Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Erin Wells, IBCLC,
Petitioner
v.
Centers for Medicare & Medicaid Services.
Docket No. C-16-761
Decision No. CR4734

Date: November 10, 2016

DECISION

For the reasons set forth below, I grant the Centers for Medicare & Medicaid Services’
(CMS’s) motion for summary judgment. Noridian Healthcare Solutions (Noridian), a
Medicare administrative contractor, had a legitimate basis to determine that Erin Wells,
IBCLC (Petitioner), did not meet the requirements to enroll in the Medicare program as a
non-physician practitioner lactation consultant. I therefore affirm the contractor’s
determination to deny Petitioner’s application.

I. Background

Petitioner has submitted documentation that she is certified by the International Board of
Lactation Consultant Examiners as an “International Board Certified Lactation
Consultant® IBCLC.” CMS Exhibit (Ex.) 3 at 6. Petitioner seeks to enroll in the
Medicare program as a non-physician practitioner, specifically as a lactation consultant.

Petitioner filed an enrollment application in February 2016. CMS Ex. 1. Noridian
denied her enrollment application on March 1, 2016, because “[t]here is no statutory or
regulatory basis which permits an International Board Certified Lactation Consultant to
enroll into [the] Medicare Program for ordering and referring services.” CMS Ex. 2 at 1.
Petitioner submitted a letter on April 4, 2016, that was construed as a request for
reconsideration of the March 2016 decision. CMS Exs. 3, 4. On June 9, 2016, Noridian
issued a letter denying Petitioner’s request for reconsideration. CMS Ex. 4. Noridian
explained, in pertinent part:

Revocation, Denial, or Effective date reason: 42 CFR §424.530(a)(1)
Not in Compliance with Medicare Requirements
There is no statutory or regulatory basis which permits an
International Board Certified Lactation Consultant to enroll
into the Medicare Program for ordering and referring services.

CMS Ex. 4 at 1. Noridian further explained that “Medicare does not enroll International
Board Certified Lactation Consultants for payment or ordering and referring.” CMS Ex.
4atl.

Petitioner timely filed a request for an administrative law judge (ALJ) hearing that was
dated July 22, 2016 and filed on July 26, 2016. I issued an Acknowledgment and Pre-
Hearing Order (Order) on July 29, 2016, at which time I instructed that an “in-person

earing to cross-examine witnesses will be necessary only if a party files admissible,
written direct testimony, and the opposing party asks to cross-examine.” Order, § 10
(emphasis omitted). While Petitioner stated, in her brief, that “I request a formal hearing
before this Tribunal where each side may present arguments to this matter,” she has not
submitted any written direct testimony such that a live hearing is necessary for the
purpose of cross-examination. Petitioner’s brief (P. Br.) at 7.

I informed each party that it could file a brief, motion to dismiss, or motion for summary
judgment with its pre-hearing exchange. Order, § 4. CMS filed a pre-hearing brief,
motion to dismiss, or motion for summary judgment (CMS Br.) on September 2, 2016,
along with five exhibits. CMS Exs. 1-5. On September 29, 2016, Petitioner filed a brief
in response, along with two exhibits.’ P. Exs. 1-2. In the absence of objections, I admit
CMS Exs. 1-5 and P. Exs. 1-2 into the record. I granted CMS’s motion for leave to file a
reply brief, and CMS filed its reply on October 13, 2016.

II. Issue

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

' In my Order, | instructed the parties to identify exhibits by whole numbers. Order,
§ 5(c). Because Petitioner identified her two exhibits as “Exhibit A” and “Exhibit B,” I
have re-identified those exhibits respectively as P. Ex. 1 and P. Ex. 2.
HI. Jurisdiction
I have jurisdiction to decide this case. 42 C.F.R. §§ 498.3(b)(15), 498.5()(2)
IV. Findings of Fact, Conclusions of Law, and Analysis”

I. Summary judgment is appropriate.

Summary judgment is appropriate if there is “no genuine issue as to any material fact,
and the moving party is entitled to judgment as a matter of law.” Mission Hosp. Reg’]
Med. Ctr., DAB No. 2459, at 5 (2012) (citations omitted). In order to prevail on a motion
for summary judgment, the moving party must show that there is no genuine dispute of
material fact requiring an evidentiary hearing and that it is entitled to judgment as a
matter of law. Jd. If the moving party meets this initial burden, the non-moving party
must “come forward with ‘specific facts showing that there is a genuine issue for trial. . .
.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). “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.” Senior Rehab. & Skilled Nursing Ctr., DAB No. 2300 at 3 (2010).
In moving for summary judgment, CMS must present evidence sufficient to show, if
uncontradicted, that it is entitled to judgment as a matter of law and that there are no
genuine issues of material fact in dispute. St. Catherine’s Care Ctr. of Findlay, Inc.,
DAB No. 1964 at 6-7 (2005). In evaluating a petitioner’s response to a motion for
summary judgment, the ALJ is to view the evidence in the light most favorable to the
facility and is to draw all reasonable inferences therefrom in the facility’s favor. Id.

The role of the ALJ in deciding a motion for summary judgment differs from the role of
an ALJ in resolving a case after a hearing: “[A]t the summary judgment stage the judge's
function is not... to weigh the evidence and determine the truth of the matter but to
determine whether there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 255 (1986). Here, there is no genuine dispute of material fact. In fact,
both CMS and Petitioner are in agreement regarding the undisputed material facts. CMS
Br. at 2-3; P. Br. at 2-3 (agreeing on the following facts: Noridian received Petitioner’s
enrollment application on February 23, 2016 and denied that application on March 1,
2016; Petitioner’s request for reconsideration was received by Noridian on April 8, 2016;
Noridian issued an unfavorable reconsidered determination on June 9, 2016; and,
Petitioner submitted a request for hearing dated July 22, 2016).

> My findings of fact and conclusions of law are set forth in italics and bold font.
2. CMS, through its administrative contractor, correctly denied Petitioner’s
application for enrollment because she is not eligible to enroll as a supplier
in the Medicare program.

Petitioner appeals Noridian’s denial of her Medicare enrollment application to be a
supplier of lactation consulting services. Noridian denied her application because there is
“no statutory or regulatory basis which permits [lactation consultants] to enroll into the
Medicare program for ordering and referring services.” CMS Ex. 4 at 1.

Part B of the Medicare program is a voluntary supplemental insurance program covering
outpatient 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
practitioners such as physician assistants, nurse practitioners, certified registered nurse
anesthetists, 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); Act

§ 1842(b)(18)(C), 42 U.S.C. § 1395u(b)(18)(C); Act § 1861(bb), 42 U.S.C. § 1395x(bb);
Act § 1861(I1), 42 U.S.C. § 1395x(I]); 42 C.F.R. § 405.400. The entities or individuals
furnishing such health care services are known as “suppliers.” 42 C.F.R. § 400.202.

[he Act requires the Secretary to issue regulations establishing a process for the
enrollment of suppliers. Act § 1866(j). To receive payment, a supplier must be enrolled
in the Medicare program. 42 C.F.R. § 424.505. The purpose of the Medicare Part B
enrollment process is to determine a supplier’s eligibility to bill and receive Medicare
payment for health care services. 42 C.F.R. § 424.502 (defining the term “enrollment” to
mean the process for establishing eligibility to submit payment claims to Medicare).
CMS may deny a prospective supplier enrollment if Medicare Part B does not authorize
payment for its services. See 42 C.F.R. § 424.505; see Peter McCambridge, C.F.A.,
DAB CR1961 (2009), aff’d, DAB No. 2290 (2009). It is appropriate to deny an
enrollment application if a prospective supplier is found not to be in compliance with the
enrollment requirements. 42 C.F.R. § 424.530(a)(1).

The Medicare Program Integrity Manual (MPIM), CMS’s guidance for affiliated
contractors, lists the types of non-physician practitioners that may be enrolled in the
Medicare program as suppliers, referencing the statutory and regulatory bases for
Medicare payment to these suppliers. Pursuant to federal regulations, a lactation
consultant is not included among the types of non-physician practitioners authorized to
receive payment for services as a supplier under the Medicare program. MPIM, Ch. 15,
Sections 4.4-4.4.15 (Rev. 519, iss’d May 30, 2014, effective July 31, 2014); see 42
C.F.R. § 405.400; see also 42 C.F.R. §§ 424.5, 410.1 — 410.175.
CMS does not dispute that Petitioner holds a certification from an accrediting body, the
International Board of Lactation Consultant Examiners (IBLCE). CMS Br.; see CMS Ex.
3 at 6. Neither CMS’s reconsidered determination, nor my decision, questions that
Petitioner has received a certification from the IBLCE. My decision does not hinge on
Petitioner’s individual qualifications, but rather, is based on the fact that I have no
authority to grant Petitioner the relief she seeks, namely enrollment in the Medicare
program. Similarly, CMS lacked the authority to grant Petitioner’s enrollment
application.

The purpose of the Medicare Part B enrollment process is to determine a supplier’s
eligibility to bill and receive Medicare payment for health care services. 42 C.F.R.

§ 424.502; see McCambridge, DAB No. 2290 at 4. Neither CMS nor I can ignore
binding statutory and regulatory authority, and Petitioner’s appeal of her rejected
enrollment application is not an appropriate means to challenge or change existing law.
See 42 C.F.R. § 424.502 (explaining that the enrollment process is for establishing
eligibility to submit payment claims to Medicare). Simply stated, I am bound by the law,
and I cannot create a new policy that is inconsistent with the law. 1866/CPayday.com,
L.L.C., DAB No. 2289, at 14 (2009) (“An ALJ is bound by applicable laws and
regulations and may not invalidate either a law or regulation on any ground.”). I must
apply the Medicare laws as they currently exist, and there is no lawful provision that
currently authorizes Medicare to enroll a lactation consultant as a practitioner and
supplier of services. See McCambridge, DAB No. 2290 at 7-8.

Petitioner’s arguments are largely premised on a document entitled, “United States
Department of Labor, Employee Benefits Security Administration, FAQs about
Affordable Care Act Implementation (Part XXIX) and Mental Health Parity
Implementation” (FAQs) that was jointly prepared by the Departments of Labor, Health
and Human Services, and Treasury. CMS Exs. 3 at 7-8; 5; see P. Br. at 1;
http://www.dol.gov/ebsa/faqs/fag-aca29. html, last visited November 1, 2016. While
Petitioner contends that this document supports her position, she is mistaken in her
reliance on this document. First, Petitioner does not identify any statutory or regulatory
authority supporting her interpretation that the FAQs support that lactation consultants
such as Petitioner can be enrolled as suppliers in the Medicare program. See Act

§ 1861(s), 42 U.S.C. § 1395x(s); Act § 1842(b)(18)(C), 42 U.S.C. § 1395u(b)(18)(C);
Act § 1861(bb), 42 U.S.C. § 1395x(bb); Act § 1861(II), 42 U.S.C. § 1395x(II).
Petitioner’s citation to the FAQs is not authoritative, in that the information posted on the
Department of Labor website does not have the effect of law. More importantly, nothing
in the FAQs cited by Petitioner indicates that Medicare, as opposed to the “non-
grandfathered” group health plans and health insurance issuers referenced under the
Patient Protection and Affordable Care Act (PPACA) that are the subject of the FAQs,
must provide access to “lactation consultants.” The FAQs cited by Petitioner are

pertinent only to “group health plans,” as discussed by the PPACA®, and Medicare is not
a group health plan; Medicare is a federal health insurance program for people who are
age 65 or older or for younger people who are disabled. Furthermore, the FAQs relied
upon by Petitioner only state, for non-grandfathered group health plans, that depending
on the circumstances, plans must cover lactation counseling without cost sharing, and
that this obligation does not necessarily obligate an insurer to retain a /actation
consultant’s services for providing covered lactation counseling services. Rather, and
depending on the circumstances, a group health plan could satisfy the requirement to
provide lactation counseling services through utilizing other professionals, such as a
licensed health care professional (e.g., a registered nurse) other than a lactation
consultant. CMS Ex. 5 at 3; see § 2713(a)(4) of the Public Health Service (PHS) Act; 42
U.S.C. § 300gg-13(a)(4); 29 C.F.R. § 2590.715-2713.

The Act is clear; only specified and eligible non-physician practitioners may enroll in the
Medicare program so that they can individually bill for services. See 42 U.S.C.

§ 1395u(b)(18)(C). These practitioners include specified health care suppliers, such as
physician assistants, nurse practitioners, clinical nurse specialists, certified registered
nurse anesthetists, certified nurse midwives, clinical social workers, clinical
psychologists, registered dietitian or nutrition professionals; and speech-language
pathologists (to include qualified audiologists). [d; see Act § 1861 (Il), 42 U.S.C.

§ 1395x(Il). CMS’s regulations contain essentially identical guidance, and once again, do
not list lactation consultants among the non-physician practitioners who are entitled to
payment for services from the Medicare program. 42 C.F.R. § 405.400 (defining
“practitioner” to include physician assistant, nurse practitioner, clinical nurse specialist,
certified registered nurse anesthetist, certified nurse midwife, clinical psychologist, clinic
social worker, registered dietitian or nutrition professional, who is currently legally
authorized to practice in that capacity by each state in which he or she provides services).
Finally, CMS policy guidance contained in the MPIM directs that the following
“individual practitioners” may enroll in Medicare: anesthesiology assistants,
audiologists, certified nurse-midwives, certified registered nurse anesthetists, clinical
nurse specialists, clinical psychologists, clinic social workers, nurse practitioners,
occupational therapists in private practice, physical therapists in private practice,
physicians, physician assistants, psychologists practicing independently, registered
dieticians, and speech language pathologists in private practice. MPIM,

§ 15.4.4-4.4.15. Neither statutes, regulations, nor Health and Human Services

> CMS has explained that the PPACA, among other things, “reorganizes, amends, and
adds to the provisions of part A of title XX VII of the Public Health Service Act (PHS
Act) relating to group health plans and health insurance issuers in the group and
individual markets.” 79 Fed.Reg. 51092 (August 27, 2014).
Department-level policy guidance provide for lactation consultants to independently

enroll in the Medicare program, and Petitioner cannot cite to any legal authority

mandating the enrollment of lactation consultants because no such authority currently
te 4

exists.

I must apply the law as it currently exists. The applicable law does not authorize CMS to
enroll Petitioner in the Medicare program as a lactation consultant. Petitioner points to
no source of authority for me to grant an exemption on policy or equitable grounds.
Moreover, I have no authority to declare the statute or the regulations invalid or ultra
vires. See 18661CPayday.com, supra.

3. Petitioner’s argument that “Medicare is currently set up to recognize
Lactation Consultants as suppliers” based on the existence of a taxonomy
code for lactation consultants is without merit.

Petitioner argues that the “Federal Government provides a specific Taxonomy Number
for Lactation Consultant non-RN (174N00000X) to be recognized as a health
professional” and this supports that Medicare should enroll lactation consultants. P. Br.
at 9. I note that taxonomy codes are developed by the National Uniform Claim
Committee, which is “a diverse group of health care industry stakeholders representing
providers, payers, designated standards maintenance organizations, public health
organizations, and vendors.” See http://www.nucc.org/index.php, last visited November
1, 2016; see also https://www.cms.gov/medicare/provider-enrollment-and-
certification/medicareprovidersupenroll/taxonomy.html, last visited November 1, 2016
(explaining that the taxonomy code set is maintained by the National Uniform Claim
Committee, which is not an entity of the federal government). I recognize that group
health plans may choose to enroll lactation consultants who are not registered nurses, and

* Section 2713 of the Public Health Service Act directs that non-grandfathered group
health plans provide lactation counseling and breastfeeding equipment. PHS Act

§ 2713(a)(4); 42 U.S.C. § 300gg-13(a)(4). No provision of the PHS Act or the PPACA
directs that covered lactation counseling services must be provided by lactation
consultants. Rather, group health plans determine who will provide covered lactation
counseling services, and are not obligated to reimburse unlicensed or uncertified
practitioners. CMS Ex. 5 at 3. Petitioner has submitted evidence that she holds a
certification, but has not submitted evidence that she is licensed. Thus, under some group
health plans, Petitioner may not qualify as a provider of services.
the existence of a taxonomy code for lactation consultants is therefore appropriate and
necessary. However, the existence of a taxonomy code for lactation consultants does not
demonstrate that the federal government has determined it will enroll lactation
consultants as Medicare suppliers.”

4. Ihave no jurisdiction over Petitioner’s other requests for relief.

As I previously stated, my jurisdiction is derived from 42 C.F.R. §§ 498.3(b)(15),
498.5(/)(2). The only matter properly before me is the denial of Petitioner’s Medicare
enrollment by Noridian in its June 2016 reconsidered determination; any denial of any
request of Petitioner to be an “in-network” or “Medi-Cal” practitioner (P. Br. at 6) is not
the subject of an initial or reconsidered determination that is the subject of the instant
request for hearing and is a matter entirely separate from the denial of her Medicare
enrollment application. I therefore lack jurisdiction over these requests for relief.

V. Conclusion

Petitioner does not qualify as a non-physician practitioner supplier under the regulations.
1 affirm the denial of Petitioner’s Medicare enrollment application.

/s/
Leslie C. Rogall
Administrative Law Judge

> T recognize CMS’s objection to Petitioner’s argument on the grounds that she
previously did not raise this argument.


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Harris Histology Services,
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-16-587
Decision No. CR4733

Date: November 10, 2016

DECISION

Petitioner, Harris Histology Services, is a slide preparation facility that does business in
California. Operating as a sole proprietorship, it participated in the Medicare program for
many years. When the facility reorganized itself as a limited liability company (LLC),
this new legal entity applied to enroll in the Medicare program. The Centers for
Medicare & Medicaid Services (CMS) denied its application, claiming that neither the
Medicare statute nor any regulation allows a slide preparation facility to enroll.

Petitioner appeals the denial.

The parties have filed cross-motions for summary judgment. For the reasons discussed
below, I deny CMS’s motion and grant Petitioner’s.

Background

A “slide preparation facility” receives tissue samples from physicians, primarily
dermatologists, prepares slides of those tissue samples, and returns the slides to the
physician. P. Ex. | at | (Harris Decl. { 4); P. Ex. 2 at 3; CMS Ex. 4 at 3-4. Such entities
have apparently been serving physicians for many years. In 1976, Harris Histology
began operating as a sole proprietorship, and, since 1994, it has been enrolled in the
Medicare Part B program as a supplier of services. P. Ex. 1 at 1-2 (Harris Decl. §§ 5, 8).
In April 2015, the business reorganized as Harris Histology Services, a limited liability
company, and obtained a new taxpayer identification number. In accordance with CMS
requirements, on June 8, 2015, it filed a new enrollment application (CMS Form 855B)
with the Medicare contractor, Noridian Healthcare Solutions. P. Ex. 1 at 2-3 (Harris
Decl. ff 11, 15); CMS Ex. 1; CMS motion and brief (CMS MSJ) at 2.

By letter dated December 2, 2015, the Medicare contractor denied Petitioner’s
application. CMS Ex. 3. Citing 42 C.F.R. § 424.530(a)(1), the letter asserts that no
statutory or regulatory authority permits a slide preparation facility to enroll in or receive
payment from the Medicare program. CMS Ex. 3 at 1.

Petitioner requested reconsideration. In a reconsidered determination, dated April 4,
2016, the contractor upheld the denial, also citing 42 C.F.R. § 424.530(a)(1), and
declaring that no statutory or regulatory authority allows a slide preparation facility to
enroll in or receive payment from the Medicare program. CMS Ex. 5. Petitioner timely
appealed.

The parties have filed cross motions for summary judgment. With its motion and brief,
CMS submitted ten exhibits (CMS Exs. 1-10). Petitioner submitted its own brief and
cross-motion for summary judgment, substituting a revised version that corrected
typographical errors (P. MSJ). Petitioner submitted five exhibits (P. Exs. 1-5). CMS
replied to Petitioner’s motion (CMS Reply).

CMS objects to four of Petitioner’s exhibits — P. Ex. 1 attachments, P. Exs. 2, 4, and 5 —
citing 42 C.F.R. § 498.56(e)(1), which precludes me from admitting new documentary
evidence absent a showing of good cause for submitting that evidence for the first time at
the Administrative Law Judge level. CMS argues that no good cause justifies my
admitting this “new evidence.” These exhibits are not new documentary evidence. They
are sections from manuals and other instructions from CMS to its contractors and others,
ie., these documents are sub-regulatory statements of CMS policy. As such, a party need
not submit them as marked exhibits but could simply draw them to my attention, which
Petitioner subsequently (and needlessly) did, re-labeling them as attachments rather than
exhibits. I therefore overrule CMS’s objections. For convenience, I will refer to these
issuances by their exhibit numbers.

Discussion
Petitioner is entitled to summary judgment because the uncontroverted

evidence establishes that, for decades, CMS has enrolled slide
preparation facilities in the Medicare program and pays for the services
they provide, and no policy issuance or other directive establishes that
CMS has changed this policy.’

CMS may deny a supplier’s Medicare enrollment if the supplier does not comply with
enrollment requirements. 42 C.F.R. § 424.530(a)(1). From this, CMS argues that a slide
preparation facility does not comply with enrollment requirements because neither the
statute nor any regulation authorizes its enrollment in the Medicare program.

The problem with CMS’s position is that, for more than 20 years, CMS’s policies have
considered that the statute and regulations authorized a slide preparation facility’s
program participation. Since the early 1990’s, CMS and its predecessor, the Health Care
Financing Administration (HCFA),” have allowed slide preparation facilities to enroll in
the Medicare program as suppliers and have paid for their services “through the technical
component of the surgical pathology service.” CMS Ex. 4 at 5. Initially, it seems, CMS
carriers* enrolled slide preparation facilities as Independent Physiological Labs. When
HCFA no longer allowed Independent Physiological Labs to enroll, some Medicare
carriers converted slide preparation facilities to Independent Diagnostic Testing Facilities
(IDTFs). “Due to their unique characteristics,” HCFA determined that slide preparation
facilities could not technically qualify as IDTFs; nevertheless, the agency recognized
them as suppliers performing services that may be reimbursed under Medicare Part B. In
instructions effective September 15, 1999, HCFA authorized Medicare carriers to convert
slide preparation facilities to IDTFs “if that is the only way that the carrier can effect
payment.” HCFA indicated that “in the future” it might set standards for SPFs and “place
them in a code other than an IDTF code.” CMS Ex. 4 at 5.

For years thereafter, HCFA and its successor, CMS, reiterated its position that slide
preparation facilities could be enrolled in the Medicare program and that Medicare would
reimburse them for the services they provided:

e Ina transmittal dated August 21, 2009 (Transmittal 539), CMS directed its
contractors to begin a “limited provider revalidation effort,” focusing on all slide
preparation facilities, to ensure that CMS is “enrolling and paying [only] eligible
organizations.” P. Ex. | at 6.

I make this one finding of fact/conclusion of law.
“ “HCFA” was renamed “CMS” in 2001.

> Carriers are CMS contractors that process Part B claims. Social Security Act §
1842(a).
e Ina September 14, 2011 technical direction letter to its contractors, CMS advised
that, in accordance with section 6401 of the Patient Protection and Affordable
Care Act, existing providers “must be reevaluated under new screening guidelines
by no later than March 23, 2013.” CMS Ex. 6 at 1.4 The memorandum exempts
slide preparation facilities from revalidation “at this time.” CMS Ex. 6 at 1, 7.

CMS points to this exemption as evidence that slide preparation facilities cannot properly
enroll in the Medicare program, but this does not follow. CMS Br. at 8. CMS did not
explain why it exempted slide preparation facilities from its 2011 revalidation efforts, but
I find it far more likely that, in the face of such a daunting task — revalidating all enrolled
providers/suppliers in a relatively short time — CMS opted to exempt, for the time being,
the category of suppliers whose participation it had so recently revalidated.

Moreover, CMS’s subsequent statements and instructions undercut CMS’s position.

e In letters dated January 26 and February 13, 2012, Marilyn Tavenner, CMS Acting
Administrator, assured the American Association of Histology Laboratories that
CMS “[is] not attempting to abolish the classification of [slide preparation
facility]” and has no plans to change the “clinical laboratory improvement
amendments exemption for the technical component of current procedural
terminology code 88305” (i.e., the billing code for slide preparation services). She
promised that Medicare would continue to pay the claims submitted for covered
services “as such claims have been paid in the past,” although she cautioned that,
“Ta]s with any policy” CMS could revise its position. CMS Ex. 4 at 6, 8.

e Noridian’s own list of Medicare Part B specialties, updated October 15, 2013,
includes Slide Preparation Facilities under its list of suppliers. CMS Ex. 4 at 10;
see also CMS Ex. 4 at 14 (12/8/15 document listing slide preparation facilities as
providing reimbursable services).

e The current version of CMS’s Medicare Claims Processing Manual provides that
the services provided by slide preparation facilities are “payable through the
technical component of the surgical pathology service,” and cites the payment
codes. The manual repeats CMS’s long-standing position that slide preparation
facilities are not IDTFs but “must enroll separately with their Medicare

* CMS initially submitted a copy of this memorandum, “redacted to provide only
relevant information due to confidential contents.” I have no idea why any of this should
be confidential, and CMS has not explained why. But the redacted version leaves just
two sentences; everything else has been obscured, which makes it impossible to
determine the document’s purpose. CMS Ex. 6 at 1, 7; CMS Ex. List at 3. At my
direction, CMS provided an un-redacted version, from which I could determine the
purpose of the memorandum.
contractor.” Medicare Claims Processing Manual, Ch. 35 § 10.2C; P. Ex. 2 at 3;
see also P. Ex. 4 at 7 (provider/supplier taxonomy, listing slide preparation
facilities under “technologists, technicians & other technical service
providers/technician, other”).

e The current version of CMS’s Medicare Program Integrity Manual lists entities
that are not eligible to enroll in Medicare. I agree with CMS that the list was
never meant to be exhaustive. However, if slide preparation facilities were on the
list, my inquiry could stop there. The facilities are not on the list. P. Ex. 3; see P.
Ex. 5 at 3.

Thus, without articulating the specific portions of the Act or regulations, CMS has treated
slide preparation facilities as hybrids or subsets of IDTFs or labs, both of which are
eligible for Medicare enrollment. See, e.g., 42 C.F.R. § 410.33. CMS did not act
illegally or extra-legally when it enrolled these entities, but exercised its discretionary
authority to make policy. In this regard, I do not agree with Petitioner that CMS’s
enrollment determinations are substantive rules that require notice-and-comment before
they can be changed. CMS has the discretion to reverse its policy and may deny
enrollment. It may also allow currently enrolled facilities to continue their enrollment,
while denying new enrollment applications. And I would generally defer to CMS’s
articulated policies.

But CMS must somewhere articulate that policy change so that I have some authority to
which I can defer. Here, CMS cites no manual provision, policy transmittal, directive, or
other generally accepted articulation of policy. Indeed, as noted above, current manual
provisions authorize enrollment. Instead, CMS asks me to infer the policy change, based
on flimsy evidence:

e Ihave already discussed why I reject CMS’s reliance on its September 14, 2009
technical direction letter, which exempted slide preparation facilities from
revalidation.

e CMS points to changes in the application form (CMS Form 855B), which
apparently eliminated “slide preparation facility” from its checklist of supplier
types, although the form includes the option “other” and allows the applicant to fill
in the “type of supplier.” CMS Ex. | at 9. There could be many reasons for this
change, however. An enrollment application may reflect CMS policies, but it is
not the appropriate means by which CMS should make or change its policies.

e¢ CMS also points to December 23, 2009 changes in the Medicare Program Integrity
Manual (CMS Transmittal 320), which deleted a section titled “slide preparation
facilities.” CMS Ex. 7 at 4. But entire portions of the manual have been deleted,
including sections covering such obviously Medicare-eligible entities as rural
health clinics, skilled nursing facilities, ambulatory surgical centers, CLIA labs,
and many others. CMS Ex. 7 at 3-4. This does not establish any policy change
with respect to slide preparation facilities.

CMS provides the written declaration of Noridian Operations Manager Jesse
Score, who says that the contractor’s “business analysts” determined, based on the
September 14, 2011 technical direction letter, that slide preparation facilities may
no longer enroll in Medicare. CMS Ex. 2 at 4 (Score Decl. § 10). He also refers
to the opinion of CMS’s Provider Enrollment Operations Group, but neither
identifies the members of that group nor explains the basis for its opinion. CMS
Ex. 2 at 4 (Score Decl. § 11). Finally, he refers to the December 23, 2009 manual
changes. CMS Ex. 2 at 5 (Score Decl. § 12). As I have already discussed, these
“authorities” are not persuasive evidence that CMS has changed its decades-old
policy.

Conclusion

For more than twenty years, CMS (and its predecessor, HCFA) concluded that the
Medicare statute and regulations authorize Medicare enrollment of slide preparation
facilities. Because CMS points to no reliable evidence that it has changed that policy, I
grant Petitioner Harris Histology’s motion for summary judgment and reverse the
Medicare contractor’s reconsidered determination.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Total Kidney Care, LLC,

(NPI: 1710371745, 1861685844),
(PTAN: IN546A, HO609Y),
Petitioner,

v.

Centers for Medicare & Medicaid Services
Docket No. C-16-716
Decision No. CR4730

Date: November 8, 2016

DECISION

I sustain the determination of a Medicare contractor, as affirmed upon reconsideration
and ratified by the Centers for Medicare & Medicaid Services (CMS), to assign
Petitioner, Total Kidney Care, LLC, an effective Medicare participation date of March 7,
2016.!

I. Background

Petitioner filed a hearing request in order to challenge its effective participation date
determination. CMS moved for summary judgment. With its motion, CMS submitted 12
exhibits that it identified as CMS Ex. 1-CMS Ex. 12. Petitioner wrote a letter in
opposition to the motion and filed no exhibits. I receive CMS’s proposed exhibits into
the record.

' Based on this effective participation date Petitioner may submit reimbursement claims
to Medicare for items or services rendered as early as February 6, 2016. 42 C.F.R.
§ 424.521(a)(1).
It is unnecessary that I decide whether the criteria for summary judgment are met here.
Neither side proposes the testimony of a witness. Consequently, there is no need for an
in-person hearing. I decide the case based on the parties’ written submissions.

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

The issue in this case is whether a Medicare contractor appropriately assigned Petitioner
an effective participation date of March 7, 2016.

B. Findings of Fact and Conclusions of Law

The governing regulation in this case is 42 C.F.R. § 424.520(d). In relevant part, the
regulation states that the earliest effective date of participation for a Medicare supplier
such as Petitioner will be the date on which the supplier submits an enrollment
application that is subsequently approved by a Medicare contractor.

Petitioner submitted a Medicare enrollment application on April 30, 2015. CMS Ex. 4.

A Medicare contractor reviewed that application and found it to be incomplete or
inaccurate. It informed Petitioner of its conclusion in letters dated July 6, 2015. CMS
Ex. 3 at 3-8. The contractor advised Petitioner that, in order to process Petitioner’s
application, it needed either a pre-printed voided check from Petitioner or confirmation of
account information on a bank letterhead. /d. It also advised Petitioner that Petitioner
needed to file a form known as CMS-855R. The contractor informed Petitioner that it
might reject Petitioner’s application if Petitioner did not reply to the contractor’s request
with complete information within 30 days of the July 6 letters. Id.

Petitioner responded on July 13, 2015 by submitting an indecipherable copy of a check to
the contractor along with a form CMS-855R. CMS Ex. 5 at 2. On August 6 and 18,
2015, the contractor sent letters to Petitioner telling it that it had not processed
Petitioner’s application because Petitioner had not submitted a voided pre-printed check
or bank verification letter. CMS Ex. 3 at 9, 11.

Petitioner filed a second application for participation on October 5, 2015. CMS Ex. 2

at 2; CMS Ex. 3 at 15. On December 1, 2015, the contractor informed Petitioner that
Petitioner’s second application was incomplete and inaccurate. Again, the contractor told
Petitioner that the application lacked a pre-printed voided check or confirmation of
account information on bank letterhead. CMS Ex. 3 at 17, 19. Once again, the contractor
advised Petitioner that it might reject Petitioner’s application if Petitioner failed to supply
the requested information within 30 days. Id.
On December 7, 2015, Petitioner submitted yet another indecipherable copy of a check to
the contractor. CMS Ex. 8 at 2. On February 17, 2016, the contractor told Petitioner that
it would not process Petitioner’s application due to Petitioner’s failure to submit a voided
check or requisite bank information. CMS Ex. 3 at 20, 22.

Petitioner submitted a third application for participation on March 7, 2016. CMS Ex. 9;
CMS Ex. 3 at 26. The contractor processed this application to completion and assigned
Petitioner an effective participation date of March 7, 2016 (enabling Petitioner to claim
reimbursement for services provided as early as February 6, 2016). CMS Ex. 3 at 31-32,
38.

These facts establish that the earliest effective participation date that the contractor could
ave assigned to Petitioner was March 7, 2016, because that is the date on which
Petitioner filed a Medicare enrollment application that the contractor subsequently
approved. 42 C.F.R. § 424.520(d). The contractor could not assign an earlier effective
date to Petitioner because Petitioner did not file an acceptable enrollment application
prior to March 7.

Medicare regulations provide that a rejected enrollment application is one that may not be
processed to completion. A contractor may reject an application if the applicant fails to
provide requested information within 30 days from the date that the contractor requests
that information. 42 C.F.R. § 424.525(a)(1). Here, Petitioner submitted two applications
that were incomplete. In both instances, the contractor requested additional information
and Petitioner failed to supply that information within 30 days. Consequently, the
contractor rejected each of Petitioner’s first two applications. The earliest application
that the contractor was able to process to acceptance was the March 7 application.

Petitioner asserts that the checks it submitted to the contractor were readable, or at least
the originals of these checks were readable, and were not indecipherable. It complains
that the contractor failed to tell it that the checks that it submitted were indecipherable. It
suggests that it could easily have fixed the problems with the indecipherable checks had it
known about them. It argues additionally that the failure to approve an effective
participation date based on either Petitioner’s first or second enrollment application has
caused substantial hardship on Petitioner and it complains about the unfairness of that
rejection.

These arguments are an attempt by Petitioner to challenge the contractor’s rejection of its
April 30 and October 5, 2015 applications. An applicant has no right to appeal a decision
to reject an enrollment application. 42 C.F.R. § 424.525(d). Consequently, I may not
consider Petitioner’s argument that the contractor improperly rejected Petitioner’s
applications.
Additionally, Petitioner’s argument boils down to an assertion that the contractor acted
unfairly in rejecting Petitioner’s applications. I have no authority to consider arguments
premised on equitable considerations. Consequently, I must reject Petitioner’s unfairness
argument.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Mei Juan You
d/b/a Hunan Garden,

Respondent.

Docket No. C-15-2617
FDA Docket No. FDA-2015-H-1753

Decision No. CR4727

Date: November 8, 2016

INITIAL DECISION

I sustain the determination of the Centers for Tobacco Products of the United
States Food and Drug Administration (CTP) to impose a civil money penalty of
$11,000 against Respondent, Mei Juan You, d/b/a Hunan Garden. The
preponderance of the evidence establishes that Respondent sold tobacco products
to minors, failed to verify the purchaser’s identification , and sold individual
cigarettes during a forty-eight month period in violation of 21 C.F.R.

§§ 1140.14(a), 1140.14(b)(1), and 1140.14(d). These actions were violations of
the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 387c(a)(7)(B).
I. Procedural History

Respondent requested a hearing in order to challenge CTP’s determination to
impose an $11,000 civil money penalty against her. CTP filed a brief plus ten
proposed exhibits that are identified as CTP Ex. 1 - CTP Ex. 10. Respondent filed
neither exhibits nor a brief, but requested an in-person hearing in order to cross-
examine CTP’s witnesses.

Iconvened an in-person hearing on February 8, 2016. Respondent had advised me
that she could not speak English, so I obtained an interpreter of Mandarin Chinese
for that hearing. However, at the hearing, Respondent also averred that she could
not read English. I therefore adjourned the hearing in order to translate all of
CTP’s proposed exhibits into Mandarin Chinese.

I reconvened the hearing on September 14, 2016 after having the exhibits
translated. At this hearing Respondent appeared with an individual who identified
himself as Mr. Chen. Mr. Chen was uncertain as to whether he would represent
Respondent. He subsequently advised me that he was not Respondent’s
representative. Therefore, I consider Respondent to have appeared pro se. At the
September 14, 2016 hearing Respondent did not object to the admission of any of
CTP’s proposed exhibits and declined to cross-examine CTP’s witnesses. I
received into evidence CTP Ex. | - CTP Ex. 10.

Neither party filed a post-hearing brief.
II. Issues, Findings of Fact and Conclusions of Law
A. Issues
The issues are whether:
1. Respondent violated regulations governing the sale of tobacco
products to minors;
2. A civil money penalty of $11,000 is reasonable.

B. Findings of Fact and Conclusions of Law

There is no dispute in this case that Respondent is a business that sells tobacco
products to the general public.

CTP determined to impose a civil money penalty against Respondent pursuant to
the authority conferred by the Federal Food, Drug, and Cosmetic Act (Act) and
implementing regulations at Part 21 of the Code of Federal Regulations (C.F.R.).
The Act prohibits the misbranding of tobacco products while they are held for sale
after shipment in interstate commerce. 21 U.S.C. § 331(k). FDA and its agency,
CTP, may seek civil money penalties from any person who violates the Act’s
requirements as they relate to the sale of tobacco products. 21 U.S.C. § 331(f)(9).
The sale of tobacco products to an individual who is under the age of 18 and the
failure to verify the photographic identification of an individual who is not over
the age of 26 are violations of implementing regulations. 21 C.F.R. §§ 1140.14(a),
(b)(1). Additionally, the sale of “single cigarettes” — cigarettes that are sold
individually from an open package of cigarettes — is a violation of 21 C.F.R.

§ 1140.14(d).

The alleged violations that are at issue here are not the first instance in which
Respondent was charged with violating law and regulations concerning the sale of
tobacco products. CTP filed a previous administrative complaint against
Respondent on October 14, 2014, alleging that Respondent: on June 14, 2014
unlawfully sold tobacco products to a minor and failed to verify the minor
purchaser’s age by means of photographic identification; and on December 9,
2013 unlawfully sold a single cigarette to a minor and failed to verify the minor’s
age on that date. CTP Ex. 1. On November 9, 2014, Respondent admitted to the
allegations in the October 14, 2014 complaint and waived her right to contest
those violations in the future. These previous allegations of noncompliance are
administratively final and are not subject to challenge by Respondent.

What remains at issue are additional allegations of noncompliance made by CTP.
CTP alleges that on February 8, 2015, Respondent sold tobacco products
consisting of three single cigarettes to a minor and that Respondent failed to check
the minor’s identification on that date. These allegations, if true, constitute three
additional violations of law: unlawful sale of tobacco products to a minor in
violation of 42 C.F.R. § 1140.14(a); failure to check the identification of an
underage purchaser in violation of 42 C.F.R. § 1140.14(b); and unlawful sale of
single cigarettes from an opened package in violation of 42 C.F.R. § 1140.14(d).

The evidence relied on by CTP consists of the testimony of an inspector, Tonya
Ahmed, plus a photograph of three individual cigarettes. CTP Ex. 4; CTP Ex. 5.
Ms. Ahmed testified that she accompanied a minor to Petitioner’s facility on
February 8, 2015. There, she personally observed a clerk sell three individual
Newport cigarettes to the minor. CTP Ex. 4 at 2-3. Ms. Ahmed averred that she
subsequently photographed the cigarettes purchased by the minor and that CTP
Ex. 5 is an accurate photograph of those cigarettes. Id.; CTP Ex. 5.

On its face this evidence is more than sufficient to prove that Respondent violated
the law on February 8, 2015. Respondent offered nothing by way of rebuttal.
CTP proposes to impose a civil money penalty of $11,000 based on the fact that
Respondent committed six violations of law in the period commencing December
9, 2013, and running through February 8, 2015. The proposed penalty is the
maximum allowed by law. 21 C.F.R. § 17.2.

I find that the evidence amply justifies the penalty sought by CTP. Respondent is
not only a repeat offender but she has on multiple occasions sold a dangerously
addictive product to minors, individuals who are among the most vulnerable in our
society. She has done so in the face of repeated warnings by CTP of the adverse
consequences of unlawful sales of tobacco products and in the face of findings of
prior violations of law.

In sustaining the penalty I have considered whether Respondent lacks the financial
wherewithal to pay a civil money penalty of $11,000. Respondent has offered no
evidence to show that she is incapable of doing so. In light of that, there is no
basis for me to mitigate the penalty amount.

Order

For these reasons, I enter judgment in the amount of $11,000 against Respondent
Mei Juan You, d/b/a Hunan Garden.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

John Spencer Chikeziem Archinihu, M.D.
(OI File No. H-16-40152-9),

Petitioner
v.
The Inspector General.
Docket No. C-16-642
Decision No. CR4726

Date: October 27, 2016

DECISION

The Inspector General (IG) of the United States Department of Health and Human
Services excluded Petitioner, John Spencer Chikeziem Archinihu, M.D., from
participation in Medicare, Medicaid, and all federal health care programs based on
Petitioner’s conviction of a felony 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. For the reasons discussed below, I conclude that the IG
has a basis for excluding Petitioner because he was convicted of operating a
nonregistered pain management clinic, a felony offense that is related to fraud in
connection with the delivery of a health care item or service. I affirm the mandatory five-
year exclusion, and I also affirm that the effective date of Petitioner’s exclusion is May
19, 2016.

I. Background
By letter dated April 29, 2016, the IG notified Petitioner that, pursuant to section

1128(a)(3) of the Social Security Act (Act), 42 U.S.C. § 1320a-7(a)(3), he was being
excluded from participation in Medicare, Medicaid, and all federal health care programs
for a minimum period of five years, effective 20 days from the date of the letter. IG
Exhibit (Ex.) 1 at 1.' In the letter, the IG informed Petitioner of the factual basis for the
exclusion, stating:

This exclusion is due to your felony conviction as defined in section
1128(i) (42 U.S.C. 1320a-7(i)), in the Circuit Court of the Ninth Judicial
Circuit in and for Orange County, Florida, of an 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,
including the performance of management or administrative services
relating to the delivery of such items or services, or with respect to any act
or omission in a health care program (other than Medicare and a State
health care program) operated or financed by, or financed in whole or in
part, by any Federal, State, or local Government agency.

IG Ex. | at 1. The IG informed Petitioner that the exclusion period would be for the
statutory minimum period of five years. 1.G. Ex. 1 at 1.

Petitioner, through counsel, timely filed a request for hearing before an administrative
law judge on June 16, 2016. On July 6, 2016, I convened a prehearing conference by
telephone pursuant to 42 C.F.R. § 1005.6, during which I clarified the issues of the case
and established a schedule for the submission of pre-hearing briefs and exhibits. I
memorialized the schedule and summary of the pre-hearing conference in my Order and
Schedule for Filing Briefs and Documentary Evidence (Order), dated July 6, 2016.

Pursuant to the Order, the IG filed an informal brief (IG Br.) along with 11 proposed
exhibits (IG Exs. 1-11). Petitioner thereafter filed his informal brief (P. Br.). The IG
then filed a reply brief (IG Reply). In the absence of any objections, I admit the parties’
submissions and exhibits into the record.

Petitioner asserts that an in-person hearing is necessary, and the IG has argued against the
necessity of an in-person hearing. In my July 6, 2016 Order, I offered the parties an
opportunity to submit written direct testimony and I explained that I would not accept
direct testimony given for the purpose of attacking “any underlying conviction, civil
judgment imposing liability, determination by another government agency, or any prior
determination where the facts were determined and a final decision was made, if the

' The instant exclusion followed Petitioner’s application for reinstatement following a
previous exclusion pursuant to section 1128(b)(4) of the Act, 42 U.S.C.

§ 1320a-7(b)(4), based on the suspension of Petitioner’s Florida medical license. See IG
Exs. 2, 3, 9, 10.
conviction, judgment, or determination is the basis for the exclusion.” Order, § 5(b.). In
my Order, I informed the parties of the following with respect to direct testimony:

Direct testimony must be marked as an exhibit and submitted with a party's
documentary exhibits. 42 C.F.R. § 1005.16(b). Any written direct
testimony must be in the form of an affidavit or declaration that complies
with 28 U.S.C. § 1746. A live hearing will only be held for cross-
examination of a witness or witnesses who provided direct testimony, if it
is deemed necessary. Any request for cross-examination should be
submitted no later than the date the IG's reply brief is due, as stated in
Section 5(c)(iii) of this Order. I strongly caution that if written direct
testimony is submitted, the submitting party should be fully cognizant that
written direct testimony will not be accepted for the purpose of being a
collateral attack on any underlying conviction, civil judgment imposing
liability, determination by another government agency, or any prior
determination where the facts were determined and a final decision was
made, if the conviction, judgment, or determination is the basis for the
exclusion. 42 C.F .R § 1001.2007(d). Ifa live hearing is not necessary,
then I will proceed to issue my written decision.”

Order, § 5(b.). Petitioner contends that he would testify “as to the facts underlying the
offense, including the most significant issue, whether the conduct leading to the finding
of a violation of [Florida Statute] § 458.327(1)(f) involved fraud.” P. Br. at 8. However,
in presenting such testimony, Petitioner, in essence, would be essentially re-litigating the
basis for his conviction for operating a nonregistered pain management clinic. A hearing
is not warranted for such testimony, because the essential elements of Petitioner’s
criminal offense, regardless of the facts and “intent” Petitioner wishes to present through
testimony, support a determination that Petitioner’s offense was related to fraud in the
delivery of a health care item or services. 42 C.F.R § 1001.2007(d). Further, while not
dispositive, Petitioner has not availed himself of the opportunity to provide written direct
testimony. I will decide this case on the written submissions and documentary evidence.
See Order, § 5(b).

> T recognize that the blank short-form brief that accompanied my Order asked Petitioner
to indicate whether he desired an in-person hearing. Therefore, despite the directive in
my Order regarding the submission of written direct testimony, I have considered
whether a live hearing is necessary for the presentation of direct testimony.
IL. Issues

The issue in this case is whether there is a basis for exclusion; if so, | must uphold the
five-year minimum period of exclusion. 42 U.S.C. § 1320a-7(c)(3)(B); 42 C.F.R.
§ 1001.2007(a)(1).

Il. Jurisdiction
I have jurisdiction to decide this case. 42 U.S.C. § 1320a-7(f)(1); 42 C.F.R. § 1005.2.
IV. Findings of Fact, Conclusions of Law, and Analysis*

1. Petitioner’s conviction for operating a nonregistered pain management clinic
requires his exclusion from Medicare, Medicaid, and all federal health care
programs for a minimum of five years.

The Act requires the exclusion of any individual or entity from participation in Medicare,
Medicaid, and all federal health programs based on four types of criminal convictions.
42 U.S.C. § 1320a-7(a). In this case, the IG relied on section 1320a-7(a)(3) as the legal
basis to exclude Petitioner, which states:

(a) Mandatory exclusion

The Secretary shall exclude the following individuals and entities
from participation in any Federal health care program (as defined in section
1320a—7b(f) of this title):

(3) Felony conviction relating to health care fraud

Any individual or entity that has been convicted for an
offense which occurred after August 21, 1996, under Federal or
State law, in connection with the delivery of a health care item or
service or with respect to any act or omission in a health care
program (other than those specifically described in paragraph (1))
operated by or financed in whole or in part by any Federal, State, or
local government agency, of a criminal offense consisting of a
felony relating to fraud, theft, embezzlement, breach of fiduciary
responsibility, or other financial misconduct.

> My findings of fact and conclusions of law are set forth in italics and bold font.
42 U.S.C. § 1320a-7(a)(3).
The IG argues that Petitioner’s exclusion is required based on his conviction for
operating a nonregistered pain management clinic because it is related to fraud, and was
committed in connection with the delivery of a health care item or service.* IG Br. at 9-
2; 1G Reply at 5-8. Petitioner does not dispute that, for purposes of the Act, he has a
“conviction” for operating a nonregistered pain management clinic.> P. Br. at 1-2; 42
U.S.C. § 1320a-7(i)(3), (4). However, Petitioner argues, as relevant to the discussion
erein, that his felony conviction does not mandate exclusion because it is not related to
fraud nor was it committed in connection with the delivery of a health care item or
service. P. Br. at 2-8. As explained below, I reject Petitioner’s arguments and I conclude
that Petitioner’s conviction for operating a nonregistered pain management clinic requires
is exclusion.

On April 23, 2013, the State of Florida Department of Health (DOH) filed an
administrative complaint (IG Ex. 9 at 54-94) in which it charged Petitioner with
numerous violations of Florida law. Among the charges, the DOH alleged that Petitioner
ad repeatedly violated section 458.331(1)(q) of the Florida Statutes by prescribing
controlled substances “excessively and inappropriately.” IG Ex. 3 at 92. In an amended
administrative complaint filed on November 6, 2013 (IG Ex. 9 at 16-53), the DOH
charged, among other violations, that Petitioner owned and operated a nonregistered pain
management clinic beginning in August 2012. IG Ex. 3 at 17. The two administrative
complaints included a combined 32 counts detailing allegations of specific violations
committed by Petitioner. P. Ex. 3 at 16-94.

Petitioner, with the benefit and advice of counsel, entered into a settlement agreement
with the DOH in August 2014. IG Ex. 3 at 1-15. Petitioner admitted that the facts
alleged with respect to specific allegations, if proven, would constitute violations of
various laws cited in the administrative complaints. IG Ex. 3 at 5-6. In particular,

* The IG also argued that Petitioner’s offense related to a breach of his fiduciary duty to
the State of Florida and his patients. Because I am upholding Petitioner’s exclusion

based on the aforementioned reason, I will not address the IG’s alternative arguments for
exclusion based on section 1128(a)(3).

> Petitioner correctly recognized that although he entered a no contest plea and the
presiding judge accepted the plea and withheld adjudication, he has a conviction for
purposes of the Act. P. Br. at 2; see 42 U.S.C. § 1320a-7(i)(3), (4); 42 C.F.R. § 1001.2
(stating that for purposes of an exclusion, an individual is convicted if he or she has
entered a nolo contendere plea that has been accepted by a state or local court, even if
judgment of conviction has been withheld).

Petitioner did not dispute the allegations contained in Count One of the revised
administrative complaint, which charged, in pertinent part:

54. Section 458.3265(2)(a), Florida Statutes (2011-2012)
prohibits a physician from practicing medicine in a pain-
management clinic if the pain-management clinic is not
registered with the department as required by Section
458.3265, Florida Statutes.

55. Respondent violated Section 458.331(1)(nn), Florida
Statutes (2011-2012), by violating Section 458.327(1)(e),
Florida Statutes (2011-2012), by practicing medicine at an
unregistered pain management clinic by prescribing the
majority of patients seen during the month of November
2012, opioids, benzodiazepines, barbiturates, or carisoprodol
for the treatment of chronic non-malignant pain.

IG Ex. 3 at 26-27. Petitioner also did not contest allegations that, in violation of Florida
Statutes (F.S.) § 458.331(1)(m), and with respect to a specific patients, he failed to do the
following: document the medical justification for treatment, including the use of
controlled substances; document any consultation with specialists; obtain a complete
history; document the results of complete physical examinations; and document the
results of treatment. ° IG Ex. 3 at 34-40. Petitioner also did not contest several charges
that he failed to keep adequate medical records as required by F.S. § 458.331(1)(m).’ IG
Ex. 3 at 64, 70, 77, 84, 91. The stipulated disposition included a reprimand, a fine of
$50,000, an order to reimburse DOH $17,726.87 in costs, a suspension of Petitioner’s

° The Florida Statutes state that “[k]nowingly operating, owning, or managing a
nonregistered pain-management clinic that is required to be registered with the
Department of Health pursuant to [§] 458.3265(1)” is a felony of the third degree. F.S.
§ 458.327(1)(e). The sentence of incarceration for a third degree felony may not exceed
five years. F.S. § 775.082(3)(e).

7 The revised administrative complaint states, in pertinent part: “Section 458.331(1)(m),
Florida Statutes (2011-2012), subjects a physician to discipline for failing to keep legible,
as defined by department rule in consultation with the board, medical records that
identify the licensed physician by name and professional title who is responsible for
rendering, ordering, supervising, or billing for each diagnostic or treatment procedure and
that justify the course of treatment procedure and that justify the course of treatment of
the patient, including, but not limited to, patient histories; examination results; test
results; records of drugs prescribed, dispensed, or administered; and reports of
consultations and hospitalizations.” IG Ex. 3 at 34-35.
license to practice medicine for 18 months, a permanent license restriction barring
Petitioner from prescribing certain controlled substances, and restrictions barring
Petitioner from treating patients for “chronic nonmalignant pain” or “operat[ing] ...a
“Pain Management Clinic’ as that term is defined in Section 458.2365, Florida Statutes
(2011-2013).” IG Ex. 3 at 6-9.

Nearly contemporaneous with the DOH’s filing of its first administrative complaint, the
State Attorney for the Ninth Judicial Circuit of Florida filed a criminal information on
April 12, 2013, charging that Petitioner “between the 12th day of September, 2011 and
the 11th day of January, 2013 . . . did, in violation of Florida Statute 458.327(1)(e),
knowingly operate, own or manage a nonregistered pain-management clinic that is
required to be registered with the Department of Health pursuant to [§] 458.3265(1).” IG
Ex. 6. An affidavit in support of an arrest warrant, executed March 8, 2013, cites to data
showing that from September 20, 2011 through September 17, 2012, Petitioner issued
7,629 prescriptions for controlled substances and prescribed a total of 675,656 tablets of
controlled substances during that time period.’ IG Ex. 5 at 3-4. The arrest warrant
further cites data showing that during the six-month period from July 1, 2012 through
January 11, 2013, Petitioner issued 4,945 prescriptions for controlled substances, for a
total of 429,179 controlled substance tablets prescribed during that time period. IG Ex. 5
at 4-5. The affidavit reported that Petitioner prescribed 399,661 oxycodone pills during
the one-year period from September 20, 2011 through September 17, 2012, and
prescribed 199,764 oxycodone pills between July 1, 2012 and January 11, 2013. IG Ex. 5
at 5. The arrest warrant stated, in summary, that “[t]he pharmacy profiles reflect that
[Petitioner] prescribes controlled prescription medication consistent with the type of
prescribing associated with that of a “pill mill” (a high volume prescriber of controlled

® For purposes of illustrating the amount of controlled substances prescribed by
Petitioner, I have calculated that Petitioner’s patients, over the 195-day period from July
1, 2012 through January 11, 2013, and based on the assumption that they took their
medications as prescribed, were collectively taking on average, 2,200 tablets of
controlled substances per day. 1.G. Ex. 5 at 5-6. The total number of prescriptions for
controlled substances, divided over 195 days (including weekends and holidays), yields a
calculation that Petitioner issued, on average, more than 25 prescriptions for controlled
substances each day, even though Petitioner was purportedly operating a primary care
practice, and not a pain management clinic. Even more remarkable is that the number of
tablets per prescription averaged nearly 90 tablets per prescription, which certainly does
not evidence that Petitioner issued prescriptions for controlled substances to primary
medicine patients who were seeking relief of short-term episodes of acute pain. IG Ex. 5
at 3-4. While Petitioner states that he was “working on a part time basis [at] other,
licensed pain management clinics” and that the aforementioned data in the affidavit was
“skewed,” Petitioner has not submitted any evidence to refute the data contained in the
arrest warrant affidavit. P. Br. at 5-6.

substances), with [Petitioner] prescribing multiple patients for the same exact pattern of
medication combinations on the same date, with the same strength dosage and multiple
duplicate medications, with most drugs prescribed being a narcotic, along with a
benzodiazepine.” IG Ex. 5 at 10.

On January 5, 2015, and with the assistance of counsel, Petitioner entered a plea of nolo
contendere to the charge that he did, “in violation of Florida Statue 458.327(1)(e),
knowingly operate, own or manage a nonregistered pain-management clinic that is
required to be registered with the Department of Health pursuant to [§] 458.3265(1).” IG
Exs. 6, 7.

Petitioner primarily argues that “the definition of excludable offenses does not comport
with the specific offense to which [Petitioner] entered a plea and is therefore not an
offense involving fraud, or a financial crime, but relates to an application for licensure.”
P. Br. at 2-3. Petitioner further contends that “his intention was to have a primary care
medicine practice and not a pain management clinic, although he did intend and did see
patients from his prior pain management practice.” P. Br. at 4. Petitioner acknowledged
that “[t]he application for an occupational license application made for [Petitioner’s]
practice, Diamond Medical Center, was for operating a primary care clinic.” P. Br. at 5.
Petitioner argues that “[t]he failure to obtain a registration . . . is a licensure violation, not
an offense related to fraud, theft, embezzlement, breach of a fiduciary responsibility, or
other financial misconduct in connection with the delivery of a health care item or
service.” P. Br. at 6.

Petitioner has admitted that he previously operated a pain management practice and
explained that although his “intention was to have a primary care medicine practice and
not a pain management clinic,” he continued to see patients from his prior pain
management practice. P. Br. at 4. As a former operator of a pain management clinic,
Petitioner was presumably knowledgeable about the State of Florida’s registration
requirement for pain management clinics. P. Br. at 4; see IG Ex. 4 at 3-4 (July 26, 2011
filing amending the name of Petitioner’s medical practice from “Diamond Urgent Care
and Pain Clinic Corporation” to “Diamond Urgent Care Corporation”); IG Ex. 5 at 2
(affidavit in support of arrest warrant explaining that on August 1, 2011, Petitioner had
“closed out the Pain Management Clinic Registration with the State. ..””). Florida law
sets forth numerous conditions for pain management clinics, to include specific
requirements relating to clinic registration and approval, physician responsibilities, state
inspections, recordkeeping, and patient data reporting. F.S. § 458.3265. Further, the
State of Florida may levy fines against a pain management clinic for noncompliance with
requirements and may also, if warranted, revoke or deny a pain management clinic’s
registration. F.S. § 458.3265(5). Additionally, Florida law contains criminal penalties
for individuals who own, operate, or manage a nonregistered pain management clinic that
is required to be registered. F.S. § 458.327(1)(e). Even though Petitioner, as a previous
operator of a pain management clinic, would have been familiar with the registration
requirement for pain management clinics and knew that he had been prescribing
controlled substances in such a quantity that mandated his clinic’s registration as a pain
management clinic (i.e., issuing 7,629 prescriptions totaling 675,656 tablets of controlled
substances in a one-year period), Petitioner falsely operated his practice as a primary care
clinic when in reality it was a pain management clinic. By continuing to operate as a
primary care clinic, Petitioner avoided the state registration process and was able to
operate with less scrutiny than if he had operated as a state-registered pain management
clinic.? See F.S. § 458.3265; see also F.S. Chapter 458 (Medical Practice).

Petitioner may be correct in his belief that the requirement to register a pain management
clinic is a “licensure requirement,” but he fails to appreciate the importance of this state-
mandated requirement. The State of Florida has determined that the requirement to
register a pain management clinic is so important that it allows for criminal penalties,
specifically a third degree felony conviction, for anyone who is convicted of failing to
comply with this requirement. See F.S. § 458.327(1) (listing six specific medical practice
violations that can result in a felony conviction, to include the aforementioned offense
involving operating, owning, or managing a nonregistered pain management clinic, along
with: practicing or attempting to practice medicine without a license; practicing or
attempting to practice with a revoked or suspended license; obtaining or attempting to
obtain a license to practice medicine by knowing misrepresentation; obtaining or
attempting to obtain a position as a medical practitioner or resident in a clinic or hospital
through knowing misrepresentation of education, training, or experience; and, the
dispensing of a controlled substance in violation of F.S. § 465.0276). Petitioner is
incorrect in his assertion that his failure to register his clinic as a pain management clinic
is simply the failure to meet a licensure requirement; rather, Petitioner misrepresented the
nature of his practice, and he deliberately shirked the requirement to comply with state
law. As such, Petitioner’s felony criminal offense is related to fraud.

The plain language of the Act clearly states that an exclusion is mandated when the
underlying conviction is for a felony “relating to” fraud, meaning that the conviction need
not have been based on the actual commission of fraud, but rather, have only been related
to fraud. Petitioner entered a no contest plea to the charge that he operated a
nonregistered pain management clinic, and he has been convicted of operating a
nonregistered pain management clinic. Petitioner gave the State of Florida the false
impression that he was operating a primary care practice, when in fact he was operating a

° Further, it is uncertain whether the State of Florida and/or the local county would have
approved any attempt by Petitioner to operate a pain management clinic had he complied
with the registration requirements set forth in F.S. § 458.3265(1). See IG Ex. 5 at 2
(affidavit reporting that Orange County had revoked Petitioner’s occupational license to
operate his previous pain management clinic based on “‘issues of falsifying the affidavit
to the [county’s] Business Tax Receipt Office”).

10

nonregistered pain management clinic. In fact, Petitioner admits that he did not advertise
his practice as a pain management clinic and his “intention was to have a primary care
medicine practice....” P. Br. at 4. Simply said, Petitioner’s failure to register his pain
management clinic as a pain management clinic, despite his knowledge that he was in
essence operating as a pain management clinic and had previously operated a pain
management clinic, was deceptive, and at a minimum, is “related to fraud.” By failing to
report the true nature of his medical practice, Petitioner avoided the requirement to
comply with the heightened compliance requirements for pain management clinics set
forth under Florida law. Even more concerning, by failing to register as a pain
management clinic, Petitioner’s patients did not benefit from the greater protection they
would have received if they had been treated at a lawfully registered pain management
clinic.'° While the term “fraud” is not defined by statute or regulation for purposes of
exclusion, Petitioner’s operation of a nonregistered pain medication clinic is fraud under
commonly accepted principles of fraud. See Black’s Law Dictionary, 10th ed. (2014),
referencing John Willard, A Treatise on Equity Jurisprudence 147 (Platt Potter ed., 1879)
in defining fraud (“Fraud has been defined to be, any kind of artifice by which another is
deceived.”) (emphasis omitted); see Universal Health Svcs., Inc., v. Escobar, 136 8. Ct.
1989, 1999 (2016) (explaining that “misrepresentations by omission” can constitute
fraud); Abdul Razzaque Ahmed, M.D., DAB No. 2261 at 8-9 (2009), aff’d, Ahmed v.
Sebelius, 710 F. Supp. 2d 167 (D. Mass. 2010) (stating that under the common law,
“fraud generally requires a false statement or misrepresentation of material fact that the
defendant makes with knowledge of its falsity and with the intent or purpose that it
induce action or forbearance by anther.”). In summary, Petitioner, after previously
operating a pain management clinic, opened a new primary care practice. He then
proceeded to operate as a pain management clinic, prescribing hundreds of thousands, if
not more than a million, tablets of controlled substances over the period of time
addressed in the arrest warrant affidavit. IG Ex. 5 at 3-5. Petitioner knowingly failed to
register his practice as a pain management clinic despite the requirement to do so, and he
thereby avoided numerous compliance requirements, to include inspections,
recordkeeping, and reporting requirements. Petitioner’s purported operation of a primary
care practice was a misrepresentation, and his criminal action was certainly “related to
fraud” as contemplated by section 1128(a)(3).

' By not registering as a pain management clinic, Petitioner avoided compliance with
numerous requirements that presumably exist to prevent fraud and ensure quality of care
for pain management patients. For example, Florida law requires pain management
clinics to comply with quality assurance requirements and data collection and reporting
requirements such as reporting adverse incidents, the number of patients treated whose
domicile is outside of the state, and the number of new and repeat patients who are
prescribed controlled substances for the treatment of chronic, nonmalignant pain. See
F.S. § 458.3265(2)(i), (j).
11

Additionally, Petitioner committed his criminal offense in connection with the delivery of
a health care item or service. The statute states that an exclusion is warranted when the
conviction is for an offense “in connection with” the delivery of a health care item or
service, meaning that a criminal offense warranting exclusion is not limited only to the
actual delivery or provision of such an item or service. 42 U.S.C. § 1320a-7(a)(3); see
Charice D. Curtis, DAB No. 2430 at 4 (2011) (“[T]he plain language of section
1128(a)(3) encompasses felonies ‘relating to’ fraud . . . not just to felonies that constitute
fraud or one of the other listed offenses.”). The Departmental Appeals Board (Board) has
also explained that an ALJ does not need to limit review to the elements of an offense,
but may consider the extrinsic evidence surrounding the conviction to determine whether
it is “relating to” fraud and done “in connection with” the delivery of a health care item
or service. See Narendra M. Patel, M.D., DAB No. 1736 at 6 (2000), aff'd, Patel v.
Thompson, 319 F.3d 1317 (11th Cir. 2003). While Petitioner argues to the contrary, the
Act does not require that Petitioner’s offense be related to a health care program. Ellen L.
Morand, DAB No. 2436 at 9 (2012), citing Breton Lee Morgan, M.D., DAB No. 2264 at
6 (2009) (stating that the use of the disjunctive word “or” in section 1128(a)(3) means
that exclusion is mandated “for either a crime committed ‘in connection with the delivery
of a health care item or service’ or a crime that involved an act or omission in a
government-funded health care program.”). The Board has also explained that there
should be a “common sense connection” between the underlying crime and the delivery
of a health care item or service in order to meet the statutory basis for exclusion. Erik D.
DeSimone, R.Ph., DAB No. 1932 at 5 (2004). When applying a common sense analysis
to the underlying facts of this case, I conclude that Petitioner’s operation of a
nonregistered pain management clinic was “in connection with” the delivery of such
ealth care services to Petitioner’s patients. The crux of Petitioner’s criminal offense was
that he was prescribing large amounts of controlled substances to his patients in a manner
contrary to law; thereby, his offense was related to the delivery of a health care item or
service.

Based on the foregoing analysis, I conclude that Petitioner’s felony criminal conviction
for operating a nonregistered pain medicine clinic mandates his exclusion from all federal
health care programs. 42 U.S.C. § 1320a-7(a)(3).

2. A 5-year minimum exclusion is mandated.

The Act requires a minimum exclusion period of five years when the exclusion is
mandated under section 1320a-7(a). 42 U.S.C. § 1320a-7(c)(3)(B). In this case,
exclusion is required under section 1320a-7(a)(3); therefore, Petitioner must be excluded
for a minimum of five years.

Petitioner contends that, due to the exclusion, his “substantial work in restoring his
medical] license is for naught and this exclusion will also operate as denial of his ability
to practice his profession in any manner” because the State of Florida will not renew the

12

medical license of an individual who has been excluded. P. Br. at 8-9. The only relevant
matter before me is whether exclusion is mandated pursuant to section 1128(a)(3) of the
Act, and if exclusion is mandated, I have no discretion to shorten the mandatory 5-year
length of the exclusion. Any collateral or downstream state licensure issues are irrelevant
to my consideration of whether an exclusion is mandated for a minimum period of time.
It is clear that Petitioner has received lenient treatment by both the criminal justice
system and his state medical board, and as a result, the State of Florida has allowed him
to retain his medical license. Such leniency is not relevant to my consideration of
whether exclusion for a period of five years is mandated. See Henry L. Gupton, DAB
No. 2058 at 7 (2007) (explaining that while an IG exclusion aims to protect beneficiaries
of health care programs and the federal fisc, a criminal law proceeding involves
“punishment, rehabilitation, and the deterrence of future misconduct”); see also Henry L.
Gupton, DAB Ruling 2007-1 at 4 (2007) (Board stating, in denying reconsideration of its
previous Gupton decision, that the “federal exclusion law aims to protect beneficiaries of
ealth care programs and the federal fisc through remedial actions such as exclusions”).

V. Effective Date of Exclusion

The effective date of the exclusion, May 19, 2016, is established by regulation, and I am
bound by that provision. 42 C.F.R. §§ 1001.2002(b), 1005.4(c)(1).

VI. Conclusion
For the foregoing reasons, | affirm the IG’s decision to exclude Petitioner from

participation in Medicare, Medicaid, and all federal health care programs for a minimum
period of five years.

/s/
Leslie C. Rogall
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Samuel Gerson, M.D.
(O.L File No. H-14-42946-9),

Petitioner,
v.
The Inspector General.
Docket No. C-16-647
ALJ Ruling No. 2017-2

Date: October 27, 2016

ORDER RETURNING CASE TO THE INSPECTOR
GENERAL TO ADJUDICATE PETITIONER’S
APPEAL UNDER 42 C.F.R. § 1001.3004

Because the Inspector General (IG) of the Department of Health and Human Services
failed to properly provide Samuel Gerson, M.D. (Dr. Gerson or Petitioner) with notice of
is right to appeal the IG’s initial denial of his request for reinstatement, but Dr. Gerson
timely directed such an appeal to the Departmental Appeals Board (DAB) of the
Department of Health and Human Services, I return Dr. Gerson’s case to the IG to
provide a full and fair adjudication under 42 C.F.R. § 1001.3004.

On April 30, 2015, the IG notified Dr. Gerson that he was being excluded from
participating in Medicare, Medicaid, and all other federal health care programs for five
years based on a conviction for a felony offense involving the illegal manufacture,
distribution, prescribing, or dispensing of controlled substances. Dr. Gerson requested a
earing before an administrative law judge (ALJ) to contest the exclusion. After
receiving prehearing submissions from the parties, I granted summary judgment for the
IG and affirmed the exclusion under 42 U.S.C. § 1320a-7(a)(4). In doing so, I concluded

2

that Dr. Gerson had been convicted in the state of California of one count of felony
prescription forgery. My conclusion that Petitioner was “convicted” of the crime was
based on the statutory definition of that term in 42 U.S.C. § 1320a-7(i), which indicates
that for exclusion purposes, a conviction includes either pleading guilty to a crime and a
court accepting that plea, or participating in a deferred adjudication program. In Dr.
Gerson’s case, he both pled guilty and a court accepted that plea, and entered a deferred
adjudication program. See Samuel Gerson, M.D., DAB CR4373 (2015).

A number of months after my decision, California enacted a new law permitting
Petitioner to withdraw his guilty plea. Petitioner took advantage of this new law and, on
March 1, 2016, obtained an order from the Superior Court of California, County of San
Diego, accepting the withdrawal of his previously entered guilty plea, permitting
Petitioner to enter a not guilty plea, and dismissing the criminal case against Petitioner.
IG Exhibit (Ex.) 5 at 8. On April 6, 2016, Petitioner requested reinstatement (i.e.,
termination of the exclusion) from the IG under 42 C.F.R. § 1001.3005. IG Ex. 5 at 1-2.
Section 1001.3005 mandates retroactive reinstatement to individuals whose conviction is
reversed or vacated on appeal. On May 26, 2016, the IG denied Petitioner’s request for
reinstatement. IG Ex. 6. Although the IG warned Petitioner not to participate in any
federal health care program and advised Petitioner that he could request reinstatement
again 90 days before his five-year exclusion ended, the IG notably did not advise
Petitioner that he had the right to appeal this denial of reinstatement to the IG within 30
days. IG Ex. 6 at 2-3.

On June 21, 2016, Petitioner filed an appeal of the IG’s denial of reinstatement with the
DAB. Petitioner’s appeal indicated that he sought review of the reinstatement denial, but
also asked that an ALJ reopen my decision upholding his exclusion in order to consider
the California Superior Court’s March 1, 2016 order dismissing the criminal charges
against him. I was assigned to Petitioner’s appeal and, on July 20, 2016, I held a
prehearing conference with counsel for the parties. At that conference, I told the parties
that I needed them to brief whether I had jurisdiction to review the denial of Petitioner’s
reinstatement request and/or to reopen my previous decision involving Dr. Gerson to
reverse the exclusion. The IG filed a brief (IG Br.) and 11 exhibits. Petitioner filed a
brief (P. Br.) and one exhibit.

While conceding that an ALJ may reopen an exclusion decision, the IG argues that the
authority to reopen a decision is limited to correcting clear errors in the decision and that
my decision was not erroneous when | issued it. IG Br. at 7. The IG also asserts that
only the IG has jurisdiction to review the denial of reinstatements and Petitioner failed to
avail himself of the IG’s appeal process. IG Br. at 8.
3

Petitioner argues in response that ALJs have the authority to reopen exclusion cases to
consider new evidence that an individual should not be excluded. P. Br. at 4. Petitioner
asserts that my exclusion decision is now erroneous in light of the March 1, 2016
California Superior Court order and that I should reopen the case to correct my decision.
P. Br. at 5. Petitioner also argues that he sought reinstatement from the IG, but was
denied based on the IG’s incorrect interpretation of 42 C.F.R. § 1001.3005, and alleges
that the IG never provided notice of his appeal rights. P. Br. at 6-7.

l agree with both parties that the DAB has recognized that adjudicators in exclusion cases
may exercise inherent authority to reopen decisions in order to correct errors. Mark B.
Kabins, M.D., DAB Ruling No. 2012-1 at 2-3 (2011); Henry L. Gupton, DAB Ruling No.
2007-1 (2007). However, the regulations provide an avenue by which Petitioner may
obtain the relief he seeks short of me exercising “inherent authority.” Rather, Petitioner’s
timely appeal of the IG’s denial must be adjudicated and, under the regulations, it is the
IG, and not I, who must perform the adjudication.

With certain exceptions not applicable in this case, the Administrative Procedure Act
mandates ALJ review “in every case of adjudication required by statute to be determined
on the record after opportunity for an agency hearing.” 5 U.S.C. §§ 554(a), 556(a)-(b).
Individuals excluded by the IG are afforded hearing rights under section 205(b) of the
Social Security Act (42 U.S.C. § 405(b)). 42 U.S.C. § 1320a-7(f)(1). Hearings under
section 205(b) are hearings held pursuant to the Administrative Procedure Act. Batavia
Nursing & Convalescent Ctr., DAB No. 1904 (2004).

Although an excluded individual has a right to notice and an opportunity for a hearing on
the record, and thus ALJ review, regarding the imposition of exclusion, no such right
exists for decisions related to reinstatement. Rather, the Secretary of Health and Human
Services has statutory authority to terminate an individual’s exclusion, but that individual
has no right to a hearing to dispute the Secretary’s decision. See 42 U.S.C. § 1320a-
7(g)(2). The Secretary promulgated regulations assigning the Office of the Inspector
General to consider requests for reinstatement, and if the Office of the Inspector General
should deny the request initially, then the excluded individual could appeal that denial to
the Office of the Inspector General. 42 C.F.R. §§ 1001.3002-.3004. Significantly, the
regulations prohibit an ALJ from ordering the reinstatement of an excluded individual
and preclude administrative review of the IG’s ultimate decision regarding reinstatement.
42 C.F.R. §§ 1001.3002(f), 1001.3004(c).

Although I do not have authority to review the IG’s denial of Petitioner’s reinstatement, I
order the IG to fully consider Petitioner’s appeal of that denial. Petitioner had a right to
seek review of the denial of his reinstatement request within 30 days of the decision
denying the request. 42 C.F.R. § 1001.3004(a). The IG’s denial notice sent to Petitioner
4

did not mention his right to appeal. Not illogically, Petitioner filed his appeal with the
DAB, the entity with whom he filed his appeal after receiving the initial exclusion
determination. Importantly, Petitioner filed that appeal within 30 days of the notice
denying his reinstatement request.

ALJs have the authority to remand timely filed appeals to the Department of Health and
Human Services’ component with jurisdiction to conduct the adjudication. See Victor
Alvarez, DAB CR2070 at 5-6 (2010), aff'd, DAB No. 2325 at 12-13 (2010). Therefore,
in line with the Alvarez case, I construe Petitioner’s timely appeal with the DAB as an
appeal under 42 C.F.R. § 1001.3004(a). DAB CR2070 at 5. I return this case to the IG
and order the IG to adjudicate Petitioner’s appeal under 42 C.F.R. § 1001.3004(b).
Because the IG failed to provide Petitioner with notice of his appeal rights, the IG will
afford Petitioner, prior to rendering a final decision on appeal, the opportunity to submit
any written argument or documentary evidence he wishes to submit and/or a written
request to present written evidence and oral argument to an IG official. See 42 C.F.R.

§ 1001.3004(a). When rendering a decision on appeal, the IG will respond to Petitioner’s
particular claim that he deserves early reinstatement based on 42 C.F.R. § 1001.3005.

Because adjudication of Petitioner’s appeal through the regulatory process can be
achieved, I do not rule on Petitioner’s request to reopen his exclusion decision.

It is so ordered.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Brighton Convalescent Center
(CCN: 55-5338),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-16-517

ALJ Ruling No. 2017-1

Date: October 27, 2016

DISMISSAL

Brighton Convalescent Center (Brighton or Petitioner) requested a hearing before an
administrative law judge (ALJ) to contest the California Department of Public Health’s
(state agency) determination that Brighton was not in substantial compliance with
Medicare participation requirements for skilled nursing facilities (SNF). Because the
Centers for Medicare & Medicaid Services (CMS) did not impose enforcement remedies
on Brighton, Brighton does not have a right to a hearing. Therefore, I dismiss Brighton’s
hearing request.

I. Procedural History and Background

Brighton is an SNF located in Pasadena, California, that participates in the Medicare
program. The state agency completed a complaint survey of Brighton’s facility on March
2, 2016, which resulted in a finding that Brighton did not substantially comply with 42
C.F.R. §§ 483.13(b) and 483.13(c)(1)(i) at the “G” scope and severity level (i.e., isolated
deficiencies that constituted actual harm that is not immediate jeopardy). CMS Exhibit
(Ex.) 1; CMS Ex. 2 at 1. In an undated letter, the state agency: informed Brighton of its
2

finding; provided Brighton with an opportunity to file a plan of correction; warned
Brighton that if it did not return to substantial compliance by certain dates in the future,
the state agency would recommend that CMS impose a civil money penalty and terminate
Brighton’s Medicare provider agreement; and notified Brighton that the state agency was
imposing, as authorized by CMS, a denial of payment for new admissions, to take effect
in the future if Brighton did not return to substantial compliance. CMS Ex. 2 at 1-3. The
letter also advised Brighton that if it disagreed with the state agency’s determination of
noncompliance, it could request a hearing before an ALJ, noting that “[y]ou may appeal
the finding of noncompliance that led to an enforcement action, but not the enforcement
action or remedy itself.” CMS Ex. 2 at 3. Further, the state agency indicated that
Brighton could request informal dispute resolution of this case. CMS Ex. 2 at 5-6.
Finally, the state agency stated that if CMS imposed termination or any other
enforcement remedy, CMS would send notice of this to Brighton. CMS Ex. 2 at 6.

On April 13, 2016, the state agency returned to Brighton for a revisit survey and noted
that Brighton no longer had any deficiencies. CMS Ex. 3. On April 29, 2016, Brighton
requested an ALJ hearing. Brighton disputed the state agency’s finding that it was not in
substantial compliance and the conclusion that the deficiency the state agency found was
a“G” level deficiency.

On May 4, 2016, I issued an Acknowledgment and Pre-Hearing Order. In response,
CMS filed a motion to dismiss Petitioner’s hearing request, arguing that CMS did not
impose any enforcement remedies and that Petitioner only has a right to a hearing when
CMS imposes enforcement remedies. CMS also filed four exhibits with the motion.
Petitioner opposed CMS’s motion (P. Opposition) and submitted a declaration from
Petitioner’s administrator (P. Declaration).

II. Issue

Whether Petitioner has a right to a hearing before an ALJ if CMS did not impose
enforcement remedies against Petitioner.

III. Discussion

An SNF has a right to a hearing before an ALJ when CMS has “made an adverse ‘initial
determination’ of a kind specified in 42 C.F.R. § 498.3(b).” Columbus Park Nursing &
Rehab. Ctr., DAB No. 2316 at 6 (2010); see also 42 C.F.R. § 498.3(a)(1). When CMS
makes a finding that an SNF is noncompliant and imposes a remedy under 42 C.F.R.

§ 488.406, the SNF has received an initial determination that is subject to further review.
42 CFR. § 498.3(b)(13); see also 42 C.F.R. §§ 488.330(e)(3), 488.408(g)(1),
498.3(a)(3)(ii). Consistent with this proposition, an SNF “has no right to an ALJ hearing
3

to contest survey deficiency findings where CMS has not imposed any of the remedies
specified in section 488.406 based on those findings, or where CMS imposed, but
subsequently rescinded, any such remedies.” Columbus Park, DAB No. 2316 at 7.
Remedies specified at 42 C.F.R. § 488.406 include termination of a provider agreement, a
denial of payment for new admissions, and civil money penalties. Further, there is no
right to ALJ review of CMS’s determination as to the level of an SNF’s noncompliance
unless a successful challenge would affect either the permissible range of a civil money
penalty amount or a finding of substandard quality of care that results in the loss of
approval of a nurse aide training program. 42 C.F.R § 498.3(b)(14), (d)(10).

In the present matter, the state agency advised Petitioner that it recommended that CMS
impose civil money penalties and termination of Petitioner’s provider agreement if
Petitioner did not achieve substantial compliance with program participation
requirements within specified time frames. CMS also authorized the state agency to
impose a denial of payment for new admissions if Petitioner did not return to substantial
compliance within a certain time frame. However, because Petitioner timely returned to
substantial compliance on the next revisit survey, CMS never imposed any enforcement
remedies. Therefore, Petitioner does not have any hearing rights based on the remedies
originally recommended or imposed, but never effectuated.

Petitioner asserts that dismissal of its hearing request will violate its due process rights
because it has been significantly harmed by the state agency’s finding of a deficiency at
the “G” level of scope and severity. P. Opposition at 1-2. Brighton alleges that the state
agency’s finding resulted in a reduction in Brighton’s Five-Star Rating from four stars to
two, which in turn made it more difficult for Brighton to contract with health
maintenance organizations, attract new residents, and recruit “quality staff.” P.
Declaration at 2-3. Petitioner also asserts that the state agency’s letter expressly provided
notice of hearing rights if it disagreed with the findings of noncompliance leading to
enforcement remedies. P. Opposition at 4-5. Finally, Petitioner avers that various federal
courts, including the United States Court of Appeals for the Ninth Circuit, have taken
positions that all allegations arising from a survey must be reviewed or dismissed. P.
Opposition at 5-6.

With the exception of an unreported district court case, the cases Petitioner cites are not
directly on point to the issue in this matter. Even the district court case differs, for in that
case, CMS actually imposed a remedy that was in effect for three days and “affected the
Medicare/Medicaid admissions and reimbursements” of the SNF. Golden Living Ctr.-
Grand Island Lakeview, 2011 WL 6303243 *2 (D. Neb. Dec. 16, 2011). Unlike the cases
Petitioner cites, Columbus Park is directly applicable to the present matter. DAB No.
2316 at 6-10. Therefore, I follow the rationale of that case and conclude that Petitioner
has no right to an ALJ hearing.
IV. Conclusion

Dismissal of a hearing request is appropriate when a petitioner does not have the right to
a hearing. 42 C.F.R. § 498.70(b). In the present matter, Petitioner does not have a right
to a hearing; therefore, I dismiss its hearing request.

The parties have 60 days from receipt of this dismissal to request that I vacate this
dismissal with a showing of good cause. 42 C.F.R. § 498.72.

It is so ordered.

/s/
Scott Anderson
Administrative Law Judge