Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
18661CPayday.com, L.L.C., ) Date: July 21, 2009

)
Petitioner, )
)

-Vv.- ) Docket No. C-09-259

) Decision No. CR1976
Centers for Medicare & Medicaid )
Services. )
)

DECISION

I sustain the determination of the National Supplier Clearinghouse (NSC)' and the
Centers for Medicare & Medicaid Services (CMS) to revoke the Medicare supplier
number of Petitioner 1866ICPayday.com, L.L.C?

I. Procedural Background

Prior to the revocation at issue in this case Petitioner was enrolled in the Medicare
program as a supplier of durable medical equipment, prosthetics, orthotics and supplies
(DMEPOS). Petitioner’s supplier number was revoked by NSC based on an NSC
investigator’s findings during an on-site visit on May 29, 2008. NSC notified Petitioner

' NSC is the entity authorized by CMS to issue, revoke, and reinstate DMEPOS
supplier numbers. 42 C.F.R. §§ 405.874(a); 421.210(e)(3); see 57 Fed. Reg. 27,290
(June 18, 1992); 58 Fed Reg. 60,789 (Nov. 18, 1993).

? Petitioner’s distinctive name is an internet website address, and reference to its
website is illuminating. Petitioner is an interstate payday loan company, with two offices
in New Jersey, one in Pennsylvania, and one — the one before me now — in Texas. I
express, of course, no view as to whether a payday loan company is a suitable vehicle for
supplying specialized medical equipment to those whose infirmities might leave them
compromised financially.
by noticed dated July 30, 2008, that it was in violation of supplier standards 1, 4, 5, 7, 12,
and 14. The notice also afforded Petitioner an opportunity to provide additional
information as to its compliance. CMS Exhibit (CMS Ex.) 3. The letter was
subsequently returned as “unclaimed.” CMS Ex. 4. On November 25, 2008, NSC wrote
to Petitioner revoking Petitioner’s Medicare supplier number. P. Ex. 2. The NSC notice
gave as grounds for revocation the charge that Petitioner was in violation of supplier
standards 1, 4, 5,7, 9,° 12 and 14. Id.

By letter dated December 20, 2008, Petitioner requested reconsideration to contest NSC’s
determination. P. Ex. 10, at 1. The Medicare Hearing Officer conducted an on-the-
record hearing and determined that based on documentation submitted to NSC in the
reconsideration request, Petitioner was in compliance with supplier standards 1, 4, 5, and
14 prior to the on-the-record review, but was not in compliance at the time of the
revocation of its provider number with supplier standards 7, 9, and 12. Based on her
findings, the Hearing Officer determined that the denial of Petitioner’s Medicare suppler
number was appropriate. On January 14, 2009, the Hearing Officer issued her decision.’
CMS Ex. 10; P. Ex. 1.

By letter dated February 13, 2009, Petitioner timely requested a hearing and perfected its
appeal of the Hearing Officer’s decision. I convened a telephone prehearing conference
on March 9, 2009, in order to discuss the issues presented by the case and procedures for
addressing those issues. I told the parties that based upon my review of the file, it
appeared that the issues could be addressed in summary fashion, and I established a
schedule for further development of the evidentiary record and the filing of briefs. The
substance of the prehearing conference is memorialized in my Order of March 11, 2009.

On March 31, 2009, CMS timely filed its Motion for Summary Disposition and
supporting Brief-in-Chief (CMS Br.) and proffered CMS Exhibits 1-13 (CMS Exs. 1-13).
On April 22, 2009, Petitioner timely filed its Answer Brief (P. Br.) and proffered

* Supplier standard 9 was not identified in NSC’s July 30, 2008 notice to
Petitioner, but is listed as a basis for the revocation of Petitioner’s supplier number in
NSC’s notice to Petitioner dated November 25, 2008. Compare CMS Ex. 3 (July 30,
2008 NSC notice) with P. Ex. 2 (November 25, 2008 NSC notice). Petitioner was not
prejudiced by the omission as it had sufficient notice by NSC’s November 25, 2008 letter
and opportunity to present evidence to the Hearing Officer regarding supplier standard 9.

*T observe that the Hearing Officer’s decision is dated January 14, 2008 rather
than January 14, 2009. Neither party has raised this as an issue which would bring into
question the timely filing of Petitioner’s request for hearing. However, I find that the
wrong year listed on the decision is likely a typographical error and, therefore, January
14, 2009 is the correct date for the issuance of the Hearing Officer’s decision. See CMS
Ex. 10; P. Ex. 1.
Petitioner’s Exhibits 1-11 (P. Exs. 1-11). CMS filed a Reply Brief (CMS Reply) on April
24, 2009. All briefing is now complete, and the record in this case is closed. The
evidentiary record before me on which I decide the issue contains the parties’ pleadings
and admitted exhibits CMS Exs. 1-13 and P. Exs. 1-5 and 7-11.

II. Issue

The issue in this case is whether NSC and CMS had a basis to revoke Petitioner’s
Medicare supplier number.

III. Controlling Statutes and Regulations

Pursuant to section 1834(j)(1)(A) of the Act, a supplier of medical equipment and
supplies may not be paid for items provided to an eligible beneficiary unless the supplier
has a supplier number issued by the Secretary. In order to participate in Medicare as a
DMEPOS supplier and obtain a supplier number, an entity must meet the 25 standards
specified at 42 C.F.R. § 424.57(c)(1) through (25). Ifa supplier is subsequently found
not to meet the standards, NSC must revoke the supplier’s number, effective 15 days”
after NSC mails the notice of revocation. 42 C.F.R. § 405.874(b). Standard 7 sets the
requirements for a supplier’s physical facility and provides that the location “must
contain space for storing business records including the supplier’s delivery, maintenance,
and beneficiary communication records.” 42 C.F.R. § 424.57(c)(7). Standard 9 sets the
requirements for a supplier as to how the beneficiary can contact the supplier and
provides that a supplier “[m]aintains a primary business phone listed under the name of
the business . . . furnish information to beneficiaries at the time or delivery of items on
how the beneficiary can contact the supplier by telephone” and prohibits “[t]he exclusive
use of a beeper number, answering service, pager, facsimile machine, car phone, or an
answering machine” as the primary business number. 42 C.F.R. § 424.57(c)(9).
Standard 12 requires, in relevant part, that the supplier “must document that it or another
qualified party has at an appropriate time, provided beneficiaries with necessary
information and instructions on how to use Medicare-covered items safely and
effectively”. 42 C.F.R. § 424.57(c)(12).

Revocation of a supplier’s billing privileges is governed by 42 C.F.R. § 424.535. CMS
or its contractor NSC, will revoke a supplier’s billing privileges (i.e. supplier number) if
the suppler does not meet the standards in 42 C.F.R. § 424.57(b) and (c). 42 C.F.R.

* The regulation at 42 C.F.R. § 405.874 was amended in 2008, making the
effective date of a revocation 30 days, rather than 15 days, from the mailing of the notice.
As this change became effective August 26, 2008, it does not apply to the effective date
of Petitioner’s supplier number revocation. 42 C.F.R. § 405.874(b)(2); see 73 Fed. Reg.
36,460 (June 27, 2008).
§ 424.57(d). CMS may use an on-site review to determine whether a “supplier is no
longer operational to furnish Medicare covered items or services, or is not meeting
Medicare enrollment requirements ....” 42 C.F.R. § 424.535(a)(5). A supplier is
operational when “the provider or supplier has a qualified physical 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 . . . to furnish these
items or services.” 42 C.F.R. § 424.502.

The procedures for hearings and appeal are set out in 42 C.F.R. Part 498. Section
1866(j)(2) of the Act allows suppliers appeal rights described in section 1866(h)(1)(A) of
the Act. The hearing before an Administrative Law Judge (ALJ) is a de novo proceeding.
In cases subject to Part 498, the Departmental Appeals Board (Board) has found that
CMS must establish a prima facie showing of a regulatory non-compliance and the
regulated entity then bears the burden of showing by a preponderance of the evidence that
it was compliant with the Act or regulations, or that it had a defense. Batavia Nursing
and Convalescent Center, DAB No. 1904 (2004); Batavia Nursing and Convalescent Inn,
DAB No. 1911 (2004); Emerald Oaks, DAB No. 1800 (2001); Cross Creek Health Care
Center, DAB No. 1665 (1998); Evergreene Nursing Care Center, DAB No. 2069 (2007).
The Board has found this allocation of the burden of going forward with the evidence and
the burden of persuasion properly applied in the DMEPOS supplier cases. MediSource
Corporation, DAB No. 2011, at 2-3 (2006). The parties have urged no different
allocation in this case.

IV. Findings and Conclusions
I find and conclude as follows:
1. Mark D. Porter, an investigator employed by NSC, conducted an on-site
inspection of Petitioner’s business facility, located at 1801 S. Dairy Ashford

Street, Suite 104, Houston, Texas, on May 29, 2008. CMS Ex. 1, at 3, 8.

2. Petitioner was not in compliance with supplier standard 9 during the on-site visit
on May 29, 2008.

3. Petitioner was not in compliance with supplier standard 12 during the on-site visit
on May 29, 2008.

4. The inspection conducted on May 29, 2008, established a basis for revocation of
Petitioner’s supplier number. 42 C.F.R. §§ 424.57(d), 424.535(a)(1) and (a)(5).

5. Following the on-site inspection on May 29, 2008, Petitioner was notified by letter
dated July 30, 2008 that its facility was found to be in violation of one or more of
the 25 supplier standards. CMS Ex. 3.
6. By notice dated November 25, 2008, CMS notified Petitioner that its supplier
number was being revoked. P. Ex. 2.

7. Petitioner’s billing number must be revoked pursuant to 42 C.F.R. § 424.57(d).
See also, 42 C.F.R. § 424.535(a)(1).

8. There are no disputed issues of material fact and summary disposition is therefore
appropriate in this matter. Brightview Care Center, DAB No. 2132 (2007);
Residence at Kensington Place, DAB No. 1963 (2005); Community Hospital of
Long Beach, DAB No. 1928 (2004); Lebanon Nursing and Rehabilitation Center,
DAB No. 1918 (2004).

V. Discussion

The supplier standards at issue before me are set forth at 42 C.F.R. § 424.57(c)(7), (9),
and (12).

The regulation is clear on its face that a DMEPOS supplier must meet the 25 standards
specified in 42 C.F.R. § 424.57(c)(1) through (25) in order to qualify for billing
privileges as a Medicare supplier. The regulation states that a “supplier must meet and
must certify in its application for billing privileges that it meets and will continue to
meet” the standards. 42 C.F.R. § 424.57(c) (emphasis added). Ifa supplier is found to be
not in compliance with even one of the 25 standards, then a basis exists for revocation of
the supplier’s billing number. Because I have determined — and as I shall discuss below
—that Petitioner was not in compliance with supplier standards 9 and 12, I need not
address Petitioner’s compliance with standard 7, for Petitioner’s non-compliance with
two of the standards provided a sufficient basis for NSC to have revoked Petitioner’s
billing privileges.°

I discuss my findings for supplier standards 9 and 12 below in each lettered heading.

A. Petitioner was not in compliance with supplier standard 9 during
the on-site inspection on May 29, 2008.

Standard 9 sets the requirements for a supplier as to how the beneficiary can contact the
supplier. The standard provides that a supplier:

° Since I shall not address supplier standard 7 in this discussion, I need not address
here Petitioner’s argument that CMS waived the issue since it chose to not pursue
summary disposition on supplier standard 7, nor need I rule on the objections CMS raises
as to Petitioner’s Exhibit 6, for that exhibit relates only to supplier standard 7. P. Br. at 4;
CMS Reply at 4.
6

Maintains a primary business phone listed under the name of the business
locally or toll-free for beneficiaries. The supplier must furnish information
to beneficiaries at the time or delivery of items on how the beneficiary can
contact the supplier by telephone. The exclusive use of a beeper number,
answering service, pager, facsimile machine, car phone, or an answering
machine may not be used as the primary business telephone for purposes of
this regulation.

42 C.F.R. § 424.57(c)(9); see also, 65 Fed. Reg. 60366, 60371 (Oct. 11, 2000).

To verify its compliance with supplier standard 9, Petitioner proffered to the Hearing
Officer a copy of its listing in the Yellow Book phone directory identifying Petitioner’s
phone number as 281-679-1680. After review of the document and the case file, the
Hearing Officer found that Petitioner had failed to present evidence substantiating its
compliance with supplier standard 9, stating:

However, after careful review of the case file, and the CMS 855S on file
with the NSC, it lists the telephone number as 832-884-0498, and the fax
number as 281-679-1680. WhitePages.com records indicate the number
832-884-0498 as of January 7, 2009 is a cell phone number and not
available for information.

P. Ex. 1, at 3.

CMS points out that NSC warned suppliers, in its 2002 and 2003 newsletters, that cell
phones, cell phone numbers, and telephone-pager numbers were not acceptable. CMS
submits as support for this assertion CMS Ex. 11 which consists of a document titled
“NSC NEWS”, dated October 2002. The newsletter issued by Palmetto GBA advises
suppliers that a supplier number can be revoked if “[t]he supplier is running a business
using a cell phone and/or pager with no business phone number set up.” CMS Ex. 11, at
2,4. CMS Ex. 12 is also a newsletter issued by Palmetto GBA, dated June 2003, which
provides a listing of the standards a supplier must meet or face revocation of its supplier
number. Under the category listing titled in bold print “CMS MEDICARE DMEPOS
SUPPLIER STANDARDS”, the newsletter contains the following reference to supplier
standard 9:

9. A supplier must maintain a primary business telephone listed under the
name of the business in a local directory or a toll free number available
though directory assistance. The exclusive use of a beeper, answering
machine or cell phone is prohibited.

CMS Ex. 12, at 5 (emphasis added). CMS also states that NSC published on its
website an “abbreviated version” of the supplier standards making the general
point at issue in this part of my decision. CMS Ex. 13, at 1, 3.

Although Petitioner maintained that its business phone number was 281-679-1680,
the Hearing Officer determined that there was sufficient evidence before her to
find that 832-884-0498 was Petitioner’s telephone number and 281-679-1680 was
Petitioner’s fax number. The Hearing Officer further concluded that as of January
7, 2009, the 832-884-0498 number was a cell phone number. P. Ex. 1, at 3.

CMS argues before me that there is “an overwhelming abundance of evidence”
that Petitioner used as its primary business phone 832-884-0498, and as its fax
number 281-679-1680. CMS Br. at 6. CMS directs me to the following evidence
to support its assertion:

+ CMS Ex. 1 — which contains copies of completed delivery forms obtained
by the site inspector on May 29, 2008. Under Petitioner’s name on each of
these forms the phone number 832-884-0498 is listed. CMS Ex. 1, at 9-11.

* CMS Ex. 5 — which is a copy of Petitioner’s CMS-855S’ application,
dated August 1, 2006. The application lists 832-884-0498 as Petitioner’s
telephone number and 281-679-1680 as Petitioner’s fax number.

+ CMS Ex. 7 — which is a copy of the Texas Franchise Tax Public
Information Report for Petitioner, dated April 16, 2007 and signed by
Lawrence T. Tyler. The document lists Petitioner’s “Daytime phone” as
832-884-0498.

+ CMS Ex. 8 — which contains downloaded documents from medical
supplier listing service websites. All of the documents from 11 different
medical suppliers were downloaded on March 27, 2009, and each lists 832-
884-0498 as Petitioner’s telephone number (CMS Ex. 8, at 1-21).
Additionally, the exhibit includes copies of documents from several of
Petitioner’s wholesale suppliers, all of which list Petitioner’s telephone
number as 832-884-0498 and fax number as 281-679-1680 (CMS Ex. 8, at
22, 25-28). The exhibit also contains copies of documents Petitioner faxed
from 281-679-1680 (CMS Ex. 8, at 23, 24, 29-31).

The evidence in the record before me provides conclusive proof that Petitioner used 832-
884-0498 as its primary business number and 281-679-1680 as its fax number. Petitioner

7CMS-855S is a CMS form titled “Application for DMEPOS Suppliers” and
serves as a supplier’s initial application for a Medicare supplier number.
does not dispute that 832-844-0498 is a cell phone number. Neither a cell phone nor a
facsimile machine suffices to meet the requirements of standard 9. The regulation
specifically prohibits the “exclusive use of a beeper number, answering service, pager,
facsimile machine, car phone, or an answering machine” as the primary business number,
and suppliers were provided ample notice from NSC that a supplier number could be
revoked as failure to comply with supplier standard 9 based on a supplier’s use of a cell
phone number as its primary business number. CMS Ex. 11, at 4, 2; CMS Ex. 12, at 5.

Petitioner provided a declaration from Lawrence Tyler, the manager of 18661CPday.com.
P. Ex. 11. In his declaration, Mr. Tyler asserts that the documents contained in P. Ex. 4
are “prima facie proof of compliance” with standard 9. He contends that these
documents establish that “the primary business telephone listed under
18661CPayday.com L.L.C. is (281) 679-1680”. Id. at 9. A review of P. Ex. 4 shows that
it contains three documents. The first is an apparently-downloaded internet page titled
“yellowbook” which contains Petitioner’s name, its address and a local number listed as
“281-679-1680”. The second document is a similar page, a YELLOWPAGES.COM
listing indicating Petitioner’s contact number as “(281) 679-1680”. The third document,
another downloaded internet page, is from WhitePages.com and also indicates
Petitioner’s contact number as “(281) 679-1680”. P. Ex. 4, at 1-3. Mr. Tyler’s
declaration may be bold, but it is conspicuously incomplete, for not one of these three
references conveys any information whatsoever about the nature of the listed number,
that is, whether the instrument to which the number is assigned is a conventional
telephone, a cell phone, a pager, or a facsimile machine. Mr. Taylor’s declaration is
patently insufficient to raise a genuine issue of material fact in response to CMS’s well-
documented assertions.

Although Petitioner now asserts that the number listed is a conventional telephone
connection or “landline,” the evidence presented by CMS establishes that 281- 679-1680
was Petitioner’s fax number (CMS Ex. 5; CMS Ex. 8, at 22, 25-28) and that 832-884-
0498 was used by Petitioner as its primary business number (CMS Ex. 1; CMS Ex. 5;
CMS Ex. 7; CMS Ex. 8). I find Mr. Tyler’s suggestion that 281-679-1680 is a
conventional telephone connection or “landline” utterly unsupported by any evidence in
this record, and I specifically find that Mr. Tyler’s unsupported and uncorroborated
assertions, and any inferences that I might reasonably draw from them, do not create a
genuine issue of material fact as to whether 832-884-0498 was used by Petitioner as its
primary business telephone number. I have applied the Brightview Care Center test® to
this question, and neither evidence nor inference is sufficient to suggest any other view of
this record. I need not weigh evidence, nor need I assign more credibility to some

*In deciding a summary judgment motion, an ALJ may not make credibility
determinations or weigh conflicting evidence but must instead view the entire record in
the light more favorable to the non-moving party, drawing all reasonable inferences from
the evidence in that party’s favor. Brightview Care Center, DAB No. 2131, at 9.
elements of the evidence than to others, to find that Petitioner used 832-884-0498, a cell
phone number, as its primary business telephone number, and in doing so placed itself in
obvious non-compliance with supplier standard 9.

B. Petitioner was not in compliance with supplier standard 12 during
the on-site inspection on May 29, 2008.

Standard 12 requires that the supplier:

Must be responsible for the delivery of Medicare covered items to
beneficiaries and maintain proof of delivery. (The supplier must document
that it or another qualified party has at an appropriate time, provided
beneficiaries with necessary information and instructions on how to use
Medicare-covered items safely and effectively).

42 CFR. § 424.57(c)(12).

In support of its argument that it was in compliance with supplier standard 12,
Petitioner provided the Hearing Officer with Purchase Option Letters and patient
insurance information signed by beneficiaries. After review of the documents
provided, the Hearing Officer found, in somewhat murky language:

The beneficiary has initialized on each of these Purchase Option Letters
that are signed and dated, that they, the beneficiary, had been instructed on
the use of the equipment, as well as the warranty coverage. However no
documentation outlining proper administration of the product has been sent
for review to verify what information the patient received.

P. Ex. 1, at 3.

Mr. Tyler declares that the “Officer’s findings and conclusion of non-compliance are
directly controverted by the evidence submitted by the DME supplier.” P. Ex. 11, at 4.

A review of those documents, now before me as P. Ex. 5, show 33 documents signed and
initialed by each beneficiary attesting to the following statement: “Instruction on the safe
and effective use of the equipment was given before the beneficiary start[s] using the
equipment on the date below.” The dates on the signed documents are as follows:

6/26/08, 7/1/08, 7/1/08, 7/1/08, 7/2/08, 7/7/08, 7/24/08, 7/31/08, 7/31/08,
8/13/08, 8/13/08, 8/13/08, 8/13/08, 9/30/08, 10/1/08, 10/02/08, 10/2/08,
10/2/08, 10/2/08, 10/2/08, 10/3/08, 10/10/08, 10/10/08, 10/10/08, 10/07/08,
10/16/08, 10/16/08, 10/16/08, 10/21/08, 10/21/08, 10/23/08, 11/18/08, and
one document was undated.
P. Ex. 5.

Although Petitioner may arguably have produced documents with beneficiaries’
signatures indicating that they received instructions on how to use the Medicare-covered
items safely and effectively (P. Ex. 5, at 2-69), I need not decide that question. For the
plain fact is that the dates on the documents cover the period between June 26 and
November 18, 2008, a period of time well after the May 29, 2008 on-site inspection.
They are valueless as support for Petitioner’s assertion that it was in compliance with
supplier standard 12 at the time of the on-site inspection, on May 29, 2008. Thus,
CMS’s assertion — that Petitioner was not in compliance with supplier standard 12 at the
time of that inspection — remains unchallenged. No genuine issue of material fact exists
with reference to CMS’s assertion. | find that Petitioner did not meet the requirements of
supplier standard 12 at the relevant time.

C. Petitioner’s constitutional arguments.

Petitioner complains that its “Due Process rights under the Fifth and Fourteenth
Amendments to the U. S. Constitution” have been violated in these proceedings and those
below. P. Ex. 11, at 15. Petitioner also raises other arguments based on constitutional
questions of unlawful taking under TEX. CONST. art. 1, § 19. But Petitioner’s
constitutional arguments present no issue suitable for my resolution, as they lie beyond
my authority to consider. Wisteria Care Center, DAB No. 1892 (2003); Hermina Traeye
Memorial Nursing Home, DAB No. 1810 (2002); Sentinel Medical Laboratories, Inc.,
DAB No. 1762 (2001). Whatever factual disputes may attend Petitioner’s constitutional
claims, those facts are not material to the issue over which I exercise jurisdiction.

D. Petitioner’s challenge to CMS’s exhibits.

Petitioner challenges all of CMS’s exhibits. P. Br. at 6-7. Petitioner cites FED, R. CIv. P.
56(e) to support its argument that CMS’s exhibits are inadmissible because the
documents are not “sworn or certified copies”. Petitioner further argues that Mr. Porter’s
declaration fails to reference or authenticate the exhibits. Jd. at 7.

Petitioner’s objections are unsound. It is well-established in these administrative
proceedings that although the Federal Rules of Civil Procedure can be used as guidance,
the Rules are not controlling. See, e.g., Guardian Health Care Center, DAB No. 1943, at
15 (2004). The Board made clear in Guardian that the Administrative Procedure Act, 5
U.S.C. § 556(d), provides the standard for the admission of oral and documentary
evidence, and allows an ALJ to admit all evidence with the exception of irrelevant,
immaterial, or unduly repetitious material, but obliges the ALJ to consider objections to a
document’s authenticity or genuineness. Here, Petitioner fails to assert that CMS’s
exhibits are not authentic or complete. Therefore, I find as fact that they are all reliable,

complete, and authentic. Some are from publicly-available sources. Petitioner’s
objection is overruled, and CMS Exs. 1-13 are admitted.

E. CMS’s challenge to Petitioner’s Exhibits 6 and 8.

As part of its proffer of evidence, Petitioner submitted P. Exs. 6 and 8. Neither of these
documents was before the Hearing Officer for her review and are now being filed for the
first time. CMS objects to both of these documents. CMS Reply at 4.

CMS objects to P. Ex. 6, noting that it is a photo of Petitioner’s office. CMS argues that
the photo does not accurately depict the room as it existed at the time of the inspection.
As I have pointed out above, I am not considering Petitioner’s compliance with supplier
standard 7 in this decision. Accordingly, I expressly decline to rule on CMS’s objection
to P. Ex. 6 as that objection has been presented, but I exclude P. Ex. 6 as irrelevant.

CMS also objects to P. Ex. 8. CMS claims that Petitioner fails to provide an explanation
of its failure to produce the material at an earlier stage of these proceedings. P. Ex. 8 isa
document identified as a “Manufacturer’s Instructions on Equipment”. The regulations
govern a supplier’s submission of evidence, and 42 C.F.R. § 405.874(c)(5) addresses the
timing of a supplier’s presentation of supporting evidence: if the supplier fails to provide
evidence before the contractor’s Hearing Officer issues a decision, the supplier is
precluded form introducing new evidence at higher levels of the appeal process.
However, 42 C.F.R. § 498.56(e) allows an ALJ to examine any new evidence submitted
by the supplier to determine if some justification exists for the late submission. The
documents are relevant to my determination of whether Petitioner was in compliance
with the requirements of supplier standard 12. Since that determination is made in the
context of summary disposition, and since every reasonable opportunity ought to be
extended to Petitioner in making its record in that context, I find good reason to allow
Petitioner to submit the evidence for the first time at this level of its appeal. CMS’s
objection to P. Ex. 8 is overruled, and P. Ex. 8 is admitted.

F. Summary Disposition is appropriate.

Petitioner’s hearing rights in this case are governed by 42 C.F.R. Part 498. These
regulations do not address explicitly the circumstances under which an ALJ may grant
summary disposition or judgment. However, the regulations have been interpreted
consistently in this forum and by the Board to allow summary disposition in those
circumstances where summary judgment would be appropriate under FED. R. CIv. P.
56(c). Summary disposition is appropriate where there are no disputed issues of material
fact and where the only questions that must be decided involve either questions of law or
the application of the law to the undisputed facts. Livingston Care Center, DAB No.
1871, at 6 (2003).
A party opposing summary disposition must allege facts that, if true, would refute the
facts relied upon by the moving party. See, e.g, FED. R. Clv. P. 56(c); Garden City
Medical Center, DAB No. 1763 (2001); Everett Rehabilitation and Medical Center, DAB
No. 1628, at 3 (1997). A party may not simply state that it disputes allegations of fact in
order to avoid the entry of summary disposition; it must describe the asserted facts
sufficiently to establish a genuine dispute as to a material factual issue. In evaluating
whether there is a genuine issue as to a material fact, an ALJ must view the facts and the
inferences reasonably to be drawn from the facts in the light most favorable to the
nonmoving party. See Pollock v. American Tel. & Tel. Long Lines, 794 F.2d 860, 864
(3rd. Cir. 1986); Madison Health Care, Inc., DAB No. 1927, at 5-7 (2004). This latter
formulation of the summary-disposition principle has been emphasized by the Board in
Brightview Care Center, DAB No. 2132, and in Oklahoma Heart Hospital, DAB No.
2183 (2008). It is at this specific point that Petitioner has failed: no facts have been
asserted that would show, or would reasonably support inferences of, a genuine issue of
material fact. Having applied the standard I recite above, I find and conclude that CMS is
entitled to summary disposition in its favor.

II. Conclusion

For the reasons set out above, I find and conclude that Petitioner’s Medicare supplier
number was appropriately revoked pursuant to 42 C.F.R. § 424.57(d). The CMS Motion
for Summary Disposition should be, and it is, GRANTED.

/s/
Richard J. Smith
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Mary Louise Chrostowski, M.D., ) Date: July 20, 2009

)
Petitioner, )
)

-V.- ) Docket No. C-09-225

) Decision No. CR1975
The Inspector General. )
)

DECISION

Petitioner, Mary Louise Chrostowski, M.D., appeals her exclusion from
participation in Medicare, Medicaid, and all other federal health care programs
pursuant to section 1128(b)(4) of the Social Security Act (Act) (42 U.S.C.

§ 1320a-7(b)(4)) for as long as her medical license in Tennessee is revoked. I find
a basis for the exclusion. I further find that the Act and regulations mandate the
length of the exclusion.

I. Background

The Inspector General for the Department of Health and Human Services (1.G.)
notified Petitioner by letter dated November 28, 2008 , that she was being
excluded from participation in Medicare, Medicaid, and all federal health care
programs pursuant to section 1128(b)(4) of the Act because she lost her license to
practice medicine or provide health care as a medical doctor in the State of
Tennessee while a formal disciplinary proceeding was pending before the
Tennessee Board of Medical Examiners for reasons bearing on her professional
competence, professional performance, or financial integrity. Her exclusion, if
upheld, became effective December 18, 2008 and remains in effect until such time
as she regains her license as a medical doctor in Tennessee. Petitioner timely
requested review. Her case was assigned to me for resolution.
On April 3, 2009, I convened a telephone prehearing conference with the parties,
the substance of which is memorialized in my Order dated April 3, 2009. During
the call, the parties agreed to disposition of this matter based on the parties’
written submissions together with any supporting documentary evidence.

The I.G. submitted briefing and three exhibits (1.G. Exs. 1-3); those three I.G.
Exhibits are admitted. Petitioner submitted briefing, but proffered no exhibits of
her own. The LG. submitted a reply and Petitioner submitted a sur-reply.

II. Discussion
A. Issues

The Secretary of Health and Human Services (the Secretary) has by regulation
limited my scope of review to two issues:

Whether there is a basis for the imposition of the exclusion; and,
Whether the length of the exclusion is unreasonable.

42 C.F.R. § 1001.2007(a)(1).
B. Applicable Law

Petitioner's right to a hearing by an administrative law judge (ALJ) and judicial
review of the final action of the Secretary is provided by section 1128(f) of the Act
(42 U.S.C. § 1320a-7(f)).

Pursuant to section 1128(b)(4)(A) of the Act, the Secretary may exclude from
participation in Medicare, Medicaid, and all federal health care programs, any
individual whose license to provide health care is revoked or suspended by any
state licensing authority for reasons bearing upon the individual’s professional
competence, professional performance, or financial integrity. See also, 42 C.F.R.
§ 1001.501(a)(1). Any exclusion taken under section 1128(b)(4) must remain in
effect for as long as the license is revoked, suspended or lost in the State taking
action. Act, § 1128(c)(3)(E); 42 C.F.R. § 1001.501(b).

C. Analysis

My conclusions of law are in bold followed by my findings of fact and analysis.
1. Because Petitioner agreed to revocation of her license to
practice medicine by the Tennessee Board of Medical
Examiners while a formal disciplinary action related to her
professional competence and professional performance was
pending, the I.G. may exclude her from participation in
Medicare, Medicaid, and other federally funded health care
programs.

The statute authorizes the Secretary to exclude from participation in any federal
health care program an individual whose license to provide health care has been
revoked or suspended by any State licensing authority, or who otherwise lost such
a license for reasons bearing on the individual’s professional competence,
professional performance, or financial integrity. Act, § 1128(b)(4); see also 42
C.F.R. § 1001.501.

The uncontroverted record establishes that on March 19, 2008, the Tennessee
Board of Medical Examiners (TBME) issued an Agreed Order revoking
Petitioner’s license to practice as a medical doctor. I.G. Ex. 3. The TBME found
that Petitioner’s conduct violated several statutes and rules of the Tennessee
Medical Examiners Practice Act.? I.G. Ex. 3, at 7. Therefore, the TBME took
action to revoke Petitioner’s license “in order to protect the health, safety and
welfare of the citizens of the State of Tennessee.” I.G. Ex. 3, at 11.

Petitioner admits that her license was revoked: she admits that she signed the
Agreed Order to revoke her license while formal disciplinary action pended
against her for reasons bearing on her professional competence and professional
performance. She contends that, “If I had knowledge, whatsoever of my
Attorney[‘s] . . . lack of professional competence and lack of professional ethical
performance, I would never would have hired him to represent me . . . I never
would have signed my livelihood away.” Petitioner’s Brief at 3.

Unfortunately, Petitioner’s contentions are no defense to the proposed exclusion.
The sole issue before me is whether a basis exists for the I.G.’s exclusion action.

' Although she had a right to contest the charges, Petitioner agreed in
writing to the imposition of the Order. I.G. Ex. 3, at 2, and 11-13.

* The Board found among other things that Petitioner failed to perform an
appropriate history or physical examination and failed to document any exam in
order to justify the prescribing and dispending of narcotics and other medications
and controlled substances for over 150 patients.
Clearly there is, and Petitioner admits that there is. Petitioner is an educated and
articulate individual, and her signature on the document acknowledges that she
read and understood the Agreed Order, and approved its entry by the TBME. I.G.
Ex. 3, at 13. That Order sets forth explicitly that she was aware of her rights and
that she would be giving up those rights if she agreed to the Order without further
process. Finally, Petitioner’s collateral attack against her attorney is simply
irrelevant; the example she cites for his lack of professional competence or ethical
performance is in all respects unrelated to his representation of her before the
Tennessee Board of Medical Examiners. Therefore, I conclude that Petitioner’s
license to practice as a medical doctor was revoked and the revocation was for
reasons related to Petitioner’s professional competence and performance. Thus, I
conclude that a basis exists for the I.G.’s exclusion of Petitioner.

2. The period of exclusion is reasonable as a matter of law.

The duration of the exclusion under section 1128(b)(4) is set by statute. Section
1128(c)(3)(E) of the Act specifies that the exclusion shall not be less than the
period during which Petitioner’s state license to provide health care is revoked,
suspended, or surrendered. See also, 42 C.F.R. § 1001.501(b)(1). The Secretary’s
regulations provide that the I.G. will consider a request for reinstatement only after
the individual obtains a valid license in the state where the individual’s license was
originally suspended or revoked. 42 C.F.R. § 1001.501(b)(4).

Til. Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare,
Medicaid, and all federal health care programs effective December 18, 2008, 20
days after the November 28, 2008 I.G. notice of exclusion, and for a period
coterminous with her license revocation.

/s/
Richard J. Smith
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:

Emmanuel Ridge Hospice Ministry,
(CCN: 25-1588)

Date: July 14, 2009

Petitioner,

Docket No. C-09-324
Decision No. CR1974

-V.-

Centers for Medicare & Medicaid
Services.

eS SSS SS HS SH HS ES SH DS

DECISION

THIS MATTER IS BEFORE ME on the Motion for Summary Disposition filed by
the Centers for Medicare & Medicaid Services (CMS) on April 9, 2009. By its
Motion, CMS seeks affirmation of its December 19, 2008 determination to
terminate the Medicare participation agreement of Petitioner Emmanuel Ridge
Hospice Ministry (ERHM). Because no genuine issues of material fact appear in
dispute in the record before me, and because settled law supports CMS’s position,
I GRANT the CMS Motion and affirm its termination of ERHM’s Medicare
agreement.

I. Procedural Background

Until June 30, 2008, ERHM operated a hospice in Florence, Mississippi under a
license granted to it by the Mississippi State Department of Health (MSDH).
ERHM allowed its license to expire on that date, and did not submit an application
to renew its license until mid-July, 2008. MSDH determined that it would not
renew ERHM’s license, and, on December 4, 2008 notified CMS that ERHM was
then unlicensed as a hospice and recommended that CMS terminate ERHM’s
Medicare agreement.
CMS acted on the MSDH notification: on December 19, 2008, CMS notified
ERHM that its Medicare provider agreement was terminated effective December
4, 2008, giving as its reason for the termination ERHM’s failure to be licensed as a
hospice by the State of Mississippi. CMS relied on the terms of 42 C.F.R.

§ 418.116.

On February 23, 2009, ERHM mailed a three-page letter with attachments to the
CMS regional office in Atlanta, Georgia. That office forwarded the letter and
attachments to the Civil Remedies Division, since the letter’s content made it clear
that ERHM requested a hearing on its termination of its participation in the
Medicare program. My Orders of March 19, 2009, and May 6, 2009, a telephonic
conference held on May 6, 2009, and my letter of June 15, 2009, established the
procedural outline by which this case has progressed.

ERHM’s hearing request included 25 pages of attached documents marked
Exhibits A, B-1, B-2, and C-F, and the June 3, 2009 “Informal Brief of Petitioner”
included an additional 64 pages of attached documents marked Exhibits A, B, C-1,
C-2, and D-H. Although much of the latter submission is duplicative of the
material submitted with ERHM’s hearing request, and although most of both
submissions consists of material irrelevant to the issue before me, I have admitted
it all as marked and have reviewed it all. I have also admitted the two exhibits
proffered by CMS, CMS Exs. | and 2.

II. Issue

The sole legal issue before me is whether CMS was authorized to terminate
ERHM’s Medicare agreement because ERHM was no longer licensed to operate a
hospice by the State of Mississippi.

III. Controlling Statutes and Regulations

In order to participate in the Medicare program, a hospice must have an approved
provider agreement with CMS. The statutory requirements for hospices providing
Medicare services are established at section 1861(dd) et seq. of the Social Security
Act (Act), 42 U.S.C. § 1395x(dd) et seq.

42 C.F.R. § 418.116 provides that, as a condition of participation in the Medicare
program as a provider of hospice services, a “[h]ospice and its staff must operate
and furnish services in compliance with all applicable Federal, State, and local
laws and regulations related to the health and safety of patients. If State or local
law provides for licensing of hospices, the hospice must be licensed.”
42 C.F.R. § 489.53(a)(3) grants CMS the discretionary authority to terminate any
Medicare provider agreement if it “no longer meets the appropriate conditions for
participation . . .” in the Medicare program.

IV. Findings of Fact and Conclusions of Law
I find and conclude as follows:

1. ERHM’s license to operate as a hospice expired on June 30, 2008, and was not
renewed or extended beyond that date by MSDH.

2. Because ERHM was not licensed to operate as a hospice beyond June 30, 2008,
its hospice operation was after that date not in compliance with the condition for
participation in the Medicare program set out at 42 C.F.R. § 418.116.

3. By the terms of 42 C.F.R. § 489.53(a)(3), CMS was authorized to terminate
ERHM’s Medicare provider agreement because it no longer met the condition for
participation in the Medicare program set out at 42 C.F.R. § 418.116.

4. There are no genuine issues of material fact in dispute in this record and CMS
is entitled to summary disposition in its favor. I have viewed the facts and
inferences reasonably to be drawn from the undisputed facts in the light most
favorable to ERHM, the non-moving party. Brightview Care Center, DAB No.
2132 (2007).

V. Discussion

The State of Mississippi forbids the unlicensed operation of a hospice facility, and
extends its prohibition broadly to include the use of the title “hospice” in a
facility’s name or the general providing of hospice-like care without a license.
MISS. CODE ANN. § 41-85-5(1). Until June 30, 2008, ERHM acknowledged the
application of that statute to its hospice operation by seeking and being granted
Hospice Operator License Number 096. On or about July 14, 2008, ERHM again
acknowledged the application of the statute by seeking the renewal of its hospice
license.

It appears from the documents attached to ERHM’s request for hearing that during
the period immediately prior to the expiration of its hospice license on June 30,
2008, ERHM had become involved in a somewhat contentious inspection process
conducted by representatives of MSDH. The details of the inspection process are
not relevant here, but what is relevant is the undisputed fact that ERHM’s license
expired on June 30, 2008, and was not renewed thereafter.
The condition of participation here at issue is set out at 42 C.F.R. § 418.116. The
language in which the condition is framed is unambiguous: “If State or local law
provides for licensing of hospices, the hospice must be licensed.” The terms of 42
C.F.R. § 418.116 became effective December 2, 2008. 73 Fed. Reg. 32,204 (June
5, 2008). It should be noted that the regulation’s publication date in the Federal
Register was prior to the expiration date of ERHM’s license, and that CMS did not
effectuate the termination of ERHM’s Medicare eligibility until December 4,
2008, two days after the effective date of the new regulation.

In the language of 42 C.F.R. § 489.53(a)(3), “CMS may terminate the agreement
with any provider if CMS finds that . . . [i]t no longer meets the appropriate
conditions of participation... .” The choice to terminate lies in CMS’s discretion.
See United Medical Home Care, Inc., DAB No. 2194 (2008).

ERHM appears here through its non-attorney president and chief executive officer.
I have for that reason treated this matter as if ERHM appears pro se, and have
accordingly remained mindful of the Departmental Appeals Board’s admonition
that pro se litigants be afforded “some extra measure of consideration” in
developing their cases. Louis Mathews, DAB No. 1574 (1996); Edward J. Petrus,
Jr., M.D., et al., DAB No. 1264 (1991). My Order of May 6, 2009, and my by
direction letter of June 15, 2009, demonstrate that extra measure of consideration.
I have searched ERHM’s pleadings for any arguments or contentions that might
amount to a colorable defense to the termination. I have found nothing that could
be so construed: ERHM argues vigorously that MSDH improperly denied it a
hospice license, and complains stridently about certain aspects of the Medicare
program, but ERHM has never asserted that it actually had an MSDH-issued
hospice license after June 30, 2008, and that is the material question. Once that
question is resolved against ERHM — as it is here by every element of the record
before me, which record is uncontradicted by any claim or assertion by ERHM —
summary disposition in favor of the CMS Motion is required as a matter of law.

Conclusion

For all of the reasons discussed above, CMS’s Motion for Summary Disposition
should be, and it is, GRANTED. I affirm CMS’s determination to terminate
Petitioner ERHM’s participation in the Medicare program effective December 4,
2008.

/s/
Richard J. Smith
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Shields Richmond Nursing Center, ) Date: July 10, 2009

(CCN: 05-5292) )
)
Petitioner, )
)

-V.- ) Docket No. C-08-371

) Decision No. CR1973
Centers for Medicare & Medicaid )
Services. )
a )

DECISION

I dismiss the hearing request filed by Petitioner, Shields Richmond Nursing Center. I do
so because Petitioner did not file a timely hearing request and has not shown good cause
for its failure to file a timely hearing request.

I. Background

Petitioner is a long-term care facility located in Richmond, California. A compliance
survey of Petitioner was conducted by the California Department of Health Services (state
survey agency) on or about February 7, 2007, and on April 10, 2007. By letter dated
February 22, 2007, the state survey agency notified Petitioner that it was not in
compliance with federal participation requirements for nursing homes, and that it was
recommending various remedies.

By letter dated May 1, 2007, CMS notified Petitioner that it concurred with the
recommendations of the state survey agency, and that it was imposing, among other
remedies, a per instance civil money penalty (CMP) of $10,000. CMS further informed
Petitioner that if it disagreed with the determination, a hearing was available before an
administrative law judge (ALJ) pursuant to 42 C.F.R. Part 498, and that a written request
for a hearing must be filed no later than 60 calendar days from the date of receipt of
notice.

2

Petitioner then engaged in informal dispute resolution (IDR) relative to the deficiency
findings of both the February 7, 2007 and April 10, 2007 surveys. Ultimately, the state
survey agency upheld the scope and severity level of the deficiency findings of the
February 7, 2007 survey, however, it reduced the scope and severity level of the
deficiency findings of the April 10, 2007 survey.

Based on the reduction of the scope and severity level of the findings of the April 10,
2007 survey, CMS informed Petitioner in a June 20, 2007 letter that the deficiency
findings and remedies from the survey completed on April 10, 2007, had been rescinded.
n the same letter, Petitioner was reminded that the deficiencies and remedies from the
February 7, 2007 survey still remained, and that any request for a hearing challenging the
findings of noncompliance resulting from the February 7, 2007 survey, had to be filed no
later than 60 calender days from receipt of the May 1, 2007 notice letter.

By letter dated March 4, 2008, CMS advised Petitioner that because it failed to timely
request a hearing challenging CMS’s findings of noncompliance from the February 7,
2007 survey, the per instance CMP in the amount of $10,000 that was imposed as a result
of the findings of noncompliance was now due and payable on March 19, 2008.

By letter dated March 17, 2008, Petitioner requested a hearing, and provided an
explanation as to why it did not file an appeal earlier.

By letter dated March 26, 2008, Petitioner requested an extension of time to file its
hearing request.

On April 14, 2008, the case was assigned to me for hearing and decision.

CMS filed a motion to dismiss Petitioner’s hearing request on the basis of untimeliness,
along with a brief (CMS Br.) and nine attached exhibits. Petitioner filed a response brief
(P. Br.) along with seven supporting exhibits opposing CMS’s motion to dismiss.
Without objection from the parties, I admit into evidence CMS Exhibits (CMS Exs.) 1-9,
and Petitioner Exhibits (P. Exs.) 1-7.

After consideration of the parties’ written arguments, documentary evidence, and
applicable law, I grant CMS’s motion to dismiss. In doing so, I find that Petitioner’s
hearing request was untimely filed and the time for filing a request for hearing has not
been extended as Petitioner has not shown good cause for its failure to file a timely
hearing request.
II. Issues
The issues in this case are:
Whether Petitioner filed a timely request for hearing, and if not;

Whether Petitioner has shown good cause for receiving an extension of time to file
a request for hearing.

Ill. Applicable law and regulations

In cases involving CMS, a party is entitled to a hearing only if that party files its request
within the time limits established by 42 C.F.R. § 498.40(a)(2), unless the period for filing
is extended. In order to be entitled to a hearing, a party must file its request within 60
days from receipt of a notice of a determination by CMS to impose a remedy. The date of
receipt of a notice is presumed to be five days after the date on the notice, unless there is a
showing of actual receipt on an earlier or later date. 42 C.F.R. § 498.22(b)(3). An ALJ
may extend the time within which a hearing request may be filed based on a showing of
good cause to justify an extension of time. 42 C.F.R. § 498.40(c)(2). An ALJ may
dismiss a request for hearing which is not timely filed. 42 C.F.R. § 498.70(c).

IV. Findings and Discussion

I make findings of fact and conclusions of law (Findings) to support my decision in this
case. I set forth each finding below as a separately numbered heading. I discuss each
Finding in detail.

1. Petitioner is not entitled to a hearing because it did not file a
timely hearing request.

CMS faxed Petitioner a notice of deficiencies along with the remedies it determined to
impose on May 1, 2007. P. Ex. 2. Petitioner does not dispute that it actually received the
notice on May 2, 2007. CMS Ex. 7, at 3. It was not until March 17, 2008, 260 days after
Petitioner’s receipt of CMS’s notice letter, that Petitioner filed a request for a hearing
before an ALJ.

42 C.F.R. § 498.40(a)(2) expressly provides that:
4

[an] affected party or its legal representative or other authorized official
must file the request for hearing in writing within 60 days from the receipt
of the notice of initial, reconsidered, or revised determination unless that
period is extended....

The filing of Petitioner’s request was clearly well beyond the 60 day period required by
the regulations. Petitioner’s receipt of the notice letter on May 2, 2007, required it to file
a request for an administrative hearing no later than July 1, 2007.

2. Petitioner has not established good cause for me to extend the
deadline for it to file a hearing request.

If the hearing request was not filed within 60 days, the affected party or its legal
representative may file with the ALJ a written request for an extension of time stating the
reasons why the request was not filed timely. 42 C.F.R. § 498.40(c)(1). An ALJ may
extend the time within which a hearing request may be filed based on a showing of good
cause to justify an extension of time. 42 C.F.R. § 498.40(c)(2). Petitioner did indeed file
a request for an extension of time to appeal the CMS determinations from the February 7,
2007 survey. However, Petitioner filed the request on March 26, 2008, 269 days after the
receipt of CMS’s notice letter and after it had filed its request for hearing. CMS Ex. 9.
Petitioner believes that it acted in good faith and that it had legitimate reasons for not
requesting a hearing within the statutory guidelines. Specifically, Petitioner explains that:

the state survey agency’s letter of February 22, 2007, states that remedies
would be recommended to CMS if substantial compliance had not been
achieved when the facility was re-surveyed, and that penalties were to be
imposed if it was determined that Petitioner was not in substantial
compliance with Medicare participation requirements on March 7, 2007;

CMS’s letter of June 20, 2007, indicated that as a result of IDR the
remedies during the April 10, 2007 survey had been rescinded; and
therefore it did not request a hearing to challenge the certification/findings
of noncompliance based on the February 7, 2007 survey because of its
belief that it had been given an opportunity to correct by the state.

P. Br. 3-5.
5

Petitioner argues that it reasonably relied on representations that no penalties would be
imposed if compliance was achieved, and that the delay in requesting a hearing was
caused by the, ”[state survey agency and CMS’s] own words and actions alone which
have created confusion and ambiguity that gives rise to this seemingly [sic] Motion to
Dismiss.” P. Br. 5.

The fundamental issue to be decided here is whether Petitioner has shown good cause for
me to extend the time to file a request for hearing beyond the 60 days provided in the
regulations. 42 C.F.R. §§ 498.40(c)(1), (c)(2). Good cause is not defined in the
regulations. However, the Departmental Appeals Board has held that “good cause”
means circumstances beyond an entity’s ability to control which prevented it from making
a timely request for hearing. Cary Health and Rehabilitation Center, DAB No. 1771
(2000); Hospicio San Martin, DAB No. 1554 (1996).

Thus, I examine the facts of this case to determine what circumstances, if any, beyond
Petitioner’s control, prevented it from filing a timely hearing request. Petitioner’s
essential argument is that the state survey agency and CMS’s confusing and ambiguous
notice letters caused it to believe that penalties would only be imposed if it failed to be in
compliance with the revisit survey. P. Br. 4-5.

The notices of imposition of sanctions dated May 1, 2007 and June 20, 2007, advised
Petitioner that its facility had a right to contest the findings of noncompliance that
resulted in the imposition of remedies, by filing a written request within 60 days of
receipt of such notices. CMS Exs. 1, 5.

The notice letters unequivocally refer to the specific section of the regulation that
establishes that Petitioner has 60 days from the receipt of the notice to appeal the agency
action. Petitioner has to show that it was prevented from filing a timely request for
hearing due to circumstances beyond its control. Hospicio San Martin, at 2. Petitioner
has maintained from the beginning that it was the state survey agency’s ambiguous and
poorly written notice letter of February 22, 2007, that started a series of
misunderstandings that ultimately caused it to file out of time, and therefore, good cause
exists for me to extend the time to file a request for hearing. Petitioner’s arguments are
without merit. A plain reading of the notice letters and the regulatory language regarding
Petitioner’s appeal rights, leads me to conclude that Petitioner simply did not read the
information carefully. Petitioner’s reliance on the state survey agency’s letter written and
sent prior to CMS’s initial determination letter of May 1, 2007, which actually imposed
remedies, is unreasonable and illogical. The state survey agency’s letter of February 22,
2007, is not ambiguous. The letter states in part that:
6

[rJemedies will be recommended for imposition by the Centers for
Medicare & Medicaid Services (CMS) Regional Office and/or the State
Medicaid Agency if your facility has failed to achieve substantial
compliance....

P. Ex. 1, at 2.

The plain meaning of this section is that remedies would be imposed if Petitioner failed to
achieve substantial compliance. Remedies were imposed and Petitioner was placed on
notice of those remedies by CMS’s letter of May 1, 2007. Petitioner subsequently sought
to resolve the allegations of noncompliance through IDR. Petitioner was then advised by
CMS by letter dated June 20, 2007, that remedies from the April 10, 2007 survey were
rescinded, but that the findings of noncompliance and remedies from the February 7, 2007
survey still remained. Indeed, the letter states plainly that:

[w]e remind you that since the notice was faxed to you by facsimile on May
1, 2007, your appeal must be filed no later than sixty (60) days from the
date indicated on that notice.

CMS Ex. 5, at 3.

Thus, Petitioner was clearly advised that it still had not achieved substantial compliance
and that remedies would be imposed. Moreover, if Petitioner’s status was still unclear, it
was specifically reminded that it must file an appeal within 60 days of the May 1, 2007
notice. Therefore, upon receipt of the June 20, 2007 notice letter, Petitioner still had 11
days in which to file a request for hearing. Despite this reminder, Petitioner did not file a
hearing request. Indeed, if Petitioner questioned whether or not it needed to request a
hearing, it should have followed the instructions in the May 1, 2007 and June 20, 2007
letters which provided the name and number of a CMS employee in which it could ask
questions. CMS Ex. 1, at 5; CMS Ex. 5, at 3. Petitioner contends that by phone call and
e-mail a CMS representative, “was made aware of Petitioner’s position and responded
informally and without apparent authority to explain the details of CMS’s position.” P.
Br. 3. Petitioner implies that a CMS representative gave it misleading information.
However, CMS’s e-mail of August 22, 2007, merely recites the same information
contained in its notice letters, and does not provide any information to the contrary. P.
Ex. 4. Petitioner’s willful or negligent failure to understand the clear and plain language
of the June 20, 2007 letter from CMS does not establish good cause for me to grant an
extension of time to receive Petitioner’s request for hearing.
V. Conclusion

Based on my review of the applicable law, the facts of the case, and the arguments
advanced in the briefs filed by the parties, I conclude that Petitioner’s hearing request was
untimely filed, and good cause does not exist to extend the time for filing.

Accordingly, CMS’s motion to dismiss is granted.

/s/
Alfonso J. Montafio
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Johnnie Lee Winfield, ) Date: July 2, 2009

)
Petitioner, )
)

-V.- ) Docket No. C-09-282

) Decision No. CR1971
The Inspector General. )
)

DECISION

I sustain the determination of the Inspector General (I.G.) to exclude Petitioner, Johnnie
Lee Winfield, from participating in Medicare and other federally funded health care
programs for a period of 15 years.

I. Background

Petitioner and his wife (a physician who received money from the Medicare program)
owned and operated RehabSource, Inc. (clinic) in Greenville, Mississippi. On December
31, 2008 the I.G. notified Petitioner that he had determined to exclude him from
participation in Medicare and other federally funded health care programs because,
allegedly, he had been convicted of a criminal offense as is described at section
1128(a)(1) of the Social Security Act (Act). The I.G. told Petitioner that the length of the
exclusion, 15 years, was based on evidence relating to three circumstances: the acts
resulting in his conviction caused a financial loss to a government program of more than
$5000; the acts were committed over a period of one year or more; and the sentence
imposed by the court included incarceration. I.G. Ex. 3.

Petitioner requested a hearing and the case was assigned to me for a hearing and a
decision. Neither party requested that I convene an in-person hearing to receive
testimony. Each party filed a brief. The LG. filed three proposed exhibits which he
identified as I.G. Ex. 1 — LG. Ex. 3. Petitioner filed no proposed exhibits, but he filed an
attachment with his brief providing explanations for some answers in his brief.
IL. Issue, findings of fact and conclusions of law
A. Issues
The issues in this case are whether:
1. Exclusion of Petitioner is mandated by section 1128(a)(1) of the Act; and
2. An exclusion of 15 years is reasonable.
B. Findings of fact and conclusions of law

1. Petitioner’s exclusion is mandated by section 1128(a)(1) of the Act
because Petitioner was convicted of a criminal offense related to the
delivery of items or services under the Medicare program.

Section 1128(a)(1) of the Act mandates that the 1.G. exclude any individual who is
convicted of a criminal offense related to the delivery of an item or service under
Medicare or a State health care program. In this case Petitioner’s exclusion is mandated
by the fact that he was convicted of a criminal offense related to the delivery of items or
services by the United States District Court for the Northern District of Mississippi.

The evidence establishes that, on March 31, 2008, based on his guilty plea, Petitioner was
found guilty of conspiracy to commit health fraud. IG. Ex. 1.

Petitioner’s plea was in response to the first count of an indictment which alleges that
between December 2003 and May 2005, Petitioner and his wife knowingly and willfully
combined, conspired, and agreed with each other and with others to commit and aid and
abet certain offenses against the United States. LG. Ex. 2, at 2. Specifically, the
indictment alleges that Petitioner violated the Health Care Fraud statute by knowingly
and willfully executing a scheme: (1) to defraud the Medicare program; and (2) to obtain
money and property owned by and under the custody and control of the Medicare
program by false pretenses, “in connection with the delivery of or payment for health
care benefits, items and services, in violation of Title 18, United States Code Section
1347,” ie., to falsely bill Medicare. I.G. Ex. 2, at 2-3.

The indictment alleges that the clinic falsely billed Medicare in the amount of $971,802
for evaluations and physical therapy services and received $458,237. LG. Ex. 2, at 3.
For each Medicare check received by the physician directed group, one or more
representations below regarding evaluations and physical therapy services were false.
The clinic falsely represented that the services were:
(a) initiated by a physician’s direct and personal medical evaluation;

(b) administered for a diagnosis determined to be reasonable and necessary
for the medical condition of the patient under Medicare guidelines;

(c) ordered by a physician as an integral part of a physician’s continuing
active participation and management of the course of treatment;

(d) provided by qualified persons; and

(e) actually provided.

LG. Ex. 2, at 3.

Petitioner argues that he had no ownership in the clinic; that he is not listed on the
corporate documents; that he is not listed on the Planters bank account and did not have
any type of signing privileges; and that he has never received compensation for any
services performed in relationship to any type of managerial or day to day operations of
the clinic. However, Petitioner acknowledges, and the evidence shows, that he was
convicted of a criminal offense for which exclusion is required. The facts underlying
Petitioner’s conviction are not reviewable in this forum. 42 C.F. R. § 1001.2007(d).

The indictment is clear as to the nature of the crime to which Petitioner pled guilty. It
explicitly provides that Petitioner executed a scheme to fraudulently obtain money from
Medicare, “in connection with the delivery of or payment for health care benefits, items
and services ....” LG. Ex. 2, at 2. The crime, conspiracy to commit health fraud,
clearly meets the criteria of section 1128(a)(1). It is well-established that theft from the
Medicare program by falsely claiming reimbursement for items or services that were not
provided as claimed constitutes a crime related to the delivery of a healthcare item or
service.

2. A 15-year exclusion is reasonable.

The purpose of imposing an exclusion is remedial. The Act’s purpose is to protect
federally funded health care programs and their beneficiaries and recipients from
individuals and entities who are untrustworthy.

As a matter of law, an individual must be excluded for a minimum of five years if he or
she is convicted of a crime for which section 1128(a)(1) mandates exclusion. Act,
section 1128(c)(3)(B). The I.G. is authorized to exclude an individual beyond the
minimum five year period where the evidence shows that individual to be so
untrustworthy as to necessitate a longer exclusion. When the I.G. excludes an individual
for more than five years that raises the issue of whether his determination is reasonable.

Regulations governing the imposition of exclusions define certain aggravating and
mitigating factors to consider when evaluating the reasonableness of the length of
exclusions. 42 C.F.R. § 1001.102(b), (c). Evidence of aggravating factors may justify
imposing an exclusion longer than the five-year minimum. Evidence of mitigating
factors may justify reducing the length of an exclusion but never below the five-year
minimum.

The regulatory aggravating and mitigating factors establish what evidence is relevant to
the length of exclusion. However, the regulations do not dictate how to weigh that
evidence when deciding whether the length of an exclusion is reasonable.

Here, evidence relating to three aggravating factors strongly supports the I.G.’s
determination to exclude Petitioner for 15 years. There is no mitigating evidence.

First, the evidence proves that Petitioner was convicted of a crime that caused a financial
loss of $5000 or more to the Medicare program. 42 C.F.R. § 1001.102(b)(1). Petitioner
alleges that he did not submit claims on behalf of the clinic.' But he was charged with,
and pled guilty to, a conspiracy which resulted in the loss of more than $458,000 to the
Medicare program. Petitioner was ordered to pay restitution totaling $458,237. I.G. Ex.
1, at 1, 5; LG. Ex. 2, at 3.

Second, Petitioner’s crimes extended over a period of more than a year. 42 C.F.R.

§ 1001.102(b)(2). Petitioner claims that he was only in the office for five or six days
after the first month of the period from December 2003 to May 2005. His day to day
involvement with the clinic is irrelevant, he was charged with, and pled guilty to, crimes
that extended over that period of nearly 18 months. I.G. Ex. 1, at 1; I.G. Ex. 2, at 2.

Third, Petitioner’s sentence included incarceration. 42 C.F.R. § 1001.102(b)(5).
Petitioner was sentenced to twelve months and one day of incarceration. I.G. Ex. 1, at 2.

Petitioner acknowledges that aggravating factors are present, but states that to the best of
his knowledge the work for which the clinic billed Medicare was done, that no one was
injured, and that the money is being paid back to the government. Petitioner’s attachment
at 1.

The evidence as to aggravating factors is sufficient to support an exclusion of 15 years in
this case because it establishes Petitioner to be manifestly untrustworthy. Regardless of
whether anyone was injured or whether Petitioner or his coconspirators began paying
back the money after he was caught, he engaged in a systematic large scale scheme to
steal program monies over a lengthy period of time. His claim of ignorance is not
credible, especially in light of his guilty plea to “conspiracy to commit health care fraud.”

' Petitioner complains that the LG. attempts to support his supposed untrustworthiness
with unproven information related to other counts in the indictment (he only pled guilty
to and was convicted of the first count). However, the I.G.’s case is based solely on the
first count of the indictment.
The persistence and scale with which Petitioner conspired to defraud the Medicare
program establishes a pattern of criminal activity.

Petitioner alleges that mitigating factors exist that would support reducing his exclusion.
He contends that he had no ownership in the clinic; that he is not listed on the corporate
documents; that he is not listed on the Planters bank account and did not have any type of
signing privileges; and that he has never received compensation for any services
performed in relationship to any type of managerial or day to day operations of the clinic.
However, as discussed above, the regulations specifically outline what factors may be
considered mitigating, and none of Petitioner’s evidence falls within that definition.’ See
42 CFR. § 1001.102(c).

/s/
Steven T. Kessel
Administrative Law Judge

> The only factors that may be considered mitigating are: the individual was convicted of
three or fewer misdemeanors and the entire financial loss to a federally funded health

care program was less than $1500; the record in the criminal proceeding, including
sentencing documents, demonstrates that the individual had a mental, emotional, or
physical condition before or during the commission of the offense that reduced his
culpability; or the individual’s cooperation with federal or state officials resulted in others
being convicted or excluded from Medicare, additional cases being investigated or
reports identifying program weaknesses, or the imposition of a civil money penalty or
assessment against anyone. 42 C.F.R. § 1001.102(c).


The Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the case of: )
)
St. Pete Behavioral Health Center, Inc.) Date: June 24, 2009

(CCN: 10-1447), )
)
Petitioner, )
)

-Vv.- ) Docket No. C-08-654

) Decision No. CR1968
Centers for Medicare & Medicaid )
Services. )
)

DECISION

Petitioner, St. Pete Behavioral Center, Inc., is a community mental health center (CMHC)
located in St. Petersburg, Florida that participates in the Medicare program as a provider
of services. Petitioner wants to bill Medicare for services provided at an alternative
location in Lakeland, Florida. The Centers for Medicare and Medicaid Services (CMS)
has determined, initially and on reconsideration, that Petitioner may not bill for those
services under its current provider agreement, but must apply for a separate provider
agreement for the Lakeland site. P. Ex. 1, at 1; P. Ex. 2, at 1. Petitioner now seeks
review of that determination, and CMS has moved to dismiss Petitioner’s hearing
request.

For the reasons set forth below, I conclude that Petitioner is not entitled to a hearing
because CMS’s determination that it must apply for a separate provider agreement is not
an initial determination, as defined in 42 C.F.R. § 498.3(b), subject to my review. I grant
CMS’s motion to dismiss pursuant to 42 C.F.R. § 498.70(b).

' CMS has filed its motion, accompanied by a pre-hearing brief (CMS Br.). Petitioner
filed a response to the motion (P. Response) and a pre-hearing brief (P. Br.). CMS
submitted a reply brief (CMS Reply). CMS submitted five exhibits (CMS Exs. 1-5) and
Petitioner submitted four exhibits (P. Ex. 1-4).
Discussion

1. Petitioner has no right to a hearing because its hearing
request does not appeal an initial determination.

Under section 1866(h)(1) of the Social Security Act (Act), an institution or agency has a
right to a hearing to challenge CMS’s determination that it is not a provider of services.

It is also entitled to a hearing to challenge: 1) CMS’s refusals to enter into a provider
agreement; 2) CMS’s refusal to renew an existing provider agreement; and 3) CMS’s
determination to terminate a provider agreement. Act §§ 1866(h)(1), 1866(b)(2).° Under
the statute’s implementing regulations, found at 42 C.F.R. Part 498, a provider
dissatisfied with CMS’s initial determination is entitled to further review, but
administrative actions that are not initial determinations are not subject to appeal. 42
C.F.R. § 498.3(d); Wesley Long Nursing Center, DAB No. 1937, at 2 (2004). The
regulation lists all of CMS’s initial determinations. 42 C.F.R. § 498.3(b).

Here, CMS argues that Petitioner is not entitled to a hearing because the challenged
determination is not among the initial determinations listed in section 498.3(b).
Petitioner, on the other hand, claims that it is entitled to a hearing under 42 C.F.R.
§ 498.3(b)(2), which describes as an initial determination:

[whether a prospective department of a provider, remote
location of a hospital, satellite facility, or provider-based
entity qualifies for provider-based status under § 413.65 of
this chapter...

But, as CMS accurately points out, inasmuch as Petitioner neither sought nor received
any determination as to its “provider-based status,” this matter is not an appeal of any
“provider-based status” determination.*

? My findings of fact and conclusions of law are set forth, in italics and bold, in the
discussion captions of this decision.

> “Provider agreement” is defined in 42 C.F.R. § 489.3 as “agreement between CMS and
one of the providers specified in § 489.2(b) [which includes CMHCs] to provide services
to Medicare beneficiaries and to comply with the requirements of section 1866 of the
Act.”

* Of course, if Petitioner’s Lakeland site were to apply unsuccessfully for provider-based
status or for Medicare certification as a separate CMHC, it would likely be entitled to a
hearing by an Administrative Law Judge under 42 C.F.R. Part 498.
Moreover, Petitioner does not fall within any of the categories described by section
498.3(b)(2). It is not a remote location of a hospital nor a satellite facility (defined as a
“part of a hospital that provides inpatient services in a building also used by another
hospital... .). 42 C.F.R. §§ 412.22(h)(1), 412.25(e)(1). Nor does it meet the definition
of “provider-based entity.” “Provider-based entity” means that the provider of health
care services is created or acquired by a main provider “for the purpose of furnishing
health care services of a different type from those of the main provider... .” 42 C.F.R.

§ 413.65(a)(2). Petitioner concedes that the Lakeland center provides the same core
services as the St. Petersburg center. P. Prehearing Memorandum at 5. Finally, it does
not qualify as a “department of a provider” because a “department of a provider” may not
by itself qualify to participate in Medicare as a provider. 42 C.F.R. § 413.65(a)(2).
Petitioner maintains that its Lakeland center “independently meets all criteria for CMHCs
....” P. Prehearing Memorandum at 5.

2. That representatives from CMS and the Medicare Fiscal
Intermediary misled Petitioner does not create a hearing
right.

Petitioner points to CMS’s notice letters which characterize CMS’s determination as an
“initial determination” and an “initial denial.” P. Exs. 1 and 2. Petitioner also points out
that CMS advised it that, if it disagreed with CMS’s decision, it could request a hearing
before an Administrative Law Judge. P. Ex. 2. Petitioner also complains of instances in
which representatives from the Fiscal Intermediary and CMS misled it into thinking that
the Lakeland Center could bill Medicare under Petitioner’s current provider agreement.

Such misleading communications are unfortunate, but I have no authority to create, under
a theory of equitable estoppel or any other theory, hearing rights that are not provided by
the statute and regulations. See Regency on the Lake, DAB No. 2205, at 6 (2008);
Community Hospital of Long Beach, DAB 1938 (2004).

Conclusion

Because Petitioner has no legal right to a hearing, I dismiss its hearing request pursuant to
42 CFR. § 498.70(b).

/s/
Carolyn Cozad Hughes
Administrative Law Judge