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

George E. Anderson, M.D.
(NPI: 1851325708/PTAN: 00X435F01)

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-16-150
Decision No. CR4631

Date: June 14, 2016
DECISION

The Medicare enrollment and billing privileges of Petitioner, George E. Anderson, M.D.,
are revoked pursuant to 42 C.F.R. § 424.535(a)(3) and (9),! effective June 4, 2012.

I. Background

Palmetto GBA (Palmetto), a Medicare Administrative Contractor for the Centers for
Medicare & Medicaid Services (CMS), notified Petitioner by letter dated August 7, 2015,
that his Medicare enrollment and billing privileges were revoked effective January 30,
2013. Palmetto stated that revocation was pursuant to 42 C.F.R. § 424.535(a)(3), based
on Petitioner’s January 30, 2013 federal felony conviction for filing false income tax
returns. Palmetto also cited 42 C.F.R. § 424.535(a)(9) as a basis for revocation based on
Petitioner’s failure to report his conviction within 30 days of that reportable event.
Palmetto advised Petitioner that he was subject to a three-year bar to re-enrollment

' References are to the 2014 revision of the Code of Federal Regulations (C.F.R.), the
revision in effect at the time of the initial determination in this case, unless otherwise
stated.
beginning 30 days from the postmark on Palmetto’s notice letter. CMS Exhibit (Ex.) 1 at
7-8.

On August 17, 2015, Petitioner requested reconsideration of the initial determination to
revoke his Medicare enrollment and billing privileges. CMS Ex. | at 4-5. On October
23, 2015, Palmetto upheld the revocation on reconsideration, also citing 42 C.F.R.

§ 424.535(a)(3) and (9) as the bases for revoking Petitioner’s Medicare enrollment and
billing privileges. CMS Ex. | at 1-2.

On December 3, 2015, Petitioner timely filed a request for hearing before an
administrative law judge (ALJ). On December 17, 2015, the case was assigned to me for
hearing and decision, and an Acknowledgement and Prehearing Order (Prehearing Order)
was issued at my direction.

On January 19, 2016, CMS filed a combined prehearing brief and motion for summary
judgment (CMS Br.) with CMS Exs. | through 5. On February 11, 2016, Petitioner filed
a combined prehearing brief and opposition to CMS’s motion for summary judgment (P.
Br.), with Petitioner’s exhibits (P. Exs.) 1 through 11. CMS failed to comply with the
Prehearing Order, para. II.D.3, which required that CMS file a reply brief or a waiver of a

reply.

No objection has been made to my consideration of CMS Exs. | through 5 or P. Exs. 2
through 4 and 7 through 11, and they are admitted as evidence. On March 1, 2016, CMS
objected to my consideration of P. Exs. 1,5, and 6. Petitioner responded to the objection
on March 7, 2016. P. Ex. | is a certificate declaring that Petitioner met the requirements
for a specialty in anesthesiology for the period September 27, 2016, to December 31,
2020, and a license to practice medicine and surgery issued by the Virginia Department
of Health Professions for the period May 1, 1986, through March 31, 2016. P. Ex.5 isa
client agreement effective May 1, 2007, which reflects the terms of the agreement
pursuant to which MedNet provided billing and collection services for Petitioner. P. Ex.
6 includes letters from multiple individuals attesting to Petitioner’s skills and the
community need for his services as an anesthesiologist. CMS cites 42 C.F.R.

§ 498 .56(e)(1) and the Prehearing Order, para. II.D.2, and objects to my consideration of
P. Exs. 1,5, and 6 on grounds that they were not submitted to the hearing officer on
reconsideration and Petitioner has not stated good cause for submitting the documents for
the first time on ALJ review. CMS Objection to Petitioner’s Exhibits. Petitioner argues
that P. Ex. 1 did not exist at the time of his reconsideration request and, though he
received the documents before the reconsidered determination issued, he was not told he
could submit additional evidence. Petitioner argues that he did not submit P. Ex. 5 as he
had no attorney at the time and did not understand that it supported his argument.
Petitioner argues that there was no need for P. Ex. 6 prior to the reconsidered
determination. Petitioner cites his prehearing brief and opposition to the motion for
summary judgment as showing good cause for the admission and my consideration of P.
Exs. 1, 5, and 6. Petitioner’s Motion to Overrule CMS’ Objection to Petitioner’s
Exhibits. I conclude that P. Exs. 1 and 6 are not relevant to the issue before me and not
admissible as evidence because they do not have a tendency to make a fact at issue before
me more or less probable. Fed. R. Evid. 401. I may only admit evidence that is relevant
and material. 42 C.F.R. § 498.60(b)(1). There is no dispute that Petitioner has the
qualification reflected by P. Ex. 1 and the facts reflected by P. Ex. 1 are not at issue and
do not require resolution in this proceeding. The letters in P. Ex. 6 are offered by
Petitioner in support of his argument that equity requires that I resolve this case in his
favor. P. Br. at 9-10. However, as discussed later, I have no equitable authority.
Therefore, the letters in P. Ex. 6 are not relevant to any issue that I may resolve. P. Ex. 5,
the agreement between Petitioner and his billing and collection agent is relevant to
Petitioner’s defense that he relied upon his agent to notify CMS of his conviction. P. Br.
7-8. Petitioner’s assertion that he did not have an attorney and he was ignorant of the
need to present the document to the hearing officer on reconsideration does not constitute
good cause for his failure to do so. Indeed, in his request for reconsideration Petitioner
specifically blames his billing company, but he failed to submit the document that he now
submits which establishes the terms of the relationship. More significant is the fact that
CMS does not dispute that Petitioner had a billing company, the terms of Petitioner’s
arrangement with his billing company, or that the billing company failed to provide
notice to CMS within 30 days of Petitioner’s conviction. Therefore, P. Ex. 5 is not
relevant to resolving issues in dispute before me. As discussed hereafter, I conclude that
as a matter of law Petitioner is responsible to maintain compliance with enrollment
requirements and for the failings of his agent to maintain compliance, without regard to
the terms of the contract between the two. Accordingly, I conclude that P. Exs. 1,5, and
6 will not be admitted and considered as evidence.

II. Discussion
A. Applicable Law

Section 1831 of the Social Security Act (the Act) (42 U.S.C. § 1395j) establishes the
supplementary medical insurance benefits program for the aged and disabled known as
Medicare Part B. Administration of the Part B program is through contractors, such as
Palmetto. Act § 1842(a) (42 U.S.C. § 1395u(a)). Payment under the program for
services rendered to Medicare-eligible beneficiaries may only be made to eligible
providers of services and suppliers.” Act §§ 1835(a) (42 U.S.C. § 1395n(a)), 1842(h)(1)
(42 U.S.C. § 1395(u)(h)(1)). Petitioner, a physician, is a supplier.

> A “supplier” furnishes services under Medicare and includes physicians or other
practitioners and facilities that are not included within the definition of the phrase
“provider of services.” Act § 1861(d) (42 U.S.C. § 1395x(d)). A “provider of services,”

(Continued next page.)
The Act requires the Secretary of Health and Human Services (Secretary) to issue
regulations that establish a process for the enrollment in Medicare of providers and
suppliers, including the right to a hearing and judicial review of certain enrollment
determinations, such as revocation of enrollment and billing privileges. Act § 1866(j)
(42 USC. § 1395cc(j)). Pursuant to 42 C.F.R. § 424.505, a supplier such as Petitioner
must be enrolled in the Medicare program and be issued a billing number to have billing
privileges and to be eligible to receive payment for services rendered to a Medicare-
eligible beneficiary.

The Secretary has delegated the authority to revoke enrollment and billing privileges to
CMS. 42 C.F.R. § 424.535. CMS or its Medicare contractor may revoke an enrolled
supplier’s Medicare enrollment and billing privileges and supplier agreement for any of
the reasons listed in 42 C.F.R. § 424.535. The effective date of the revocation is
controlled by 42 C.F.R. § 424.535(g).

A supplier whose enrollment and billing privileges have been revoked may request
reconsideration and review as provided by 42 C.F R. pt. 498. 42 C.F.R. § 424.545(a). A
supplier submits a written request for reconsideration to CMS or its contractor. 42 C.F.R.
§ 498.22(a). CMS or its contractor must give notice of its reconsidered determination to
the supplier, giving the reasons for its determination, specifying the conditions or
requirements the supplier failed to meet, and advising of the right to an ALJ hearing.

42 CFR. § 498.25. If the decision on reconsideration is unfavorable to the supplier, the
supplier has the right to request a hearing by an ALJ and further review by the
Departmental Appeals Board (the Board). Act § 1866(j)(8) (42 U.S.C. § 1395cc(j)(8));
42 CFR. §§ 424.545, 498.3(b)(17), 498.5. A hearing on the record, also known as an
oral hearing, is required under the Act. Crestview Parke Care Ctr. v. Thompson, 373
F.3d 743, 748-51 (6th Cir. 2004). The supplier bears the burden to demonstrate that it
meets enrollment requirements with documents and records. 42 C.F.R. § 424.545(c).

B. Issues
Whether summary judgment is appropriate; and

(Continued from preceding page.)

commonly shortened to “provider,” includes hospitals, critical access hospitals, skilled
nursing facilities, comprehensive outpatient rehabilitation facilities, home health
agencies, hospice programs, and a fund as described in sections 1814(g) (42 U.S.C.

§ 1395f(g)) and 1835(e) (42 U.S.C. § 1395n(e)) of the Act. Act § 1861(u) (42 U.S.C.

§ 1395x(u)). The distinction between providers and suppliers is important because they
are treated differently under the Act for some purposes.
Whether there was a basis for the revocation of Petitioner’s billing
privileges and enrollment in Medicare.

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

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

1. Summary judgment is appropriate.

CMS requested summary judgment. A supplier whose enrollment has been revoked has a
right to a hearing and judicial review. A hearing on the record is required under the Act.
Act §§ 205(b), 1866 (h)(1), Gj) (42 U.S.C. § 1395cc(h)(1), (j)); 42 C.F.R. §§ 498.3(b)(1),
(5), (6), (8), (15), (17), 498.5; Crestview, 373 F.3d at 748-51. A party may waive
appearance at an oral hearing but must do so affirmatively in writing. 42 C.F.R.

§ 498.66. In this case, Petitioner has not waived the right to oral hearing or otherwise
consented to a decision based only upon the documentary evidence or pleadings.
Accordingly, disposition on the written record alone is not permissible, unless CMS’s
motion for summary judgment has merit.

Summary judgment is not automatic upon request but is limited to certain specific
conditions. The Secretary’s regulations at 42 C.F.R. pt. 498 that establish the procedure
to be followed in adjudicating Petitioner’s case do not establish a summary judgment
procedure or recognize such a procedure. However, the Board has long accepted that
summary judgment is an acceptable procedural device in cases adjudicated pursuant to
42 CFR. pt. 498. See, e.g., Ill. Knights Templar Home, DAB No. 2274 at 3-4 (2009);
Garden City Med. Clinic, DAB No. 1763 (2001); Everett Rehab. & Med. Ctr., DAB No.
1628 at 3 (1997). The Board also has recognized that the Federal Rules of Civil
Procedure do not apply in administrative adjudications such as this, but the Board has
accepted that Fed. R. Civ. Pro. 56 and related cases provide useful guidance for
determining whether summary judgment is appropriate. Furthermore, a summary
judgment procedure was adopted as a matter of judicial economy within my authority to
regulate the course of proceedings and made available to the parties in the litigation of
this case by my Prehearing Order, para. II.D and G. The parties were given notice by my
Prehearing Order that summary judgment is an available procedural device and that the
law as it has developed related to Fed. R. Civ. Pro. 56 will be applied.

Summary judgment is appropriate when there is no genuine dispute as to any material
fact for adjudication and/or the moving party is entitled to judgment as a matter of 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. The party requesting summary judgment
bears the burden of showing that there are no genuine issues of material fact for trial
and/or that it is entitled to judgment as a matter of law. Generally, the non-movant may
not defeat an adequately supported summary judgment motion by relying upon the
denials in its pleadings or briefs but must furnish evidence of a dispute concerning a
material fact, i.e., a fact that would affect the outcome of the case if proven. Mission
Hosp. Reg’| Med. Ctr., DAB No. 2459 at 4 (2012) (and cases cited therein); Experts Are
Us, Inc., DAB No. 2452 at 4 (2012) (and cases cited therein); Senior Rehab. & Skilled
Nursing Ctr., DAB No. 2300 at 3 (2010) (and cases cited therein); see also Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

The standard for deciding a case on summary judgment and an ALJ’s decision-making in
deciding a summary judgment motion differ from that used in resolving a case after a
hearing. On summary judgment, the ALJ does not make credibility determinations,
weigh the evidence, or decide which inferences to draw from the evidence, as would be
done when finding facts after a hearing on the record. Rather, on summary judgment, the
ALJ construes the evidence in a light most favorable to the non-movant and avoids
deciding which version of the facts is more likely true. Holy Cross Vill. at Notre Dame,
Inc., DAB No. 2291 at 5 (2009). The Board also has recognized that on summary
judgment it is appropriate for the ALJ to consider whether a rational trier of fact could
find that the party’s evidence would be sufficient to meet that party’s evidentiary burden.
Dumas Nursing & Rehab., L.P., DAB No. 2347 at 5 (2010). The Secretary has not
provided in 42 C.F R. pt. 498 for the allocation of the burden of persuasion or the
quantum of evidence required to satisfy the burden. However, the Board has provided
some persuasive analysis regarding the allocation of the burden of persuasion in cases
subject to 42 C.F.R. pt. 498. Batavia Nursing & Convalescent Ctr., DAB No. 1904
(2004), aff'd, Batavia Nursing & Convalescent Ctr. v. Thompson, 129 Fed. App’x 181
(6th Cir. 2005).

Viewing the evidence before me in a light most favorable to Petitioner and drawing all
inferences in Petitioner’s favor, I conclude that there are no genuine disputes as to any
material facts pertinent to revocation under 42 C.F.R. § 424.535(a)(3) or (9) that requires
a hearing in this case. The issues in this case raised by Petitioner related to revocation
under 42 C.F.R. § 424.535(a)(3) and (9) must be resolved against him as a matter of law.
The undisputed evidence shows that there are two bases for revocation of Petitioner’s
Medicare enrollment and billing privileges. Accordingly, summary judgment is
appropriate.

2. The issue for hearing and decision is whether there is a basis for
revocation of Petitioner’s Medicare enrollment and billing privileges
and, if there is a basis for revocation, my jurisdiction does not extend
to review of whether CMS properly exercised its discretion to revoke
Petitioner’s Medicare enrollment and billing privileges.
3. Petitioner was convicted of felony offenses.

4. The Secretary has determined and provided by regulation that
financial crimes such as income tax evasion or similar crimes are
detrimental to the Medicare program or its beneficiaries. 42 C.F.R.
§ 424.535(a)(3)(i)(B).

5. Petitioner was convicted of failing to file income tax returns, which
is a financial crime within the meaning of 42 CFR.
§ 424.535(a)(3)()(B).

6. There is a basis for revocation of Petitioner’s enrollment in
Medicare and his billing privileges pursuant to 42 C.F. R.
§ 424.535(a)(3)()(B).

7. There is no dispute that neither Petitioner nor anyone on his behalf
notified CMS, or its contractor Palmetto, of Petitioner’s conviction
within 30 days of the date of conviction as required by 42 C.F R.

§ 424.516(d)(1)(ii).

8. There is a basis for revocation of Petitioner’s enrollment in
Medicare and his billing privileges pursuant to 42 C.F. R.
§ 424.535(a)(9) for violation of 42 C.F.R. § 424.516(d)(1)(ii).

9. Petitioner’s Medicare enrollment and billing privileges are revoked
effective June 4, 2012. 42 C.F.R. § 424.535(g).

10. Ihave no authority to review CMS’s determination to impose a
three-year bar on Petitioner’s Medicare re-enrollment.

11. Pursuant to 42 C.F.R. § 424.535(c), the three-year bar to
reenrollment runs from the effective date of revocation, but the
Secretary and CMS have discretion not to enroll a supplier convicted
of a felony determined detrimental to the best interests of Medicare or
its beneficiaries for up to ten years from the date of conviction. Act

§ 1866(b)(2)(42 U.S.C. § 1395cc(b)(2)); 42 C.F.R. § 424.530(a)(3).

a. Facts

The following material facts are undisputed.
In May 2007, Petitioner was enrolled in Medicare and reassigned his right to receive
payments from Medicare for services delivered to Medicare-eligible beneficiaries to
Farmville Anesthesia Associates, P.C. CMS Ex. 5 at 2,95; P. Br. at2n.1.

On June 4, 2012, a magistrate judge in the U.S. District Court for the Eastern District of
Virginia found Petitioner guilty pursuant to his guilty pleas of two felony counts of filing
false income tax returns - one charge related to corporate tax returns and the other related
to personal income tax returns. A federal district judge accepted the findings and
recommendations of the magistrate and entered findings of guilty on both counts, also on
June 4, 2012. CMS Ex. 3 at 34-38. On December 5, 2012, Petitioner appeared before a
federal district judge for sentencing. On December 6, 2012, judgment was entered and
Petitioner was sentenced to 33 months incarceration, one-year supervised release, a
special assessment, and restitution of $471,919. P. Br. at 2; CMS Ex. | at 4; CMS Ex. 3
at 4-6, 39-49.

Neither Petitioner nor anyone on his behalf reported his conviction to CMS or its
contractor within 30 days of either June 4, 2012, or December 6, 2012. CMS Ex. 5; P.
Br. at 1-4.

b. Analysis

Petitioner does not dispute that he was convicted in 2012 of two federal felony counts of
filing false income tax returns. Petitioner does not dispute that neither he nor anyone on
his behalf reported his conviction to CMS or its contractor within 30 days of the date of
the conviction. Petitioner does not dispute that the offenses of which he was convicted —
filing false tax returns — are financial crimes akin to income tax evasion, which CMS on
behalf of the Secretary has determined to be detrimental to the best interests of Medicare
and its beneficiaries within the meaning of 42 C.F.R. § 424.535(a)(3)(i)(B).

Palmetto revoked Petitioner’s Medicare enrollment and billing privileges under 42 C.F.R.
§ 424.535(a)(3) and (9). Sections 424.535(a)(3) and (9) provide in pertinent part:

(a) Reasons for revocation. CMS may revoke a currently
enrolled provider or supplier’s Medicare billing privileges
and any corresponding provider agreement or supplier
agreement for the following reasons:

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

(i) Offenses include —

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

(9) Failure to report. The provider or supplier did not
comply with the reporting requirements specified in
§ 424.516(d)(1)(ii) and (iii) of this subpart.

42 CFR. § 424.535(a)(3)(i)(B) and (9). The Act specifically grants the Secretary
authority not to enroll or to revoke the enrollment of a provider or supplier convicted
under federal or state law of a felony offense that the Secretary determines is detrimental
to the program or its beneficiaries. Act § 1866(b)(2)(D). Section 424.516(d)(1) of

42 C.F R. requires that a physician report any adverse legal action within 30 days of the
event. The elements for revocation under both 42 C.F.R. § 424.535(a)(3)(i)(B) and (9)
are satisfied by the undisputed facts in this case.

Accordingly, I conclude that there is a basis for revocation of Petitioner’s Medicare
enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(3)(i)(B). I further
conclude that the failure to report the conviction within 30 days as required by 42 C.F.R.
§ 424.516(d)(1)(ii) is an independent basis for revocation of Petitioner’s enrollment
pursuant to 42 C.F.R. § 424.535(a)(9).

The notice of the initial determination dated August 7, 2015, stated that the effective date
of revocation of Petitioner’s enrollment and billing privileges was January 30, 2013. The
initial determination also incorrectly stated that Petitioner was convicted on January 30,
2013. CMS Ex. | at 7. The reconsidered determination dated October 23, 2015, also
incorrectly found that Petitioner was convicted on January 30, 2013, and did not change
the January 30, 2013 effective date of revocation. CMS Ex. | at 1. Petitioner argues that
the effective date and running of the three-year bar to re-enrollment determined by
Palmetto and urged by CMS are incorrect. P. Br. at 2-6. I agree.

No definition of “conviction” is found in 42 C.F.R. § 424.535 or 42 C.F R. pt. 424.
However, section 1128(i) of the Act provides a definition of conviction. The Act
10

specifies that one is convicted of a criminal offense when a judgment of conviction has
been entered against an individual by a federal, state, or local court; when there has been
a finding of guilt by a federal, state, or local court; when a guilty plea or no contest pleas
is accepted by a federal state, or local court; or when an individual has entered an
arrangement where a judgment of conviction has been withheld. Act § 1128(i) (42
U.S.C. § 1320a-7(i)). The undisputed evidence shows that Petitioner pleaded guilty and
the guilty plea was accepted on June 4, 2012. Accordingly, I conclude that, as a matter of
law, Petitioner was convicted on June 4, 2012, within the meaning of Act section 1128(i).

The effective date of the revocation is controlled by 42 C.F.R. § 424.535(g). The
regulation provides that when revocation is based on a felony conviction, the effective
date of revocation is the date of the conviction. 42 C.F.R. § 424.535(g).

(g) Effective date of revocation. Revocation becomes
effective 30 days after CMS or the CMS contractor mails
notice of its determination to the provider or supplier, except
if the revocation is based on Federal exclusion or debarment,
felony conviction, license suspension or revocation, or the
practice location is determined by CMS or its contractor not
to be operational. When a revocation is based on a Federal
exclusion or debarment, felony conviction, license
suspension or revocation, or the practice location is
determined by CMS or its contractor not to be operational,
the revocation is effective with the date of exclusion or
debarment, felony conviction, license suspension or
revocation or the date that CMS or its contractor determined
that the provider or supplier was no longer operational.

42 CFR. § 424.535(g) (emphasis added). This regulation grants CMS and its contractor
no discretion to choose an effective date of revocation other than the date of the
conviction. Accordingly, the effective date of Petitioner’s exclusion pursuant to 42
CFR. § 424.535(a)(3)(i)(B) was June 4, 2012. Although failure to report the conviction
is an independent basis for revocation under 42 C.F.R. § 424.535(a)(9) that would
normally be effective 30 days after notice of the initial determination, the regulation does
not grant CMS or its contractor discretion to choose the later effective date.

When a supplier’s Medicare enrollment and billing privileges are revoked, the supplier is
barred from re-enrolling in the Medicare program for one to three years. 42 C.F.R.

§ 424.535(c). In this case, CMS determined that a three-year bar was appropriate. There
is no statutory or regulatory language establishing a right to review of the duration of the
re-enrollment bar CMS imposes. Act § 1866(j)(8) (42 U.S.C. § 1395cc(j)(8)); 42 C.F.R.
§§ 424.535(c), 424.545; 498.3(b), 498.5. The Board has held that the duration of a
revoked supplier’s re-enrollment bar is not an appealable initial determination listed in
11

42 C.F.R. § 498.3(b) and, thus, is not subject to ALJ review. Vijendra Dave, DAB No.
2672 at 11 (2016).

However, Petitioner disputes when the three-year bar began to run not its duration. P. Br.
at 4-6. This dispute must be resolved as a matter of law based on the regulation, which
provides:

(c) Reapplying after revocation. After a provider, supplier,
delegated official, or authorizing official has had their billing
privileges revoked, they are 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.
The re-enrollment bar does not apply in the event a
revocation of Medicare billing privileges is imposed under
paragraph (a)(1) of this section based upon a provider or
supplier’s failure to respond timely to a revalidation request
or other request for information.

42 C.F.R. § 424.535(c) (emphasis added). The regulation is clear that the re-enrollment
bar begins running from the effective date of the revocation and continues until the end of
the re-enrollment bar period, whether one, two, or three years. The regulation grants
CMS or its contractor no discretion to adjust the running of the period of the bar.

In the case of a revocation based on a felony conviction, however, there is an additional
legal obstacle to re-enrolling in Medicare. According to the regulation:

(d) Re-enrollment after revocation. If a provider or supplier
seeks to re-establish enrollment in the Medicare program after
notification that its billing privileges is [sic] revoked (either
after the appeals process is exhausted or in place of the
appeals process), the following conditions apply:

(1) The provider or supplier must re-enroll in the
Medicare program through the completion and
submission of a new applicable enrollment application
and applicable documentation, as a new provider or
supplier, for validation by CMS.

(2) Providers must be resurveyed and recertified by the
State survey agency as a new provider and must
12

establish a new provider agreement with CMS’s
Regional Office.

42 CFR. § 424.535(d). Pursuant to section 1866(b)(2) of the Act and 42 C.F.R.

§ 424.530(a)(3) the Secretary and CMS may deny enrollment in Medicare if during the
ten years preceding the enrollment the applicant has been convicted of a federal or state
felony offense that the Secretary or CMS has determined to be detrimental to Medicare or
its beneficiaries, including financial crimes such as income tax evasion. Thus, while the
bar to re-enrollment may expire in Petitioner’s case three years after his conviction on
June 4, 2012, as Petitioner advocates, the Act and regulation may nevertheless prevent
him from enrolling anew in the Medicare program until June 3, 2022. I note however
that both section 1866(b)(2) and 42 C.F.R. § 424.530(a)(3) are discretionary not
mandatory, as they provide that the Secretary and CMS “may deny” enrollment rather
than mandating that they do so.

Petitioner argues that he reasonably relied upon his billing and collection agent to notify
CMS of his conviction. P. Br. at 7-8. I accept as true for purposes of summary judgment
that Petitioner informed his billing and collections agent, MedNet, of his conviction. I
also accept as true that pursuant to the terms of his agreement with MedNet (P. Ex. 5) he
had a reasonable expectation that MedNet would make the required report to CMS or its
contractor. Petitioner does not dispute that MedNet did not file the required report with
CMS or its contractor however. I am not bound to accept Petitioner’s legal position that
he can shift responsibility for MedNet’s failure to report or that MedNet’s failure
constitutes a defense to revocation pursuant to 42 C.F.R. § 424.535(a)(9). Petitioner cites
no statute, regulation, or CMS policy that permits an enrolled supplier or provider to
avoid enforcement of participation requirements based on the failure of an employee or
an agent. The defense is most often addressed and rejected in the area of the submission
of false claims. A provider or supplier is ultimately responsible, both as a matter of law
and under the terms of his participation agreement, for ensuring that claims for Medicare
reimbursement are accurate and for any errors in those claims. Louis J. Gaefke, D.P.M.,
DAB No. 2554 at 5-6. Petitioner cannot avoid responsibility by the simple expedient of
shifting responsibility and liability by contracting with a billing agent.

In conclusion, we believe that providers and suppliers are
responsible for the claims they submit or the claims submitted on
their behalf. We believe it is essential that providers and suppliers
take the necessary steps to ensure they are billing appropriately for
services furnished to Medicare beneficiaries.

73 Fed. Reg. 36,448, 36,455 (June 27, 2008) (emphasis added). I conclude on the same
rationale that Petitioner cannot avoid responsibility for failure to comply with reporting
requirements by blaming his agent. Petitioner’s reliance on the ALJ decision in David
Burkett, M.D., DAB CR2830 (2013), is misplaced. In that case the ALJ did not conclude
13

that the petitioner’s failure to report should not be a basis for exclusion under 42 C.F.R.

§ 424.545(a)(9) or that he sufficiently reported. Rather, the ALJ concluded that summary
judgment was not appropriate on that alleged basis for exclusion. The judge did not order
a hearing as he concluded it was appropriate to grant summary judgment on another basis
for exclusion. Burkett, DAB CR2830 at 5-6. Even if I accepted Petitioner’s argument
and excused his failure to report his conviction, Petitioner’s Medicare enrollment would
nevertheless be subject to revocation based on the conviction, as the conviction is
undisputed. I have no authority to review the exercise of discretion by CMS or its
contractor to revoke where there is a basis for revocation. Abdul Razzaque Ahmed, M_D.,
DAB No. 2261 at 19 (2009), aff'd, Ahmed v. Sebelius, 710 F.Supp.2d 167 (D. Mass.
2010). The scope of my authority is limited to determining whether there is a legal basis
for revocation of Petitioner’s Medicare enrollment and billing privileges. Id. I have
concluded that there is a basis for CMS to revoke Petitioner’s Medicare enrollment and
billing privileges pursuant to 42 C.F.R. § 424.535(a)(3). Thus, a regulatory basis for
revocation exists and excusing the failure to report causes no different result in this case.

Petitioner argues that equity dictates that he should be allowed to re-enroll in Medicare
immediately. P. Br. at 9-10. I have no authority to grant equitable relief. US
Ultrasound, DAB No. 2302 at 8 (2010) (“Neither the ALJ nor the Board is authorized to
provide equitable relief by reimbursing or enrolling a supplier who does not meet
statutory or regulatory requirements.”). Furthermore, I am bound to follow the Act and
regulations, and I have no authority to declare statutes or regulations invalid or ultra
vires. 1866I1CPayday.com, L.L.C., DAB No. 2289 at 14 (2009) (noting that “[a]n ALJ is
bound by applicable laws and regulations and may not invalidate either a law or
regulation on any ground.”). My conclusion that the effective date of revocation was
June 4, 2012, and that date triggered the running of the three-bar to re-enrollment means
that the bar expired on June 3, 2015. Nevertheless, Petitioner is subject to the provisions
of section 1866(b)(2) of the Act and 42 C.F.R. § 424.530(a)(3) which grant the Secretary
and CMS discretion to deny Petitioner enrollment for up to ten years from the date of his
conviction.

III. Conclusion

For the foregoing reasons, I conclude that Petitioner’s Medicare enrollment and billing
privileges are properly revoked pursuant to 42 C.F.R. § 424.535(a)(3) and (9), effective
June 4, 2012.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Southern Rhode Island Pulmonary and Critical Care LLC,
(PTAN: U100236372),
(NPI: 1922400100),
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-16-257
Decision No. CR4630

Date: June 13, 2016

DECISION

Petitioner, Southern Rhode Island Pulmonary and Critical Care LLC, is a group medical
practice, located in Rhode Island, that applied to enroll in the Medicare program. The
Centers for Medicare & Medicaid Services (CMS) granted its application, effective June
30, 2015 (with a billing date of June 1, 2015). Petitioner now challenges that effective
date. For the reasons set forth below, I find that CMS appropriately granted Petitioner’s
enrollment effective June 30, 2015.

Background

By letter dated August 31, 2015, the Medicare contractor, National Government Services,
approved Petitioner’s Medicare enrollment application, effective June 30, 2015, with a
billing date of June 1, 2015. CMS Exhibit (Ex.) 1 at 6-7.' Petitioner sought

' CMS allows certain suppliers, which would include Petitioner, to bill retrospectively
for up to 30 days prior to the effective date of enrollment if certain conditions are met.
reconsideration to challenge that effective date. CMS Ex. 1 at 4-5. In a reconsidered
determination dated November 3, 2015, the contractor denied Petitioner a new effective
date, concluding that it had not provided evidence to justify a change. CMS Ex. | at 1-3.
Petitioner appealed.

CMS has submitted a brief in support of dismissal or summary judgment (CMS Br.) and
three exhibits (CMS Exs. 1-3). In response, Petitioner submitted a letter dated April 13,
2016. Because neither party has any witnesses to present, an in-person hearing would serve no
purpose, and I need not consider whether summary judgment is appropriate but may decide this
case based on the written record. See Acknowledgment and Pre-hearing Order at 3 (J 4c),5 9 8,
10, 11). In the absence of any objections, I admit into evidence CMS Exs. 1-3.

Discussion

CMS properly determined the effective date for
Petitioner’s Medicare enrollment because the practice
filed its subsequently-approved enrollment application
on June 30, 2015, and its effective date can be no earlier
than the date it filed that enrollment application?

To receive Medicare payments for services furnished to program beneficiaries, a
Medicare supplier must be enrolled in the Medicare program. 42 C.F.R. § 424.505.
“Enrollment” is the process used by CMS and its contractors to: 1) identify the
prospective supplier; 2) validate the supplier’s eligibility to provide items or services to
Medicare beneficiaries; 3) identify and confirm a supplier’s owners and practice location;
and 4) grant the supplier Medicare billing privileges. 42 C.F.R. § 424.502. To enroll in
Medicare, a prospective supplier must complete and submit an enrollment application. 42
CFR. §§ 424.510(d)(1),424.515(a). An enrollment application is either a CMS-
approved paper application or an electronic process approved by the Office of
Management and Budget. 42 C.F.R. § 424.502.

When CMS determines that a supplier applicant meets the applicable enrollment
requirements, it grants Medicare billing privileges, which means that the supplier can
submit claims and receive payments from Medicare for covered services provided to
program beneficiaries. For medical practices such as Petitioner, the effective date for
billing privileges “is the later of the date of filing” a subsequently- approved enrollment
application 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) (emphasis added).

42 C.F.R. § 424.521(a)(1). In its notice letter, the contractor refers to this retrospective
billing date as the effective date.

> T make this one finding of fact/conclusion of law.
If a supplier meets all program requirements, CMS allows it to bill retrospectively for up
to “30 days prior to [its] effective date if circumstances precluded enrollment in advance of
providing services to Medicare beneficiaries. . . .” 42 C.F.R. § 424.521(a)(1).

Here, the Medicare contractor approved the application that Petitioner submitted on June
30, 2015, so, under the regulations, the supplier’s enrollment date should be June 30.
Petitioner, however, points to an earlier application, submitted on October 14, 2014, and
asks for that effective date. Petitioner acknowledges that the contractor rejected the
October 14 application, but complains that, even after sending the rejection letter, the
contractor asked for additional information, which suggested that the application was still
active.

By letter dated December 31, 2014, the contractor rejected Petitioner’s October
application because it did not include a voided check with the practice group’s legal
business name. Although given an additional opportunity to provide the required
document, Petitioner did not do so. CMS Ex. 2 at 12. CMS may reject a prospective
supplier’s enrollment application if, within 30 calendar days of the contractor’s request, it
fails to furnish complete information. 42 C.F.R. § 424.525(a)(1). Ifa supplier’s
application is rejected, it must complete and submit a new enrollment application (with
the required supporting documents) in order to enroll in the Medicare program. 42
C.F.R. § 424.525(c). I have no authority to review a rejected enrollment application. 42
CFR. § 424.525(d).

Ordinarily, this would end the discussion, but, in error, the contractor continued to
correspond with Petitioner about the rejected application. On January 5, 2015, Petitioner
responded to the December 31 rejection letter by returning the letter to the contractor
with the following written on its face: “You are in error — this was sent to you 12-5-14.”
CMS Ex. 3 at 2. Petitioner enclosed a sample check. CMS Ex. 3 at 4. But the name on
that sample check was not Petitioner’s valid legal business name.>_ In error, the
contractor responded in a letter dated February 24, 2015, explaining the problem with the
check and allowing Petitioner seven calendar days in which to furnish complete
information (either a voided check with the complete legal business name or a letter on
bank letterhead with specific identifying information). CMS Ex. 3 at 5. Petitioner
immediately faxed another copy of the voided check with the wrong name on it. CMS
Ex. 3 at 7. Again in error, the contractor sent a letter dated March 17, 2015, offering
Petitioner 15 days in which to correct. CMS Ex. 3 at 9. Petitioner did not comply. On
April 7, 2015, the contractor, again in error, sent Petitioner yet another letter asking for
an accurate voided check or letter from the bank. CMS Ex. 3 at 15. Petitioner responded
by sending a copy of the same check with the wrong name on it. CMS Ex. 3 at 18. The
contractor apparently then rejected the application for a second time on April 21, 2015.
See CMS Ex. | at 1.

> Petitioner’s valid legal business name is “Southern Rhode Island Pulmonary and
Critical Care LLC.” CMS Ex. 2 at 4. The name on the check was “Southern RI
Pulmonary & Critical Care LLC.” CMS Ex. 3 at 4.
This lengthy exchange between the contractor and Petitioner muddies the waters but
doesn’t change the result here. The contractor rejected Petitioner’s October 14
application, and I have no authority to review that rejection. Petitioner ultimately
submitted a new application, which the contractor approved, and the date of that
submission (June 30, 2015) must be the effective date of Petitioner’s Medicare
enrollment.

Conclusion

The evidence in this record establishes that, on June 30, 2015, Petitioner submitted an
enrollment application that was subsequently approved. It may have attempted to submit
an earlier application but has not established that it did so successfully. Petitioner’s
effective date of enrollment can be no earlier than June 30, 2015, with a billing date of
June 1, 2015.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Robert C. Hartnett,
(O.I. File No. H-15-4-2858-9),

Petitioner,
v.
The Inspector General.
Docket No. C-16-287
Decision No. CR4628

Date: June 8, 2016

DECISION

Petitioner, Robert C. Hartnett, was a licensed practical nurse (LPN) in the State of New
York. He pled guilty to willful violation of state health laws, a misdemeanor. Based on
this conviction, the Inspector General (IG) has excluded him for five years from
participating in Medicare, Medicaid, and all federal health care programs, as authorized
by section 1128(a)(2) of the Social Security Act (Act). Petitioner appeals the exclusion.
For the reasons discussed below, I find that the IG properly excluded Petitioner Hartnett
and that the statute mandates a minimum five-year exclusion.

Background

In a letter dated November 30, 2015, the IG notified Petitioner that he was excluded from
participating in Medicare, Medicaid, and all federal health care programs for a period of
five years because he had been convicted of a criminal offense related to the neglect or
abuse of patients in connection with the delivery of a health care item or service. The
letter explained that section 1128(a)(2) of the Act authorizes the exclusion. IG Ex. 1.
Petitioner timely requested review.
Each party submitted a written argument (IG Br.; P. Br.) and the IG submitted a reply (IG
Reply). The IG submitted five proposed exhibits (IG Exs. 1-5). Petitioner submitted
seven proposed exhibits (P. Exs. 1-7). In the absence of any objections, I admit into
evidence IG Exs. 1-5 and P. Exs. 1-7.

The parties agree that an in-person hearing is not necessary. IG Br. at 8-9; P. Br. at 11.
Discussion

Petitioner must be excluded from program participation for
a minimum of five years because he was convicted of a
criminal offense related to the neglect or abuse of a patient
in connection with the delivery of a health care item or
service. Act § 1128(a)(2 ).!

Under section 1128(a)(2) of the Act, the Secretary of Health and Human Services must
exclude an individual who has been convicted, under federal or state law, of “a criminal
offense related to the neglect or abuse of a patient, in connection with the delivery of a
health care item or service... .” 42 C.F.R. § 1001.101(b). The “delivery of a health care
item or service” includes providing any item or service to an individual to meet his or her
physical, mental, or emotional needs or well-being, whether or not reimbursed by
Medicare, Medicaid, or any federal health care program. Id.

Petitioner Hartnett was an LPN working at a residential health care facility in Utica, New
York. IG Ex. 3 at 1. On January 27, 2015, he was charged with two misdemeanor counts:
endangering the welfare of an incompetent or physically disabled person (N.Y. PENAL
LAW § 260.24); and willful violation of health laws (N.Y. PENAL LAW § 12-b(2)).
Specifically, the criminal information charged that he “failed to call the doctor or the RN
Supervisor after receiving laboratory results containing a panic-high potassium laboratory
result” for one of the facility residents. That resident suffered from hepatic
encephalopathy, hepatitis C, hypothyroidism, hyperlipidemia, depression, mental
retardation with psychiatric disorder, anxiety, thrombocytopenia, hyper-ammonemia with
diabetes mellitus, and schizophrenia. IG Ex. 3.

On July 10, 2015, Petitioner Hartnett pled guilty in state court to willfully violating health
laws and the court sentenced him to a one-year conditional discharge. The court
dismissed the remaining count (endangering the welfare of an incompetent or physically
disable person). IG Exs. 4,5.

' I make this one finding of fact/conclusion of law.
Petitioner concedes that he was convicted of a criminal offense but denies that his
conviction was related to the neglect or abuse of patients and that any alleged patient
neglect or abuse occurred in connection with the delivery of a healthcare item or service.
P. Br. at 2. He simply denies the facts underlying his conviction, claiming that they were
never proven.

But criminal convictions don’t occur in a vacuum, and the facts underlying Petitioner’s
conviction are spelled out in the information. That he pled guilty to just one of the two
counts is irrelevant because both counts stemmed from the same underlying facts, which,
as Petitioner concedes (P. Br. at 10), relate to patient abuse and neglect. Petitioner thus
conceded that he did not notify a doctor or RN supervisor when he received lab results
showing a facility resident’s “panic-high” potassium levels. He thereby acted “recklessly
. .. in a manner likely to be injurious to the physical, mental or moral welfare” of a
seriously disabled person. IG Ex. 3 at 1. Such a failure to act constitutes neglect.

Moreover, the regulations explicitly preclude a collateral attack on an underlying
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); Donna Rogers, DAB No. 2381 at 4-5 (2011); Joann Fletcher
Cash, DAB No. 1725 (2000); Chander Kachoria, R.Ph., DAB No. 1380 at 8 (1993)
(“There is no reason to ‘unnecessarily encumber the exclusion process’ with efforts to
reexamine the fairness of state convictions.”); Young Moon, M.D., DAB CR1572 (2007).

Petitioner’s conviction thus falls squarely within the ambit of section 1128(a)(2). While
charged with delivering health care services to a vulnerable patient, Petitioner neglected
to report a potentially life-threatening lab result. He is therefore subject to exclusion. An
exclusion brought under section 1128(a)(2) must be for a minimum period of five years.
Act § 1128(c)(3)(B); 42 C.F.R. §§ 102(a), 1001.2007(a)(2).
Conclusion

For these reasons, I conclude that the IG properly excluded Petitioner from participation
in Medicare, Medicaid and all federal health care programs, and I sustain the five-year
exclusion.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


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

Jean-Claude Henry, M.D.,
(NPI: 1215022561/PTAN: CB 234986),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Respondent
Docket No. C-16-276
Decision No. CR4627
Date: June 8, 2016
DECISION REMANDING AND DISMISSING CASE
This case is remanded to the Centers for Medicare & Medicaid Services (CMS) pursuant
to 42 C.F.R. § 498.56(d).' This case is dismissed pursuant to 42 C.F.R. § 498.70(b) to
permit action by CMS in accordance with current regulations. This dismissal is without
prejudice to any right of Petitioner to request a hearing as to a determination by CMS on
remand that triggers such a right. Either party may request in writing that I vacate, for

good cause, the dismissal within 60 days of the date of this Order. 42 C.F.R. § 498.72.
Any other objection to this Order must be filed within ten days of the date of this Order.

' References are to the revision of the Code of Federal Regulations (C.F.R.) in effect at
the time of the initial and reconsideration determinations, unless otherwise stated.
I. Procedural History and Findings of Fact

Noridian Healthcare Solutions (Noridian) is a Medicare Administrative Contractor.
Petitioner is Jean-Claude Henry, M.D. Noridian sent Petitioner a letter dated October
10, 2014, advising Petitioner that his Medicare billing privileges related to PTANs
WA36648E, CV274A, CB203296, and WA36648G were deactivated. Nordian stated
that the basis for the deactivation was Petitioner’s failure to respond to a revalidation
request mailed April 21, 2014. The letter advised Petitioner that to reactivate his billing
privileges he needed to submit a paper CMS-855 or to file an electronic application
through PECOS (Provider Enrollment, Chain, and Ownership System). Petitioner
Exhibit (P. Ex.) 8.

Petitioner filed an enrollment application by PECOS on October 29, 2014. CMS Exhibit
(CMS Ex.). 1 at 11. Corrections to the application were requested by email on May 15,
2015 and June 17, 2015. CMS Ex. | at 16-17, 19-20, 27-28. Noridian notified Petitioner
by letter dated June 25, 2015, that Petitioner’s “initial enrollment application” was
approved effective January 1, 2015, with the new PTAN CB234986. CMS Ex. | at 6-7,
9-10. Petitioner timely requested reconsideration on June 25,2015. CMS Ex. 1 at 3-5, 8.
Noridian notified Petitioner by letter dated September 5, 2015, that Petitioner’s effective
date was changed to February 25, 2015. CMS Ex. | at 1-2.

On October 14, 2015, an unsigned reconsidered determination was issued by an
unidentified contractor hearing officer. The reconsidered determination stated that
Petitioner’s request for an earlier effective date was denied. The reconsidered
determination cited Medicare Program Integrity Manual (MPIM), CMS pub. 100-08,

§ 15.27.1.2 and 42 C.F.R. § 424.520(d) as the basis for its decision and stated that
Petitioner’s effective date of Medicare enrollment could be no earlier than Noridian’s
receipt of the signed application for reactivation. CMS Ex. 2. The reconsidered
determination reflects that the unidentified contractor hearing officer recognized that
Petitioner submitted the CMS-855] application to reactivate its billing privileges not for
the purpose of enrollment as Petitioner was already enrolled in Medicare and his
enrollment was never revoked. As explained hereafter, the reconsidered determination,
which is the subject of my review, is based on an error of law and cannot be upheld or
enforced.

Petitioner requested a hearing before an administrative law judge (ALJ) on November 20,
2015 accompanied by 14 supporting documents which were not subsequently marked and
offered as evidence by Petitioner. The case was assigned to me on February 5, 2016 for
hearing and decision and an Acknowledgment and Prehearing Order (Prehearing Order)
was issued at my direction.

On March 7, 2016, CMS filed a motion for summary judgment with CMS Exs. | and 2.
On April 4, 2016, Petitioner filed a response in opposition to the CMS motion for
summary judgment with P. Exs. 3 through 8. On April 21, 2016, CMS filed a reply brief
(CMS Reply). CMS objects to my consideration of P. Ex. 3 on grounds that there is not
good cause for receiving new evidence not considered on reconsideration. CMS Reply at
2-3. CMS Exs. | and 2 and P. Exs. 4 through 8 are admitted. P. Ex. 3 is not admitted
because it is not relevant to the issue before me.

II. Discussion
A. Applicable Law

Section 1831 of the Social Security Act (the Act) (42 U.S.C. § 1395j) establishes the
supplementary medical insurance benefits program for the aged and disabled known as
Medicare Part B. Payment under the program for services rendered to
Medicare-eligible beneficiaries may only be made to eligible providers of services and
suppliers.” Administration of the Part B program is through contractors such as
Noridian. Act § 1842(a) (42 U.S.C. § 1395u(a)).

The Act requires the Secretary of Health and Human Services (the Secretary) to issue
regulations that establish a process for the enrollment of providers and suppliers,
including the right to a hearing and judicial review of certain enrollment determinations.
Act § 1866(j) (42 U.S.C. § 1395cc(j)).

Pursuant to 42 C.F.R. § 424.505, a provider or supplier must be enrolled in the Medicare
program and be issued a billing number to have billing privileges and to be eligible to
receive payment for services rendered to a Medicare-eligible beneficiary. The effective
date of enrollment in Medicare of a physician, nonphysician practitioner, and physician
and nonphysician practitioner organizations is governed by 42 C.F.R. § 424.520(d). The
effective date of enrollment for a physician or nonphysician practitioner may only be the

> Petitioner is a “supplier” under the Act and the regulations. A “supplier” furnishes
services under Medicare and the term supplier applies to physicians or other practitioners
and facilities that are not included within the definition of the phrase “provider of
services.” Act § 1861(d) (42 U.S.C. § 1395x(d)). A “provider of services,” commonly
shortened to “provider,” includes hospitals, critical access hospitals, skilled nursing
facilities, comprehensive outpatient rehabilitation facilities, home health agencies,
hospice programs, and a fund as described in sections 1814(g) and 1835(e) of the Act.
Act § 1861(u) (42 U.S.C. § 1395x(u)). The distinction between providers and suppliers is
important because they are treated differently under the Act for some purposes. Act

§§ 1835(a) (42 U.S.C. § 1395n(a)); 1842(h)(1) (42 U.S.C. § 1395(u)(h)(1)).
later of two dates: the date when the physician filed an application for enrollment that
was subsequently approved by a Medicare contractor charged with reviewing the
application on behalf of CMS; or the date when the physician first began providing
services at a new practice location. Id. An enrolled physician or nonphysician
practitioner may retrospectively bill Medicare for services provided to Medicare-eligible
beneficiaries up to 30 days prior to the effective date of enrollment, if circumstances
precluded enrollment before the services were provided. Retrospective billing for up to
90 days prior to the effective date of enrollment is permitted only in case of a
Presidentially-declared disaster pursuant to 42 U.S.C. §§ 5121-5206. 42 C.F.R.

§ 424.521.

The Secretary has authorized CMS to deactivate a provider’s or supplier’s Medicare
billing privileges if the provider or supplier does not submit any Medicare claims for 12
consecutive calendar months. 42 C.F.R. § 424.540(a)(1). CMS may also deactivate a
provider’s or supplier’s billing privileges if the provider or supplier does not report
certain changes of information, such as a change in practice location or change of any
managing employee, within 90 calendar days of when the change occurred, or does not
provide complete and accurate information within 90 days of CMS’s request for such
information. 42 C.F.R. § 424.540(a)(2), (3). A provider or supplier “deactivated for any
reason other than nonsubmission of a claim” is required to “complete and submit a new
enrollment application to reactivate its Medicare billing privileges or, when deemed
appropriate, at a minimum, recertify that the enrollment information currently on file with
Medicare is correct.” 42 C.F.R. § 424.540(b)(1). A provider or supplier who is
“deactivated for nonsubmission of a claim” for 12 months is “required to recertify that
the enrollment information currently on file with Medicare is correct and furnish any
missing information as appropriate. The provider or supplier must meet all current
Medicare requirements in place at the time of reactivation, and be prepared to submit a
valid Medicare claim.” 42 C.F.R. § 424.540(b)(2). Deactivation of Medicare billing
privileges is to protect the provider or supplier from misuse of their billing privileges and
the Medicare Trust Funds. Deactivation does not have any effect upon the provider’s or
supplier’s participation in Medicare. 42 C.F.R. § 424.540(c).

B. Analysis

CMS’s evidence shows that on or about April 21, 2014, Noridian requested that
Petitioner revalidate his Medicare enrollment. Noridian then notified Petitioner by letter
dated October 10, 2014, that his billing privileges were deactivated on that date because
Petitioner had not submitted the requested revalidation information. P. Ex. 8. There is
no evidence that Noridian advised Petitioner that his enrollment in Medicare would be
revoked if he failed to timely submit the requested information.

On October 29, 2014, Noridian electronically received an unsigned enrollment
application, CMS-855l], from Petitioner. Petitioner electronically signed the application
on February 25, 2015. I infer from the fact that Noridian requested Petitioner to
revalidate his Medicare enrollment information in April 2014, that Petitioner was
enrolled at that time and I find no evidence to support a contrary inference. There is no
evidence that CMS ever revoked Petitioner’s Medicare enrollment or was authorized to
do so under 42 C.F.R. § 424.535 or any other provision of the Act or regulations.
Petitioner’s billing privileges were deactivated under 42 C.F.R. § 424.540. Petitioner’s
Medicare enrollment was not revoked under 42 C.F.R. § 424.535. Therefore, the issue
is not the effective date of Petitioner’s enrollment in Medicare, as he has apparently
remained continuously enrolled since prior to April 2014. The issue is the effective date
of the reactivation of Petitioner’s billing privileges. As discussed hereafter, the effective
date of the reactivation of Petitioner’s billing privileges must be determined in
accordance with the Secretary’s regulation, 42 C.F.R. § 424.540(c), not the CMS policy
cited on reconsideration that is contrary to the regulation.

Petitioner submitted his application by PECOS on October 29, 2014. Petitioner
electronically signed the application on February 25, 2015. CMS policy in effect at the
time Petitioner filed and signed the application provided that if the contractor approves a
provider’s or supplier’s reactivation application, the reactivation effective date will be the
provider’s or supplier’s date of deactivation. MPIM, ch. 15, § 15.27.1 (C) (rev. 462, iss’d
May 16, 2013, eff. Mar. 18, 2013); MPIM, ch. 15, § 15.27.1.2(D) (rev. 474, iss’d Jul. 5,
2013, eff. Oct. 8, 2013).

CMS subsequently changed its policy effective March 18, 2015. The new CMS policy in
effect at the time of the initial and reconsidered determinations provides that, if a CMS
contractor such as Noridian approves a supplier’s reactivation application, “the
reactivation effective date shall be the date the contractor received the application . . . that
was processed to completion.” MPIM, ch. 15, § 15.27.1.2 (rev. 561, iss’d Dec. 12, 2014,
eff. Mar. 18,2015). MPIM, ch. 15, § 15.29.4.3 (rev. 578, iss’d Feb. 25, 2015, eff. May
15, 2015) instructs contractors that if a revalidation is received more than 120 days after
deactivation, a new effective date will be issued to the supplier consistent with the
effective date requirements of section 15.17 of chapter 15, which applies 42 C.F.R.

§ 424.520(d), which pertains to establishing the effective date of a new enrollment by a
physician, nonphysician practitioner, or organizations of either. The unknown hearing
officer applied the new CMS policies on reconsideration. The new CMS policy is
inconsistent with and violates the Secretary’s regulation, which provides that deactivation
of Medicare billing privileges is to protect the provider or supplier from misuse of their
billing privileges and the Medicare Trust Funds and does not have any effect upon the
provider’s or supplier’s participation in Medicare. 42 C.F.R. § 424.540(c) If the current
version of MPIM, ch. 15, § 15.27.1.2 is given effect, it potentially prevents the filing of
claims for covered services rendered to Medicare-eligible beneficiaries during the period
of the deactivation and before the contractor receives the CMS-855]I filed for purposes of
reactivation. This effect is clearly contrary to the Secretary’s regulation that provides
deactivation “does not have any effect upon the provider’s or supplier’s participation
agreement or conditions of participation.” 42 C.F.R. § 424.540(c) (emphasis added).*

The current version of MPIM, ch. 15, § 15.27.1.2 may not be enforced to the extent the
policy is inconsistent with the Secretary’s regulation. CMS policy statements such as
those set forth in the MPIM do not have the force and effect of law, i.e., the statutes or
regulations. Perex v. Mortgage Bankers Ass’n,__ U.S. ___, 135 S.Ct. 1199 at 1204
(2015) (Convenience of issuing an interpretive rule or policy rather than a legislative rule
using the Administrative Procedure Act (APA) notice and comment procedure “comes at
a price: Interpretive rules ‘do not have the force and effect of law and are not accorded
that weight in the adjudicatory process.”” (citation omitted) (emphasis in original)); Ind.
Dep 't. of Pub. Welfare v. Sullivan, 934 F.2d 853 (7th Cir. 1991) (substantive rules
promulgated under the APA notice and comment rulemaking procedures as regulations
are enforceable as law; agency interpretative rules or policy statements are not subject to
notice and comment rulemaking requirements but are not enforceable as law); Nw. Tissue
Ctr. v. Shalala, 1 F.3d 522 (7th Cir. 1993). Furthermore, as an ALJ I am bound to follow
the Constitution, the Act, and the Secretary’s regulations, and I give effect to the policies
of the Secretary and CMS to the extent they are not inconsistent with the law.
1866ICPayday.com, L.L.C., DAB No. 2289 at 14 (2009) (“[a]n ALJ is bound by
applicable laws and regulations and may not invalidate either a law or regulation on any
ground.”).

Pursuant to 42 C.F.R. § 498.56(d), I may remand a case to CMS for consideration of a
new issue and a new determination. In this case, the new CMS policy for determining the
effective date of a reactivation of Medicare billing privileges set forth in MPIM, ch. 15,

§ 15.27.1.2 is inconsistent with 42 C.F.R. § 424.540(c). The application of that policy by
the contractor hearing officer was legal error. This case is remanded to permit a new
reconsidered determination that determines the effective date of the reactivation of
Petitioner’s Medicare billing privileges consistent with the Act and the Secretary’s
regulations.

> The current CMS policy also creates a conflict among 42 C.F.R. § 424.545(b),

42 CFR. § 498.5(1), and 42 C.F.R. § 498.3(b)(15). Under 42 C.F.R. §§ 424.545(b),
498.5(1), a supplier has no right to review of the decision to deactivate billing privileges
or the reactivation of those privileges. However, 42 C.F.R. § 498.3(b)(15) recognizes a
right to review of a determination by CMS or its contractors as to the effective date of a
Medicare provider agreement or the approval of a supplier’s participation in Medicare.
Accordingly, this case is remanded to CMS and dismissed. The parties may request that
an order dismissing a case be vacated within 60 days for good cause shown pursuant to
42 C.F.R. § 498.72. If CMS completes its action on this case more than 60 days from
the date of this Order and Petitioner desires my further review, Petitioner will file a
request for hearing referring to this case with a copy of this Order attached.

III. Conclusion

For the foregoing reasons, this case is remanded and dismissed.

Is/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Hrak Derderian, M.D.,

(NPI: 1619034725 / PTAN: CB241266),
Petitioner,

v.

Centers for Medicare & Medicaid Services.
Docket No. C-16-294
Decision No. CR4623
Date: June 02, 2016
DECISION

The request for hearing of Petitioner, Hrak Derderian, M.D., is dismissed pursuant to
42 CFR. § 498.70(b).

I. Procedural History

Noridian Healthcare Solutions (Noridian), a Medicare contractor, notified Petitioner by
letter dated October 26, 2015, that his application to enroll in Medicare was approved
effective September 1, 2015. CMS Ex. 1. The letter advised Petitioner that if he
disagreed with the effective date determination he could request reconsideration before a
contractor hearing officer within 60 days. The letter provided instructions for how to
submit the request for reconsideration. The notice stated that a “reconsideration request
must be signed and dated by the physician, non-physician practitioner or any responsible
authorized or delegated official within the entity.” CMS Ex. | at 2.
Reconsideration was requested by letter dated October 27, 2015. However, the request
for reconsideration was on the letterhead of Emergency Groups’ Office, with a
different address from Petitioner, and the request was signed by Carol Sharou, not
Petitioner. CMS Ex. 2. On December 2, 2015, Noridian notified Petitioner that it
rejected Petitioner’s request for reconsideration, because it was not properly signed and
dated by Petitioner, an authorized or delegated official, or a legal representative. CMS
Ex. 3.

Petitioner requested a hearing by letter dated January 21, 2016, which was received by an
express delivery service on January 29, 2016, and received at the Civil Remedies
Division of the Departmental Appeals Board on February 1, 2016. The case was
assigned to me for hearing and decision. I issued an Acknowledgment and Prehearing
Order on February 11, 2016.

On February 25, 2016, CMS filed a motion to dismiss this case (CMS Motion) with CMS
Exhibits (Exs.) | through 3. Petitioner filed a response on April 1, 2016. CMS filed a
reply on April 14, 2016. Petitioner did not object to my consideration of CMS Exs. 1
through 3 and they are admitted.

Il. Applicable Law

A provider or supplier may request reconsideration of an initial determination by CMS
that affects the provider’s or supplier’s ability to participate in the Medicare program.

42 C.F.R. § 498.5(a), (b), (d) and (1). CMS or its contractor reconsiders an initial
determination if there is a written request for reconsideration that complies with

42 C.F.R. § 498.22(b) and (c). The request for reconsideration must be filed in writing
with CMS or its contractor; either directly by the provider/supplier or through the
provider’s or supplier’s designated legal representative or authorized official, within 60
days of receipt of the notice of the initial determination. 42 C.F.R. § 498.22(b). The date
of receipt of the initial determination is presumed to be five days after the date on the
notice from CMS or its contractor, unless there is a showing that it was received earlier or
later. 42 C.F.R. § 498.22(b). Pursuant to 42 C.F.R. § 498.5(1)(2), CMS, a CMS
contractor, and a prospective or existing provider or supplier dissatisfied with a
reconsidered determination are entitled to a hearing before an administrative law judge
(ALJ).

III. Findings of Fact and Conclusions of Law

My conclusions of law are set forth in bold followed by the pertinent findings of
fact and analysis.
A. Petitioner has no right to a hearing before an ALJ because there was
no reconsidered deter mination.

B. Dismissal is appropriate as Petitioner has no right to a hearing.

CMS moved to dismiss Petitioner’s request for hearing on grounds that I lack jurisdiction
because no reconsidered determination was issued. CMS alleges more specifically that
Petitioner failed to file a properly signed request for reconsideration and Noridian
properly rejected the request. CMS Motion at 4.

On October 26, 2015, Noridian issued the initial determination approving Petitioner’s
enrollment and granting an effective date of September 1, 2015. CMS Ex. 1. The
unsigned initial determination advised Petitioner that if he disagreed with the effective
date determination, he could request reconsideration before a contractor hearing officer.
The letter advised that the request for reconsideration had to be submitted in writing
within 60 days of the postmark on the envelope bearing the initial determination. The
initial determination stated that the reconsideration request had to “be signed and dated
by the physician, non-physician practitioner or any responsible authorized or
delegated official within the entity.” CMS Ex. | at 2 (emphasis added). The initial
determination also advised Petitioner that the request for reconsideration could be
submitted to one of two addresses depending upon the manner of shipping. One address
was Provider Enrollment, Noridian Healthcare Solutions, 900 42™ Street South, Fargo,
ND 58103. CMS Ex. 1 at 2.

Petitioner filed a request for reconsideration dated October 27, 2015, addressed to
Noridian at 900 42" Street South in Fargo. There is no dispute that the request for
reconsideration was timely. The request stated the background or history and requested
an earlier effective date of November 1, 2007 or December 15, 2014. However, the
request for reconsideration was on the letterhead of Emergency Groups’ Office, with a
different address from Petitioner, and the request was signed by Carol Sharou, not
Petitioner. CMS Ex. 2.

By letter dated December 2, 2015, Noridian notified Petitioner that reconsideration was
denied because the request for reconsideration “did not meet the requirements as stated in
the PIM (Program Integrity Manual) 15.25.” CMS Ex. 3. Bolded language in the letter
denying reconsideration indicates that the reconsideration was denied because it was not
“signed and dated by the provider/supplier, the authorized or delegated official, or a legal
representative.” CMS Ex. 3. CMS specifically alleges in its motion to dismiss that
reconsideration was denied because Petitioner did not sign the reconsideration request.
CMS Motion at 4.
Pursuant to 42 C.F.R. § 498.22(b), an affected party dissatisfied with an initial
determination may request reconsideration by filing the request in writing directly or
through its legal representative or other authorized official. CMS policy for submitting a
request for reconsideration is set forth in the Medicare Program Integrity Manual
(MPIM), CMS Pub. 100-08, chap. 15, § 15.25.1.2. The CMS policy is consistent with
the requirements established by 42 C.F.R. § 498.22. According to the MPIM,

§ 15.25.1.2B, a reconsideration request must be in the form of a letter that is signed and
dated by the “provider/supplier, the authorized or delegated official, or a legal
representative.” There is no definition of “authorized official” in 42 C.F.R. pt. 498.
However, the regulations that control enrollment of providers defines an “authorized
official” to be:

an appointed official (for example, chief executive officer,
chief financial officer, general partner, chairman of the board,
or direct owner) to whom the organization has granted the
legal authority to enroll it in the Medicare program, to make
changes or updates to the organization’s status in the
Medicare program, and to commit the organization to fully
abide by the statutes, regulations, and program instructions of
the Medicare program.

42 CFR. § 424.502. MPIM, § 15.1.1, contains a similar definition of authorized official.

In this case, the reconsideration request was not signed by Petitioner. CMS Ex. 3.
Petitioner has not presented any evidence to show the relationship between him and Ms.
Sharou or Emergency Groups’ Office and he has not presented evidence that Ms. Sharou
was his authorized or delegated official or legal representative. Petitioner does not
address this deficiency in his opposition to the motion to dismiss. Accordingly, I
conclude that the reconsideration request did not comply with MPIM § 15.25.1.2B or

42 CFR. § 498.22(b).

I conclude that Noridian committed no legal error by refusing to conduct reconsideration
on grounds that the request for reconsideration was not signed and dated by Petitioner,
Petitioner’s legal representative, or an authorized official. Pursuant to 42 C.F.R.

§ 498.5(1)(2), a supplier dissatisfied with a reconsidered determination is entitled to a
hearing before an ALJ. In this case reconsideration was denied and no reconsidered
determination was issued. Accordingly, Petitioner has no right to a hearing before an
ALJ and dismissal pursuant to 42 C.F.R. § 498.70(b) is appropriate.
IV. 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

Advanced Clinical Solutions, Inc.
(PTAN: 6373270001),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-16-405
Decision No. CR4621

Date: May 31, 2016

DECISION

The Centers for Medicare & Medicaid Services (CMS), through an administrative
contractor, revoked the enrollment of Advanced Clinical Solutions, Inc. (Advanced
Clinical Solutions or Petitioner) as a Medicare supplier of durable medical equipment,
prosthetics, orthotics, and supplies (DMEPOS) because Advanced Clinical Solutions was
not accessible and staffed during posted hours of operation under 42 C.F.R.

§ 424.57(c)(7), was not operational under 42 C.F.R. § 424.535(a)(5), and did not report
changes to its enrollment information under 42 C.F.R. § 424.57(c)(2). Advanced Clinical
Solutions requested a hearing to dispute the revocation. Because Petitioner’s office was
neither staffed nor accessible when a site inspector attempted to conduct a site visit
during Petitioner’s posted hours of operation, and because Petitioner admits that no one
was present at the office on the date of the attempted site visit, 1 conclude that Petitioner
violated 42 C.F.R. § 424.57(c)(7). However, I also conclude that Advanced Clinical
Solutions was still operational and did not fail to provide updated enrollment information.
Therefore, I affirm CMS’s determination to revoke the enrollment of Advanced Clinical
Solutions from the Medicare program based on its failure to be accessible during posted
hours of operation, but, because Petitioner was operational, I modify the effective date of
revocation from November 18, 2015, to January 15, 2016.
I. Background

On May 28, 2010, CMS approved Petitioner’s enrollment in the Medicare program as a
DMEPOS supplier. CMS Exhibit (Ex.) 1. In a December 16, 2015 initial determination,
a CMS administrative contractor revoked Advanced Clinical Solutions’ Medicare
enrollment and billing privileges. CMS Ex. 5. The initial determination provided several
reasons for revocation:

42 CFR § 424.57(c)(2) . . . [Petitioner] failed to notify the
[CMS administrative contractor] regarding changes in
[Petitioner’s] supplier file including, but not limited to,
address or closing of your business.

42 CFR § 424.57(c)(7) . . . Recently, a representative of the
[CMS administrative contractor] attempted to conduct a visit
of [Petitioner’s] facility on November 10, 2015 and on
November 18, 2015; however, the visits were unsuccessful
because your business was closed during hours of operation
posted which indicates that your business is no longer
operational. Because we could not complete an inspection of
your facility, we could not verify [Petitioner’s] compliance
with the supplier standards. Based upon a review of the facts,
we have determined that [Petitioner’s] facility is not
operational to furnish Medicare covered items and services.
Thus, [Petitioner is] considered to be in violation of 42 CFR
§§ 424.535(a)(5), all supplier standards as defined in 42 CFR
424.57(c) and pursuant to 424.535(g), the revocation is
effective the date CMS determined that [Petitioner was] no
longer operational.

42 CFR § 424.57(c)(10) . . . [Petitioner’s] insurance policy
on file with the [CMS administrative contractor] expired on
April 21, 2014. [Petitioner] failed to have a current
comprehensive liability insurance policy that is required in
this standard.

CMS Ex. 5 at 1-2. The initial determination specified that the revocation was effective
November 18, 2015, the date on which CMS determined Petitioner was not operational
and that Petitioner was barred from reenrollment in the Medicare program for two years.
CMS Ex. 5 at 1. Finally, the initial determination stated that Petitioner could file a
corrective action plan (CAP) and a request for reconsideration. CMS Ex. 5 at 3.
Advanced Clinical Solutions filed a CAP. CMS Ex. 6. Although the CMS
administrative contractor accepted the CAP regarding the violation of 42 C.F.R.

§ 424.57(c)(10), because Petitioner provided proof of its liability insurance coverage, the
contractor rejected the CAP in relation to the violations of 42 C.F.R. § 424.57(c)(2)
(failure to report a change in enrollment information) and 42 C.F.R. § 424.57(c)(7)
(facility not accessible during posted hours of operation). The CMS administrative
contractor also noted that the regulations prohibited it from considering a CAP for a
violation of 42 C.F.R. § 424.535(a)(5) (not operational). CMS Ex. 7 at 3.

Petitioner subsequently requested reconsideration. See CMS Ex. 8. On February 25,
2016, a hearing officer employed by the CMS administrative contractor issued an
unfavorable reconsidered determination that upheld the findings that Advanced Clinical
Solutions violated 42 C.F.R. §§ 424.57(c)(2) and (7), 424.535(a)(5), and that the
revocation should be retroactive to November 18, 2015. CMS Ex. 9.

On March 7, 2016, Advanced Clinical Solutions requested a hearing before an
administrative law judge (Hearing Request). Petitioner included a number of documents
with the hearing request (Hearing Request Attachments).' I issued an Acknowledgment
and Pre-hearing Order (Order) on March 22, 2016. In response to my Order, CMS filed a
brief and ten exhibits (CMS Exs. 1-10). Petitioner filed a brief (P. Br.) and two exhibits
(P. Exs. 1-2).

II. Decision on the Record

I admit all of the parties’ proposed exhibits into the record because neither party objected
to them. Order § 7; Civil Remedies Division Procedures (CRDP) § 14(e).

Further, I admit documents into the record that Petitioner submitted with its hearing
request that are not duplicative of those submitted as CMS’s exhibits. Hearing Request
Attachments at 18-24. Petitioner submitted these documents with its reconsideration
request (see Hearing Request at 1-2); therefore, they are not new evidence under

42 CFR. § 498.56(e). Further, CMS’s failure to file a copy of Petitioner’s
reconsideration request as one of its exhibits is unusual and unexplained. Although

' Petitioner’s Hearing Request and Hearing Request Attachments were uploaded in a pdf
format into the Departmental Appeals Board Electronic Filing System (DAB E-File) as
Item #1 (titled “Request for Hearing”) and #1a (titled “Original Case Decision),
respectively. The Hearing Request Attachments file includes copies of the initial
determination, the CAP decision, the reconsidered determination, and other documents
related to Petitioner’s business. The Hearing Request Attachments consists of a total of
25 pages and, in this decision, I will cite to the corresponding pdf file page when
referring to a specific document.
Petitioner, which is not represented by counsel, did not resubmit the documents in
Hearing Request Attachments pages 18-24 as marked exhibits, I waive that requirement.
These documents are relevant and material to this case. 42 C.F.R. § 498.60(b).

I directed the parties to submit written direct testimony for each proposed witness. Order
§ 8. CMS submitted written direct testimony from one witness (CMS Ex. 10). Petitioner
did not submit written direct testimony for any witnesses. I advised the parties in my
Order that an in-person hearing would only be necessary if the opposing party requested
an opportunity to cross-examine a witness. Order { 9 (“I will assume that Petitioner does
not wish to cross-examine any proposed CMS witness if Petitioner’s brief fails to
affirmatively state so.”); CRDP § 16(b). Because Petitioner did not request to cross-
examine CMS’s witness, I decide this case based on the written record. Order §§ 10-11;
CRDP § 19(b), (d).

III. Issue

Whether CMS had a legitimate basis to revoke Petitioner’s Medicare enrollment and
billing privileges.

IV. Jurisdiction

Ihave jurisdiction to decide this issue. 42 C.F.R. §§ 498.3(b)(17), 498.5(1)(2); see also
42 USC. § 1395cc(j)(8).

V. Findings of Fact, Conclusions of Law, and Analysis”

The Secretary of Health and Human Services (Secretary) has the authority to create
regulations that establish enrollment standards for providers and suppliers, and to create
supplier requirements for DMEPOS suppliers. 42 U.S.C. §§ 1395m()(1)(B)(i),
1395cc(j). The Secretary promulgated a regulation that requires providers and suppliers
to be operational. 42 C.F.R. § 424.535(a)(5). To be “operational,” a provider or supplier
must be “open to the public for the purpose of providing health care related services
....” 42 CFR. § 424.502. The Secretary also promulgated regulations establishing
DMEPOS supplier standards, which a DMEPOS supplier must meet and maintain.

42 CFR. § 424.57(c). The supplier standards require a DMEPOS supplier to report,
within 30 days, any changes to information it had previously provided to CMS on its
Medicare enrollment application. 42 C.F.R. § 424.57(c)(2). Further, a DMEPOS
supplier must be “open to the public a minimum of 30 hours per week,” post its hours of
operation, and be “accessible and staffed during posted hours of operation.” 42 C.F.R.

> My numbered findings of fact and conclusions of law are set forth below in italics and
bold.
§ 424.57(c)(7)(i), (c)(30). CMS or its contractors may conduct inspections of a supplier’s
premises at any time to determine if a supplier is in compliance with Medicare enrollment
requirements or the supplier standards. See 42 C.F.R. §§ 424.57(c)(8), 424.510(d)(8),
424.515(c), 424.517(a). A supplier is subject to revocation of its Medicare billing
privileges if it violates the DMEPOS supplier standards or the regulatory requirements
applicable to all suppliers. 42 C.F.R. §§ 424.57(e)(1), 424.535(a).

1. On November 16, 2015, at approximately 12:30 p.m. and November 18, 2015, at
approximately 11:50 a.m., a site inspector from a CMS administrative contractor
was unable to gain entry into Advanced Clinical Solutions’ office at 1836
Techny Court, Northbrook, Illinois, because the door was locked and no one
answered the door when the site inspectors knocked.

On November 16, 2015, at approximately 12:30 p.m., a site inspector with a CMS
administrative contractor attempted a site visit at Advanced Clinical Solutions’ office at
1836 Techny Court. The site inspector knocked on the door, but no one answered.
Further, the site inspector took pictures of the front door to Advanced Clinical Solutions’
office, which show the date and time that the inspector took the pictures. The
photographs show that Advanced Clinical Solutions’ front door bears its name, hours of
operation (9 a.m. to 4 p.m.), and telephone number. CMS Ex. 2 at 1,6; CMS Ex. 3; CMS
Ex. 109 2.

On November 18, 2015, at approximately 11:50 a.m., the site inspector again attempted a
site visit at Advanced Clinical Solutions’ office at 1836 Techny Court. The site inspector
knocked at the door, but no one answered. The site inspector again took pictures of the
front door to Advanced Clinical Solutions’ office. CMS Ex. 2 at 1,6; CMS Ex. 4; CMS
Ex. 109 3.

The site inspector completed a report on November 20, 2015. CMS Ex. 2; CMS Ex. 10
44. In that report, the inspector noted that Petitioner’s office: was not in a restricted area
(i.e., gated community); was accessible to the disabled; had a permanent, visible sign
with Petitioner’s name on it; and had its hours of operation posted. CMS Ex. 2 at 1-2.
The inspector also indicated that he was unable to complete the inspection. CMS Ex. 2 at
2. Finally, the inspector provided the following comments of his investigation:

Supplier was closed on both attempts. I spoke to a
neighboring business and was told that the supplier is still
open. When open, it is normally earlier in the morning.

CMS Ex. 2 at 6.

Petitioner admits that its office was closed on both days the site inspector attempted to
conduct its site inspection. Hearing Request at 1. Therefore, I find that the site inspector
attempted site visits at Petitioner’s office on November 16 and 18, 2015, but that no one
was present at Petitioner’s office to allow the site inspector to enter the office.

2. CMS had a legitimate basis to revoke Petitioner’s Medicare enrollment and
billing privileges because Petitioner’s location was not accessible and staffed
during posted hours of operation in violation of 42 C.F.R. § 424.57(c)(7).

Advanced Clinical Solution’s posted office hours of operation are 9:00 a.m. to 4:00 p.m.,
Monday to Friday. CMS Exs. 3,4. Petitioner is obligated to be accessible and staffed
during its posted hours of operation. 42 C.F.R. § 424.57(c)(7). However, during the
posted hours of operation on November 18, 2015,° Petitioner did not have staff present at
its office and its office door was locked. Therefore, Petitioner failed to comply with

42 CFR. § 424.57(c)(7).

Petitioner asserts that it has two owners and no other employees, and that they were not
present at Petitioner’s office because both owners were making emergency deliveries to
patients. The reason for the emergency deliveries appears to stem from the fact that
Petitioner had just completed a lengthy accreditation process and the Thanksgiving
holiday was approaching. Petitioner also asserts that the site inspector in this case had
previously conducted site inspections at Petitioner’s office and that the inspector had told
Petitioner’s owners that they could place a note on the door whenever they were absent
during posted hours of operation. Petitioner asserts it placed such a note on the door on
November 18, 2015, when both owners were absent from the office. Hearing Request at
1-2; P. Br.; P. Exs. 1-2; CMS Ex. 6.

Petitioner’s arguments are not availing. The requirement to be staffed and accessible
during normal hours of operation is a rule that has few exceptions. See Norpro Orthotics
& Prosthetics, Inc., DAB No. 2577, at 5 (2014) (indicating that the regulatory history of
42 C.F.R. § 424.57(c)(7) makes exceptions for disasters, emergencies, and state and
federal holidays); see also Benson Ejindu, DAB No. 2572, at 6 (2014). A DMEPOS
supplier is not “accessible” if the supplier’s location is closed because the staff is out for
lunch, on a break, making patient visits, or out of the office for any reason. See Ita
Udeobong, DAB No. 2324, at 6-7 (2010). A supplier may not close, even temporarily,

> The reconsidered determination is predicated on the site inspector not being able to
access Petitioner’s office on both November 10, 2015, and November 18, 2015. CMS
Ex. 9 at 1-3, 5. The hearing officer specifically made a finding of fact that the attempted
site visits occurred on November 10, 2015, and November 18, 2015. CMS Ex. 9 at 1.
However, the weight of evidence in the record reveals that the site inspector did not make
a failed attempt at conducting a site visit at Petitioner’s office on November 10, 2015, but
rather on November 16, 2015. CMS Ex. 3; CMS Ex. 10 § 2; but see CMS Ex. 2 at 1.
Due to this conflict in the evidence, I cannot find that a failed site visit occurred on
November 10, 2015, as the reconsidered determination indicates.
during its posted hours of operation. Complete Home Care, Inc., DAB No. 2525, at 5
(2013). Even if the staff of a DMEPOS supplier is present at its office, but the door is
locked and the staff do not hear the knock of an inspector, then the office is not accessible
under 42 C.F.R. § 424.57(c)(7). Benson Ejindu, DAB No. 2572, at 6-7. Although
Petitioner indicates its owners were making emergency deliveries, it did not submit
evidence to support that contention. Further, Petitioner does not contend that the
Thanksgiving holiday actually took place on November 18, 2015. Finally, even if
Petitioner left a note on its door indicating that staff would return, this is not a legal
excuse for failing to provide an accessible office during the posted hours of operation.
See Complete Home Care, DAB No. 2525, at 5-6.

I conclude that Petitioner violated 42 C.F.R. § 424.57(c)(7) because its office was not
accessible on November 18, 2015.

3. CMS did not have a legitimate basis to revoke Petitioner’s Medicare billing
privileges based on a finding that Petitioner was not operational under
42 CFR. § 424.535(a)(5).

Suppliers must be operational or they are subject to revocation. 42 C.F.R.
§ 424.535(a)(5). A supplier is operational if it:

has a qualified physical practice location, is open to the public
for the purpose of providing health care related services, is
prepared to submit valid Medicare claims, and is properly
staffed, equipped, and stocked (as applicable, based on the
type of facility or organization, provider or supplier specialty,
or the services or items being rendered), to furnish these items
or services.

42 CFR. § 424.502. Although the requirement to be operational has significant
similarities to the DMEPOS supplier standard that requires a DMEPOS’s facility be
staffed and accessible to the public during posted hours of operation (i.e., 42 C.F.R.

§ 424.57(c)(7)), it is important to note that the requirement to be “operational” is not a
DMEPOS supplier standard. Instead, it applies to all suppliers. Therefore, a DMEPOS
supplier could be “operational,” but still not meet all of the strict requirements of the
DMEPOS supplier standards.

In the present case, there is sufficient evidence that Petitioner was operational. The site
inspector’s investigation revealed that a neighboring businessman stated that Petitioner
was still open, mostly in the mornings. CMS Ex. 2 at 6. Although Petitioner asserts it is
staffed and open more often than just in the morning hours, it is clear that Petitioner’s
position is that it is open and staffed most of the time. P. Br. at 1; Hearing Request at 1.
The site inspector also confirmed that Petitioner has an office, with a sign and posted

hours of operation. CMS Ex. 2 at 1-2; CMS Ex. 3; CMS Ex. 4. Further, Petitioner
provided documentation that it is licensed as a medical equipment supplier until 2018, is
registered as a business until 2019, insured until 2016, and has a lease for its office space
until 2019. Hearing Request Attachments at 18-20, 22-24. Significantly, on November
18, 2015, the date that the CMS administrative contractor found Petitioner to be no longer
operational, the Accreditation Commission for Health Care certified that Petitioner “has
demonstrated a commitment to providing quality care and services to consumers through
compliance with . . . nationally recognized standards for accreditation and is therefore
granted accreditation for... DMEPOS.” Hearing Request Attachments at 21. I conclude
that while Petitioner was not always open during its posted hours of operation, it was still
open and staffed to provide health care related services sufficiently to avoid a violation of
42 CFR. § 424.535(a)(5).

4. CMS did not have a legitimate basis to revoke Petitioner’s Medicare billing
privileges based on a finding that Petitioner failed to report that it closed its
business within 30 days under 42 C.F.R. § 424.57(c)(2).

DMEPOS suppliers are required to report changes in the information the supplier
provided to CMS on its enrollment application within 30 days of the change. 42 C.F.R.

§ 424.57(c)(2). There is no evidence in this case that Petitioner’s enrollment information
changed. While Petitioner appears to have deviated from its hours of operation on an ad
hoc basis, such a minimal change in its hours is insignificant and, as already indicated
above, is properly sanctioned under 42 C.F.R. § 424.57(c)(7). To the extent that CMS
asserts Petitioner’s business is closed and that this should have been reported (CMS Ex. 5
at 1), the evidence of record, as discussed above, establishes that Petitioner’s business is
not closed.

5. Petitioner’s Medicare enrollment and billing privileges must be revoked, but the
effective date of revocation is changed to January 15, 2016.

CMS imposed a retroactive revocation effective date in this case due to its finding that
Petitioner was not operational. CMS Ex. 5 at 2, CMS Ex. 9 at 5; 42 C.F.R. § 424.535(g).
However, based on my conclusion that Petitioner was not properly revoked for being
non-operational, I must modify the effective date of revocation.

Because Petitioner violated 42 C.F.R. § 424.57(c)(7), CMS was required to revoke
Petitioner 30 days after the date that CMS sent the revocation notice to Petitioner.
42 C.F.R. § 424.57(e)(1). CMS sent Petitioner the initial determination to revoke on
December 16, 2015 (CMS Ex. 5 at 1); therefore, the effective date of Petitioner’s
revocation is January 15, 2016. Petitioner may seek reimbursement for items and
services provided to Medicare beneficiaries through January 14, 2016.
VI. Conclusion

1 affirm CMS’s revocation of Advanced Clinical Solutions’ Medicare enrollment and
billing privileges. I modify the effective date of revocation from November 18, 2015, to
January 15, 2016.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Summerton Drugs Compounding and Dispensary LLC
d/b/a Summerton Drugs,

Respondent.
Docket No. C-15-2718
FDA Docket No. FDA-2015-H-1890
Decision No. CR4618

Date: May 26, 2016

INITIAL DECISION

I sustain the determination of the Center for Tobacco Products (CTP) of the
United States Food and Drug Administration (FDA) to impose a civil money
penalty of $500 against Respondent, Summerton Drugs Compounding and
Dispensary, LLC, d/b/a Summerton Drugs

I. Background

Respondent requested a hearing in order to challenge CTP’s determination to
impose a $500 civil money penalty against it. I held a hearing by telephone on
March 15, 2016. At the hearing I received exhibits into evidence from CTP that
are identified as CTP Ex. 1-CTP Ex. 10. I heard the cross-examination testimony
of Sharmane Anderson, an inspector working on behalf of CTP'. Respondent
offered no exhibits.

CTP filed a pre-hearing brief and a post-hearing brief in support of its position.
Respondent filed a post-hearing brief.

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

The issues are whether Respondent violated regulations governing the sale of
tobacco products to minors and whether a civil money penalty of $500 is
reasonable.

B. Findings of Fact and Conclusions of Law

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

§§ 1140.14(a), (b)(1).

There is no dispute that Respondent sells tobacco products to members of the
public. Nor is there any dispute that, in the past, Respondent violated regulations
prohibiting sales of tobacco products to minors. On December 3, 2014,
Respondent signed an acknowledgement admitting that it had unlawfully sold
cigarettes to a minor on September 30, 2013 and again on March 20, 2014. CTP
Ex. 4.

What is in dispute in this case is whether Respondent sold tobacco products to a
minor on a third occasion in violation of applicable regulations.

CTP premises its allegation of a third unlawful sale of tobacco products to a minor
on Ms. Anderson’s testimony and additional corroborating evidence.

' The transcript erroneously states that “James Naso” was sworn to testify.
However, that witness did not appear in this case.
Ms. Anderson is an agent employed on CTP’s behalf to inspect facilities that sell
tobacco for possible violations of law. She testified that, on February 5, 2015, she
visited Petitioner’s establishment in the company of a minor who was under her
direction and supervision. Ms. Anderson averred that, on that date, she entered
Respondent’s establishment shortly after the minor entered. CTP Ex. 2 at 3. She
testified that, while inside the premises, she personally observed the minor
purchase a package of cigarettes from one of Respondent’s employees. Id. As
corroborating evidence CTP produced a photograph of a package of Newport
Non-Menthol Box cigarettes that the minor purchased on that date. CTP Ex. 9.

I find this evidence to be persuasive. Ms. Anderson was a credible witness and
her testimony was not impeached on cross-examination. In particular, I find no
basis to conclude that she was motivated to testify falsely nor do I find that she
was incorrect in her assertion that she observed the sale. Moreover, the
photograph of the package of cigarettes that the minor purchased on February 5,
2015, is more than ample corroboration of Ms. Anderson’s testimony.

Respondent argues that this case boils down, essentially to a “he said, she said”
situation in which Ms. Anderson’s observations are contradicted by Respondent’s
denial that an unlawful sale took place. I disagree. Respondent has offered no
evidence to contradict Ms. Anderson’s testimony. It did not come forward with
any witness testimony or other evidence rebutting Ms. Anderson’s testimony.
Furthermore, Respondent has not explained or rebutted the corroborating evidence
offered by CTP, consisting of the photograph of the cigarettes offered by
Respondent.

I find a civil money penalty of $500 to be reasonable. Governing regulations
authorize a maximum penalty of $500. 21 C.F.R. § 17.2. A $500 penalty is
justified in this case by the egregiousness of Respondent’s misconduct. The
unlawful sale of a tobacco product to a minor on February 5, 2015, is
Respondent’s third violation of law in a period that is substantially less than two
years’ duration. Tobacco is a highly addictive and extremely dangerous product
and selling to minors can only endanger the health and safety of these individuals.
Respondent has not made a showing that it is unable to pay the penalty amount.

/s/
Steven T. Kessel
Administrative Law Judge