Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Epoch Senior Healthcare of Harwich
(CCN: 225525),

Petitioner
v.
Centers for Medicare and Medicaid Services.
Docket No. C-11-287
Decision No. CR2479

Date: December 20, 2011

DECISION

In this case, I consider a long-term-care facility’s obligation to keep itself apprised of
changes in professional standards of practice.

Petitioner, Epoch Senior Healthcare of Harwich (Petitioner or facility), is a long-term
care facility located in Harwich, Massachusetts, that participates in the Medicare
program. The Centers for Medicare and Medicaid Services (CMS) determined that the
facility was not in substantial compliance with Medicare program requirements
governing infection control (42 C.F.R. § 483.65) because, in testing blood sugar levels,
its staff used the same glucoclet pen lancing device for multiple residents. Staff changed
the device’s blade between uses, but then wiped it with germicide and reused it to extract
blood from other residents. The Centers for Disease Control and Prevention (CDC), the
Food and Drug Administration (FDA) and CMS had recently warned providers not to
reuse these devices, because the practice increases the risk for transmitting blood borne
pathogens.

CMS imposed a $4,500 per instance civil money penalty (CMP).
The parties agree that no material facts are in dispute and have filed cross-motions for
summary judgment.

For the reasons set forth below, I find that the facility was not in substantial compliance
with 42 C.F.R. § 483.65 and that the penalty imposed is reasonable.

I. Background

The Social Security Act (Act) sets forth requirements for nursing facility participation in
the Medicare program and authorizes the Secretary of Health and Human Services to
promulgate regulations implementing those statutory provisions. Act §1819. The
Secretary’s regulations are found at 42 C.F.R. Part 483. To participate in the Medicare
program, a nursing facility must maintain substantial compliance with program
requirements. To be in substantial compliance, a facility’s deficiencies may pose no
greater risk to resident health and safety than “the potential for causing minimal harm.”
42 CFR. § 488.301.

The Secretary contracts with state survey agencies to conduct periodic surveys to
determine whether skilled nursing facilities are in substantial compliance. Act § 1864(a);
42 C.F.R. § 488.20. The regulations require that each facility be surveyed once every
twelve months and more often, if necessary, to ensure that identified deficiencies are
corrected. Act § 1819(g)(2)(A); 42 C.F.R. §§ 488.20(a); 488.308.

Here, following its November 18, 2010 recertification survey, CMS determined that the
facility was not in substantial compliance with Medicare program requirements,
including the regulation governing infection control, 42 C.F.R. § 483.65 (Tag F441), and
that the infection-control deficiency posed immediate jeopardy to resident health and
safety. CMS Exs. 1, 2. CMS subsequently determined that the facility returned to
substantial compliance on January 3, 2011. CMS Ex. 3.

Based solely on its infection control problems, CMS imposed against the facility a per-
instance CMP of $4,500. CMS Ex. 2 at 2; CMS Ex. 3.

The parties have filed cross-motions for summary judgment. With its memorandum in
support of summary judgment (CMS Br.), CMS submitted 15 exhibits (CMS Exs. 1-15).
Petitioner submitted its own motion for summary judgment (P. MSJ), along with a
memorandum in support (P. Br.), a separate memorandum opposing CMS’s motion (P.
Opp. Br.), and six exhibits (P. Exs. 1-6).

IL. Issues

Aside from challenging CMS’s determination that it was not in substantial compliance,
Petitioner does not contest either the amount of the CMP or the immediate jeopardy
finding.’ Thus, the sole issue before me is whether the facility was in substantial
compliance with 42 C.F.R. § 483.65.

Petitioner also raises Constitutional challenges, which I have no authority to review.
II. Discussion

CMS is entitled to summary judgment that the facility was
not in substantial compliance with 42 C.F.R. § 483.65,
because staff used the same fingerstick device to extract
blood from multiple residents, in contravention of the
Secretary’s rules relating to the health, safety, and well-
being of residents, and in contravention of professional
standards of practice.”

The parties agree that this case presents no genuine issue of material fact and that its
resolution turns on disputes of law. See CMS Br. at 1, 8; P. MSJ at 1. Summary
judgment is therefore appropriate. Livingston Care Ctr. v. U.S. Dept. of Health and
Human Servs., 388 F.3d 168, 173 (6th Cir. 2004) (citing Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986)).

Program requirements. The Act mandates that every facility participating in the
Medicare program establish and maintain an infection control program “designed to
provide a safe, sanitary, and comfortable environment” for its residents and designed “to
help prevent the development and transmission of disease and infection.” Act §
1819(d)(3)(A).The facility must be “designed, constructed, equipped, and maintained in a
manner to protect the health and safety of residents, personnel, and the general public.”

‘Tn any event, I probably have no authority to review CMS’s determination that the
deficiency posed immediate jeopardy to resident health and safety. An Administrative
Law Judge may review CMS’s scope and severity findings (which include a finding of
immediate jeopardy) only if a successful challenge would affect the range of the CMP or
if CMS has made a finding of substandard quality of care that results in the loss of
approval of a facility’s nurse aide training program. 42 C.F.R. § 498.3(b)(14); 42 C.F.R.
§ 498.3(d)(10); Cedar Lake Nursing Home, DAB No. 2344 at 9 (2010); Evergreen
Commons, DAB No. 2175 (2008); Aase Haugen Homes, Inc., DAB No. 2013 (2006).
Here, the penalty imposed is a per instance CMP, for which the regulations provide only
one range ($1,000 to $10,000), so successfully challenging the level of noncompliance
would not affect the range of the CMP. 42 C.F.R. § 488.438(a)(2). Neither party
suggests that CMS made a finding that affected approval of the facility’s nurse aide
training program.

*T make this one finding of fact/conclusion of law.
Act § 1819(d)(3)(B). The statute also says that facilities must provide services “in
compliance with . . . accepted professional standards and principles which apply to
professionals providing services” and “must meet such other requirements relating to the
health, safety, and well-being of residents . . . as the Secretary [of Health and Human
Services] may find necessary.” Act § 1819(d)(4).

The infection control regulation echoes the statutory requirements for an infection control
program. 42 C.F.R. § 483.65.° In its preamble, the regulation’s drafters confirmed that,
under the rule, a facility “must ensure” that its personnel follow aseptic and isolation
techniques “in accordance with acceptable professional practice.” 52 Fed. Reg. 38,589
(Oct. 16, 1987). Accord 42 C.F.R. § 483.20(k)(3) (requiring that services “meet
professional standards of quality”).

The facility’s practice. The facts of this case are not in dispute. Twenty-one facility
residents were diabetics who needed regular blood glucose testing to determine their
needs for insulin. CMS Ex. | at 10-11.

To test the blood, the facility used a device called a glucocet 2 automatic lancing device.
CMS Ex. 13 at 11-14; P. Ex. 1; P. Ex. 5 at 3-4 (Wadlow Decl. § 9). The device looks like
a pen to which a lancet or blade is attached. The user presses a release button at the end
of the pen, which causes the lancet to puncture the resident’s skin (usually at the side of a
finger) so that a small amount of blood can be obtained and tested. CMS Ex. 13 at 11-12.
At the time of the survey, the facility had in place a policy/procedure that instructed staff

* The regulation provides, in pertinent part:

The facility must establish and maintain an infection control
program designed to provide a safe, sanitary, and comfortable
environment and to help prevent the development and
transmission of disease and infection.
(a) Infection control program. The facility must establish
an infection control program under which it—
(1) Investigates, controls, and prevents infections in the
facility;
(2) Decides what procedures, such as isolation, should
be applied to an individual resident; and
(3) Maintains a record of incidents and corrective
actions related to infections.

*The regulation has been modified over the years, but this basic requirement has not
changed: the facility must follow professional standards of practice in providing a safe
and sanitary environment. See, e.g., 54 Fed. Reg. 5345-46 (Feb. 2, 1989); 56 Fed. Reg.
48,860-61 (Sept. 26, 1991).
to clean the pen with a germicidal wipe after each use. CMS Ex. 13 at 7; P. Ex. 5 at 4-5
(Wadlow Decl. § 12).> The parties agree that facility staff changed the blade after each
use, but they used the same device to test the blood of multiple residents, wiping it off
with a germicide between uses. CMS Ex. 14 at 2 (Grady Decl. § 3); P. Ex. 5 at 4
(Wadlow Decl. § 11).

The Secretary’s warnings. Such reuse of the glucocet device may once have been an
acceptable practice. However, on August 26, 2010 (approximately 12 weeks prior to the
survey), both the CDC and the FDA issued warnings that “use of fingerstick devices on
more than one person poses risk for transmitting bloodborne pathogens,” primarily the
hepatitis B virus. Both issuances noted that the problem is especially pronounced in
long-term care facilities and concluded that “[f]ingerstick devices should NEVER be
used for more than one person.” CMS Ex. 8 at 1-2. Instead, facilities should use auto-
disabling, single-use fingerstick devices, also referred to as “safety lancets.”” CMS Ex. 7
at 4-5; CMS Ex. 8 at 1-2 (emphasis in the originals).°

The following day, August 27, 2010, CMS posted to its website and sent to the directors
of the state agencies revisions to the State Operations Manual (SOM). CMS Ex. 6. The
revisions addressed infection control standards in nursing homes (§ 483.65 — Tag F441)
and were effective “immediately.” Pursuant to these revisions, CMS adopted, as an
interpretive rule, the CDC and FDA warnings:

Fingerstick devices must never be used for more than one
resident. Although the package instructions for some
fingerstick devices may indicate or imply the potential for
multiple patient use, surveyors and health care workers must
adhere to this CMS guidance regarding the avoidance of
multiple patient use of fingerstick devices, consistent with
recent statements of the CDC and the FDA.

* Presumably, staff also disposed of the used blade, although, surprisingly, its written
procedure does not instruct them to do so. CMS Ex. 13 at 7.

°Tn issuing the warnings against reusing the fingerstick devices, the CDC cites
authoritative scientific studies: 1) CDC, Transmission of hepatitis B virus among persons
undergoing blood glucose monitoring in long-term-care facilities — Mississippi, North
Carolina and Los Angeles, California, 2003-2004. MMWR 2005; 54:220-23; 2) Patel
AS, White-Comstock MB, Woolard D, Perz JF. Infection Control Practices in Assisted
Living Facilities: A Response to Hepatitis B Virus Infection Outbreaks. \CHE 2009;
30(3):209-14; and 3) Thompson ND, Perz JF. Eliminating the Blood: Ongoing
Outbreaks of Hepatitis B Virus Infection and the Need for Innovative Glucose Monitoring
Technologies. J. DIABETES SCI. TECH. 2009; 3(2):283-88. CMS Ex. 7 at 2, 4-5.
CMS Ex. 6 at 2, 3. The revised rule also provided that reuse of fingerstick devices for
more than one resident “should be treated as immediate jeopardy.” CMS Ex. 6 at 3.

In transmittals to the state agency directors, dated September 24, 2010 and October 1,
2010, CMS included, as an example of a deficient practice that is immediate jeopardy,
the facility’s reuse of fingerstick devices for more than one resident, explaining that the
practice exposes facility residents to bloodborne infections. P. Ex. 3 at 2; CMS Ex. 5 at
3, 20.

On November 24, 2010, the Massachusetts state agency issued a Circular Letter to the
state’s long-term care administrators “to highlight” CMS’s notice “that multiple patient
use of fingerstick devices is considered an immediate jeopardy situation if found to be the
practice in a skilled nursing/nursing facility.” CMS Ex. 11.

Petitioner’s arguments. Petitioner concedes that, at the time of the November survey, its
practice was to reuse fingerstick devices. Nevertheless, Petitioner points out that the
infection control regulation (42 C.F.R. § 483.65) does not explicitly preclude that practice
and argues that CMS has imposed a substantive new rule without providing an
opportunity for notice-and-comment. P. Br. at 8-9. In Petitioner’s view, the rule is
therefore invalid and unenforceable. Petitioner also argues that its reuse of the fingerstick
device was “a valid infection control technique.” P. Br. at 21. Finally, Petitioner
complains that neither CMS, the state agency, nor any other authority sent the facility
advance notice of the practice change, so the facility should not be held accountable for
violating the rule. P. Opp. Br. at 3-4.

Substantive v. interpretive rule. As a threshold matter, I reject, as legally unsound and
practically unworkable, Petitioner’s suggestion that a facility need not meet any standard
of practice that is not specified in a regulation, and its corollary, that each individual
“standard of care” must be considered a substantive rule, promulgated as a notice-and-
comment regulation. P. Br. at 8-9. In Omni Manor Nursing Home, DAB No. 1920
(2004), aff'd, 151 F. App’x 427 (6th Cir. 2005), the facility claimed that it was not subject
to the provisions of the State Operations Manual (SOM) that address when to resuscitate
a resident in distress. The facility argued that under section 1871(a)(2) of the Act --
which says that the Secretary must promulgate substantive rules by regulation -- the
Secretary must promulgate by notice-and-comment any “standard of practice” that she
seeks to enforce. The Departmental Appeals Board (Board) explicitly rejected this
position and held that requiring standards of practice to be specified in a regulation
“would undercut Congressional intent to ensure quality of care in nursing facilities, since
professional standards may change over time.” Omni Manor, DAB No. 1920 at 11.

Professional standards of practice. Nor do I agree that the facility’s reuse of the
fingerstick device is a valid infection control technique that comports with accepted
standards of practice. See P. Br. at 19-21. Both the CDC and the FDA are agencies

within the Department of Health and Human Services. The SOM emphasizes that “all
infection prevention and control practices [must] reflect current [CDC] guidelines.”
CMS Ex. 5 at 10.

The CDC is charged with preventing and controlling disease and promoting
environmental health and health education in the United States. Among other
responsibilities, it identifies and defines preventable health problems and maintains active
surveillance of diseases through epidemiologic and laboratory investigations and data
collection, analysis, and distribution. It serves as the lead agency within the Public
Health Service in developing and implementing operational programs relating to
environmental health problems and conducts operational research aimed at developing
and testing effective disease prevention, control, and health promotion programs. The
CDC is responsible for controlling the introduction and spread of infectious diseases. See
www.cde.gov/maso/pdf/cdemiss.pdf; see also 42 U.S.C. § 241.

The FDA is responsible for protecting the public health by assuring the safety, efficacy
and security of, among other items, medical devices. In this regard, the FDA provides
accurate, science-based information to the public on the safe use of these products. 21
U.S.C. § 393(b).

Thus, by law, the CDC and the FDA define and disseminate “acceptable standards of
practice” in matters related to preventing the spread of disease and the safe use of
medical devices. I do not second guess the guidance these agencies provide.

Petitioner also asserts that no resident suffered actual harm as a result of its practice,
which, for purpose of summary judgment, I accept as true but find not material. P. Opp.
Br. at 5 (citing P. Ex. 5 at 3 (Wadlow Decl. 4 7)). A facility is not in substantial
compliance if its deficiencies pose a greater risk to resident health and safety than “the
potential for causing minimal harm.” 42 C.F.R. § 488.301. Engaging in a practice that
exposes residents to bloodborne pathogens, including hepatitis B, presents the potential
for more than minimal harm, and thus puts the facility out of substantial compliance with
the regulation governing infection control (42 C.F.R. § 483.65).

Notice. Petitioner complains that neither CMS, the state agency, nor any other authority
sent the facility a notice of the practice change. P. Ex. 5 at 3, 5-6 (Wadlow Decl. 4 7, 14-
17). The facility first learned about the ban on reusing fingerstick devices when told so
by one of the surveyors on the second day of the survey. CMS Ex. 5 at 5-6 (Wadlow
Decl. fj 14, 15). It received the state agency’s circular letter after the time of the survey.
P. Ex. 5 at 6-7 (Wadlow Decl. § 17).

Petitioner recognizes that professional standards “evolve over time” but argues that a
Medicare-certified facility has no obligation to remain current. P. Br. at 12 (asserting
“providers are not under any obligation to constantly search CMS’ website to monitor
changes in Appendix PP [to the SOM], which is directed at surveyors. Such a burden is
no where set forth and would be unreasonable if it were.”); P. Br. at 13-15 (arguing the
state and federal agencies must advise providers of changes in professional standards,
and, until the facility receives individual notice of a change, it is not bound to follow
them); P. Br. at 18 (asserting “[u]ntil recommendations from agencies such as the CDC
and FDA are incorporated into conditions of participation and actually communicated in
writing to providers, providers cannot be expected to update their practices and policies
to reflect same”); P. Opp. Br. at 8 (arguing the facility cannot be accountable unless and
until the state agency sends it “actual . . . written notice” of a new standard).”

I reject the suggestion that a healthcare provider of any sort has no obligation to keep up
to date on practice standards. As CMS points out, the facility must designate a medical
director who is responsible for implementing resident care policies and coordinating
medical care. 42 C.F.R. § 483.75(i). The SOM explains that this makes the medical
director responsible for developing, implementing, and evaluating resident care policies
and procedures “that reflect current standards of practice.” He/she must therefore know
about current standards of practice. SOM, Appendix PP, Tag 501 at 624-625.*

Moreover, facilities have ample notice that they must comply with evolving standards of
practice because the statute and regulations explicitly say so. Implicit in the statutory
requirement is the requirement that a participating facility keep itself apprised of
changing standards. Accord Life Care Ctr. of Tullahoma, DAB No. 2304 at 47 (2010),
aff'd, No. 10-3465, 2011 WL 6275916 (6th Cir. 2011); Wade Pediatriacs, DAB No. 2153
at 23 (2008) (citing 467 U.S. 51 at 61 n.10) (suggesting that a party should exercise
“reasonable diligence” to acquire program knowledge and that “it would be negligence to
remain ignorant by not using those means”). The CDC, the FDA and CMS maintain
easily-accessible websites on which they publish this information, so any provider can
and must keep apprised of changes in standards. Indeed, as Petitioner concedes, its nurse
consultant knew about the change and implemented it in a sister facility, which belies the
suggestion that the information was not readily available. P. Opp. Br. at 4, 14; P. Ex. 5 at
7 (Wadlow Decl. § 19); CMS Ex. 13 at 1.

7In this regard, Petitioner also complains that facilities surveyed after receiving the
November 24 circular letter would have made the change prior to the date of their
surveys and thus would not have been found out of compliance. P. Br. at 22. In fact,
CMS could legitimately cite any facility for noncompliance from at least the date CMS
published the SOM change (if not the date CDC and FDA issued their warnings) until the
date the facility corrected its practice.

* CMS could therefore have cited a deficiency under section 483.75(i). That it did not do
so does not relieve the facility of its obligation to comply with section 483.65.
Finally, I reject Petitioner’s suggestion that CMS retroactively applied the rule change.

P. Br. at 13-15. On August 26, the CDC and the FDA issued their warnings. CMS Exs.
7, 8. CMS posted its revision to the SOM on August 27, advising that the change was
effective “immediately.” CMS Ex. 6. More than two months after the rule change, CMS
cited the facility for not complying.

IV. Conclusion

For these reasons, I deny Petitioner’s motion for summary judgment and grant CMS’s
motion. The undisputed facts establish that the facility was not in substantial compliance
with 42 C.F.R. § 483.65 because it continued to reuse fingerstick devices after the CDC
and the FDA warned providers that the practice increased the risk for transmitting blood
borne pathogens.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Denise A. Hardy, D.P.M.,
Petitioner
v.
Centers for Medicare and Medicaid Services.
Docket No. C-11-709
Decision No. CR2478

Date: December 16, 2011

DECISION DISMISSING REQUEST FOR HEARING

I dismiss the hearing request of Petitioner, Denise Hardy, D.P.M. Petitioner filed
her request untimely and has not shown good cause for her failure to file a timely
hearing request.

I. Background

Petitioner is a podiatrist who participated in the Medicare program. On July 22,
2009, the Centers for Medicare and Medicaid Services (CMS) notified Petitioner
that it was revoking Petitioner’s participation in Medicare. CMS’s asserted basis
for revoking Petitioner’s participation was that Petitioner was convicted in the
United States District Court for the Eastern District of Missouri of a felony count
of Medicare fraud. CMS’s notice specifically advised Petitioner that she had 60
days within which to challenge the determination to revoke her participation. She
was told that her failure to do so would be deemed to be a waiver of her right to
administrative review of the determination to revoke.
Petitioner did not request a hearing until August 15, 2011, more than two years
after she received CMS’s notice of revocation of her Medicare participation. The
case was assigned to me for a hearing and a decision. CMS moved to dismiss the
hearing request or, in the alternative, for summary judgment. Petitioner opposed
CMS’s motion.

CMS filed five proposed exhibits that are identified as CMS Exhibit (Ex.) 1 —
CMS Ex. 5 along with its motion. Petitioner did not file any proposed exhibits in
opposition to CMS’s motion. I receive all of CMS’s exhibits into the record.

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

The issue in this case is whether Petitioner established good cause for her untimely
request for a hearing.

B. Findings of Fact and Conclusions of Law

CMS’s revocation of Petitioner’s Medicare participation was an “initial
determination” that conferred hearing rights on Petitioner. 42 C.F.R. §
498.3(b)(17). However, Petitioner was required to request a hearing within 60
days of her receipt of the notice letter (presumed to be 65 days from the date of
mailing of that letter) to retain her hearing right. 42 C.F.R. § 498.40(a)(2). A
party who fails to exercise his or her right to request a hearing timely loses that
right. An administrative law judge may dismiss an untimely hearing request
absent a showing of good cause for the untimely request by the party requesting
the hearing. 42 C.F.R. § 498.70(c).

There is no dispute that Petitioner received CMS’s notice nor is there any
disagreement that Petitioner waited more than two years to file her hearing
request. Therefore, Petitioner has lost her right to a hearing in this case.
Dismissal of her hearing request is appropriate absent a showing by Petitioner that
there is good cause for her untimely filing.

The term “good cause” is not defined in the regulations. However, that term has
long been held to consist of a circumstance or circumstances beyond a party’s
control that prevents the party from filing a hearing request timely. Hospicio San
Martin, DAB No. 1554 (1996).
Petitioner argues that there are three bases to find good cause for her untimely
filing. I find that none of Petitioner’s arguments establish good cause, and,
consequently, I dismiss her hearing request.

First, Petitioner contends that she has suffered from psychiatric problems —
depression — that impaired her judgment and caused her not to file a timely hearing
request. However, Petitioner has offered no proof whatsoever to support this
contention. She has offered no medical records showing that she was diagnosed or
treated for depression. She has offered nothing to show that, if she suffered from
depression, it was so severe as to impair her judgment and cause her not to realize
the possible implications of failing to challenge CMS’s determination to revoke
her Medicare participation. Indeed, Petitioner has not even offered an affidavit or
a declaration in which she attests under oath to having suffered from depression. I
find no psychiatric or psychological justification for Petitioner’s untimely hearing
request given the absence of any proof that she even suffered from an impairment,
much less proof that such impairment — if it existed at all — would have prevented
her from filing a hearing request.

Second, Petitioner asserts that CMS’s notice is defective in that it failed to inform
her of the precise basis in law for CMS’s revocation determination. From this,
Petitioner appears to argue that she was unaware of the significance of CMS’s
notice. I disagree that the notice inadequately informed Petitioner of the basis for
CMS’s determination. The notice specifically tells Petitioner that the regulatory
authority for CMS’s determination is at 42 C.F.R. § 424.535. CMS Ex. 1. That
section includes as grounds for revocation a felony conviction of a financial crime
and a felony conviction of any of the crimes described at section 1128(a) of the
Social Security Act (Act). 42 C.F.R. § 424.535(a)(3)(i)(B), (D). Petitioner’s
conviction of Medicare fraud was both a financial crime and a program-related
crime within the meaning of section 1128(a)(1) of the Act. Petitioner surely
would have discovered this had she read the regulation cited in CMS’s notice.

Furthermore, the notice plainly informs Petitioner that the reason for revoking her
Medicare participation was that she had pled guilty to health care fraud charges.
That language, in and of itself, was adequate notice to Petitioner of the basis for
CMS’s determination.

Finally, Petitioner argues that the notice is defective in that it fails to apprise her of
the specific regulatory basis for stating that she had 60 days within which to
appeal CMS’s determination. That is not a defect. The notice is explicit. It tells
Petitioner that she has 60 days within which to file an appeal. Petitioner was
plainly informed of her rights and of her duties.
CMS moved in the alternative for summary judgment against Petitioner, arguing
that its determination to revoke Petitioner’s Medicare participation was correct as
a matter of law. It is unnecessary for me to address this issue inasmuch as I am
dismissing Petitioner’s hearing request.

/s/

Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Christopher Michael Ruby
(O.I. File Number 3-10-40192-9),

Petitioner
Vv.

The Inspector General
Department of Health and Human Services.

Docket No. C-11-686
Decision No. CR2476
Date: December 14, 2011
DECISION

Petitioner, Christopher Michael Ruby, is excluded from participation in Medicare,
Medicaid, and all other federal health care programs pursuant to sections 1128(a)(3) of
the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(3)), effective August 18, 2011.
There is a proper basis for Petitioner’s exclusion based upon his conviction in a state
court of a criminal offense committed after August 21, 1996, related to fraud in
connection with the delivery of an item or service in a health care program, other than
Medicare or Medicaid, operated by, or financed in whole or in part by, any federal, state,
or local government agency. Petitioner’s exclusion for the minimum period of five years
is mandatory pursuant to section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-
7(c)(3)(B)).

I. Background

The Inspector General for the Department of Health and Human Services (I.G.) notified
Petitioner by letter dated July 29, 2011, that he was being excluded from participation in
Medicare, Medicaid, and all federal health care programs for a period of five years

pursuant to section 1128(a)(3) of the Act, based upon his felony conviction in the Court
of Common Pleas of Fayette County, Pennsylvania, of a criminal offense related to fraud,
theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct in
connection with the delivery of a health care item or service.

Petitioner timely requested a hearing by letter dated August 3, 2011, which he
supplemented by a letter dated August 18, 2011. The case was assigned to me on August
16, 2011 for hearing and decision. A telephone prehearing conference was convened on
August 31, 2011, the substance of which is memorialized in my order dated September 1,
2011. During the prehearing conference, Petitioner waived an oral hearing. The parties
agreed that this matter could be resolved based upon the parties’ briefs and documentary
evidence, and a briefing schedule was set.

The LG. filed a brief (I.G. Brief) on September 30, 2011, with I.G. exhibits (I.G. Exs.)
through 5. Petitioner filed his brief on October 11, 2011, with Petitioner’s exhibits (P.
Exs.) A through D. The L.G. filed a reply on October 31, 2011. No objection has been
made to my consideration of the exhibits offered by the I.G., and I.G. Exs. 1 through 5
are admitted. The I.G. objected to P. Exs. A through D on grounds that they are not
relevant. The I.G. argues that the exhibits are offered in support of Petitioner’s collateral
attack upon his underlying conviction. I.G. Reply at 1. The LG. is correct that Petitioner
may not challenge, and I may not review, whether he was correctly convicted in the state
court. However, P. Ex. A through C relate to the underlying conduct or activity for
which Petitioner was convicted. The general issue I must resolve is whether the statutory
elements of section 1128(a)(3) of the Act are satisfied so that there is a basis for
Petitioner’s exclusion pursuant to that section as alleged by the LG. The evidence
contained in the exhibits is relevant to the extent that it has a tendency to show whether
the facts necessary to meet the statutory elements under section 1128(a)(3) of the Act are
more or less probable. FED. R. EVID. 401. Accordingly, I conclude that P. Exs. A
through C are relevant, and they are admitted. P. Ex. D contains the results of polygraph
examination administered to Petitioner on October 16, 2004. The information in the
report does not reveal the conduct or activity of which Petitioner was convicted.
Therefore, the report is not relevant to any issue that I may decide. Accordingly, I
conclude that P. Ex. D is not admissible, and it is not considered for any purpose.

IL. Discussion
A. Applicable Law
Petitioner’s rights to a hearing by an administrative law judge (ALJ) and judicial review

of the final action of the Secretary of Health and Human Services (the Secretary) are
provided by section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)).
Pursuant to section 1128(a)(3) of the Act, the Secretary must exclude from participation
in any federal health care program:

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.

The Secretary has promulgated regulations implementing these provisions of the Act. 42
C.F.R. § 1001.101(c).

Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section
1128(a) will be for a period of not less than five years. Pursuant to 42 C.F.R. §
1001.102(b), the period of exclusion may be extended based on the presence of specified
aggravating factors. Only if the aggravating factors justify an exclusion of longer than
five years are mitigating factors considered as a basis for reducing the period of exclusion
to no less than five years, 42 C.F.R. § 1001.102(c). No aggravating factors are cited by
the I.G. in this case, and the I.G. does not propose to exclude Petitioner for more than the
minimum statutory period of five years.

The standard of proof is a preponderance of the evidence, and there may be no collateral
attack of the conviction that provides the basis of the exclusion. 42 C.F.R. §
1001.2007(c), (d). Petitioner bears the burden of proof and the burden of persuasion on
any affirmative defenses or mitigating factors, and the I.G. bears the burden on all other
issues. 42 C.F.R. § 1005.15(b).

B. Issues:

The Secretary has by regulation limited my scope of review to two issues:

Whether the I.G. has a basis for excluding Petitioner from participating in
Medicare, Medicaid, and all other federal health care programs; and

Whether the length of the proposed exclusion is unreasonable.

42 C.F.R. § 1001.2007(a)(1).
C. Findings of Fact, Conclusions of Law, and Analysis

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

1. Petitioner’s request for hearing was timely, and I have jurisdiction.
2. Petitioner’s exclusion is required by section 1128(a)(3) of the Act.

Petitioner does not deny that on or about September 30, 2009, he pled guilty to one
felony count of insurance fraud. Petitioner does not deny he was convicted pursuant to
his guilty plea by the Court of Common Pleas of Fayette County, Pennsylvania, of one
count of insurance fraud in violation of Pennsylvania statute. Petitioner does not deny
that, on November 30, 2009, he was sentenced to make restitution to private pay insurers
and to the Commonwealth of Pennsylvania Department of Welfare, and to two years of
supervised probation. Petitioner also does not deny that the criminal actions that formed
the basis of his conviction were committed between June 2003 and August 2006, while
he was employed as a pharmacist at Burns Drug Pharmacy in Connellsville,
Pennsylvania. Petitioner’s Supplement Request for Hearing dated August 18, 2011; P.
Br. at 1-2; [.G. Ex. 2, at 2; 1.G. Ex. 3, at 3; I.G. Ex. 4, at 1; LG. Ex. 5. The evidence
establishes that there is a nexus or common sense connection between Petitioner’s
conviction of fraud and his position as a licensed pharmacist delivering health care items
or services. Erik D. DeSimone, R.Ph., DAB No. 1932, at 5 (2004).

The evidence before me shows that the elements necessary for exclusion under section
1128(a)(3) of the Act are satisfied in this case. Petitioner was convicted by a state court
of felony insurance fraud that occurred after August 21, 1996. The conduct for which
Petitioner was convicted was in connection with the delivery of health care items or
services. Accordingly, I conclude that there is a basis to exclude Petitioner pursuant to
section 1128(a)(3) of the Act.

3. Pursuant to section 1128(c)(3)(B) of the Act, five years is the
minimum period for of exclusion under section 1128(a).

4. Petitioner’s exclusion for five years is not unreasonable as a matter
of law.

Petitioner challenges the five-year exclusion as unreasonable based on his dispute of the
facts underlying his conviction. Petitioner asserts that he was innocent of the crime to
which he pled guilty. Petitioner argues that he can prove that he did not commit the
insurance fraud, and that he did not have access to the money that was fraudulently
obtained. Petitioner explains that he accepted the criminal charge and plea agreement
because it was a non-drug charge that would allow him to minimize the penalty that
would be imposed against him by the Pennsylvania State Board of Pharmacy. Petitioner
asserts that he was unaware that he would be subject to exclusion based on his
conviction. Petitioner’s Supplement Request for Hearing dated August 18, 2011; P. Br.
at 1-2; 1.G. Ex. 5. Petitioner may not attack his conviction on either substantive or
procedural grounds in this proceeding and I have no authority to review his conviction.
42 C.F.R. § 1001.2007(d). Petitioner also cannot avoid the effect of his guilty plea by
claiming he was unaware that Congress mandated his exclusion under 1128(a)(3) of the
Act.

Five years is the minimum period authorized for a mandatory exclusion pursuant to
section 1128(a). Act § 1128(c)(3)(B). I have found there is a basis for Petitioner’s
exclusion pursuant to section 1128(a)(3) of the Act, and the five year exclusion is not
unreasonable as a matter of law.

The Secretary’s regulation provides that an exclusion is effective 20 days from the date of
the I.G.’s written notice of exclusion to the affected individual or entity. 42 C.F.R. §
1001.2002(b). The Secretary’s regulations do not give me discretion to change the
effective date of Petitioner’s exclusion and I may not refuse to follow the Secretary’s
regulations. 42 C.F.R. § 1005.4(c)(1); Thomas Edward Musial, R.Ph., DAB No. 1991
(2005). Consequently, the effective date of Petitioner’s exclusion is August 18, 2011,
twenty days after the July 29, 2011, LG. notice of exclusion. Pursuant to 42 C.F.R. §
1001.3001, Petitioner may apply for reinstatement only after the period of exclusion
expires. Reinstatement is not automatic upon completion of the period of exclusion.

III. Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare,
Medicaid, and all other federal health care programs for the minimum statutory period of
five years, effective August 18, 2011.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Patsy Welshman
(OI File No.: 2-10-40173-9),
Petitioner
v.
The Inspector General.
Docket No. C-11-593
Decision No. CR2475

Date: December 12, 2011

DECISION

Petitioner, Patsy Welshman, asks review of the Inspector General’s (I.G.’s) determination
to exclude her for five years from participation in the Medicare, Medicaid, and all federal
health care programs under section 1128(a)(1) of the Social Security Act (Act). For the
reasons discussed below, I find that the I.G. is authorized to exclude Petitioner and that
the statute mandates a minimum five-year exclusion.

Discussion

The sole issue before me is whether the I.G. has a basis for excluding Petitioner from
program participation. Because an exclusion under section 1128(a)(1) of the Act must be
for a minimum period of five years, the reasonableness of the length of the exclusion is
not an issue. Act § 1128(c)(3)(B); 42 C.F.R. § 1001.2007(a)(2).

The parties have submitted briefs (I.G. Br.; P. Br.), and the LG. filed a reply. With his
brief, the LG. submitted eight exhibits (I.G. Exs. 1-8). Petitioner submitted four exhibits
(P. Exs. 1-4). In the absence of any objections, I admit into evidence I.G. Exs. 1-8 and P.
Exs. 1-4.
I directed the parties to indicate in their briefs whether an in-person hearing would be
necessary and, if so, to “describe the testimony it wishes to present, the names of the
witnesses it would call, and a summary of each witnesses’ proposed testimony.” I
specifically directed the parties to explain why the testimony would be relevant. Order
and Schedule for Filing Briefs and Documentary Evidence, Attachment | (Informal Brief
of Petitioner § III) and Attachment 2 (Informal Brief of I.G. { III) (August 10, 2011).

The L.G. indicates that an in-person hearing is not necessary. Petitioner, on the other
hand, contends that an in-person hearing is necessary but also says that she has no
testimony to offer. She lists no witnesses and offers no explanation as to what an in-
person hearing would accomplish. P. Br. at 2-3. I therefore decline to schedule a hearing
that would serve no purpose.

Petitioner must be excluded for five years because she was
convicted of a criminal offense related to the delivery of an
item or service under the Medicare or a state health
program, within the meaning of section 1128(a)(1) of the
Social Security Act.’

From approximately November 5, 2005 until July 4, 2006, Petitioner worked for a home
health agency (HHA) in New York State. Although she had no valid state nursing
license, she provided healthcare services to patients in their homes as if she were properly
licensed as a licensed practical nurse or a registered nurse, and the HHA billed the
Medicaid program for her “nursing services” as if they had been provided by a licensed
nurse. I.G. Ex. 2; 1.G. Ex. 3 at 2 (Rowe-Smith Decl. 4-6). In November 2008, she
was indicted on one felony count of grand larceny and one felony count of unauthorized
practice of nursing. LG. Ex. 6. Pursuant to a plea agreement, dated June 15, 2009, she
pled guilty in New York State Court to one misdemeanor count of criminal trespass, and
the court accepted the plea. 1.G. Exs. 4,5, 7. She was ordered to pay $4,000 restitution
to the State Medicaid program. LG. Exs. 2, 4, 8.

Ina letter dated May 31, 2011, the LG. advised Petitioner that, because she had been
convicted of a criminal offense related to the delivery of an item or service under the
Medicare or a state health care program, the I.G. was excluding her from participation in
Medicare, Medicaid, and all federal health care programs for a period of five years. CMS
Ex. 1. Section 1128(a)(1) of the Act authorizes such exclusion. I.G. Ex. 1.

Section 1128(a)(1) of the Act requires that the Secretary of Health and Human Services
exclude an individual who has been convicted under federal or state law of a criminal

' [make this one finding of fact/conclusion of law.
offense related to the delivery of an item or service under Medicare or a state health care
program.” 42 C.F.R. § 1001.101.

An offense is related to the delivery of an item or service under Medicare or a state health
care program if there is “a nexus or common-sense connection” between the conduct
giving rise to the offense and the delivery of the item or service. Lyle Kai, R.Ph., DAB
No. 1979 (2005); Berton Siegel, D.O., DAB No. 1467 (1994). Here, Petitioner’s plea
agreement and the court’s judgment of conviction establish the necessary connection
between her crime and the Medicaid program. In her plea agreement, she conceded that
“from on or about November 5, 2005 to on or about July 4, 2006,” she entered the homes
of Medicaid recipients and remained there unlawfully, causing $4,000 in damages to the
New York State Medicaid program. I.G. Ex. 5 at 2. She agreed to make restitution in
that amount. I.G. Ex. 5 at 3; I.G. Exs. 7, 8.

Petitioner was therefore convicted of a crime related to the delivery of an item under the
Medicaid program, and is subject to a minimum five-year exclusion. Act §
1128(c)(3)(B); 42 C.F.R. § 1001.2007(a)(2).

Petitioner concedes that she was convicted of a criminal offense but claims that she was
not convicted of an offense for which an exclusion is required, because the New York
Office of the Medicaid Inspector General removed her name from the state’s Disqualified
Provider List. P. Br. at 1-2, 4; P. Ex. 1. She does not explain why the state took this
action. But the state’s action does not supersede federal law, which mandates that the
1.G. exclude her from program participation.

Petitioner also suggests that she did not fully understand the implications of her plea and
that she was not guilty of the crime. She says that she is a “British trained licensed
Registered Nurse/Certified Midwife” and thought that she would be able to practice so
long as she passed the licensing exam within a year. In this regard, she charges that the
manager of the home health agency misled her. P. Br. at 5-6. Federal regulations
explicitly preclude any collateral attack on Petitioner’s conviction.

When the exclusion is based on the existence of a criminal conviction . . .
where the facts were adjudicated and a final decision was made, the basis
for the underlying conviction . . . is not reviewable and the individual or
entity may not collaterally attack it, either on substantive or procedural
grounds, in this appeal.

42 C.F.R. § 1001.2007(d); Joann Fletcher Cash, DAB No. 1725 (2000); Chander
Kachoria, R.Ph., DAB No. 1380, at 8 (1993) (“There is no reason to ‘unnecessarily

* The term “state health care program” included a state’s Medicaid program. Section
1128(h)(1) of the Act; 42 C.F.R. § 1320a-7(h)(1).
encumber the exclusion process’ with efforts to reexamine the fairness of state
convictions.”); Young Moon, M.D., DAB CR1572 (2007).

I note also that, according to the June 15, 2009 court transcript, Petitioner told the state
court judge that she was satisfied with the services of her attorney and that her plea was
voluntary. She understood that she would receive a conditional discharge and would pay
$4,000 in restitution, but that no other promises were made to her. I.G, Ex. 4 at 3-5.

Finally, Petitioner complains about the impact of the exclusion on her health and
finances, points out that she has no other convictions, and that her former employer hopes
to reinstate her. These factors are simply irrelevant and not bases for overturning a
mandatory exclusion.

Conclusion

The I.G. properly excluded Petitioner from participation in Medicare, Medicaid, and all
federal health care programs under section 1128(a)(1) of the Act, and the statute
mandates a five-year minimum period of exclusion.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Joseph Michaels V, M.D.,
Petitioner
v.
Centers for Medicare and Medicaid Services.
Docket No. C-11-632
Decision No. CR2473
Date: December 9, 2011
DECISION

I find that the Centers for Medicare and Medicaid Services (CMS) and its
contractor, Highmark Medicare Services (Highmark), incorrectly assigned
Petitioner, Joseph Michaels V, M.D., a retrospective Medicare billing date of
September 4, 2010. I find that the status that Petitioner had as a Medicare
participating provider continued from the date he established his new practice,
August 1, 2010, and on subsequent dates. Therefore, Petitioner is entitled to claim
reimbursement for services that he provided between August | and September 4,
2010.

I. Background

Petitioner is a physician who participates in the Medicare program. On February
3, 2011, Highmark informed Petitioner that he had been accepted to participate in
Medicare effective September 14, 2010.! Petitioner, dissatisfied with that
determination, requested reconsideration. The determination was affirmed on
reconsideration, and Petitioner requested a hearing. The case was assigned to me
for a hearing and a decision.

' Apparently, the contractor meant to tell Petitioner that his retrospective billing
date was September 4, and not September 14, 2010.
directed the parties to exchange proposed exhibits and briefs. CMS filed a brief
and five proposed exhibits that are identified as CMS Exhibit (Ex.) 1 - CMS Ex. 5
on August 25, 2011. Petitioner replied to this brief on October 21, 2011 and filed
six proposed exhibits of its own that are identified as P. Ex. 1 — P. Ex. 6.

reviewed the parties’ briefs and concluded that CMS had not explained its
position coherently. Consequently, I ordered CMS to re-brief its arguments.
Order Directing Centers for Medicare and Medicaid Services to File Additional
Brief (Oct. 31, 2011). CMS filed a new brief on November 16, 2011. Petitioner
filed a reply to CMS’s new brief on December 6, 2011. Petitioner also filed five
additional exhibits identified as P. Ex. 1 — P. Ex. 5.

receive CMS Ex. 1 — CMS Ex. 5 and P. Ex. 1 — P. Ex. 6 into the record. I also
receive the five exhibits Petitioner filed on December 6, 2011, which I have
renumbered as P. Ex. 7 — P. Ex. 11 into the record. I note that CMS re-filed its
exhibits with its second brief. However, these are identical to its initial exhibit
proffer, and, thus, I need not admit the second set of exhibits in addition to the first
set.

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

The issue is whether Petitioner’s effective date of participation should be
September 4, 2010, as CMS contends, or whether Petitioner’s status as a
participating Medicare provider was unaffected by his change of employment and
opening a new practice location.

B. Findings of Fact and Conclusions of Law

The material facts of this case are undisputed. Petitioner participated in the
Medicare program prior to August 1, 2010 as an employee of another physician to
whom Petitioner had assigned his Medicare benefits. In July 2010, Petitioner
decided to separate his practice from that of his former employer. Effective
August 1, 2010 Petitioner began seeing patients under a new practice arrangement
and at a new office location.

CMS contends that Petitioner was obligated not only to report his change of
employment and practice location but that Petitioner was required to file a new
application to enroll in the Medicare program by virtue of that employment and
practice location change. CMS asserts that Petitioner was obligated to apply to
participate in Medicare by filing a Form CMS 8551 with Highmark. Petitioner
filed that form on October 4, 2010. CMS argues that, based on the filing date, the
earliest retrospective billing date that the contractor, and CMS, could have
assigned to Petitioner was September 4, 2010. That was the date that was assigned
to Petitioner, and, consequently, CMS contends that he may not be assigned an
earlier retrospective billing date.

CMS premises its case on two contentions. First, it contends that, as a matter of
law, Petitioner was required to file a new enrollment application, consisting of a
CMS Form 8551, with Highmark to enroll in the Medicare program. CMS asserts
that Petitioner incurred this obligation when he left his previous employment and
opened a new practice. According to CMS, there was no other mechanism
available by which Petitioner could have attained the status of an enrolled
physician.

Second, CMS relies on the language of two regulations, 42 C.F.R. §§ 424.520(d)
and 424.521. Section 520(d) states that the effective date for billing privileges for
a Medicare-participating physician will be the later of the following dates: the
date that the physician files a Medicare enrollment application that is subsequently
approved by a Medicare contractor; or the date when the physician first begins
furnishing services at a new practice location. Section 521 states, in relevant part,
that a physician may claim reimbursement for services provided up to 30 days
prior to the date when the physician first meets all program requirements.

CMS argues that Petitioner filed an application that was approved by Highmark
effective October 4, 2010, the date when he filed the CMS Form 855]. Thus,
according to CMS, Petitioner may not — as a matter of law — claim reimbursement
for any services that he provided prior to September 4, 2010.

The problem with CMS’s argument — that I pointed out in my October 31, 2011
order — is that Petitioner already was enrolled in the Medicare program on October
4, 2010. The undisputed facts are that Petitioner enrolled in the Medicare program
in 2009 and was accepted as a participating provider at that time. CMS has
offered no explanation for its assertion that Petitioner had to reapply to participate
in Medicare when he severed his relationship with his former employer and
opened a new practice. It has cited to no law, no regulation, and no policy
document whatsoever supporting that argument. In my October 31, 2011 order, I
pointed out to CMS that it had not provided me with any legal authority for its
assertion, and I directed it to do so. CMS, in its November 16, 2011 brief, filed in
response to my October 31 order, simply states baldly that Petitioner was required
to file the CMS Form 855] so that his new practice could be reimbursed by
Medicare. Again, it has provided me with no legal authority of any kind to
support this argument.

I have given CMS two opportunities to explain why Petitioner had to reapply to
participate in Medicare and file a CMS Form 8551 to inform the contractor of his
status as a provider. CMS failed to provide me with anything, and I am unwilling
to accept its naked assertion without some legal authority to support it.

Moreover, the regulations do not appear to support CMS’s argument. A provider
or supplier who seeks to participate in Medicare must be enrolled in the program.
42 C.F.R. § 424.505. That provider must submit his or her application on the
“applicable enrollment application.” 42 C.F.R. § 424.510(a). There is no
exception to these requirements, and CMS clearly has the authority to determine
what form of application a provider must complete to enroll in Medicare. Thus, a
provider seeking for the first time to enroll must file an appropriate form with the
contractor, and CMS has created the CMS Form 8551 for that purpose.

But, there is nothing in the regulations to suggest that Petitioner, when he changed
his employment, reverted to the status of an unenrolled provider who sought to
participate in Medicare. The undisputed facts are that Petitioner was enrolled in
Medicare as a participating provider on all applicable dates, including August 1,
2010 and thereafter. There is nothing in the regulations that suggests that
Petitioner was required to submit an entirely new application for enrollment when
he changed his employment status and practice location.

Clearly, Petitioner’s status changed as of August 1, 2010. He was no longer an
employee of his former employer, and he opened a new practice location effective
August 1. Medicare regulations provide that Petitioner was required to inform
Highmark of that change in his employment status and practice location. A
participating physician must report a change of ownership of his or her practice
and a change of practice location within 30 days of the event. 42 C.F.R. §
424.516(d).

There is nothing in this regulation that specifies the form that a provider must use
to satisfy the regulatory requirements. There is nothing, for example, that
precludes a provider from filing that information with the contractor by letter or
even by phone. CMS has not argued that there is a specific form that is required to
communicate the information required by 42 C.F.R. § 424.516(d). Indeed, CMS
did not discuss the requirement at all, in either of its two briefs, despite my
specific request that it explain its position as to this issue.

In the absence of any argument or explanation from CMS, one could reasonably
interpret the regulation as not affecting a provider’s effective date of participation.
This regulation appears on its face to apply to those providers who are already
enrolled in Medicare. It says that a provider who already enrolled must keep the
contractor apprised of certain information. It does not suggest that filing that
information will establish a new effective Medicare participation date.

Petitioner’s October 4, 2010 filing with Highmark apparently was intended by him
to satisfy these regulatory requirements. On that date, he filed a CMS Form 8551
containing information concerning his new employment status and practice
location. It is, however, totally unclear why Petitioner opted to use this particular
form for that purpose. It also appears that Petitioner’s submission was untimely in
that he provided Highmark with information that he should have filed by the end
of August, 2010. However, the regulations do not suggest that a provider who
fails to timely report a change in certain information will automatically be
disenrolled from participation in Medicare, and CMS has not made that argument.
Thus, and absent any argument from CMS as to the effect of an untimely filing by
Petitioner, I cannot conclude that Petitioner’s October 4, 2010 filing should be
used to establish a “new” participation status as opposed to the one that he
previously occupied.

/s/
Steven T. Kessel
Administrative Law Judge


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

Bryant H. Hudson, III, M.D.
(O.1 File No. H-11-40322-9),

Petitioner
v.
The Inspector General.
Docket No. C-11-606
Decision No. CR2472
Date: December 9, 2011
DECISION

The hearing request of Petitioner, Bryant H. Hudson, III, M.D., is dismissed pursuant to
42 C.F.R. § 1005.2(e)(3) for abandonment.

I. Background

The Inspector General (I.G.) notified Petitioner by letter dated June 30, 2011, that he was
being excluded from participation in Medicare, Medicaid, and all federal health care
programs for five-years. The LG. excluded Petitioner, pursuant to section 1128(a)(2) of
the Social Security Act (Act), based upon his conviction in the Circuit Court of
Montgomery County, Alabama of a criminal offense related to neglect or abuse of
patients in connection with the delivery of a health care item or service.

Petitioner timely requested a hearing by letter dated July 12, 2011. The case was
assigned to me for hearing and decision on July 21, 2011. I convened a prehearing
conference by telephone on August 3, 2011, the substance of which is memorialized in
my August 4, 2011 Prehearing Conference Order and Schedule for Filing Briefs and
Documentary Evidence (Prehearing Order).

In accordance with my Prehearing Order, the I.G. filed its motion for summary judgment
and proposed exhibits on September 19, 2011. My Prehearing Order directed that
2

Petitioner file his response to the I.G.’s motion with supporting memorandum and
exhibits not later than November 4, 2011. My office did not receive Petitioner’s
response, and, on November 10, 2011, my office contacted Petitioner’s counsel of record,
Robert J. Russell, Jr., Esquire. Mr. Russell stated that he no longer represents Petitioner
and that he would not file a notice of withdrawal.

On November 14, 2011, I sua sponte granted Petitioner an extension of time and ordered
Petitioner to file his response to the I.G. motion for summary judgment no later than
November 28, 2011. I warned Petitioner that, if no response was received, I may treat his
request for hearing as abandoned and dismiss his request pursuant to 42 C.F.R. §
1005.2(e)(3). To date, my office has not received a response from Petitioner.

II. Discussion

The sole issue in this case is whether Petitioner’s request for hearing must be dismissed.
An Administrative Law Judge (ALJ) is required to dismiss a request for hearing when a
petitioner has abandoned his or her hearing request. 42 C.F.R. § 1005.2(e)(3).

Petitioner has not responded to the I.G. motion for summary judgment. Petitioner has
also failed to meet the filing deadlines that I established in my August 4, 2011 Prehearing
Order and as amended by my November 14, 2011 Order. I find that Petitioner has
abandoned his request for a hearing. Accordingly, I dismiss this matter, pursuant to 42
CFR. § 1005.2(e)(3).

III. Conclusion

For the foregoing reasons, Petitioner’s request for hearing is dismissed.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Vinod Chandrashekhar Patwardhan, M.D.,
(OI File No.: L-08-40719-9),

Petitioner
v.
The Inspector General.
Docket No. C-11-615
Decision No. CR2471

Date: December 8, 2011

DECISION

Petitioner, Vinod Chandrashekhar Patwardhan, M.D.., is a California physician,
specializing in internal medicine and oncology, who organized a scheme to smuggle
unapproved chemotherapy drugs into the United States from India and Honduras and to
administer those drugs to patients. He was eventually caught and convicted on felony
counts of conspiracy, introducing misbranded drugs into interstate commerce, smuggling
goods into the United States, and knowingly and intentionally aiding, abetting and
causing the fraudulent importation of drugs purchased in Honduras. Based on his
convictions, the Inspector General (I.G.) excluded him from participation in Medicare,
Medicaid, and all federal health care programs for a period of 23 years. However,
responding to a request from a state healthcare program, the I.G. partially waived his
exclusion, allowing him to bill the programs for the oncology services he provides in a
medically-underserved area.

Petitioner appeals the exclusion.

The parties agree that, based on his convictions, Petitioner Patwardhan is subject to
a minimum five-year exclusion under sections 1128(a)(1) and 1128(a)(3) of the Social
Security Act (Act). They dispute the length of his exclusion beyond five years.

For the reasons set forth below, I find that, based on the narrow and unique circumstances
of this case, a 23-year exclusion does not fall within a reasonable range and reduce the
period of exclusion to 12 years.

I. Background

By letter dated June 30, 2011, the LG. notified Petitioner that he was partially excluded
from participation in Medicare, Medicaid, and all federal health care programs for a
period of 23 years, because he had been convicted of felony criminal offenses related to:
1) the delivery of an item or service under the Medicare or state health care program; and
2) fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial
misconduct in connection with the delivery of a health care item of service. The letter

explained that sections 1128(a)(1) and 1128(a)(3) of the Act authorize the exclusion. LG.
Ex. 1.

The letter also explained that the I.G. partially waived the exclusion in response to a
November 19, 2010 letter from David Maxwell-Jolly, Director of the California
Department of Health Care Services. Director Maxwell-Jolly asked the I.G. to waive
Petitioner’s exclusion pursuant to 42 C.F.R. § 1001.1801(b), because the physician was
the sole source of oncology services in his community. The LG. therefore granted a
limited waiver for “services [Petitioner provides] under the Medicare, Medicaid, and all
federal health care programs . . . in Upland, California for oncological items and
services” for as long as the state agency determines that a need exists. I.G. Ex. 1 at 1-2;
P. Ex. 8.

Petitioner concedes that he was convicted and is subject to exclusion under sections
1128(a)(1) and 1128(a)(3) of the Act. P. Brief (Br.) at 1, 2.

Each party submitted a written argument (I.G. Br.; P. Br.). The IG. also submitted five
exhibits (I.G. Exs. 1-5) and a reply brief (I.G. Reply). Petitioner submitted ten exhibits
(P. Exs. 1-10).

In the absence of an objection, I admit into evidence I.G. Exs. 1-5.

The L.G. objects to P. Exs. 1 and 4-10, arguing that they are irrelevant. P. Ex. 1 isa
written declaration from Noam Drazin, M.D., a physician specializing in oncology and
hematology, in which he opines that patient responses to the illegally-imported drugs
“were not atypical” and that the standard of care Petitioner provided his patients was “not
worse than the standard of care for oncologists in the area.” P. Ex. 1. P. Exs. 4-7 include
hundreds of letters from grateful patients, their families, and health care providers

describing Petitioner’s practice and attesting to his professional abilities, charitable works
and many kindnesses. P. Ex. 8 is the letter from Director Maxwell-Jolly requesting a
waiver. P. Exs. 9 and 10 are letters from California state senators attesting to the
importance of Petitioner’s clinic to the medically-underserved community in which it is
located.

I find none of these exhibits irrelevant. Because they relate to the waiver, P. Exs. 8-10
explain the current scope of Petitioner’s exclusion.’ Moreover, these and the other
challenged documents also provide evidence of Petitioner’s motive and intent, which, by
regulation, makes them relevant and admissible. 42 C.F.R. § 1005.17(g) (making
admissible “acts other than those at issue in the instant case. . . in order to show motive,
opportunity, intent, knowledge, preparation, identity, lack of mistake, or existence of a
scheme. . . .”); Emem Dominic Ukpong, DAB No. 2220 (2008); Narendra M. Patel,
M.D., DAB No. 1736 (2000), aff'd sub nom, Patel v. Thompson, No. 00-00222-CV-
HLM-4 (N.D.G. 2002), aff'd, 319 F. 3d 1317 (11th Cir. 2003)(holding that extrinsic
evidence is admissible to fill in the circumstances surrounding the events that formed the
basis for the offense of which Petitioner was convicted). I therefore admit into evidence
P. Exs. 1-10.

I directed the parties to indicate in their briefs whether an in-person hearing would be
necessary and, if so, to “describe the testimony it wishes to present, the names of the
witnesses it would call, and a summary of each witnesses’ proposed testimony.” I
specifically directed the parties to explain why the testimony would be relevant. Order
and Schedule for Filing Briefs and Documentary Evidence, Attachment | (Informal Brief
of Petitioner § IV) and Attachment 2 (Informal Brief of 1.G. § III) (Aug. 15, 2011). The
1G. indicates that an in-person hearing is not necessary. Petitioner, on the other hand,
contends that an in-person hearing is necessary and lists himself, Dr. Drazin, and some
unidentified patients as potential witnesses. He says that he and his patients would
describe his practice, his ignorance of the law, the low level of his culpability, and the
impact of his exclusion on the population he serves. Dr. Drazin’s testimony would repeat
the statements included in his written declaration: in his opinion, Petitioner did not
endanger patients when he gave them the illegally-imported drugs. P. Ex. 1.

Evidence of Petitioner’s purported ignorance is not admissible here. Knowledge was an
element of his crimes, and he may not collaterally attack in this forum the underlying
conviction. 42 C.F.R. § 1001.2007(d); Joann Fletcher Cash, DAB No. 1725 (2000).

The remaining evidence that Petitioner proposes to submit through these witnesses is
already in the record. As discussed below, for example, the sentencing judge laid out, in

' [recognize that I have no authority to review the I.G.’s decision to grant or deny a
waiver. It does not follow, however, that the scope of Petitioner’s current program
participation is irrelevant to the issues before me.
considerable detail, Petitioner’s practice and level of culpability. See, e.g., P. Ex. 2 at 18-
24. In her decision, which was adopted by the Medical Board of California, State
Administrative Law Judge Mary Agnes Matyszewski set forth in detail the testimony of
Petitioner and his other witnesses and incorporates that testimony into her findings. P.
Ex. 3. The I.G. has not challenged any portion of that decision. I therefore conclude that
an in-person hearing would serve no purpose but would repeat testimony and evidence
that is already in the record.

IL. Issue

Because the parties agree that the I.G. has a basis upon which to exclude Petitioner from
program participation, the sole issue before me is whether the length of the exclusion (23
years) is reasonable. 42 C.F.R. § 1001.2007.

III. Discussion

Based on the criminal convictions (including Petitioner’s
underlying motive and intent) and three aggravating
factors, a 23-year exclusion is excessive; rather, a 12-year
exclusion falls within a reasonable range.”

Section 1128(a)(1) of the Act mandates that the Secretary of Health and Human Services
exclude an individual who has been convicted under federal or state law of a criminal
offense related to the delivery of an item or service under Medicare or a state health care
program. 42 C.F.R. § 1001.101(a).

Section 1128(a)(3) says that an individual or entity convicted of felony fraud, theft,
embezzlement, breach of fiduciary responsibility, or other financial misconduct in
connection with the delivery of a health care item or service must also be excluded from
participation in federal health care programs. 42 C.F.R. § 1001.101(c).

An exclusion under either section 1128(a)(1) or 1128(a)(3) must be for a minimum
period of five years. Act § 1128(c)(3)(B); 42 C.F.R. §§ 1001.102(a), 1001.2007(a)(2).
Federal regulations set forth criteria for lengthening exclusions beyond the five-year
minimum. 42 C.F.R. § 1001.102(b). Evidence that does not pertain to one of the
aggravating or mitigating factors listed in the regulation may not be used to decide
whether an exclusion of a particular length is reasonable.

The conviction. Petitioner is a physician specializing in internal medicine and oncology
who maintains a medical practice in California. On September 21, 2009, he was

> [make this one finding of fact/conclusion of law.
convicted in the U.S. District Court for the Central District of California of one count of
conspiracy (18 U.S.C. § 371); two counts of introducing misbranded drugs into interstate
commerce (21 U.S.C. §§ 331(a), 333(a)(2), 352(c), 352(f)(1)); two counts of smuggling
goods into the United States, namely drugs purchased in India (18 U.S.C. § 545); and one
count of knowingly and intentionally aiding, abetting, counseling, commanding,
inducing, procuring, and causing the fraudulent and knowing importation and bringing
into the United States drugs purchased in Honduras (18 U.S.C. §§ 2 (a),(b), 545). LG.
Ex. 2.

The court sentenced him to nine months in-home detention followed by five years
probation. It ordered him to pay a $10,000 fine, a $600 assessment and $1,313,634.10 in
restitution to the Department of Health and Human Services, MediCal/MediCaid
Services. I.G. Ex. 2.

Circumstances surrounding the events that formed the basis for the offenses of which
Petitioner was convicted. Petitioner is a native of India with a medical degree from
Nagpur University Medical College in Nagpur, India. P. Ex. 3 at 4. He eventually found
his way to the United States and, since 1975, has conducted a private medical practice in
California. P. Ex. 3 at 4. Sentencing Judge Virginia A. Phillips characterized
Petitioner’s history as “a lifetime of service to his profession and the provision of medical
care without regard to his patient’s ability to pay for it.” P. Ex. 2 at 18, 33; accord P. Ex.
3 at 12. He treated patients “without much regard for reimbursement.” However,
beginning in 1997, changes in reimbursement policies put his practice in financial
difficulty. P. Ex. 2 at 16.

When visiting family in India, Petitioner volunteered to treat patients, usually without
charge. P. Ex. 2 at 20. Because the medications were so much cheaper there, he began
purchasing them at an Indian pharmacy and taking them back to the United States, where
he administered them to his patients, many of whom were indigent and could not afford
to pay. P. Ex. 2 at 16; P. Ex. 3 at 10. These were the same drugs he used in treating
patients in India. P. Ex. 2 at 16. Petitioner subsequently expanded that practice to other
countries and involved some of his employees.

Judge Phillips found it “impossible” to view his crime as one that was motivated by
greed. P. Ex. 2 at 18. She also found him “extraordinarily unlikely to commit another

> The Court’s judgment indicates that Petitioner entered a guilty plea, and the I.G. asserts
that Petitioner pled guilty. I.G. Ex. 2; I.G. Br. at 3. However, during the sentencing
proceedings, the participants repeatedly alluded to a trial. See, e.g., P. Ex. 2 at 27-28 (in
which counsel states “at trial evidence came out. . . .”); P. Ex. 2 at 29-30 (referring to trial
testimony); P. Ex. 2 at 79 (in which government counsel states that “the jury found
beyond a reasonable doubt. . . .”); P. Ex. 2 at 80 (referring to the “closing argument”); P.
Ex. 2 at 82 (the court referring to the “trial of this case”).
crime.” P. Ex. 2 at 23. Similarly, State ALJ Matyszewski concluded that “no evidence
suggests that [Petitioner’s] actions were motivated by anything other than an attempt to
provide oncology medications to poor and indigent patients ....” P. Ex. 3 at 17.

Thus, Petitioner or others acting at his direction traveled to foreign countries (India,
Honduras, the Philippines and Panama), where they bought drugs. They concealed the
drugs, and brought them back to the United States without declaring them to customs
officials. P. Ex. 2 at 15. Without telling his patients the source of the drugs, he
administered them and, where feasible, billed health care programs as if the drugs were
FDA-approved medicines.

Aggravating factors. Among the factors that may serve as bases for lengthening the
period of exclusion are three that the I.G. relies on in this case: 1) the acts resulting in the
conviction, or similar acts, caused a government program or another entity financial
losses of $5,000 or more; 2) the acts that resulted in the conviction, or similar acts, were
committed over a period of one year or more; and 3) the sentence imposed by the court
included incarceration. 42 C.F.R. § 1001.102(b). The presence of an aggravating factor
or factors, not offset by any mitigating factor or factors, justifies lengthening the
mandatory period of exclusion.

Petitioner agrees that this case presents three aggravating factors. P. Br. at 2. First, the
sentencing court ordered him to pay $1,313,634.10 in restitution to the Medicaid
program. I.G. Ex.1 at 2. Restitution has long been considered a reasonable measure of
program losses. See Jason Hollady, M.D., DAB No. 1855 (2002). Second, the acts that
formed the basis of his conviction occurred over a period of approximately three years,
from 2005 until about July 30, 2008. I.G. Ex. 3 at 6, 14, 15. Third, even though the trial
judge imposed a comparatively light jail sentence — 9 months in a home detention
program without electronic monitoring — this qualifies as incarceration, within the
meaning of the regulations. 42 C.F.R. § 1001.2(d)(defining incarceration as
“imprisonment or any type of confinement with or without supervised release, including,
but not limited to, community confinement, house arrest and home detention”).

No mitigating factors. The regulations consider mitigating just three factors: 1) a
petitioner was convicted of three or fewer misdemeanor offenses and the resulting
financial loss to the program was less than $1,500; 2) the record in the criminal
proceedings demonstrates that a petitioner had a mental, physical, or emotional condition
that reduced his culpability; and 3) a petitioner’s cooperation with federal or state
officials resulted in others being convicted or excluded, or additional cases being
investigated, or a civil money penalty being imposed. 42 C.F.R. § 1001.102(c).
Characterizing mitigating factors as “in the nature of an affirmative defense,” the Board
as ruled that Petitioner has the burden of proving any mitigating factor by a
preponderance of the evidence. Barry D. Garfinkel, M.D., DAB No. 1572 at 8 (1996).

Petitioner suggests that his “interminable humanitarian nature and altruism” falls within
the meaning of a “mental, emotional or physical condition” that reduces his culpability.
P. Br. at 5. I reject this argument. Altruism is a positive quality, not a mental or
emotional “condition” within the meaning of the regulation.

I nevertheless recognize that Petitioner is not typical of the convicted felons excluded
from program participation. That he was motivated by misguided altruism is well-
established by the record before me. Both the criminal trial judge and the state licensing
judge agreed that he poses no risk to his patients and virtually no risk to program
integrity. Nevertheless, I cannot disregard the significant aggravating factors in this case.
Because of those factors, I must reject his plea to reduce the exclusion to the statutory
minimum.

On the other hand, I agree with Judges Phillips and Matyszewski: Petitioner poses less of
a risk to program integrity than many of those subject to a minimum period of exclusion.
Given the totality of circumstances in this case, I find a 23-year exclusion unreasonably
harsh and reduce that period to 12 years, which I consider within a reasonable range.

IV. Conclusion

For these reasons, I conclude that the I.G. properly excluded Petitioner from participation
in Medicare, Medicaid and all federal health care programs. Considering the unique
circumstances of this case, I find a 23-year exclusion unreasonable and reduce his period
of exclusion to 12 years.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Tri Pham, M.D., Gail Frances, N.P., and Mandana Shafai, M.D.,
Petitioners,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-11-760
Decision No. CR2470

Date: December 6, 2011

DECISION

Tri Pham, M.D., Gail Frances, N.P., and Mandana Shafai, M.D., who are providers
affiliated with Metro Medical Centers, Inc. (Metro), requested a hearing to challenge the
effective dates assigned to their enrollment in Medicare. For the reasons explained
below, I grant summary disposition in favor of the Centers for Medicare and Medicaid
Services (CMS) upholding the assigned effective dates.

I. Background

On August 29, 2011, Petitioners filed a hearing request and challenged the effective dates
of their enrollment in the Medicare program. Petitioners argue that they are entitled to
obtain reimbursement for services rendered to Medicare patients prior to the filing of
their Medicare applications, i.e. covering the period late 2009 through 2010. This case
was assigned to me for a hearing and a decision.

CMS submitted a motion for summary disposition and a brief in support of its motion,
along with three exhibits identified as CMS Exs. 1-3. Petitioners filed a response, to
which they attached copies of CMS Exs. 1-3. In the absence of objection, I admit CMS
Exs. 1-3 into the record.
IL. Issue, Findings of Fact, and Conclusions of Law
A. Issue
The issue in this case is whether:

CMS’s contractor and CMS properly determined Petitioners’ effective
dates of Medicare enrollment.

B. Findings of Fact and Conclusion of Law
I. Summary judgment is appropriate in this case as a matter of law.

CMS argues that it is entitled to summary disposition (i.e. summary judgment) because
the material facts in this case are undisputed. CMS Brief at 2. The Departmental
Appeals Board (Board) has explained that —

[s]ummary judgment is appropriate when the record shows that there is no
genuine issue as to any material fact, and the moving party is entitled to
judgment as a matter of law. . .. The party moving for summary judgment
bears the initial burden of showing that there are no genuine issues of
material fact for trial and that it is entitled to judgment as a matter of law. . .
. To defeat an adequately supported summary judgment motion, the non-
moving party may not rely on the denials in its pleadings or briefs, but must
furnish evidence of a dispute concerning a material fact — a fact that, if
proven, would affect the outcome of the case under governing law. . . . In
determining whether there are genuine issues of material fact for trial, the
reviewer must view the evidence in the light most favorable to the non-
moving party, drawing all reasonable inferences in that party’s favor.

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

The Board has further explained that the role of an Administrative Law Judge (ALJ) in
deciding a summary judgment motion differs from its role in resolving a case after a
hearing. The ALJ should not assess credibility or evaluate the weight of conflicting
evidence. Holy Cross Vill. at Notre Dame, Inc., DAB No. 2291, at 5 (2009).

Having accepted all of Petitioners’ factual assertions as true and having drawn all
reasonable inferences in their favor, I find that Petitioners have not disputed any key

material facts in this case. Accordingly, for the reasons set forth below, I agree with
CMS that summary judgment is appropriate in this case.
2. CMS correctly determined the effective dates of Petitioners’ Medicare
enrollment.

The effective date of enrollment for physicians, nonphysician practitioners, and physician
and nonphysician organizations is set as follows:

The effective date for billing privileges for physicians, nonphysician
practitioners, and physician and nonphysician practitioner organizations is
the later of the date of filing of a Medicare enrollment application that was
subsequently approved by a Medicare contractor or the date an enrolled
physician or nonphysician practitioner first began furnishing services at a
new practice location.

42 C.F.R. § 424.520(d). The “date of filing” is the date that the Medicare contractor
receives a signed provider enrollment application that the Medicare contractor is able to
process to approval. 73 Fed. Reg. 69,725, 69,769 (Nov. 19, 2008) (emphasis added).

In addition, CMS permits limited retrospective billing as follows:

Physicians, nonphysician practitioners, and physician and nonphysician

practitioner organizations may retrospectively bill for services when a
physician or nonphysician practitioner or a physician or a nonphysician
organization have met all program requirements, including State licensure
requirements, and services were provided at the enrolled practice location
for up to—

(1) 30 days prior to their effective date if circumstances precluded
enrollment in advance of providing services to Medicare beneficiaries, or

(2) 90 days [in certain emergencies.]
42 C.F.R. § 424.521 (a).

The undisputed facts of this case are as follows. Petitioners filed enrollment applications
with Highmark Medicare Services (Highmark), a Medicare contractor operating on
CMS’s behalf. Highmark received Dr. Pham’s CMS-855R application on September 13,
2010; Nurse Practitioner Frances’ CMS-855R application on October 25, 2010, and Dr.
Shafia’s CMS-855R application on March 18, 2011. On February 17, 2011, Highmark
approved the applications for Dr. Pham and Nurse Practitioner Frances with effective
Medicare enrollment dates of August 14, 2010 and September 25, 2010, respectively. On
March 22, 2011, Highmark approved Dr. Shafai’s application with an effective date of
February 16, 2011. CMS Ex. 3.
The record also reflects that Metro, the group practice with which Petitioners are
affiliated, has been enrolled in Medicare with an effective date of September 1, 1989. On
December 27, 2010, Metro submitted a CMS-855B enrollment application to Highmark
to update its information in the Internet-based Provider Enrollment, Chain and Ownership
System (PECOS).!

Petitioners were dissatisfied with the effective dates assigned by Highmark and requested
reconsideration. On July 5, 2011, Highmark advised Petitioners that their effective dates,
which allowed for a 30-day period of retrospective billing, were correctly determined in
accordance with 42 C.F.R. §§ 424.520(d) and 424.521(a).

Petitioners do not assert that they filed their enrollment applications on an earlier date nor
do they allege that approvable applications were received by the contractor at an earlier
date. Instead, Petitioners argue that they were unaware of changes to Medicare
regulations and contend that “[they] never received any notification from Highmark that
[they] needed to submit a new application for the group and each provider affiliated with
our group.” Request for hearing; CMS Ex. 2; see Petitioners’ Response. Petitioners
contend that they are a small practice that has “had an ‘effective’ contractual date since
1989” and that each of their physicians had Medicare enrolled effective dates prior to
their filings. Petitioners refer to the language of 42 C.F.R. § 424.520(d), claiming that
the effective date of enrollment can be “either the date the physician files an enrollment
application or the date an already enrolled physician begins practicing at a new location.”
In Petitioners’ view, because their physicians were already enrolled in Medicare at other
offices, their effective dates should have been the dates they began practicing at a new
location. Petitioners’ Response. Petitioners also complain that it took Medicare five
months to process Dr. Pham’s application because of a backlog in applications.
Petitioners emphasize the notion of “contractual intent” and contend that they acted in
good faith when they submitted their claims to Medicare in 2009 and 2010.

Petitioners’ arguments provide no ground for me to grant them earlier effective dates. I
note that, in quoting the text of 42 C.F.R. § 424.520(d), Petitioners have omitted the key
words “the later of” from the regulation and thus misinterpreted the meaning of 42 C.F.R.
§ 424.520(d). The full text of the regulation states that the effective date “is the later of
the date of filing of a Medicare enrollment application that was subsequently approved by

* PECOS is a “web-based enrollment process, which is based off of the information
collected on the CMS-855 forms.” CMS Medicare Program Integrity Manual (MPIM),
Ch. 10, § 1.2.
a Medicare contractor or the date an enrolled physician or nonphysician practitioner first
began furnishing services at a new practice location.” Thus, in determining the effective
date within the meaning of 42 C.F.R. § 424.520(d), the question one should ask is — in
examining the date of filing of an approvable Medicare enrollment application and the
date an enrolled physician or nonphysician practitioner first began furnishing services at a
new practice location, which is the later date? Here, Petitioners have not suggested that
they began providing services at a new practice location after they filed their Medicare
enrollment applications; hence, the date when each Petitioner filed his or her application
must be the controlling date.

Petitioners’ other arguments, such as their complaints of what they see as poor
communication from Highmark regarding Medicare enrollment changes and CMS’s
alleged delay in processing applications, and what they describe as their own good
intentions, are equitable in nature. Equitable claims cannot be a basis to grant Petitioners
an earlier date for billing privileges. US Ultrasound, DAB No. 2302 at 8 (2010)
(“Neither the ALJ nor the Board is authorized to provided equitable relief by reimbursing
or enrolling a supplier who does not meet statutory or regulatory requirements.”);
Oklahoma Heart Hosp., DAB No. 2183 at 16 (2008). I have no jurisdiction to hear and
decide Petitioner’s equitable arguments.

I find that Petitioners received the earliest possible effective dates of Medicare
participation under the applicable regulations. Under 42 C.F.R. § 424.520(d), the
effective enrollment date, for each Petitioner in this case, would be the date Highmark

received an approvable application from the Petitioner. As stated above, Dr. Pham and
Nurse Practitioner Frances submitted valid applications that were received by Highmark
on September 13, 2010 and October 25, 2010, respectively, and Dr. Shafai submitted a
valid application that was received on March 18, 2011. In assigning effective dates to
each Petitioner, Highmark afforded each of them the 30-day period of retrospective
billing to which each was entitled pursuant to 42 C.F.R. § 424.521(a)(1). Thus, for Dr.
Pham, the date from which he may retrospectively bill for services rendered was properly
set at August 14, 2010; for Nurse Practitioner Frances, her retrospective billing period
was properly set to begin on September 25, 2010; and for Dr. Shafia, Highmark properly
determined that his retroactive billing period was to start on February 16, 2011. I can
neither alter nor deviate from the explicit limitations on retroactive billing contained in
42 C.F.R. § 424.521(a)(1). Thus, I have no authority to extend the retroactive billing
periods for Petitioners.
II. Conclusion

Because no genuine issue as to any material fact exists, and for the foregoing reasons, I
grant CMS’s motion for summary disposition and sustain its determination of Petitioners’
effective dates of Medicare enrollment. I have no authority to order CMS to make
payment for any claims that were provided by Petitioners outside of their 30-day
retroactive billing periods provided by regulation.

/s/
Richard J. Smith
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Incare Home Healthcare, Inc.,
Petitioner
v.
Centers for Medicare and Medicaid Services.
Docket No. C-11-711
Decision No. CR2469
Date: December 6, 2011
DECISION
I grant summary judgment in favor of the Centers for Medicare and Medicaid
Services (CMS) sustaining its determination to revoke the Medicare supplier
number of Petitioner, Incare Home Healthcare, Inc.
I. Background
Petitioner was enrolled in the Medicare program as a supplier of durable medical
equipment, prosthetics, orthotics, and supplies. Petitioner’s Medicare billing
privileges are conditioned on its continuing compliance with Medicare
requirements as set forth in statutes and in regulations at 42 C.F.R. Part 424.
Particularly relevant here are the standards that are set forth at 42 C.F.R. §
424.57(c)(1) — (26). Petitioner must comply with each of these standards to
remain eligible.
On March 24, 2011, CMS notified Petitioner that its Medicare supplier number
would be revoked, based on CMS’s determination that Petitioner had failed to
comply with three regulatory standards. These standards are: 42 C.F.R. §
424.57(c)(10), which requires a supplier to have comprehensive liability insurance

in an amount of at least $300,000, covering both the supplier’s place of business
and all of its customers and employees; 42 C.F.R. § 424.57(c)(21), which requires
a supplier to furnish CMS with any information required pursuant to the Medicare
statutes and implementing regulations; and 42 C.F.R. § 424.57(c)(26), which
requires a supplier to meet surety bond requirements.

Petitioner requested reconsideration of this determination. Reconsideration was
denied on June 8, 2011. Petitioner then requested a hearing. CMS, at my
direction, filed a pre-hearing exchange that included eight proposed exhibits,
identified by CMS as CMS Exhibit (Ex.) 1 - CMS Ex. 8. Additionally, CMS
moved for summary judgment. Petitioner did not initially file a pre-hearing
exchange. I sent Petitioner an order to show cause, and, in response, it filed an
exchange that included an affidavit by Tasha Duhamell. I identify that affidavit as
P. Ex. 1. Ireceive CMS Ex. 1 — CMS Ex. 8 and P. Ex. | into the record.

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

The issue in this case is whether CMS properly revoked Petitioner’s Medicare
supplier billing number.

B. Findings of Fact and Conclusions of Law

CMS or the National Supplier Clearinghouse (NSC), acting on CMS’s behalf, may
revoke a supplier’s Medicare billing privileges if that supplier fails to satisfy any
of the requirements contained in 42 C.F.R. § 424.57(c). 42 C.F.R. §
405.874(b)(2). Here, the undisputed facts show that Petitioner failed to meet three
of those requirements. Consequently, CMS was justified in revoking Petitioner’s
Medicare supplier number.

The undisputed facts show that, on October 14, 2010, the Supplier Audit and
Compliance Unit of the NSC notified Petitioner that it could not verify that
Petitioner had complied with the requirements of 42 C.F.R. §§ 424.57(c)(10) and
(26). Specifically, the NSC told Petitioner that the liability insurance policy that
Petitioner had on file with the NSC had expired on April 9, 2010 and that the NSC
had received notification that Petitioner’s surety bond had was cancelled on
October 2, 2010. CMS Ex. 1.

Petitioner did not reply to NSC’s October 14 letter and did not furnish information
to NSC about its liability insurance or its surety bond. On March 24, 2011, CMS
revoked Petitioner’s Medicare billing number because of its failures to: provide
proof of comprehensive liability insurance; maintain a surety bond; and provide
information requested by NSC. 42 C.F.R. § 424.57(c)(10), (21), (26).

Petitioner’s response to this letter was to request reconsideration and to file a
corrective action plan. Petitioner did not deny that it had allowed its liability
insurance to expire. Rather, Petitioner stated that it had renewed its liability
insurance on April 10, 2011. However, it provided no proof of this assertion.
Petitioner submitted only a certificate of liability insurance that had expired on
April 9, 2011. CMS Ex. 3 at 4. Moreover, Petitioner conceded that its surety
bond had been cancelled. Petitioner averred that it was working on obtaining a
new one but implicitly acknowledged that it had no surety bond even as of the date
that it requested reconsideration. Jd. at 2. Finally, Petitioner did not deny that it
had failed to provide NSC with requested information, stating only that it had
overlooked the request due to staffing changes in its office. Jd. at 1.

These undisputed facts are sufficient grounds for me to grant summary judgment
sustaining CMS’s determination. As I have stated, a supplier must remain in
compliance with all Medicare regulatory requirements to retain its supplier
number. CMS may revoke a supplier’s Medicare billing privileges at any time
that the supplier fails to comply with requirements. Here, the undisputed facts that
I have recited show that Petitioner was noncompliant with Medicare supplier
standards as of March 24, 2010. CMS was, therefore, entitled to revoke
Petitioner’s Medicare billing privileges.

Petitioner now argues that it was in compliance with Medicare requirements and
that there is at least a fact dispute as to that compliance. Therefore, according to
Petitioner, summary judgment should not be imposed against it. As support for
this argument, Petitioner relies on the affidavit of Tasha Duhamell. P. Ex. 1. In
her affidavit, Ms. Duhamell asserts that:

By April 21, 2011 the proper documentation was provided to NSC to
prove .. . [Petitioner] was in compliance and working to maintain
compliance going forward.

Id. at 1. Ms. Duhamell does not explain exactly what this alleged compliance
consists of, except to aver that the insurance certificate that Petitioner provided in
its corrective action plan (presumably the certificate showing insurance that had
expired on April 9, 2011) provided the name, address, and phone number of
Petitioner’s insurer, and that it also provided the name of Petitioner’s surety bond
company. /d. at 2. Ms. Duhamell asserts that NSC could have called these
entities to ascertain Petitioner’s insurance and surety bond status. Jd.

But calling Petitioner’s insurers and bondholders was not NSC’s obligation. NSC
sent several requests for information to Petitioner that were unanswered or
answered by Petitioner with incomplete information, or information showing that
Petitioner’s insurance policy had expired. NSC had no obligation to contact
agencies that Petitioner might be doing business with to verify Petitioner’s status.
The duty to supply relevant information rested solely on Petitioner, and it bears
full liability for its failure to supply that information.

Petitioner has not proven that, as of March 24, 2010, it had the requisite liability
insurance and bond. To this day, it has not provided certification of that status.
Asserting, as Petitioner does, that contacting its insurer and bondholder would
have clarified Petitioner’s status is not the same as averring affirmatively that it
had the requisite insurance and bond. Petitioner simply has not offered facts from
which any reasonable fact finder could infer that it was in compliance with
Medicare regulatory requirements.

Petitioner also complains that the notices it received from NSC and CMS were
ambiguous. I am hard put to find ambiguity in these notices. But, even assuming
the notices were ambiguous, that does not relieve Petitioner of its responsibility to
comply with Medicare requirements. What Petitioner has never shown — in
response to NSC’s information requests, in its corrective action plan, or before me
— is that it had the requisite insurance and bond at the time that CMS determined
that Petitioner was noncompliant.

/s/
Steven T. Kessel
Administrative Law Judge