Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Digestive Disease Centers
(CCN: 29-C0001018),

Petitioner
Vv.
Centers for Medicare and Medicaid Services.
Docket No. C-09-69
Decision No. CR2216
Date: August 13, 2010
DECISION

I grant summary judgment in favor of the Centers for Medicare and Medicaid Services
(CMS) and against Petitioner, Digestive Disease Centers. In doing so, I sustain CMS’s
determination to impose the remedy of terminating Petitioner’s Medicare agreement
effective September 26, 2008. Summary judgment is appropriate as no genuine issues of
material fact are in dispute, and the controlling issues may be resolved as a matter of law.

I. Background

Petitioner is an ambulatory surgical center (ASC) located in Las Vegas, Nevada. On
April 22, 2008, the Bureau of Health Care Quality and Compliance, Nevada Department
of Health and Human Services (state survey agency) surveyed Petitioner’s center to
determine Petitioner’s compliance with Medicare conditions for coverage for an ASC.
The survey results found Petitioner not to be in compliance with several conditions for
coverage.' By letter dated June 2, 2008, the state survey agency notified Petitioner (CMS
Exhibit (Ex.) 3) and provided Petitioner with a copy of the Statement of Deficiencies.

' The conditions required for coverage which Petitioner was alleged to not be in
compliance with during the April survey, and which Petitioner challenges in this appeal
include: 42 C.F.R. § 416.41 (Governing body and management); 42 C.F.R. § 416.43
(Evaluation of quality); 42 C.F.R. § 416.44 (Environment); and 42 C.F.R. § 416.45
(Medical staff). CMS Exhibit (Ex.) 3; CMS Ex. 1.
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CMS Ex. 1. The letter advised Petitioner that if it remained out of compliance with any
Medicare condition for coverage, the state survey agency would recommend that CMS
terminate Petitioner’s participation in Medicare. The letter also provided Petitioner with
the opportunity to submit a credible allegation of compliance, which could be verified
through a resurvey of Petitioner’s center. CMS Ex. 3. In response, Petitioner submitted a
plan of correction on June 13, 2008. Jd. A revisit survey of Petitioner’s center was
conducted on July 16, 2008 to verify Petitioner’s allegation of compliance. The survey
disclosed that Petitioner continued to be out of compliance with three of four conditions
cited during the April 22 survey and was not in compliance with an additional condition.”
By letter dated September 3, 2008, CMS notified Petitioner that its Medicare
participation would be terminated on September 26, 2008.7 CMS Ex. 7.

Petitioner timely requested a hearing before an administrative law judge (ALJ) by letter
dated November 3, 2008, challenging the findings and remedies resulting from the two
surveys of its center. The case was assigned to me on November 7, 2008 for a hearing,
related proceedings, and a decision. A prehearing conference was convened with the
parties on April 2, 2009, at which time this case was set for hearing in Las Vegas, Nevada
for June 2009. A prehearing order was issued on April 6, 2009, directing the parties to
file their prehearing exchanges and briefs.

The parties filed their prehearing exchanges, and, on June 8, 2009, CMS moved for
summary judgment and a stay to further proceedings pending resolution of the motion for
summary judgment.’ By order issued June 17, 2009, I stayed the hearing date and issued
a briefing schedule to the parties. The parties completed their briefing> and CMS’s
motion for summary judgment is now before me. For purposes of the record, I receive
CMS Exs. | through 45 and P. Exs. | through 11. Although I may cite to some of these

> The findings Petitioner challenges from the July 16, 2008 resurvey allege that Petitioner
continued to remain out of compliance with 42 C.F.R. §§ 416.41, 416.43, and 416.44. In
addition, Petitioner was also found to not be in compliance with an additional condition
outlined at 42 C.F.R. § 416.48 (Pharmaceutical services). CMS Ex. 7; CMS Ex. 2.

* CMS subsequently revised its September 3, 2008 letter by notice letter dated September
8, 2008, deleting a finding related to Petitioner’s loss of its business license. CMS Ex. 8.

+ On May 1, 2009, CMS filed its exchange, which included CMS Exs. 1-45. On May 18,
2009, Petitioner filed objections to CMS’s exhibits. On May 26, 2009, Petitioner filed its
witness list. On June 8, 2009, CMS filed its motion for summary judgment, and, on June
15, 2009, Petitioner filed its pre-hearing brief accompanied by P. Exs. 1-11.

* On July 17, 2009, Petitioner filed its opposition to CMS’s motion for summary
judgment and its own limited countermotion for summary judgment with one attachment
identified as the declaration of Petitioner’s owner and medical director, Osama Haikal,
M.D. (Dr. Haikal). CMS filed its reply on July 31, 2009, and Petitioner filed its reply on
August 20, 2009.
3

exhibits in this decision to describe undisputed material facts, I do not make findings as
to the exhibits’ evidentiary weight. In issuing summary judgment, I rely on the
undisputed material facts, and I make no evidentiary findings.

II. Applicable Law and Regulations

Title XVIII of the Social Security Act (Act) provides for payment of part, or all, of the
cost of covered services furnished to eligible individuals by qualified providers of
services and suppliers. Section 1832(a)(2)(F) of the Act authorizes Medicare Part B
coverage for services that an ASC furnished in connection with surgical procedures,
which the Secretary of Health and Human Services (Secretary) specifies, that meets
health, safety, and other standards and which the ASC has an agreement with the
Secretary to participate and accept payment as an ASC. The Secretary has issued
regulations at 42 C.F.R. Part 416, subpart C, which set forth Medicare conditions for an
ASC’s participation in Medicare by establishing general conditions for coverage at 42
CFR. §§ 416.40 through 416.52°

CMS can terminate an ASC’s enrollment in Medicare as a supplier, if CMS determines
that the ASC no longer meets the conditions for coverage as specified under 42 C.F.R.

§ 416.26. To effectuate a termination, CMS is only required to provide the ASC with
notice of at least 15 days before the effective date of termination. 42 C.F.R. § 416.35(b);
(b)(2).

An ASC is entitled to a hearing before an ALJ to contest the termination of its agreement.
The regulations pertaining to an ASC’s participation in Medicare incorporate by
reference the hearing procedures of the request for review provisions in 42 C.F.R. Part
498, subparts D and E, and provide for hearing by an ALJ and review by the
Departmental Appeals Board (Board). 42 C.F.R. § 416.35(b)(3).

III. Issues

The three issues before me are:

1. Whether summary judgment is appropriate;

2. Whether Petitioner failed to comply with one or more Medicare conditions for
coverage for ASCs; and, if so,

3. Whether the termination remedy that CMS imposed was reasonable.

° Subpart C of 42 C.F.R. Part 416 was amended effective May 18, 2009. 73 Fed. Reg.
68,502, 68,811 (Nov. 18, 2008). My citations are to the regulations that were in effect at
the time of the surveys in April and July 2008.
IV. Discussion

A. Summary judgment is appropriate in this case, because no disputed issues
of material fact exist.

An ALJ may decide a case on summary judgment, without an evidentiary hearing, when
either the case presents no genuine issue of material fact and the only questions that must
be decided involve application of law to the undisputed facts, or the moving party must
prevail as a matter of law even if all disputed facts are resolved in favor of the party
against whom the motion is made. Livingston Care Ctr. v. Dep't. of Health & Human
Servs., 388 F.3d 168, 173 (6th Cir. 2004).

The Board has long recognized the availability of summary judgment, and the Sixth
Circuit has recognized the Board’s interpretative rule. Crestview Parke Care Ctr. v.
Thompson, 373 F.3d 743, 750 (6th Cir. 2004). A party opposing summary judgment
must allege facts, which, if true, would refute the facts that the moving party relied on.
See, e.g., FED. R. CIV.P. 56(c); Vandalia Park, DAB No. 1939 (2004); Lebanon Nursing
and Rehab. Ctr., DAB No. 1918 (2004). To defeat an adequately supported summary
judgment motion, the non-moving party may not rely on the denials in its pleadings or
briefs; rather, it 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. Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 n.11 (1986);

In deciding a summary judgment motion, an ALJ may not make credibility
leterminations or weigh conflicting evidence but, instead, must view the entire record in
the light most favorable to the non-moving party. Moreover, all reasonable inferences
must be drawn in that party’s favor. Innsbruck HealthCare Ctr., DAB No. 1948 (2004);
Madison Health Care, Inc., DAB No. 1927 (2004).

CMS has moved for summary judgment with respect to all cited deficiencies, asserting
that Petitioner failed to establish any genuine issue of material fact in dispute, and a
hearing in this matter is not necessary. As previously noted, CMS imposed the sanction
of termination of Petitioner’s Medicare agreement. Four deficiencies are alleged in the
appeal before me, and any one of the cited conditions for coverage deficiencies, if
proved, is sufficient to sustain CMS’s termination. Therefore, if there is no disputed
material fact and no genuine issue of material fact requiring an evidentiary hearing as to
even one of the conditions for coverage deficiencies, then summary judgment can be
entered as to that deficiency.

Petitioner argues that material facts are in dispute as to each of the alleged conditions for
coverage violations and that its center was actually in compliance with all participation
conditions at the time of the revisit survey. Petitioner bears the burden of showing that
material facts exist that are disputed, and, if Petitioner cannot show that there exists some
genuine issue for trial, then summary judgment is appropriate. Everett Rehab. & Med.
Ctr., DAB No. 1628 (1997).
5

I have carefully considered Petitioner’s responses to the two survey findings and its
arguments against summary judgment, and find that they do not raise issues of material
fact which would defeat summary judgment in favor of CMS. Based on the record before
me, arguments of the parties, and applicable law and regulations, I find that there are no
material issues of fact in dispute requiring an evidentiary hearing. Accordingly, for the
reasons set forth below, I find that this case involves only issues of law and that summary
judgment is appropriate.

B. Petitioner was not in compliance with all the conditions for coverage
requirement, as an ASC required for continued participation in the Medicare
program.

1. Petitioner was not in compliance with the requirement of
Governing Body and Management, as set forth at 42 C.F.R.
§ 416.41.

Section 416.41 of the regulation requires, in pertinent part, that:

The ASC must have a governing body, that assumes full legal responsibility
for determining, implementing, and monitoring policies governing the
ASC’s total operation and for ensuring that these policies are administered
so as to provide quality health care in a safe environment.

CMS maintains that the April survey findings show that Petitioner’s governing body was
not carrying out its responsibilities and, that upon a revisit to Petitioner’s center in July,
the surveyors found that Petitioner's governing body failed to implement the corrective
action plan that Petitioner submitted in response to findings from the initial April survey.
CMS Prehearing Brief at 4; CMS Ex. 1; CMS Ex. 2.

After the April survey, Petitioner filed a plan of correction indicating that the majority of
the deficiencies noted would be corrected by July 18, 2008 (CMS Ex. 1); however, the
completion date for the corrective action was subsequently changed when Petitioner filed
an amended plan of correction on June 27, 2009, stating that “completion dates for
correction for the Desert Inn Digestive Disease Center will be changed from 7-18-08 to
7-9-08.” Compare CMS Ex. 1 and CMS Ex. 41, at 4. Consequently, to confirm the that
Petitioner corrective action averred, a revisit survey was scheduled. The resurvey
concluded on July 16, 2008. On July 15, 2008, Petitioner’s medical director and owner,
Dr. Haikal, provided a letter to the surveyors, dated July 9, 2008, which stated that its
facility was not ready to be surveyed. CMS Ex. 37, at 23. Moreover, on July 16, 2008,
the last day of the resurvey, Dr. Haikal handed the surveyors another letter stating that the
peer review and quality improvement policies were not completed due to staff changes,
inspections, and vacations. CMS Ex. 37, at 21.

Thus, by its own admission, Petitioner had not implemented its plan of correction and,
consequently, its governing body clearly failed to fulfill its responsibility for
implementing and monitoring policies governing the center’s operation — a violation of
6

the requirements of 42 C.F.R. § 416.41. The letters that Dr. Haikal provided to the
surveyors support CMS’s prima facie case that Petitioner was not in compliance with all
of the conditions of coverage and, for purposes of my review, specifically, the condition
‘or coverage requirement at 42 C.F.R. § 416.41. Although Petitioner consistently argues
that it does have a governing body, Petitioner’s failure to come into compliance accrues
to the governing body, which is responsible to ensure Petitioner is administered in a
manner that it can provide quality health care in a safe environment. Moreover,
Petitioner’s argument is unavailing, since CMS did not cite Petitioner for not having a
governing body. Rather, Petitioner was cited for its governing body’s failure to ensure
that the center met the conditions for coverage and that the plan of correction was fully
implemented by July 9, 2008, the date Petitioner noted. CMS Ex. 41, at 4. The role of
Petitioner’s governing body and management in providing oversight to the center’s
operations to ensure that quality healthcare services were provided in a safe environment
was vital, particularly in ensuring that the center had appropriate systems in place and
sufficient resources, including policies in place and qualified personnel to carry out those
policies. The failure of an ASC’s governing body to assume and act on its responsibilities
as outlined in this condition limits its ability to ensure that its center furnishes adequate
care to its patients.

2. Petitioner was not in compliance with the requirement of Evaluation
of Quality as 42 C.F.R. § 416.43 sets forth.

Section 416.41 of the regulation requires:

The ASC, with the active participation of the medical staff, must conduct
an ongoing, comprehensive self-assessment of the quality of care provided,
including medical necessity of procedures performed and appropriateness
of care, and use findings, when appropriate, in the revision of center
policies and consideration of clinical privileges.

The regulation requires Petitioner to conduct ongoing, comprehensive self-assessments of
the quality of care it provided. Petitioner was found to not be in compliance with this
condition during the April 2008 survey. During the July 16, 2008 resurvey, the surveyors
found that Petitioner’s quality improvement programs remained incomplete, and,
consequently, Petitioner was cited for violating 42 C.F.R. § 416.43.

Petitioner has not disputed that the self-assessments were not completed by July 9, 2008,
as outlined in Petitioner’s June 27, 2008 amended plan of correction. CMS Ex. 41, at 4.
Rather, Petitioner asserts that the allotted time to complete the correction was
unreasonable and that its departing nurse manager wrote the June 27 amended plan of
correction when the center’s medical director, Dr. Haikal, was on vacation. Petitioner
avers that Dr. Haikal had neither knowledge of nor consented to the amended plan of
correction. However, Petitioner does not explain why it believed the 85 days it was
afforded between the April 22 survey and the July 16, 2008 resurvey, and the 44 days
between Petitioner’s first notice of June 2, 2008 and the July 16 resurvey were not
sufficient, or reasonable, for Petitioner to correct its deficiencies. To overcome an
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adequately supported motion for summary judgment, Petitioner may not rely on denials
in its pleadings or brief. Instead, Petitioner must furnish evidence of a dispute concerning
a material fact. Petitioner has not met its burden here. Petitioner does not maintain that it
achieved substantial compliance by July 9, 2008, nor does Petitioner raise before me any
material facts as to the achievement of substantial compliance in issue.

3. Petitioner has not raised any material issues of fact to dispute
CMS’s assertions that Petitioner’s failures had a potential to
result in harm to patients.

CMS maintains that Petitioner was cited for condition-level deficiencies, which include
deficiencies that have the potential to result in harm to patients. CMS Reply at 5, 6,
(citing Nat’! Hosp. for Kids, DAB No. 1600 at 9, 11 (1997)). Petitioner states that CMS
has failed to explain how the deficiencies actually put any patient at risk. P. Opposition
Brief at 10. However, it is well-established that CMS does not have to prove actual
harm; rather, CMS need only show the potential for harm. 42 C.F.R. § 488.24(b); see
Nat'l Hosp., DAB No. 1600, at 9 (holding potential for harm sufficient to find that
provider’s deficiencies are of such character as to limit its “capacity to [furnish] adequate
care” or to “adversely affect the health and safety of patients” under 42 C.F.R. § 488.24).
The failure of an ASC’s governing body to assume and act on its responsibilities as
established in this case limits its ability to ensure that its center furnishes adequate care to
its patients. The failure to address cited deficiencies and correct them to provide
adequate care for patients presents the potential for uncorrected deficiencies that result in
harm to patients. Petitioner has not overcome CMS’s assertion that Petitioner’s failures
had a potential placing its patients at harm. I find that relative to the potential for harm to
patients, Petitioner has not advanced any genuine issues of material fact in dispute. If
the alleged facts as to why Petitioner was not in compliance with the two conditions of
coverage identified above are viewed in a light most favorable to Petitioner, as a matter
of law, Petitioner would not prevail.

Accordingly, CMS has raised the issue of Petitioner’s failure to meet the conditions of
coverage, as 42 C.F.R. §§ 416.41 and 416.43 outlines, during the April survey and at the
July 16, 2008 resurvey. Even weighting the facts in a light most favorable to Petitioner,
Petitioner has not raised any material fact of dispute as to it being in compliance with the
two conditions by the July resurvey. Therefore, I find that, as a matter of law, Petitioner
cannot prevail on these issues. Having tendered an adequately supported motion for
summary judgment, which Petitioner has not been successful in overcoming, I grant
CMS’s motion.

In the interest of judicial economy, I do not address, and therefore make no findings or
conclusions regarding, Petitioner’s alleged violation of 42 C.F.R. §§ 416.44 and 416.48.
The two violations already discussed provide a sufficient basis for the termination
remedy imposed. Beechwood Sanitarium, DAB No. 1824, at 22 (2002); Alexandria
Place, DAB No. 2245, at 27 n.9 (2009); Community Skilled Nursing Ctr., DAB No. 1987,
at 5 (2005) (holding ““ALJs are not required to make findings of fact and conclusions of
law on deficiencies that are not necessary to support the [remedy] imposed”). In
8

reviewing the record in a light most favorable to Petitioner, even if Petitioner proffered
evidentiary and testimonial evidence on facts for the other two conditions it was found
not to be in compliance with, and, even if those facts were proven, this would not make a
substantive difference in the results of this case as Petitioner’s violation of 42 C.F.R. §§
416.41 and 416.43 provide a sufficient basis for CMS to terminate its Medicare
participation agreement.

V. The Termination Remedy That CMS Imposed Against Petitioner Was
Reasonable.

A. CMS is authorized to impose the sanction of termination.

CMS established through the findings of the state surveys on April 22 and July 16, 2008
that Petitioner did not meet all the conditions for coverage, as required of an ASC to
continue its participation in the Medicare program. Petitioner was provided with
opportunity to remedy its non-compliance to avoid termination; however, it was
unsuccessful in doing so. CMS determined that Petitioner’s capacity to furnish adequate
care to its patients was substantially limited by the governing body’s failure to provide
oversight to the center and Petitioner’s failure to ensure its quality improvement and peer
review programs were operating and current. As a result, termination of Petitioner’s
provider agreement was effectuated on September 26, 2008.

Nothing in the regulations provides me authority to review CMS’s exercise of its
discretionary authority. As noted, the applicable regulation makes it clear that the
existence of a violation of even one condition for coverage establishes a rational basis for
CMS to impose the remedy of termination against Petitioner. Petitioner has made no
argument that would lead to a different result. Thus, as a matter of law, CMS is
authorized to impose the sanction of termination.

B. The subsidiary arguments Petitioner raised are unavailing to mitigate the
sanction imposed.

During the course of these proceedings, Petitioner raised several subsidiary arguments,
which I do not weigh but which I must address.

First, Petitioner argues that CMS may not rely on the results from the April survey
findings as a basis to terminate Petitioner’s participation in Medicare and that it has a
statutory right to correct the deficiencies. P. Opposition Brief at 8. Petitioner’s argument
does not raise any issue of material fact. As a matter of law, CMS may, but is not
required to, provide an ASC the opportunity to correct its non-compliance with a
condition of coverage before terminating it. See Community Home Health, DAB No.
2134, at 14 (2007) (citing Excelsior Health Care Srvs., Inc., DAB No. 1529, at 6-7
(1995)). In the case before me, Petitioner was afforded an opportunity to submit an
acceptable plan of correction. The June 2, 2008 notice advised Petitioner that, if upon
resurvey it remained out of compliance with any condition for coverage, that the state
survey agency would recommend to CMS that its Medicare participation agreement be
9

terminated. CMS Ex. 3. Petitioner was granted a reasonable amount of time to correct
the deficiencies. Specifically, 85 days had lapsed between the April 22 survey and the
July 16, 2008 resurvey, and 44 days had lapsed between Petitioner’s first notice of June
2, 2008 and the July 16 resurvey. The purpose of the revisit survey was to confirm
Petitioner’s plan of correction and ensure that the deficiencies were, in fact, corrected.
CMS does not have the same assurance based solely on a representation by a supplier that
it has corrected the identified deficiencies. However, the surveyors found that not only
did Petitioner not implement the plan of correction as submitted, but that additional
deficiencies were noted under the same previously cited conditions. Petitioner does not
dispute these facts.

Second, Petitioner’s lengthy analysis of standard level deficiencies versus condition level
deficiencies is irrelevant. The point is that deficiencies were found in the April survey of
Petitioner’s center, and Petitioner was afforded opportunity to correct the deficiencies.
Petitioner submitted a plan of correction, and CMS returned to resurvey; however, it was
determined that Petitioner continued to remain not in compliance with the condition of
coverage at 42 C.F.R. § 416.41. Petitioner does not maintain that it achieved substantial
compliance, nor does Petitioner place any material facts as to the achievement of
substantial compliance in issue. Therefore, Petitioner cannot prevail as a matter of law.

Third, Petitioner states that it engaged a company, Healthsights, to perform an
independent review of its facility in response to the deficiencies noted during the surveys
at issue before me. Healthsights’ report is dated October 30, 2008, and the review
occurred after the July 16, 2008 survey. The report is irrelevant and does not raise any
genuine material issue of fact as to whether Petitioner was in substantial compliance with
all conditions of coverage during both the April and July 2008 surveys. P. Ex. 4, at 1.

VI. Conclusion

For the foregoing reasons, I grant summary judgment in favor of CMS and against
Petitioner. In doing so, I sustain CMS’s imposition of its termination sanction against
Petitioner.

/s/
Alfonso J. Montafio
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Sherye Epps
d/b/a Sunshine Shoes,
(NPI: 1154518033),

Petitioner
Vv.
Centers for Medicare & Medicaid Services.
Docket No. C-10-521
Decision No. CR2215

Date: August 13, 2010

DECISION

After a full review of the record before me, I uphold the revocation of the Medicare
billing privileges and supplier number of Sherye Epps d/b/a Sunshine Shoes (Petitioner)
by the Centers for Medicare & Medicaid Services (CMS) based on Petitioner’s failure to
comply with two specific standards applicable to suppliers of durable medical equipment,
prosthetics, orthotics, and supplies (DMEPOS).

I. Background

Petitioner enrolled in the Medicare program in August of 2007. CMS Ex. 1. CMS
required Petitioner to present evidence of accreditation by October 1, 2009 and of a valid
surety bond by October 2, 2009, in order to continue to participate in the Medicare
program as a supplier of durable medical equipment. The CMS contractor, Palmetto
GBA National Supplier Clearinghouse (NSC), revoked Petitioner’s Medicare supplier
number by notice dated October 9, 2009. CMS Ex. 6. The letter provided the following
“Reasons for Revocation of Your Supplier Number:”
In accordance with 42 C.F.R. §§ 424.57(c)(22) and 424.57(d), the NSC has
not received proof of accreditation as required by October 1, 2009. In
addition, in accordance with 42 C.F.R. § 424.57(c)(26) and 424.57(d), “All
existing DMEPOS suppliers subject to the bonding requirement shall
submit a copy of the required surety bond to the NSC no later than October
2, 2009.” You failed to submit the surety bond to the NSC as required.

Id. at 1 (emphasis in original).' The letter stated that the revocation was effective 30 days
from the date of postmark and that Petitioner was barred from re-enrolling in the
Medicare program for one year from the effective date of the revocation. CMS Ex. 6,

at 1; see 42 C.F.R. § 405.874(b)(2) (revocation effective 30 days after CMS or the CMS
contractor mails the notice of its determination). The letter informed Petitioner that she
could appeal the decision by requesting reconsideration within 60 days of the date of
postmark, and/or submit a corrective action plan within 30 days. CMS Ex. 6, at 2.

Petitioner requested reconsideration in a letter dated October 27, 2009.
CMS Ex. 10. An unfavorable reconsideration decision was issued on December 30,
2009. CMS Ex. 9.

On March 2, 2010, Petitioner filed a hearing request (HR) pursuant to section 1866(j)(2)
of the Social Security Act (Act), 42 U.S.C. § 1395cc(j)(2) and 42 C.F.R. Part 498 et seq.,
accompanied by several supporting documents. The attached documents included the
December 30, 2009 reconsideration decision; an October 19, 2009 letter from Sharon T.
Nesbitt; a letter requesting reconsideration dated October 27, 2009; a different surety
bond dated November 1, 2009; a power of attorney from Bond Safeguard Insurance
Company dated February 26, 2010; a certificate of accreditation; and a DMEPOS
Accreditation Addendum.’

' The language in quotations is from CMS’s Medicare Program Integrity Manual
(MPIM), chapter 10, § 21.7.

> The regulations governing provider and supplier enrollment appeals require “good
cause” for a petitioner to submit “new documentary evidence . . . for the first time at the
ALJ level.” 42 C.F.R. § 498.56(e). CMS did not challenge Petitioner’s documentary
evidence, and Petitioner did not explain whether these documents had been submitted at
the reconsideration level or whether good cause justified their late submission. It is clear
that some of the documents now submitted are dated after the December 30, 2009
reconsideration decision. However, I do not further explore whether the documentary
evidence is new or its submission justified, since CMS did not object and since the
documents do not demonstrate any dispute over facts material to the outcome of this
appeal. Since Petitioner later submitted these documents in the form of exhibits
identified below, I need not number or refer to the attachments to her hearing request.
This case was originally assigned to Administrative Law Judge (ALJ) Steven T. Kessel.
It was reassigned to me for hearing and decision pursuant to 42 C.F.R. § 498.44, which
permits designation of a member of the Departmental Appeals Board (Board) to hear
appeals taken under part 498. On March 23, 2010, ALJ Kessel issued an
acknowledgment and pre-hearing order (PHO) setting procedures for this case.

CMS submitted a Motion for Summary Disposition (CMS Br.) and its exhibits (CMS
Exs. 1-13) on April 22, 2010. CMS argues that Petitioner did not present evidence of
appropriate accreditation by October 1, 2009, or of compliance with certain surety bond
requirements by October 2, 2009. CMS Br. at 1-2. CMS also argues that Petitioner did
not voluntarily terminate her enrollment prior to the respective requirement dates, which
would have preserved her opportunity to re-enroll in Medicare once she met the
participation requirements without facing a reenrollment bar for one year. CMS Br. at 2.

Petitioner opposed CMS’s motion (P. Br.) and filed exhibits (P. Exs. 1-5). Petitioner’s
exhibits included multiple documents, as follows: marked as P. Ex. | is a letter from
NSC dated November 19, 2007; marked as P. Ex. 2 is CMS Medicare DMEPOS supplier
standards; marked as P. Ex. 3 is a letter and an email from Ms. Sharon T. Nesbitt dated
October 19, 2009; marked as P. Ex. 4 is a CMS 8558S form dated September 15, 2009;
and marked as P. Ex. 5 are a letter to the NSC dated April 19, 2010; sections of a
completed CMS-855S form dated November 1, 2009; a surety bond from Bond
Safeguard Insurance Company dated November 1, 2009; a power of attorney from Bond
Safeguard Insurance Company dated April 16, 2010; a letter dated February 15, 2010
from the Accreditation Commission for Health Care, Inc. approving Sherye Epps for
accreditation for medical supply provider services effective February 12, 2010; a letter
from the Accreditation Commission for Health Care, Inc dated October 19, 2009; an
invoice dated October 26, 2009; and an order receipt dated September 22, 2009.7 Neither
party objected to any exhibit, and I admit all exhibits into the record.

On July 26, 2010, I issued an Order in which I pointed out that Petitioner had failed to
submit any witness list or written direct testimony, that CMS had listed and submitted
testimony for one witness (an NSC employee), and that Petitioner had not sought to
cross-examine that witness. Under the procedures set out in the PHO, an in-person
hearing would only be necessary if one party has presented admissible testimony and the
opposing party sought an opportunity to cross-examine. I concluded that neither
condition existed and that, unless I heard to the contrary by a set date, I would presume

* Inote that Petitioner submitted renumbered exhibits to this office via facsimile
transmission of June 11, 2010, which also indicated that the original exhibits 4 and 5
were “mix up.” However, the fax did not include all of the documents received with
Petitioner’s official submission via UPS to this office. To avoid confusion, all references
to Petitioner’s exhibits will be to the exhibits received with Petitioner’s official
submission as numbered therein.
that Petitioner waived an in-person evidentiary hearing and consented to decision on the
merits on the written record.

In a telephone conversation with my staff attorney, memorialized in an email
communication dated July 29, 2010, Petitioner inquired only whether she was required to
resend her material in notarized form and was told that she was not required to do so.

She did not therefore object to proceeding to decision on the written record. CMS stated
by email on the same date that it had no objection to that procedure.

II. Applicable Law and Regulations

CMS revoked Petitioner’s billing privileges for failure to have complied with
requirements that a supplier be accredited by a CMS-approved accrediting organization
and provide a surety bond. Those requirements are as follows.

Section 1834(a)(16)(B) of Act states that the Secretary of Health and Human Services
(Secretary) “shall not provide for the issuance (or renewal) of a provider number for a
supplier of durable medical equipment for purposes of payment . . . for durable medical
equipment furnished by the supplier unless the supplier provides the Secretary on a
continuing basis . . . with a surety bond in a form specified by the Secretary and in an
amount that is not less than $50,000.” Section 1834(a)(20)(F)(i) states that the Secretary
“shall require suppliers . . . on or after October 1, 2009 . . . to have submitted to the
Secretary evidence of accreditation by an accreditation organization designated . . . as
meeting applicable quality standards... .”

CMS’s regulations implement these requirements among the “supplier standards” at 42
C.F.R. § 424.57(c) that DMEPOS suppliers (42 C.F.R. § 424.57(a)) must meet to
maintain Medicare billing privileges. As relevant here, section 424.57(c) provides:

(c) Application certification standards. The supplier must meet and must
certify in its application for billing privileges that it meets and will continue
to meet the following standards.

* OR Ok Ok

(22) All suppliers of DMEPOS and other items and services must be
accredited by a CMS-approved accreditation organization in order to
receive and retain a supplier billing number. The accreditation must
indicate the specific products and services, for which the supplier is
accredited in order for the supplier to receive payment for those specific
products and services. [supplier standard 22]

* OR Ok Ok
(26) [The supplier must] meet the surety bond requirements specified in
paragraph (d) of this section. [supplier standard 26]

The surety bond requirements at 42 C.F.R. § 424.57(d) referenced in supplier standard 26
state, as relevant here, that “beginning October 2, 2009, each Medicare-enrolled
DMEPOS supplier must meet the requirements of paragraph (d),” which include “a bond
that is continuous,” which “must meet the minimum requirements of liability coverage
($50,000)” and which provides that “[t]he surety is liable for unpaid claims, CMPs [civil
money penalties], or assessments that occur during the term of the bond.” 42 C.F.R.

§ 424.57(d)(1)(ii), (4), (5). “The term of the initial surety bond must be effective on the
date that the application is submitted to the NSC.” 42 C.F.R. § 424.57(d)(2). CMS may
at any time require a DMEPOS supplier to show compliance with the surety bond
requirement. 42 C.F.R. § 424.57(d)(12).

The regulations provide that failure to submit a surety bond as required is grounds for
revocation of a supplier’s billing privileges, specifying that --

CMS requires a supplier to submit a bond that on its face reflects the
requirements of this section. CMS revokes or denies a DMEPOS supplier’s
billing privileges based upon the submission of a bond that does not reflect
the requirements of paragraph (d) of this section [42 C.F.R. § 424.57].

42 CFR. § 424.57(d)(4)(ii)(B); see also 42 C.F.R. § 424.57(d)(11) (“CMS revokes the
DMEPOS supplier’s billing privileges if an enrolled supplier fails to obtain, file timely,
or maintain a surety bond as specified in this subpart and CMS instructions.”). The
regulations also provide more generally that CMS “will revoke a supplier’s billing
privileges if it is found not to meet” the supplier standards or other requirements in
section 424.57(c). 42 C.F.R. § 424.57(e) (formerly § 424.57(d)).4

A supplier that has had its billing privileges revoked is “barred from participating in the
Medicare program from the effective date of the revocation until the end of the re-
enrollment bar. The re-enrollment bar is a minimum of | year, but not greater than 3
years depending on the severity of the basis for revocation.” 42 C.F.R. § 424.535(c).

* Paragraph (e) of section 424.57 was previously designated paragraph (d) and was
redesignated by the rulemaking that imposed the surety bond requirements at paragraph
(d); however, the redesignations have not yet been incorporated in the Code of Federal
Regulations. See 42 C.F.R. Ch. IV § 424.57, Editorial Note (Oct. 1, 2009). References
are to the regulation as redesignated.
IIL. Issues, Findings of Fact, Conclusions of Law
A. Issues
The issues in this case are as follows:

1. whether CMS is entitled to summary disposition on the ground that the
undisputed facts demonstrate that the revocation of Petitioner’s Medicare billing
privileges was legally authorized;

2. whether CMS is authorized to revoke Petitioner’s Medicare billing privileges
for the stated reasons; and

3. whether Petitioner successfully submitted a timely voluntary termination of
billing privileges, making revocation and the application of a re-enrollment bar
inappropriate.

B. Applicable Standards

CMS has moved for summary disposition in the nature of summary judgment. The
Board stated the standard for summary judgment as follows:

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

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

Senior Rehab. & Skilled Nursing Ctr., DAB No. 2300, at 3 (2010) (citations omitted).
The role of an ALJ in deciding a summary judgment motion differs from the ALJ’s role
in resolving a case after a hearing. The ALJ should not assess credibility or evaluate the
weight of conflicting evidence. Holy Cross Vill. at Notre Dame, Inc., DAB No. 2291, at
5 (2009).
In deciding a case on the written record, by contrast, the factfinder must evaluate
conflicting assertions and determine the appropriate weight to be assigned to the party’s
evidence in the same manner as after an in-person hearing. The facts so found must then
be considered in light of the applicable law to determine the legal conclusion.

C. Analysis

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

L. CMS is not entitled to summary judgment.

The essence of CMS’s argument for summary judgment is that Petitioner does not deny
that she failed to comply with the surety bond and accreditation requirements. CMS Br.
at 2; CMS Ex. 6. CMS recognizes that Petitioner alleges that she sent in a voluntary
termination form, but points out that she “did not certify her alleged mailing” or
otherwise document it, and asserts that NSC had not received it as of October 3, 2009,°
whereupon the revocation notice was issued. /d., citing CMS Ex. 5. Furthermore, CMS
argues that the supporting letter from a postal worker proffered by Petitioner is
“unauthenticated” and only states that she mailed “some important documents . . .
sometime in September.” Jd. CMS concludes that Petitioner failed to successfully
submit a voluntary termination form and thus forfeited the opportunity to re-enroll in the
Medicare program without application of a re-enrollment bar of one year imposed in the
revocation notice. CMS Br. at 7.

CMS’s arguments do not address Petitioner’s position that, if a voluntary termination
were perfected during the requisite time, the revocation would not go into effect and no
re-enrollment bar would apply. CMS’s arguments, instead, amount to contentions that
Petitioner has failed to prove adequately the factual premise of her position, i.e., that she
timely and correctly mailed a voluntary termination form to NSC. These contentions go
to the weight I should give to Petitioner’s assertions and supporting letter and to the
inferences I should draw from them. In the summary judgment context, however, I am to
determine only whether a dispute of material fact exists as to whether Petitioner properly
acted to voluntarily terminate her participation in Medicare. I am not to consider whether
her evidence on that point is persuasive. A reasonable finder-of-fact, taking her
assertions as true and construing all evidence in her favor, could infer that she mailed this
important document (the voluntary termination form) in September and that NSC should
therefore have received it prior to the deadline.

5 October 3, 2009 is the relevant date because the last date on which Petitioner could
have achieved compliance with the surety bond and accreditation requirements, or
avoided their application by voluntary termination, was October 2, 2009. CMS Ex. 6,
at 1.
Given that Petitioner has thus raised a dispute of material fact, I cannot resolve the matter
in CMS’s favor on summary judgment. I turn next to what facts I find and conclusions I
draw in reviewing the entire written record of this case.

2. CMS was authorized to revoke Petitioner’s billing privileges based on
undisputed evidence that Petitioner was not accredited as required by 42
C.F.R. § 424.57(c)(22) or bonded as required by 42 C.F.R.

§ 424.57(c)(26) and (d).

CMS contends that on October 8, 2009, the NSC received a form from Petitioner
purporting to show compliance with the accreditation and surety bond requirements.
CMS Br. at 3; CMS Ex. 7. According to CMS, however, the information was received
after the deadline and did not show timely compliance with the respective requirements.
CMS Br. at 3. Ina letter dated October 23, 2009, NSC informed Petitioner that her
change of information form received on October 8, 2009 could not be processed. CMS
Ex. 8. CMS further states that, in any case, the information Petitioner provided did not
show compliance because the accreditation could not be verified by the accrediting
organization listed and Petitioner had not provided a copy of the surety bond. CMS Br.
at 3; CMS Ex. 5.

CMS asserts that NSC did not receive any subsequent evidence that would show
compliance with the accreditation and surety bond requirement, so Petitioner’s Medicare
billing privileges were revoked effective November 8, 2009. CMS Br. at 3.

On reconsideration, the NSC hearing officer determined that Petitioner’s billing
privileges were properly revoked due to Petitioner’s failure to comply with both supplier
standard 22 and supplier standard 26. CMS Ex. 9. The hearing officer concluded that
Petitioner “has not provided evidence to show they have fully complied with the standard
for which they were non-compliant... .” CMS Ex. 9, at 2. The decision also relied on
the following language from CMS’s MPIM:

In reviewing an initial enrollment decision or a revocation, a Medicare
contractor... should limit the scope of its review to the contractor’s reason
for imposing a denial or revocation at the time it issued the action and
whether the contractor made the correct decision (i.e., denial/revocation). If
a provider or supplier provides evidence that demonstrates or proves that
they met or maintained compliance after the date of denial or revocation,
the contractor shall exclude this information from the scope of its review.

Id., quoting MPIM, ch. 10, § 19.A (emphasis added).
As noted, one of the bases relied on in the revocation notice and on reconsideration was
that Petitioner failed to meet the accreditation requirement on time. Petitioner has been
less than clear in presenting her position on this question, but it appears that she alleges
that she became accredited after the revocation. Petitioner states in a letter dated
October 27, 2009 that she was “in the process of my accreatication [sic] . . . spending
over 4,100.00 trying to become certified... .” CMS Ex. 10. Petitioner also has
submitted various documents to prove that she subsequently became accredited. See,
e.g., CMS Ex. 11. However, Petitioner presents no argument or documentary evidence
indicating that she obtained appropriate accreditation by the statutory deadline or as of
the date of revocation. Indeed, she asserts that a site visit required for accreditation did
not take place until February 2010. P. Br. at 1.

A showing of compliance subsequent to the revocation is not a ground to reverse the
revocation. The regulations require that a supplier “must meet and must certify in its
application for billing privileges that it meets and will continue to meet” the supplier
standards. 42 C.F.R. § 424.57(c). The preamble to the regulations implementing the
reconsideration and appeals process for suppliers whose billing privileges are revoked
explains:

When a Medicare contractor makes an adverse enrollment determination
(for example, enrollment denial or revocation of billing privileges) . . .
appeal rights are limited to provider or supplier eligibility at the time the
Medicare contractor made the adverse determination. .. . Accordingly, a
provider or supplier is required to furnish the evidence that demonstrates
that the Medicare contractor made an error at the time an adverse
determination was made, not that the provider or supplier is now in
compliance.

73 Fed. Reg. 36,448, 36,452 (June 27, 2008). This rulemaking also amended the
enrollment regulations to provide that “suppliers have the opportunity to submit evidence
related to the enrollment action” and “must, at the time of their request [for
reconsideration], submit all evidence that they want to be considered.” 42 C.F.R.

§ 405.874(c)(3); 18661CPayday.com, L.L.C., DAB No. 2289, at 8-9 (2009). The MPIM
provision that the hearing officer cited, stating that “evidence that demonstrates or proves
that [the supplier or provider] met or maintained compliance after the date of denial or
revocation” must be excluded from the hearing officer’s review, is consistent with the
preamble language. CMS Ex. 9, at 2; MPIM, ch. 10, § 19.A.

Thus, Petitioner’s allegation that she became accredited after the fact shows no error in
the revocation on November 8, 2009, or in the reconsideration decision on December 30,
2009. The certificate of accreditation that Petitioner submitted on appeal, which does not
show accreditation at the time of revocation, is not material. Given Petitioner’s
concession that she was not accredited at the time of revocation and the absence of any
10

contrary evidence, CMS had a basis to revoke for failure to comply with supplier
standard 22.

As far as her compliance with supplier standard 26, the surety bond requirement,
Petitioner similarly takes the position that she is presently in compliance. See HR, P. Br.
In support of that assertion, Petitioner submitted a copy of a surety bond. P. Ex. 5. CMS
contends that Petitioner did not submit a surety bond by October 2, 2009 and that
Petitioner’s failure to obtain a compliant surety bond by that deadline justifies the
revocation of Petitioner’s billing privileges pursuant to 42 C.F.R. § 424.57(d)(11)(i) and
(e). CMS Br. at 9. CMS thus argues that the hearing officer correctly concluded that
Petitioner failed to comply with supplier standard 26. Jd.

Even the latest version of the surety bond submitted to me on appeal fails to demonstrate
Petitioner’s compliance with supplier standard 26. The bond states on its face that it is
effective November 1, 2009. P. Ex. 5. That date is beyond the October 2, 2009 date
upon which each Medicare-enrolled DMEPOS supplier was required to submit a
compliant bond. 42 C.F.R. § 424.57(d)(1)(ii); see 73 Fed. Reg. at 36,452; MPIM, ch. 10,
§ 19.A. The undisputed facts thus demonstrate that CMS had a basis to revoke because
Petitioner was not in compliance with supplier standard 26.

3. Petitioner did not timely submit a voluntary termination form.

CMS advised suppliers, however, that they had the option of voluntarily terminating her
enrollment in the Medicare program before the new requirements took effect. CMS

Ex. 2, at 2-3 (CMS information letter). The information made clear that, if Petitioner
voluntarily terminated her enrollment prior to October 1, 2009, Petitioner would preserve
her right to re-enroll in Medicare once she met the participation requirements. [d. CMS
also made clear that, if she did not obtain appropriate accreditation and meet certain
surety bond requirements and failed to voluntarily terminate her enrollment, her
Medicare billing privileges would be revoked. Id.

The hearing officer considered Petitioner’s argument that she sent a voluntary
termination form to NSC in September of 2009 and concluded that —

it is not possible to determine from the documentation when the
information was mailed. There is no verifiable mailing documentation to
establish when the said information was received by the NSC, therefore this
does not express compliance with the procedure regarding voluntary
termination of their supplier number prior to the allotted timeframe.
Consequently, the NSC appropriately revoked the billing privileges of
Sherye Epps dba: Sunshine Shoes.

CMS Ex. 9, at 2.
11

Petitioner alleges before me that she mailed a voluntary termination form with a proposed
termination date of September 15, 2009. HR; CMS Ex. 3. Indeed, in her hearing request,
Petitioner asserts that her “objection was never to indicate I was accredited and surety
bond by Oct. 1, 2009.” P. Br. at 1. Petitioner contends instead that she sent in the form
to terminate her privileges voluntarily sometime in the “third week of Sept 2009.” CMS
Ex. 10. In support of her contention that she mailed the voluntary termination form
timely, Petitioner submits a letter from a Sharon T. Nesbitt, who appears to work for the
United States Postal Service, stating that Petitioner “mailed separately a manilla 8 x 10
envelope that contained some important documents.” CMS Ex. 4. Ms. Nesbitt further
wrote that —

Ms. Epps came back to the PO to inquire about a scheduled delivery time
of her mail because she called your company for the status of her mailings
and to her surprise you had not received them. Those documents were
mailed from our office sometime in September.

Id. CMS submits a statement from an NSC employee asserting that NSC did not receive
a voluntary termination form. CMS Ex. 5 (Declaration of Tanya Mattingly). The NSC
hearing officer considered Petitioner’s argument that she sent a voluntary termination
form to NSC in September of 2009 and concluded that there was not verifiable mailing
documentation that could establish when NSC received the voluntary termination form
allegedly mailed in September of 2009. CMS Ex. 9, at 2. Thus, the hearing officer
determined that Petitioner did not comply with the procedure regarding voluntary
termination of her supplier number within the allotted timeframe. Jd.

Apart from her own assertions in briefing, Petitioner’s only evidence to prove that NSC
received a voluntary termination form in September of 2009 is the letter from the postal
employee. As I noted, Petitioner’s representations are not provided in a form subject to
perjury and hence are less reliable than testimony. They also lack specificity about the
date and circumstances of her preparation and mailing of a voluntary termination form.
The postal employee’s letter is, as CMS noted, unauthenticated. The claims in the letter
are extremely vague. The signatory does not purport to know the contents of the 8 x 11
manilla envelope or even to what entity the envelope was addressed. Since NSC did
receive a mailing from Petitioner on October 8, 2009, which did not contain a voluntary
termination form, a reasonable inference is that the postal employee remembers
Petitioner’s mailing of the purported documentation of accreditation and bonding which
certainly qualified as “important documents.” This documentation did not, as I have
explained above, succeed in demonstrating compliance.

In addition, in her brief, Petitioner indicates that she called and spoke to someone at NCS
in October of 2009 who stated “that they haven’t receive my voluntarily terminate but
they are back up 3 week of mail.” P. Br. at 2. In addition, in her October 27, 2009
reconsideration request, Petitioner states that she “sent my forms but didn’t certified it
12

because it was the third week of Sept 2009.” CMS Ex. 10. Petitioner also states that she
“went to the Post Office where I mail off my envelope, checking too see if some how it
was miss place after speaking to a NSC representative.” Jd. These statements by
Petitioner amount to a recognition that NSC may not have received Petitioner’s voluntary
termination form prior to October 1, 2009 and that Petitioner could have taken measures
within her own control to establish the date of receipt of her voluntary termination form
(such as using certified mailing) and simply failed to do so.

Thus, I am not persuaded that Petitioner sent, and NSC received, a timely voluntary
termination form.

IV. Conclusion

For the reasons explained above, I conclude that Petitioner was not in compliance with
applicable requirements and did not timely terminate her enrollment on a voluntary basis.
I therefore uphold the revocation of Petitioner’s Medicare billing privileges and supplier
number and the application of the one-year re-enrollment bar.

/s/
Leslie A. Sussan
Board Member