery of an item or
service under Title XVIII of the Act (Medicare) or any state health care program.
Tamara Brown, DAB No. 2195 (2008); Thelma Walley, DAB No. 1367; Boris Lipovsky,
M.D., DAB No. 1363 (1992); Lyle Kai, R.Ph., DAB CR1262 (2004), rev'd on other
grounds, DAB No. 1979 (2005); see also Russell Mark Posner, DAB No. 2033, at 5-6
(2006). Petitioner has not challenged the I.G.’s proof of these two elements, but has
vigorously argued that the exclusion itself should not be imposed.

Although the L.G.’s proof of the two essential elements has not been placed in
controversy here, I nevertheless note that the record before me reveals objective proof of
each. Court records of Petitioner’s conviction and its procedural history are before me as
1G. Exs. 2, 3, and 4, and establish the first essential element. The relation of Petitioner’s
crime to the Medicare program is set out in the language of the Indictment and
acknowledged by Petitioner in the plea agreement. That relationship establishes the
nexus or common-sense connection to the Medicare program defined in Berton Siegel,
D.O., DAB No. 1467.

It is a well-settled rule of this forum that once an individual’s conviction is found to have
been “related to the delivery of an item or service under Medicare or a State health care
program,” and thus to lie within the terms of section 1128(a)(1), the imposition of the
five-year minimum exclusion established by section 1128(c)(3)(B) of the Act is
mandatory and beyond the authority of the .G. or an Administrative Law Judge (ALJ) to
reduce, modify, or suspend. The Departmental Appeals Board (Board) has used the
clearest possible language to make this point: “Petitioner’s exclusion was mandatory
under the Act once the nexus was established between her offense and the delivery of an
item or service under the Medicare program. The ALJ had no discretion to impose a
lesser remedy.” Salvacion Lee, M.D., DAB No. 1850, at 4 (2002). This link between
conviction and exclusion admits of no exception: “We therefore affirm the ALJ’s
conclusion . . . that once an individual has been found to have been convicted of a
criminal offense relating to delivery of a health care item or service to Medicare, section
1128(a)(1) of the Act makes program exclusion mandatory.” Lorna Fay Gardner, DAB
No. 1733, at 6 (2000); Douglas Schram, R.Ph., DAB No. 1372 (1992); Napoleon S.
Maminta, M.D., DAB No. 1135 (1990).

Petitioner’s specific argument, in which he points out his desire to support his family by
working in occupations related to health care, fails for the same basic reason: the
potential closing-off of certain occupations to an excluded individual and the probable
loss of earnings from those occupations are not a defense to the mandatory imposition of
this exclusion. Henry L. Gupton, DAB No. 2058 (2007); Salvacion Lee, M.D., DAB No.
1850. As the Board observed in Joann Fletcher Cash, DAB No. 1725 (2000), the precise
point of the exclusion mechanism is to prevent untrustworthy individuals from being
involved with protected health care programs. That this exclusion may have a dramatic
effect on Petitioner’s or any other excluded individual’s future employment opportunities
is a logical consequence of any exclusion, including this one.

Because the I.G. has established a basis for Petitioner’s exclusion pursuant to section
1128(a)(1), his exclusion for five years is mandatory pursuant to section 1128(c)(3)(B) of
the Act. 42 U.S.C. § 1320a-7(c)(3)(B). That period is reasonable as a matter of law.

I note once more that Petitioner appears here pro se. Because of that I have taken
additional care in reading his submissions, guided by the Board’s reminders that pro se
litigants should be offered “some extra measure of consideration” in developing their
records and their cases. Louis Mathews, DAB No. 1574 (1996); Edward J. Petrus, Jr.,
M_D., et al., DAB No. 1264 (1991). I have searched all of Petitioner’s submissions for
any arguments or contentions that might raise a valid, relevant defense to the proposed
exclusion, but have found nothing that could be so construed.

Summary disposition is authorized by the terms of 42 C.F.R. § 1005.4(b)(12). Resolution
of a case by summary disposition is particularly fitting when settled law can be applied to
undisputed material facts. Marvin L. Gibbs, Jr., M.D., DAB No. 2279 (2009); Michael J.
Rosen, M.D., DAB No. 2096. The material facts in this case are undisputed and
unambiguous. They support summary disposition as a matter of settled law, and this
Decision issues accordingly.
VI. Conclusion

For the reasons set forth above, the I.G.’s Motion for Summary Disposition should be,
and it is, GRANTED. The I.G.’s exclusion of Petitioner pro se Kevin Wayne Maniece
from participation in Medicare, Medicaid, and all other federal health care programs for a
period of five years pursuant to the terms of section 1128(a)(1) of the Act, 42 U.S.C.

§ 1320a-7(a)(1), is sustained.

/s/
Richard J. Smith
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Shekhar S. Desai,
(PTAN: 12128),
Petitioner
v.
Centers for Medicare and Medicaid Services.
Docket No. C-11-33
Decision No. CR2356

Date: April 12, 2011

DECISION

I grant the motion of the Centers for Medicare and Medicaid Services (CMS) for
summary judgment and sustain the revocation of Petitioner Shekhar S. Desai, M.D.’s
Medicare enrollment and billing privileges based on his guilty plea to a felony under
42 CFR. § 424.535(a)(3).

I. Background

The United States Attorney for the District of New Jersey filed an information and
charged Petitioner with felony conspiracy to commit wire fraud. CMS Ex. 4. The
information alleges that Petitioner:

[D]id knowingly and intentionally conspire and agree with others to
commit an offense against the United States, that is, to devise a scheme
and artifice to defraud and to obtain money and property by means of
materially false and fraudulent pretenses, representations, and promises. . .
and for the purposes of executing such scheme an artifice, to transmit
and cause to be transmitted by means of wire communications in interstate
commerce certain writings, signs, signals, pictures, and sounds, contrary
to Title 18, United States Code 1343.

Id. at 3-4.

On March 5, 2010, Petitioner entered a guilty plea to one count of felony conspiracy to
commit wire fraud from the information. CMS Ex. 6. On October 25, 2010, Petitioner
was sentenced to five years probation, six months home confinement, and 520 hours of
community service. /d. Petitioner was also ordered to pay a $30,000 fine and $96,000 in
restitution. /d. at 6-7.

First Coast Service Options (First Coast), a Medicare contractor, revoked Petitioner’s
Medicare billing privileges effective March 5, 2010, by notice letter dated March 26,
2010. CMS Ex. 1. The notice letter cited 42 C.F.R. § 424.535 and stated that Petitioner’s
billing privileges were revoked because of his March 5, 2010 guilty plea to conspiracy to
commit wire fraud. /d. The revocation notice stated that Petitioner had thirty days to
submit a corrective action plan (“CAP”) showing compliance with Medicare
requirements and also informed Petitioner that he could request reconsideration within
sixty days. /d. Petitioner submitted a CAP by letter dated April 22, 2010. CMS Ex. 2.
Petitioner also submitted a Request for Reconsideration dated May 25, 2010. /d. at 22.
On June 28, 2010, a Senior Appeal Analyst from First Coast denied Petitioner’s request
for reconsideration and upheld the revocation based on 42 C.F.R. § 424.535. CMS Ex. 3.

On October 14, 2010, Petitioner filed a request for an Administrative Law Judge (ALJ)
hearing (HR). An Acknowledgment and Pre-Hearing Order (Pre-Hearing Order) was
sent to the parties on October 26, 2010. In accordance with the terms of the Pre-Hearing
Order, on November 24, 2010, CMS submitted its Motion for Summary Judgment and
supporting brief (CMS Br.), and six proposed exhibits (CMS Exs. 1-6). On January 1,
2011, Petitioner submitted its Opposition to CMS’s Motion for Summary Judgment and
supporting brief (P. Br.), and eight proposed exhibits (P. Exs. 1-8). On January 18, 2011,
CMS submitted a reply brief (CMS Reply) along with an attachment. In the CMS Reply,
CMS objected to P. Exs. 1, 3, 4, 6, 7, and 8. CMS argues these exhibits constitute new
evidence under 42 C.F.R. § 498.56(e),which must be excluded at the ALJ level, and the
new evidence is not relevant. CMS Reply at 4-5. On January 28, 2011, Petitioner
submitted a Response to CMS’s Reply (P. Response) along with two attachments.

i=}

Section 498.56(e) limits the admission of new documentary evidence, and a party must
show good cause for submitting evidence for the first time at the ALJ level. Petitioner’s
additional evidence includes an addendum to his affidavit submitted at the
reconsideration level, a decision of the Florida Board of Medicine, and various affidavits
and letters (P. Exs. 1, 3, 4, 6, 7, and 8). These documents are all dated after the June 28,
2010 reconsideration decision and are being submitted for the first time at the ALJ level.

Petitioner has not argued that good cause exists to submit this new evidence. I do not
find that good cause exists for the admission of P. Exs. 1, 3, 4, 6, 7, and 8 and exclude
this evidence pursuant to 42 C.F.R. § 498.56(e). Furthermore, both parties submitted
additional documents as attachments to their respective reply briefs, but they did not
mark these documents as exhibits pursuant to my Pre-Hearing Order and the Civil
Remedies Division Procedures. Thus, I exclude these attachments as evidence in this
proceeding. In any event, as I determine below, the parties’ reply attachments and

P. Exs. 1, 3, 4, 6, 7, and 8 are not material to the outcome of this case. In the absence of
objection, I admit CMS Exs. 1-6, P. Ex. 2, and P. Ex. 5.

II. Applicable Law

Section 424.535(a) of 42 C.F.R. authorizes CMS to “revoke a currently enrolled provider
or supplier’s Medicare billing privileges and any corresponding provider agreement or
supplier agreement” for reasons including, as relevant here:

(3) Felonies. The provider, supplier, or any owner of the provider or
supplier, within the 10 years preceding enrollment or revalidation of
enrollment, was convicted of a Federal or State felony offense that CMS
has determined to be detrimental to the best interests of the [Medicare]
program and its beneficiaries.

(i) Offenses include—
* * * *

(B) Financial crimes, such as extortion, embezzlement, income tax
evasion, insurance fraud and other similar crimes for which the
individual was convicted, including guilty pleas and adjudicated
pretrial diversions.

III. Issue, Findings of Fact, Conclusions of Law

A. Issue

The issue in this case is whether CMS had a legitimate basis to revoke Petitioner’s
enrollment and billing privileges in Medicare.

B. Applicable Standard

The Departmental Appeals Board (Board) stated the standard for summary judgment:
Summary judgment is appropriate when the record shows that there is no
genuine issue as to any material fact, and the moving party is entitled to
judgment as a matter of law. . . . The party moving for summary judgment
bears the initial burden of showing that there are no genuine issues of
material fact for trial and that it is entitled to judgment as a matter of

law. ... To defeat an adequately supported summary judgment motion, the
non-moving party may not rely on the denials in its pleadings or briefs, but
must furnish evidence of a dispute concerning a material fact — a fact that, if
proven, would affect the outcome of the case under governing law. . . . In
determining whether there are genuine issues of material fact for trial, the
reviewer must view the evidence in the light most favorable to the non-
moving party, drawing all reasonable inferences in that party’s favor.

Senior Rehab. & Skilled Nursing Ctr., DAB No. 2300, at 3 (2010) (citations

omitted). The ALJ's role in deciding a summary judgment motion differs from the ALJ’s
role in resolving a case after a hearing. The ALJ should not assess credibility or evaluate
the weight of conflicting evidence. Holy Cross Vill. at Notre Dame, Inc, DAB No. 2291,
at 5 (2009).

C. Analysis

My findings and conclusions are in the italicized headings and subsequent discussions
below.

1. CMS was authorized to revoke Petitioner’s enrollment under 42 C.F.R.
§ 424,535(a)(3) based on his felony conviction.

CMS argues that Petitioner’s revocation was authorized, and CMS is entitled to summary
judgment because Petitioner pled guilty to a felony charge of conspiracy to commit wire
fraud. CMS contends this charge falls within the regulation’s category of “[f]inancial
crimes, such as extortion, embezzlement, income tax evasion, insurance fraud and other
similar crimes for which the individual was convicted, including guilty pleas and
adjudicated pretrial diversions.” 42 C.F.R. § 424.535(a)(3)(i)(B). In his brief, Petitioner
argues that CMS did not properly exercise its authority to revoke Petitioner’s Medicare
billing privileges because “[t]he financial felonies that are not enumerated in 42 C.F.R.

§ 424.535(a)(3) have not been found to be per se detrimental to the Medicare program
and CMS/[First Coast] made no reasonable determination to that effect.” P. Br. at 8.
Petitioner also contends that First Coast “did not properly exercise its authority to revoke
Petitioner’s Medicare billing privileges under 42 C.F.R. § 424.535(a)(3) because it made
no reasonable determination that Petitioner’s conduct was detrimental to the Medicare
program.” P. Br. at 16. Thus, Petitioner argues that CMS is not entitled to summary
judgment as a matter of law.
It is undisputed that Petitioner pled guilty “to a one-count Information, which charges
that he conspired to commit wire fraud, contrary to Title 18, United States Code, Section
1343, in violation of Title 18, United States Code, Section 371.” CMS Ex. 5, at 1. The
relevant federal criminal statute provides, “[i]f two or more persons conspire either to
commit any offense against the United States, or to defraud the United States, or any
agency thereof in any manner or for any purpose, and one or more of such persons do any
act to effect the object of the conspiracy...” 18 U.S.C. § 371. It is also undisputed that
Petitioner pled guilty to charges stemming from “conspiring with others to engage ina
scheme whereby [Petitioner] received payments for services that he did not perform, but
were nevertheless fraudulently invoiced . . .” and that Petitioner paid restitution in the
amount of $96,000. CMS Ex. 5, at 1; P. Br. at 5.

I note that both the March 26, 2010 revocation notice letter and the June 28, 2010
reconsideration decision mistakenly identified 42 C.F.R. § 424.535 (a)(1)(b) as the basis
for Petitioner’s revocation, even though CMS based its articulated rationale on
Petitioner’s guilty plea and quoted the language of 42 C.F.R. § 424.535(a)(3)(i)(B).
However, the Board has consistently held that, after an administrative appeal has
commenced, a federal agency may assert and rely on new or alternative grounds for the
challenged action or determination as long as the non-federal party has notice of, and a
reasonable opportunity to respond to, the asserted new grounds during the administrative
proceeding. See Green Hills Enters., LLC, DAB No. 2199 (2008); see also Abercrombie
v. Clarke, 920 F.2d 1351, 1360 (7th Cir. 1990), cert. denied, 520 U.S. 809 (1991)
(holding that defects in formal notice may be cured during the course of an administrative
proceeding, and due process is satisfied as long as the party is reasonably apprised of, and
given opportunity to address, the issues in controversy). It is evident that CMS chose to
revoke Petitioner’s Medicare billing privileges under 42 C.F.R. § 424.535(a)(3)(i)(B),
and I find that Petitioner was provided notice and a reasonable opportunity to respond to
the grounds for Petitioner’s revocation in the instant appeal.

o

An ALJ’s proper role under Section 424.535(a)(3) is to determine whether CMS had
sufficient legal grounds for a revocation determination. Abdul Razzaque Ahmed, M.D.,
DAB No. 2261, at 7 (2009), afd Ahmed v. Sebelius, 710 F.Supp.2d 167 (D. Mass.
2010). The Board has clearly stated that CMS is not required to determine, in each case
of revocation for a felony conviction, that the specific offense of which the individual
supplier was convicted is detrimental to the best interests of Medicare and its
beneficiaries. Instead, the Board has held that the presence of an offense among those
listed in section 424.535(a)(3)(i)(B) means that CMS has already determined that the
offense “is detrimental per se to the best interests of the Medicare program and its
beneficiaries.” Letantia Bussell, M.D., DAB No. 2196, at 9 (2008). That holding was
based on the preamble to the final rule authorizing denial and revocation of enrollment
for felony convictions, in which CMS stated that “[f]elonies that we determine to be
detrimental! to the best interests of the Medicare program or its beneficiaries include . . .
financial crimes, such as extortion, embezzlement, income tax evasion, making false

statements, insurance fraud, and other similar crimes... .” 71 Fed. Reg. 20,754; 20,768
(Apr. 21, 2006) (emphasis added).

CMS could reasonably determine that Petitioner’s undisputed conduct of conspiring to
commit wire fraud through the submission of fraudulent invoices constitutes a felony
offense within the category of “financial crime” that is “similar” to the enumerated
offenses of embezzlement and insurance fraud. Based on the undisputed facts underlying
his guilty plea, I conclude that Petitioner’s guilty plea was covered under section
424.535(a)(3)(i)(B). In reaching this conclusion, I “examine . . . the conduct and
circumstances underlying Petitioner's offense.” Ahmed, DAB No. 2261, at 7-8.
Additionally, the Board stated in Ahmed:

[E]ven if Petitioner's felony offense was not similar to one of the crimes
named in the regulation, CMS would not necessarily be precluded from
finding that it was a financial crime. Financial crimes, the regulation states,
are crimes “such as extortion, embezzlement, income tax fraud, insurance
fraud and other similar crimes” (emphasis added). The words “such as”
imply that the subsequent list of illustrative crimes, including crimes
similar to those named in the list, are not the only set of crimes that may be
considered “financial.”

Id. at 10.

Petitioner also argues that I should reverse the revocation of his Medicare billing
privileges because he is “an excellent joint replacement surgeon,” and “it would be. . .
arbitrary and unreasonable . . . to revoke Petitioner’s Medicare billing privileges and end
his medical career without an appropriate determination of whether, in fairness, his
conduct constitutes an actual detriment to the Medicare program.” P. Reply at 3-4.
However, I have no authority to grant the equitable relief Petitioner seeks. As discussed
above, my review is limited to whether CMS has established a legal basis for its
determination to revoke Petitioner’s Medicare billing privileges. It is well-established
that statute and regulations bind ALJs. Sentinel Med. Labs., Inc., DAB No. 1762, at 9
(2001). Where a regulation speaks clearly on its face and applies to the question before
me, I am bound to follow it. See US Ultrasound, DAB No. 2302, at 8 (2010).

Therefore, I conclude based on undisputed facts that CMS was authorized under section
424.535(a)(3)(i)(B) to revoke Petitioner’s Medicare billing privileges and that I am
required to sustain CMS’s determination.

2. Petitioner’s Corrective Action Plan is not reviewable in this forum

Petitioner also argues that First Coast never determined whether Petitioner’s Corrective
Action Plan should be accepted. However, I cannot address this issue, as CMS’s decision
whether or not to reinstate a supplier based on a CAP is not an initial determination and
not reviewable by an ALJ. 42 C.F.R. § 405.874(e).

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

After the initial notice of revocation, the supplier has two tracks

to seek to avoid revocation and may elect to pursue either or both
concurrently. [Medicare Program Integrity Manual (MPIM)],

Ch. 10, § 19.A. The supplier, within 60 days, may request
“reconsideration” of whether the basis for revocation is erroneous or,
within 30 days, it may submit a CAP to demonstrate that it has corrected
that basis. If the contractor accepts the CAP, it notifies the supplier,

and any reconsideration request is withdrawn. If the contractor denies

the CAP, the reconsideration process may proceed to a hearing before a
hearing officer, who reviews “the Medicare contractor’s reason for
imposing a. . . revocation at the time it issued the action... .” Jd.

An unfavorable hearing officer decision is appealable to an ALJ,

who reviews the basis for the revocation. /d. No provision is made for

an appeal of the contractor’s decision not to reinstate based on the CAP. Jd.
The hearing officer conducting the reconsideration (and the ALJ on appeal
of the hearing officer decision) are limited to reviewing the basis for
revocation set out in the initial notice, not the merits of any contractor
decision that corrective action under a CAP was unacceptable.

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

Thus, the contractor’s CAP evaluation is not an initial determination and not appealable.
However, CMS’s reconsideration decision arises from the contractor’s initial
determination to revoke Petitioner’s Medicare billing privileges and is appealable through
the administrative process, including the present review. Emmanuel Brown M.D. and
Simeon Obeng M.D., DAB CR2145, at 6-8 (2010).

IV. Conclusion

The undisputed facts entitle CMS to summary judgment as a matter of law. I therefore
grant summary judgment in favor of CMS and sustain the revocation of Petitioner’s
Medicare billing privileges.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Derm One, PLLC,
(PTAN: C09028),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-11-29
Decision No. CR2355

Date: April 12, 2011

DECISION

For the reasons set forth below, I find in favor of CMS upholding its determination to
revoke Petitioner’s enrollment and billing privileges in the Medicare program under 42
C.F.R § 424.535(a)(3). However, pursuant to the regulations in effect at the time of the
2008 conviction of Petitioner’s sole owner, I find CMS improperly determined the
effective date of Petitioner’s revocation. I now find that date to be August 15, 2010,
thirty days from the initial notification of the revocation.

I. Background

Petitioner, Derm One, PLLC (Derm One), appeals the revocation of its Medicare billing
privileges. Trailblazer Health Enterprises, LLC (Trailblazer), the Medicare contractor,
imposed the revocation because Derm One’s sole owner, David L. Tolliver, D.O., was
convicted on September 18, 2008 of the federal felony offense of filing a false tax
return. Trailblazer initially imposed the revocation on July 16, 2010, effective
retroactively to November 3, 2008. On August 10, 2010, Trailblazer revised the notice
letter to reflect that the revocation became effective retroactive to September 18, 2008,
the date of Dr. Tolliver’s conviction. Derm One requested reconsideration of this
determination. On September 2, 2010, Trailblazer issued an unfavorable
reconsideration decision, upholding the revocation, the revocation effective date, and a
three-year bar on re-enrollment. P. Ex. 5.!

By letter dated October 12, 2010, Petitioner timely requested an Administrative Law
Judge (ALJ) hearing, and this matter was assigned to me for hearing and decision.”
Pursuant to my Acknowledgment and Pre-Hearing Order, CMS submitted a motion for
summary judgment (CMS Br.) and its exhibits (CMS Exs. 1-6). Petitioner filed its
response to CMS’s motion together with its motion for summary judgment (P. Br.) and
its exhibits (P. Exs. 1-9). CMS filed its reply (CMS Reply) to Petitioner’s motion.

II. Relevant Authority

At the time of Dr. Tolliver’s conviction in 2008, the applicable regulation authorized
CMS to “revoke a currently enrolled provider or supplier’s Medicare billing privileges

' Petitioner submitted exhibits (exhibits 1-9) with its hearing request as well as with its
motion for summary judgment (exhibits 1-9). They are not numbered the same. I cite
in this decision only to Petitioner’s exhibits (P. Exs. 1-9) attached to its motion for
summary judgment.

> Prior to this proceeding, Trailblazer revoked the billing privileges of Dr. Tolliver due
to his conviction, his medical license suspension, and his admitted failure to notify
Trailblazer about these events. After Trailblazer discovered the conviction, it notified
Dr. Tolliver on July 13, 2009 that his Medicare billing privileges were revoked effective
September 18, 2008, based on his felony conviction. Dr. Tolliver timely requested an
ALJ hearing but did not dispute the effective date of the revocation. On November 23,
2010, Board Member Sussan decided that matter, granting CMS’s motion for summary
judgment and finding that CMS had the authority to revoke Dr. Tolliver’s enrollment
and billing privileges pursuant to 42 C.F.R. §§ 424.535(a)(3) and 424.535(a)(9) based
on the revised 2009 regulations. See David L. Tolliver, DAB CR2281 (2010). Board
Member Sussan also sustained CMS’s revocation of Dr. Tolliver’s enrollment effective
September 18, 2008 and the associated three-year bar on re-enrollment. During the
pendency of that matter, Petitioner asked to broaden the scope of review to include the
revocation of Derm One but at the time of the request, Trailblazer had not issued its
reconsideration determination for Derm One. Board Member Sussan later denied
Petitioner’s motion to consolidate this matter regarding the Derm One practice
revocation with Dr. Tolliver’s individual revocation appeal because the issues presented
were significantly different, and she did not want to delay the resolution of Dr.
Tolliver’s appeal. Therefore, the revocation of Derm One is considered separately in all
respects.
and any corresponding provider agreement or supplier agreement” for reasons
including, as relevant here:

(3) Felonies. The provider, supplier, or any owner of the provider or
supplier, within the 10 years preceding enrollment or revalidation of
enrollment, was convicted of a Federal or State felony offense that CMS
has determined to be detrimental to the best interests of the [Medicare]
program and its beneficiaries.

(i) Offenses include—
* * * *
(B) Financial crimes, such as extortion, embezzlement, income tax
evasion, insurance fraud and other similar crimes for which the
individual was convicted, including guilty pleas and adjudicated
pretrial diversions.

42 C.F.R. §424.535(a)(3) (2008). That regulation further provides at 424.535(f) that
when a provider or supplier is revoked from the Medicare program, “CMS
automatically reviews all other related Medicare enrollment files that the revoked
provider or supplier has an association with to determine if the revocation warrants an
adverse action of the associated Medicare provider.” Under the terms of the regulation,
the revocation of a provider or supplier’s Medicare billing privileges becomes effective
within 30 days “of the initial revocation notification.” 42 C.F.R. § 424.535(g)(2008).

Providers or suppliers who have had their billing privileges revoked “are barred from
participating in the Medicare program from the effective date of the revocation until the
end of the re-enrollment bar,” which is “a minimum of | year, but not greater than 3
years depending on the severity of the basis for revocation.” 42 C.F.R. § 424.535(c).
III. Issues, Findings of Fact and Conclusions of Law

A. Issues
The issues in this case are:

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

* Effective January 1, 2009, this regulation was revised. It now provides that when a
revocation is based on a “felony conviction, license suspension or revocation . . . the
revocation is effective with the date of . . . felony conviction, license suspension or
revocation....” 42 C.F.R. § 424.535(g) (2009).
2. Whether CMS had a legitimate basis to determine Petitioner’s effective date
of revocation as September 18, 2008, the date of Petitioner’s sole owner’s
conviction.

B. Discussion

My findings and conclusions are in the italicized and bolded headings followed by
discussions below.

I. CMS had an undisputed and legitimate basis to revoke Petitioner’s
Medicare enrollment and billing privileges.

Petitioner, in its request for hearing, contends that it was improper for CMS to revoke
Petitioner’s enrollment and billing privileges in Medicare about a year after it decided to
revoke Dr. Tolliver’s individual enrollment and billing privileges on the same
underlying basis. Petitioner argues that 42 C.F.R. § 424.535(f) requires CMS to
“automatically” review all other related Medicare enrollment files that a revoked
supplier or provider has an association with to determine if the revocation warrants an
adverse action of the associated Medicare supplier. Petitioner contends that although
the regulations may authorize the revocation of Petitioner’s enrollment as a result of an
owner’s conviction, the regulations did not intend a period as long as a one-year lapse
between the decision to revoke the owner’s enrollment and the decision to revoke the
associated group’s enrollment.

I do not agree that section 424.535(f) constrains CMS from taking action within a
certain time period. The terms of the statute do not limit the Secretary from taking
action at any time after it ascertains that a provider or its owner has been convicted of a
felony. The Social Security Act (Act) § 1866(b)(2)(D). After all, it may take CMS
some time to learn about a conviction in situations where CMS may not have been
aware that a conviction occurred. Here, I do not find a one-year lapse between the
revocation of the individual provider and the revocation of his practice unreasonable.

2. CMS did not properly determine Petitioner’s effective date of revocation.

Under applicable legal precedent, the revocation of Petitioner’s enrollment must be
determined under the regulatory provisions in effect on the date of the conviction of
Petitioner’s owner. As of January 1, 2009, CMS revised its applicable regulations
resulting in certain changes and new provisions. Nonetheless, CMS holds Petitioner to
the new provisions of the regulations which would make Petitioner’s revocation
effective as of date of the conviction of its owner on September 18, 2008. The problem
with CMS’s position is that it results in making the revocation of Petitioner’s enrollment
retroactive to a date prior to the enactment and the effective date of the new regulatory
provisions. It also holds Petitioner to a reporting requirement that was not even in effect
at the time of Dr. Tolliver’s conviction.* CMS, in addressing Petitioner’s arguments
against retroactive application of the regulations under the circumstances here, cites to
the new regulations as being applicable and, in support, cites a previous ALJ decision.
However, the Board remanded that decision and recognized a potential issue regarding
whether the Medicare contractor erroneously applied a change in the effective date
provision retroactively rather than 30 days from its notice letter. Daniel H. Kinzie, IV,
M._D., DAB No. 2341, at 10 (2010).

A federal agency cannot create a new rule and apply it retroactively unless that power is
conveyed expressly by Congress. See Bowen v. Georgetown Univ. Hosp., 488 U.S. 204,
215 (1988). Here, while the Act authorizes the Secretary of the Department of Health
and Human Services to promulgate rules and regulations as may be necessary to the
efficient administration of the functions with which the Secretary is charged under this
Act, Congress did not provide express authority for retroactive rulemaking. Act § 1102.
Therefore, I cannot apply the 2009 revisions of 42 C.F.R. 424.535 to a conviction that
occurred on September 18, 2008.

I therefore must look at the regulatory and statutory requirements in effect on the date of
the conviction of Petitioner’s owner to determine what obligations Petitioner was under
as a result. Under those provisions, Petitioner’s revocation becomes effective within 30
days of the initial revocation notification. Reading all the applicable subsections of the
regulation together, this means that Petitioner’s revocation will be effective on August
15, 2010, which is 30 days from the date of CMS’s initial notification to Petitioner of its
revocation.

+ Trailblazer determined that one of the grounds for Petitioner’s revocation was that
under 42 C.F.R. § 424.516(d)(ii) Petitioner was required to report any adverse legal
action to Trailblazer within 30 days. This regulation became effective January 1, 2009.
Prior to this, there was no requirement to report “‘an adverse legal action.” The previous
provision required enrollees to report any changes to the information in its enrollment
application within 90 days. 42 C.F.R. § 424.520(b) (2008). CMS has not shown that
Dr. Tolliver’s conviction was a change in the information in the enrollment application
for Derm One that was required to be reported within 90 days. In any event, the statute
and applicable regulations provide that a felony conviction such as Dr. Tolliver’s
conviction for filing a false tax return is a basis for revocation if it occurred within 10
years of the date of enrollment of the Medicare program whether or not the provider
reported that conviction. Social Security Act § 1866(b)(2)(D); 42 C.F.R. §
424.535(a)(3) (2008).
IV. Conclusion

As a matter of law, I conclude that CMS was authorized to revoke Petitioner’s
enrollment and billing privileges effective August 15, 2010.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Merrimack County Nursing Home
(CCN: 305056),

Petitioner
Vv.

Centers for Medicare and Medicaid Services.
Docket No. C-11-34
Decision No. CR2352

Date: April 8, 2011

DECISION

I decide this case based on the written record. I sustain the imposition of a per-instance
civil money penalty of $3,000 against Petitioner, Merrimack County Nursing Home.

I. Background

Petitioner is a skilled nursing facility that operates in Boscawen, New Hampshire. It
participates in the Medicare program. Its participation in Medicare is governed by
sections 1819 and 1866 of the Social Security Act (Act), along with implementing
regulations at 42 C.F.R. Parts 483 and 488. Its hearing rights in this case are governed by
regulations at 42 C.F.R. Part 498.

On September 15, 2010 Petitioner was surveyed for compliance with Medicare
participation requirements. CMS concurred with noncompliance findings that were made
at the survey and determined to impose a remedy against Petitioner consisting of a $6,000
per-instance civil money penalty. Petitioner requested a hearing, and the case was
assigned to me for a hearing and a decision. CMS then moved for summary judgment,
and Petitioner opposed the motion and cross-moved for summary judgment.
With its motion CMS filed five proposed exhibits (CMS Ex.) that are designated CMS
Ex. 1—CMS Ex. 5. Petitioner filed with its opposition to the motion ten proposed
exhibits (P. Ex.) that are designated P. Ex. 1 — P. Ex. 10. I receive these exhibits into
evidence.

The parties have styled their motions as motions for summary judgment. However, it is
unnecessary that I apply the technical standards for summary judgment to the parties’
arguments to decide this case based on the written record. Although Petitioner speaks
vaguely of wanting an evidentiary hearing, neither party has presented me with any basis
to conduct a hearing in person. Neither CMS nor Petitioner has offered the testimony of
any witnesses nor has either party asserted that it requires a hearing to produce testimony.
A hearing in this case, therefore, would consist of me receiving into evidence the parties’
exhibits, something that I have done. Consequently, it is appropriate that I decide the
case based on the parties’ written submissions consisting of their exhibits. In this
decision, I make evidentiary findings based on those exhibits.

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

1. Petitioner failed to comply substantially with Medicare participation
requirements; and

2. CMS’s remedy determination is reasonable.
B. Findings of Fact and Conclusions of Law
I make the following findings of fact and conclusions of law (Findings).

1. Petitioner failed to comply substantially with the requirements of 42
C.F.R. § 483.10(b)(4).. The preponderance of the evidence establishes
that Petitioner complied with the requirements of 42 C.F.R.

§ 483.13(b).

CMS alleges that Petitioner failed to comply substantially with two Medicare

participation requirements. These consist of alleged failures to comply with: 42 C.F.R.
§ 483.10(b)(4), which, in relevant part, states that a resident of a skilled nursing facility
has the right to refuse treatment; and 42 C.F.R. § 483.13(b), which states that a resident
has the right to be free from abuse. CMS alleges that Petitioner, through the actions of
one of its employees, denied a resident, who is identified as Resident # 2, the right to
refuse treatment and also physically abused Resident # 2.

As I discuss in detail, below, the facts plainly establish that Petitioner’s staff denied
Resident # 2 his right to refuse treatment. Consequently, Petitioner failed to comply
substantially with the requirements of 42 C.F.R. § 483.10(b)(4). However, the
preponderance of the evidence establishes that Petitioner’s staff did not abuse Resident
#2. Therefore, I conclude that Petitioner complied substantially with the requirements of
42 CFR. § 483.13(b).

Resident # 2 is an individual who suffers from, among other things, Alzheimer’s disease
with behavioral disturbance and cognitive loss. CMS Ex. 2 at 1-2. The resident’s
behaviors include agitated and aggressive behavior, and the resident at times has resisted
Petitioner’s attempts to provide care to him. Beginning on August 10, 2010, Petitioner
implemented a care plan for Resident # 2, providing that, should the resident resist the
staff’s efforts to care for him, the employee or employees caring for the resident should
walk away from the resident and re-approach him after 10 to 15 minutes had elapsed. Id.
at 2. The care plan recognized that the resident was prone to resist, sometimes violently,
attempts to provide him with care.

On September 7, 2010, a licensed nurse’s assistant employed by Petitioner attempted to
lead Resident # 2 into his room for the purpose of toileting him. The resident resisted and
pushed the staff member. CMS Ex. 2 at 1-2. The staff member then placed her hands on
the resident and led him towards the room. She then put her hands on the resident’s back
and attempted to push him into the room. P. Br. at 3. The resident responded by
grabbing the staff member by the arms, pushing her away from the doorway to the room,
and ultimately causing the staff member to fall to the floor. Jd. at 4; P. Ex. 10.

The attempt by the nurse’s assistant to guide Resident # 2 into his room against his will
plainly was a violation of the resident’s right to refuse care and constituted substantial
noncompliance with the requirements of 42 C.F.R. § 483.10(b)(4). Although he is
demented, the resident nevertheless has an absolute right under this regulation to refuse
treatment. Thus, even a well-meaning attempt by Petitioner’s staff to guide the resident
into his room against his will contravened that right and was a substantial violation of the
regulation.

CMS also argues that the staff member’s attempt to guide the resident into his room
constituted physical abuse of the resident. It asserts that pushing or pulling the resident
against his will constituted — at a minimum — intentional infliction of mental anguish.

I disagree. The evidence in this case does not support a finding of abuse. To be sure, the
nurse’s assistant disregarded the resident’s plan of care in attempting to guide the resident
into his room against his will. But, there is nothing in the record to suggest that the staff
member intentionally harmed the resident.

The evidentiary record includes a surveillance video of the events that are the basis for
CMS’s allegations. P. Ex. 10. That video does not support a finding of intentional
infliction of harm. It shows the nurse’s assistant attempting to guide the resident into his
room, an act that might have been entirely appropriate but for the resident’s demented
state and his tendency to react violently when assisted by Petitioner’s staff. There is no
suggestion in the video that the nurse’s assistant was doing anything other than
attempting to assist the resident, albeit inappropriately, given the unique circumstances of
his mental condition.

The regulatory definition of “abuse” is:

the willful infliction of injury, unreasonable confinement, intimidation, or
punishment with resulting physical harm, pain or mental anguish.

42 C.F.R. § 488.301. The elements of abuse defined by the regulation are not present
here. The nurse’s assistant plainly committed an error of judgment, but that does not rise
to the level of abuse. The evidence establishes that the nurse’s assistant contravened the
resident’s plan of care by attempting to guide him into his room against his will. But,
that error is not axiomatically abuse. What is lacking here is the element of intent.
Nothing about the nurse’s assistant’s conduct suggests that she intended to inflict injury
or harm. Indeed, her actions would have been entirely appropriate but for Resident # 2’s
unique demented state.

I have considered Petitioner’s arguments that it should not be held liable for abridging
Resident # 2’s right to refuse treatment, and I find them to be without merit. Petitioner’s
primary argument is that it should not be held responsible for the actions of its staff
member. It contends that it: has policies in place that are intended to prevent
abridgement of residents’ rights; trained all of its staff in these policies; and had no
reason to assume that the staff member in question would violate these policies and
disregard her training in managing Resident # 2.

I disagree with this argument. A facility is responsible for the acts of its employees. Put
simply, all of the care provided by a skilled nursing facility is provided by employees on
its staff. The staff's performance of their duties is the measure of whether a facility
complies with regulatory requirements. Consequently, a facility bears responsibility for
the actions of each of its staff members. Gateway Nursing Ctr., DAB No. 2283 (2009).
Asserting that a staff member violated facility policy or engaged in an action that is not
reflected by that staff member’s employment history is, therefore, no defense to a finding
of noncompliance emanating from that staff member’s performance.

This is not, as Petitioner contends, a rule of strict liability. Rather, it is simply an
expression of the reality that a skilled nursing facility provides care only to the extent that
the individual members of its staff provide it. A facility would be immune from nearly
all liability for noncompliance with regulatory requirements, if it were excused from
noncompliance on the ground that it was an issue of staff performance.

Additionally, Petitioner argues that CMS inappropriately determined that the scope and
severity of Petitioner’s noncompliance was such that it caused actual harm to Resident #
2. It contends that I should reduce the scope and severity of its noncompliance so that, if
noncompliance occurred, it was insubstantial.

Petitioner’s argument is incorrect for two reasons. First, Resident # 2 was harmed. That
harm was in the form of emotional distress. That is made manifest by the resident’s
violent reaction to the nurse’s assistant’s attempt to guide him into his room. That this
level of emotional distress might not have been present in the case of a non-demented
resident is no defense to the fact that this resident suffered emotional distress as a result
of the nurse’s assistant’s inappropriate act. Second, I do not have the authority to address
the scope and severity of CMS’s noncompliance determination aside from deciding
whether the facility’s noncompliance was substantial. I have the authority to decide the
appropriateness of a scope and severity determination only in limited circumstances,
these being: (1) where the range of a civil money penalty (immediate versus non-
immediate jeopardy) is at issue; and (2) where there is a finding of substandard quality of
care leading to a loss of the facility’s authority to conduct nurse aide training. 42 C.F.R.
§ 498.3(b)(14),(16); (d)(10)(i). Here, there is no issue of immediate jeopardy versus non-
immediate jeopardy compliance. The presence of immediate jeopardy is not a necessary
factor to the imposition of a per-instance civil money penalty as was determined to be
imposed by CMS. 42 C.F.R. § 488.438(a)(2). Nor is there an issue of a finding of
substandard quality of care.

2, A per-instance civil money penalty of $3,000 is reasonable.

A per-instance civil money penalty may fall within a range of from $1,000 to $10,000.
42 C.F.R. § 483.438(a)(2). There are regulatory criteria that must be used in deciding
where within that range a per-instance penalty should fall. These factors include: the
seriousness of a facility’s noncompliance; its compliance history; its culpability; and its
financial condition. 42 C.F.R. §§ 488.438(f)(1) — (4); 488.404 (incorporated by reference
into 42 C.F.R. § 488.438(f)(3)).

CMS determined to impose a per-instance penalty of $6,000, based on Petitioner’s
alleged noncompliance with two regulations governing residents’ rights and abuse.
However, the evidence in this case establishes only one failure by Petitioner to comply
substantially with regulatory requirements. That Petitioner contravened only one and not
two regulations, in the context of this case’s evidence, reduces the seriousness of its
noncompliance.

However, the noncompliance that occurred was serious and merits a per-instance penalty,
even if less than $6,000. I find that a per-instance penalty of $3,000 is supported by the
seriousness of Petitioner’s noncompliance. Residents in skilled nursing facilities are by
definition individuals who are incapable of caring for themselves. Residents often suffer
from grievous physical infirmities. Many are at risk for injuries from accidents and falls.
Use of force against a nursing home resident is axiomatically an act that would put that
resident at risk for harm.

In this case, the risk to Resident # 2 was more than theoretical. The resident was
identified by Petitioner’s staff as being at risk from falls. P. Ex. 8 at 5. Attempting to
guide the resident into his room against his will and in light of his uniquely demented
state clearly exacerbated this resident’s risk of falling and posed a risk for causing that
resident to suffer from severe physical harm.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Horatio Aldredge, M.D., et al.,
(PTANs: 8L26845, 8L26830, 8L26821, 8L26838),

Petitioners
Vv.
Centers for Medicare and Medicaid Services.
Docket Nos. C-10-980, C-10-981, C-10-984, C-10-985
Decision No. CR2351

Date: April 8, 2011

DECISION DISMISSING REQUESTS FOR HEARING

I dismiss Petitioners appeals pursuant to 42 C.F.R. § 498.70(b) because Petitioners do not
have a right to a hearing on the deactivation of their Medicare billing privileges. So that
Centers for Medicare and Medicaid Services (CMS) may properly address their
deactivations, Petitioners may file a rebuttal under 42 C.F.R. § 424.545(b), in accordance
with 42 C.F.R. § 405.374.

I. Background

Petitioners Horatio Aldredge, M.D., John Bertelson, M.D., Andrea Raymond, M.D., and
Jason Reichenberg, M.D., (Petitioners) are neurologists who work in a group medical
practice and are enrolled as suppliers in the Medicare program. On approximately
December 19, 2009, the Medicare contractor deactivated Petitioners’ Medicare billing
privileges for not billing Medicare during a twelve-month period. CMS does not dispute
that it did not provide Petitioners any notice of either the basis for deactivation or the
dates on which the deactivations occurred until this appeal at the Administrative Law
Judge (ALJ) level.
On March 5, 2010, Petitioners learned that their billing privileges were deactivated.
Therefore, Petitioners submitted the CMS forms (CMS 855I and CMS 855R) for
reactivation of their Medicare billing privileges on March 12, 2010. Petitioners requested
the reactivation date be effective November 30, 2009. CMS processed the reactivation
applications to approval and notified Petitioners that their Medicare billing privileges
were reactivated, effective February 14, 2010.!

On September 9, 2010, Petitioners filed individual hearing requests challenging the
leactivation of their Medicare billing privileges. Petitioners contend that they were
erroneously deactivated, were not provided notice of the deactivations, and as a result are
entitled to reactivation enrollment dates effective prior to the deactivations.

This case was initially assigned to Board Member Leslie A. Sussan pursuant to 42 C.F.R.
§ 498.44, which permits a Board Member to hear appeals under 42 C.F.R. Part 498. An
Acknowledgment and Pre-hearing Order (Order) was sent to the parties on September 23,
2010. The Order noted that the cases would be automatically consolidated in ten days if
no objection was filed. Neither party objected to consolidation, therefore, the cases were
consolidated with the lead docket number C-10-980.? On October 25, 2010, this case
was reassigned to me for hearing and decision.

Consistent with the Order, on October 25, 2010, CMS filed for summary judgment. With
its brief (CMS Br.), CMS submitted eight exhibits (CMS Exs. 1-8). On November 23,
2010, Petitioners filed their objection to the CMS motion for summary judgment and
related argument (P. Br.) accompanied by one proposed exhibit (P. Ex. 1).

On March 9, 2011, I conducted a telephone conference where I directed the parties to
submit supplemental briefing addressing whether CMS provided Petitioners an
opportunity to submit a rebuttal to their deactivations pursuant to federal regulations 42
C.F.R. § 424.545(b) and 42 C.F.R. § 405.374. CMS filed its supplemental briefing on
March 16, 2011. Petitioners submitted its supplemental briefing on March 22, 2011

' [note that in the reconsideration decisions, the contractor ignored Petitioners’
deactivation challenges and focused entirely on effective date regulations. The contractor
also incorrectly informed Petitioners that no right exists to appeal an effective date
determination in Medicare enrollment. See Victor Alvarez, M.D., DAB No. 2325 (2010).

> At Petitioner’s request, on November 30, 2010, I dismissed the appeal of Charles
Brown, M.D. (C-10-982). On March 10, 2011, I dissolved the previous consolidation in
relation to Petitioner Smitha Murthy, M.D. only, whose case retained the original docket
number, C-10-983. At Petitioner’s request, I subsequently dismissed the case of Smitha
Murthy, M.D., (C-10-983), on March 29, 2011.
which was accompanied by three proposed exhibits (P. Supp. Ex. 1-3). In the absence of
objection, I admit CMS Exs. 1-8, P. Ex. 1, and P. Supp. Exs. 1-3, to the record.?

II. Issue

The issue in this case is whether Petitioners have a right to ALJ review of the
deactivation of their supplier Medicare billing numbers.

Ill. Findings of Fact, Conclusions of Law, and Supporting Discussion

My finding of fact and conclusion of law is set out below followed by supporting
discussion.

Petitioners do not have a right to ALJ review of the deactivation of their supplier
Medicare billing numbers.

Petitioners argue that they should be provided earlier effective dates of their reactivations
because they were incorrectly deactivated and not provided notice of the deactivations.
P. Br. at 1-2; P. Supp. Br. at 1-2. Petitioners assert that they were erroneously
deactivated for non-billing and provide evidence of billing submitted within the twelve-
month period described in CMS briefing. P. Br. at 1-2; P. Supp. Br. at 1-2; P. Supp. Exs.
1-3; CMS Br. 5-9.

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

§ 424.540(a)(1). “The 12 month period will begin the 1st day of the 1st month without a
claims submission through the last day of the 12th month without a submitted claim.” Id.
Although this issue is not properly before me, I note CMS has not explained how CMS

> The CMS briefing in this matter outlined Petitioners deactivations as effective March
16, 2010 (Petitioners Aldredge and Bertelson), December 19, 2009 (Petitioner Raymond),
and March 5, 2010 (Petitioner Reichenberg). During this pending litigation, Petitioners
relied upon this CMS representation as the only documented deactivation dates and
submitted argument and evidence in reliance thereof. However, on March 28, 2011, after
briefing and supplemental briefing concluded, CMS filed what it termed a “Notice of
Clerical Errors” in which CMS changes the dates of all Petitioners’ presumed
deactivations to December 19, 2009. CMS did not explain the reason for the change
other than stating it does not believe that these “clerical errors are material to the issues of
law involved.” Petitioners objected to this CMS “Notice” explaining their reliance on the
previous dates throughout their appeal. Although I am unable to address the substantive
details of their deactivations, this filing further evidences some fairness concerns
regarding Petitioners’ deactivations.
was able to properly deactivate Petitioners’ billing privileges during the middle of a
month.

CMS moves for summary judgment arguing that the effective dates for reactivation were
properly determined according to 42 C.F.R. § 424.520(d) (the date of filing of a Medicare
enrollment application (or reactivation in this case) that was subsequently approved by
the contractor). CMS Br. 9-10. CMS acknowledges that “[iJ]t is unclear as to whether
Petitioners et. al are appealing their deactivations” and “[t]o the extent that they are, it is
CMS’ position that such matters are not properly before the ALJ as they are not initial
determinations.” CMS Br. at 5. CMS asserts that because deactivations are not
appealable actions and Petitioners base their request for earlier effective dates on the fact
that their deactivations occurred without notice, CMS is entitled to judgment as a matter
of law. CMS Br. at 9-10.

Deactivation of a provider or supplier’s Medicare billing privileges is distinct from
revocation of Medicare enrollment and billing privileges. Compare 42 C.F.R. § 424.540
(conditions for deactivation) with 42 C.F.R. § 424.535 (conditions for revocation).
Section 424.502 defines “deactivate” to mean that “the . . . supplier’s billing privileges
were stopped, but can be restored upon the submission of updated information.”

A provider or supplier “deactivated for nonsubmission of a claim” is “required to
recertify that the enrollment information currently on file with Medicare is correct and
furnish any missing information as appropriate.” 42 C.F.R. § 424.540(b)(2). Section
424.540(b)(2) further provides that for reactivation of billing privileges “[t]he provider or
supplier must meet all current Medicare requirements in place at the time of reactivation,
and be prepared to submit a valid Medicare claim.”

The effect of deactivation was specifically addressed by regulation:

* Effective January 1, 2009, CMS modified the Medicare Provider Integrity Manual
(PIM) to state that, for purposes of 42 CFR §§ 424.520(d) and 424.521(a), a CMS-855
reactivation application is treated as an initial enrollment application. This means that a
reactivated provider will have a new effective date (i.e., the later of the date of filling or
the date it first began furnishing services at a new practice location) and, per section
424.521(a), limited ability to bill retrospectively. See PIM Rev. 289, issued April 15,
2009, effective January 1, 2009; Arkady B. Stern, M.D., DAB No. 2329, at 4 n.5 (2010).
The PIM is issued by CMS to provide instructions to its contractors. Unlike the Medicare
statute and regulations, however, the PIM does not have the force and effect of law and is
not binding on me. See Fady Fayad, M.D., DAB No. 2266, at 10 n.6. (2009) (citing
Massachusetts Executive Office of Health and Human Servs., DAB No. 2218, at 12
(2008)); Foxwood Springs Living Ctr., DAB No. 2294, at 8-9 (2009).
Deactivation of Medicare billing privileges is considered an action to
protect the provider or supplier from misuse of its billing number and to
protect the Medicare Trust Funds from unnecessary overpayments. The
deactivation of Medicare billing privileges does not have any effect on a
provider or supplier's participation agreement or any conditions of
participation.

42 C.F.R. § 424.540(c). The regulation is consistent with congressional intent as
contained in the preamble discussing deactivation. 71 Fed. Reg. 20,761, 20,769 (Apr. 21,
2006) (mirroring the regulatory language and stating that deactivation “is considered a
temporary action”). The preamble further supports this intent in stating that “[o]nce
notified, [CMS] would give all reactivations of Medicare billing numbers priority
handling to ensure expedient payment of claims.” Jd.

Creating deactivation as a separate action from revocation, Congress did not afford
deactivated parties the right to an ALJ hearing on deactivation. See 42 C.F.R. §
424.545(b). Instead, Congress provided an opportunity for the deactivated party to file a
rebuttal. 42 C.F.R. § 424.545(b); see 42 C.F.R. § 405.374.

I agree with CMS that I have no authority to review the deactivations of Petitioners’
billing privileges. As explained, the regulations provide only for the submission of a
rebuttal to the contractor. The rebuttal process remains available Petitioners. See 42
C.F.R. § 405.374(b)(2) (stating CMS may for good cause extend the time within which a
rebuttal may be submitted); see also 42 C.F.R. § 405.372(b)(2) (noting CMS must
provide a deactivated supplier an opportunity to submit a rebuttal when notice is not
required).

By statute and regulation, CMS has broad discretion with respect to provider/supplier
enrollment, and its actions are subject to limited review. But underlying this grant of
unreviewable authority is the expectation that the agency will not abuse its authority and
will act competently. CMS should carefully review Petitioners’ cases particularly
considering that Petitioners have presented billing evidence suggesting that they may not
ave been properly deactivated within the one-year period that CMS originally claimed
that the suppliers had been inactive. I also remind CMS in its handling of these cases that
the purpose of deactivation for non-billing is to protect both the Medicare Trust Fund and
the provider/supplier enrollees and is not a punitive measure.

Although I dismiss this case, it is my hope that the contractor will properly address
Petitioners’ concerns about an improper deactivation through the rebuttal process.

If CMS does not properly address Petitioners deactivations through the regulatory
process, Petitioners may file a request to vacate this dismissal within 60 days, pursuant 42
C.F.R. § 498.72. I will then consider the issue of whether CMS has, in effect, improperly
revoked Petitioners’ billing privileges as opposed to deactivating them.

/s/
Joseph Grow
Administrative Law Judge