Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD
Civil Remedies Division

John P. McDonough III, Ph.D.,' (NPI: 1831244714; PTAN: 54217A),
Geriatric Psychological Specialists, (NPI: 1346280161; PTAN: K0175), and
GPS II, LLC (NPI: 1922411263; PTAN: HD970A),
Petitioners,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-15-2101
Decision No. CR4494
Date: December 18, 2015
DECISION
The Medicare enrollment and billing privileges of John P. McDonough, III, Ph.D.

(Petitioner McDonough), GPS II, and Geriatric Psychological Specialists (GPS)
(collectively Petitioners) are revoked pursuant to 42 C.F.R. § 424.535(a)(8).?

' This case was originally docketed listing only John P. McDonough III, Ph.D. The
caption of this decision more accurately reflects that there are three suppliers who are
affected parties in this case. The reconsideration determination affected all three
suppliers (Centers for Medicare & Medicaid Services (CMS) Exhibit (Ex.) 1) and the
request for hearing specifically requests a hearing on behalf of all three. Joint
proceedings are permitted by 42 C.F.R. § 498.54. Modification of the caption to reflect
each of the three affected parties satisfies the regulatory requirement that I issue a
separate decision with respect to each. Jd.

> Citations are to the 2014 revision of the Code of Federal Regulations (C.F.R.), unless
otherwise stated.
I. Background

First Coast Service Options, Inc. (FCSO), the CMS Medicare contractor, notified
Petitioners by letters dated October 28, 2014, that their Medicare billing numbers and
billing privileges were revoked effective November 27, 2014. FCSO cited 42 C.F.R.

§ 424.535(a)(8) as the basis for the revocations. CMS Ex. | at 4-20. FCSO also notified
Petitioners that they were subject to a three-year bars to re-enrollment pursuant to 42
C.F.R. § 424.535(c). CMS Ex. | at 5, 8, 12.

On January 2, 2015, Petitioners requested reconsideration. CMS Ex. | at 46-50. On
February 25, 2015, CMS upheld the revocations on reconsideration. CMS Ex. | at 1-3.

Petitioners filed a combined request for hearing (RFH) before an administrative law
judge (ALJ) on April 16, 2015. On May 12, 2015, the case was assigned to me for
earing and decision and I issued an Acknowledgement and Prehearing Order
(Prehearing Order).

On June 11, 2015, CMS filed a motion for summary judgment (CMS Br.) with CMS Exs.
through 5. On July 13, 2015, Petitioners filed their opposition to CMS’s motion; a
cross-motion for summary judgment; objections to CMS Exs. 2, 3 and 4; and a waiver of
oral hearing (P. Br.). Petitioners also filed Petitioners’ exhibits (P. Exs.) | through 7.°
On July 27, 2015, CMS filed its reply (CMS Reply). On October 5, 2015, I directed the
parties to provide supplemental briefing on the impact in this case, if any, of the decision
of an appellate panel of the Departmental Appeals Board (the Board) in Proteam
Healthcare, Inc., DAB No. 2658 (2015). The parties filed their supplemental briefs on
October 26, 2015 (CMS Supp. Br. and P. Supp. Br.). CMS did not object to P. Exs. 1
through 7 and they are admitted as evidence.

Petitioners did not object to my consideration of CMS Exs. | and 5 and they are admitted.
Petitioners objected to my consideration of CMS Exs. 2, 3, and 4. P. Br. at 10-11. CMS
Exs. 2, 3, and 4 are screen shots from the Health Insurance Master Record and Multi-
Carrier Systems (HIMR) for claims submitted by the Petitioners. CMS Ex. 2 includes
claims submitted by Petitioner McDonough. CMS Ex. 3 includes claims submitted by

> On July 27, 2015, I ordered Petitioners to refile their exhibits correctly marked.
Petitioner’s filed their corrected exhibits on August 5, 2015, and it is only the corrected
exhibits that are considered, specifically those in the Departmental Appeals Board
Electronic Filing System (DAB E-File) under this docket as items #8, #8a-f ,#9, and #9a-
f.
Petitioner GPS. CMS Ex. 4 includes claims submitted by Petitioner GPSH. Maureen
Pickering states in her declaration that she personally accessed the HIMR and printed the
screenshots which comprise CMS Exs. 2, 3, and 4. She further testified that she selected
the particular beneficiaries and claims to which the screenshots relate because they are
the particular claims and beneficiaries listed on the spreadsheets attached to the October
28, 2014 notices of revocation from FCSO to Petitioners, i.e., the claims are the claims
for which the Petitioners’ enrollments and billing privileges were revoked. CMS Ex. 5.
Comparing the October 28, 2014 notices to Petitioner McDonough, Petitioner GPS, and
Petitioner GPSII and their attached spreadsheets (CMS Ex. | at 4-20) with CMS Exs. 2,
3, and 4, I find that Ms. Pickering has accurately identified the documents in CMS 2, 3,
and 4 as being related to the claims cited as the basis for the October 28, 2014 decisions
to revoke Petitioners’ enrollments. Based on my review of CMS Exs. 2, 3, and 4, and
considering the testimony of Ms. Pickering (CMS Ex. 5) and the notices in CMS Ex. 1, I
conclude that CMS Exs. 2, 3, and 4 are relevant. Petitioner does not specifically dispute
the authenticity of CMS Exs. 2, 3, and 4, and based on the testimony of Ms. Pickering
and my review of CMS Ex. 2, 3, and 4, I conclude that the documents are what they are
purported to be and they are authentic. CMS Exs. 2, 3, and 4 are offered for the truth of
the matter asserted therein and they are hearsay evidence. Petitioner has not objected to
CMS Exs. 2, 3, and 4 on grounds that they are hearsay. Even though hearsay is generally
subject to exclusion in the civil and the criminal courts (Fed. R. Evid. 803), the
documents are admissible in this administrative proceeding as the hearsay nature of the
documents does not preclude their admission as evidence, but rather, must be considered
when deciding the weight to be accorded the evidence. 42 C.F.R. § 498.61. CMS Exs. 2,
3, and 4 also arguably fit within the public records exception to the rule against admitting
earsay in criminal and civil court proceedings (Fed. R. Evid. 803(8)). Petitioners have
waived the right to cross-examine Ms. Pickering or the custodian of the documents
included in CMS Exs. 2, 3, and 4 by waiving their right to appear at an oral hearing.

Petitioner argues that CMS Exs. 2, 3, and 4 should not be admitted as evidence because
they were compiled by Ms. Pickering after the reconsideration decision and, therefore,
CMS has conceded that the documents were not considered on reconsideration.
Petitioner argues that CMS Exs. 2, 3, and 4 were not provided to Petitioners with the
October 28, 2014 revocation notices or with the notice of the reconsidered determination.
Petitioner points-out that CMS Exs. 2, 3, and 4 were actually printed just days before
being filed as proposed exhibits in this case. Petitioner argues that Ms. Pickering does
not state in her declaration that she has personal knowledge as to the accuracy of the
information contained in CMS Exs. 2, 3, and 4 or that those exhibits were prepared by
someone with knowledge of the facts asserted. P. Br. at 10-11. Petitioner’s objections
are not evidentiary objections but are rather arguments about the weight I should accord
to the information in CMS Exs. 2, 3, and 4. Furthermore, Civil Remedies Division

Procedure (CRDP)* § 15, adopts Fed. R. Evid. 1006 and provides that “unless permitted
by the ALJ to do otherwise, a party that wants the ALJ to consider the contents of
voluminous records should offer that evidence as an exhibit in the form of a chart or
summary.” In this case, the spreadsheets listing claims included with the October 24,
2014 revocation notices are offered as exhibits by CMS (CMS Ex. 1 at 4-20). The
spreadsheets are consistent with the requirements of CRDP §15a. Pursuant to CRDP
§15b, CMS was required to file with its prehearing exchange the documents upon which
the spreadsheets are based, specifically, I conclude, those documents marked as CMS
Exs. 2, 3, and 4.

Iam also not persuaded by Petitioners’ arguments that CMS Exs. 2, 3, and 4 were not
considered by the official that conducted the reconsidered determination. My review is
de novo as to the issue of whether or not CMS has a basis to revoke Petitioners’
enrollment and billing privileges. Therefore, the fact that CMS Exs. 2, 3, and 4 may not
have been considered on reconsideration is no bar to their admission in this proceeding.
Similarly the fact Petitioner may not have received CMS Exs. 2, 3, and 4 prior to the
exchange of exhibits in this case is also not grounds for excluding those documents in
this proceeding. Pursuant to my Prehearing Order paragraph II.D.1, CMS was required
to provide Petitioner copies of the exhibits on which CMS relies as a basis for revocation
of Petitioners’ enrollment and billing privileges. CMS has complied.

I conclude that CMS Exs. 2, 3, and 4 are admissible and will be considered as evidence,
and they are admitted. The weight accorded the exhibits is discussed in greater detail in
my analysis.

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
FCSO. 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.

* The CRDP was provided to the parties with the Prehearing Order on May 12, 2015.
DAB E-File #2b.

A “supplier” furnishes services under Medicare and includes physicians or other

practitioners and facilities that are not included within the definition of the phrase
(Footnote continued next page.)
§ 1395u(h)(1)). Petitioner McDonough is a psychologist and he and his two affiliated
medical practices, Petitioner GPS and Petitioner GPS II, were suppliers enrolled in
Medicare.

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 U.S.C. § 1395cc(j)). Pursuant to 42 C.F.R. § 424.505, suppliers such as Petitioners
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. If CMS revokes a supplier’s Medicare billing
privileges, the revocation becomes effective 30 days after CMS or one of its contractors
mails the revocation notice to the supplier, subject to some exceptions not applicable in
this case. After a supplier’s Medicare enrollment and billing privileges are revoked, the
supplier is barred from reenrolling in the Medicare program for a minimum of one year,
but no more than three years. 42 C.F.R. § 424.535(c).

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 and specifying the conditions or
requirements the supplier failed to meet, and the right to an ALJ hearing. 42 C.F.R.

§ 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

(Footnote Continued.)

“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) (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.

Appeals Board (the Board). Act § 1866(j)(8) (42 U.S.C. § 1395cec(j)(8)); 42 C.F.R.

§§ 424.545, 498.3(b)(17), 498.5. A hearing on the record, also known as an oral hearing,
is required under the Act unless waived. 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. Issue

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 followed by my findings of fact and analysis.
The findings of fact are based on the documents admitted as exhibits. I have carefully
considered all the evidence and the arguments of both parties, though not all may be
specifically discussed in this decision. I discuss in this decision the credible evidence
given the greatest weight in my decision-making. I also discuss any evidence that I find
is not credible or worthy of weight. The fact that evidence is not specifically discussed
should not be considered sufficient to rebut the presumption that I considered all the
evidence and assigned such weight or probative value to the credible evidence that I
determined appropriate within my discretion as an ALJ. There is no requirement for me
to discuss the weight given every piece of evidence considered in this case, nor would it
be consistent with notions of judicial economy to do so. Charles H. Kock, Jr., Admin L.
and Prac. § 5:64 (3d ed. 2013).

1. Decision on the documents and briefs is permissible in this case and
no oral hearing is required.

Pursuant to 42 C.F.R. § 498.66(a), an affected party, such as Petitioners, may waive the
right to appear and present evidence at an oral hearing by filing a written waiver. When a
written waiver is filed by a petitioner, an ALJ need not conduct an oral hearing except in
two circumstances: the ALJ concludes witness testimony is necessary to clarify facts at
issue; or CMS shows good cause for presenting oral testimony. 42 C.F.R. § 498.66(b).

Petitioners waived their right to appear and present evidence at an oral hearing and cross
examine witnesses. Petitioners agreed to receive a decision upon the documentary
evidence and briefs, citing 42 C.F.R. § 498.66. P. Br. at 1-2. CMS has not shown good
cause to require the presentation of oral evidence and I do not find that the presentation of
oral testimony is necessary to clarify any facts. Accordingly, I conclude it is not
necessary to conduct an oral hearing. Rather, I decide the case on the documentary
evidence and the written arguments of the parties. 42 C.F.R. § 498.66(b). I further
conclude that it is not necessary to decide this case by applying the standards applicable
to summary judgment. See, e.g., Fed. R. Civ. Pro. 56. Rather, I decide this case on the
merits, including assessing the weight and credibility of the evidence. The parties are
both represented by counsel, who I presume understand that by waiving an oral hearing
they have also waived cross-examination of adverse witnesses.

2. Billing privileges are abused, within the meaning of 42 C.F.R.

§ 424.535(a)(8), when three or more claims are submitted to Medicare
for services that could not have been furnished to the specific
individuals identified on the claims on the dates of the claimed services.

3. The 243 claims submitted by Petitioners or on their behalf that were
false because they were for services not delivered to the beneficiaries
listed on the claims constituted an abuse of billing privileges under 42
C.F.R. § 424.535(a)(8).

4. It is no defense to a revocation action for abuse of billing privileges
under 42 C.F.R. § 424.535(a)(8) that the false claims were due to errors
of Petitioners’ agents.

5. There is a basis for revocation of Petitioners’ Medicare enrollment
and billing privileges pursuant to 42 C.F.R. § 424.535(a)(8).

Petitioners’ enrollment and billing privileges were revoked pursuant to 42 C.F.R.
§ 424.535(a)(8). The regulation provides:

Abuse of billing privileges. The provider or supplier
submits a claim or claims for services that could not have
been furnished to a specific individual on the date of
service. These instances include but are not limited to
situations where the beneficiary is deceased, the directing
physician or beneficiary is not in the State or country when
services were furnished, or when the equipment necessary for
testing is not present where the testing is said to have
occurred.

42 C.F.R. § 424.535(a)(8) (emphasis added). This regulation provides Petitioner notice
that billing privileges and Medicare enrollment may be revoked for an abuse of billing
privileges. 5 U.S.C. §§ 551(4), 552(a)(1). The elements of the CMS prima facie case for
revocation based on the language of 42 C.F.R. § 424.535(a)(8) are: (1) the provider or
supplier submits one or more claims for services; and (2) the services for which a claim
or claims were submitted could not have been delivered to a Medicare beneficiary on the
date the service was claimed to have been delivered. Realhab, Inc., DAB No. 2542 at 16-
17 (2013). Although the plain language of the regulation seems clear enough at first
blush, there have been several Board decisions that turned to the legislative history of the
regulations for clarification of what was intended to be a sufficient basis for revocation
under the regulation. Proteam Healthcare, Inc., DAB No. 2658; Ronald J. Grason,
M.D., DAB No. 2592 at 7 (2014); Realhab, Inc., DAB No. 2542 at 16; Howard B. Reife,
D.P.M., DAB No. 2527 at 1 (2013). CMS, the proponent of the regulation, explained in
comments to the final rule making in 2008:

CMS, not a Medicare contractor, will make the determination
for revocation under the authority at § 424.535(a)(8). We
will direct contractors to use this basis of revocation after
identifying providers or suppliers that have these billing
issues. We have found numerous examples of situations
where a physician claims to have furnished a service to a
beneficiary more than a month after their recorded death, or
when the provider or supplier was out of State when the
supposed services had been furnished. In these instances,
the provider has billed the Medicare program for services
which were not provided and has submitted Medicare
claims for services to a beneficiary who could not have
received the service which was billed. This revocation
authority is not intended to be used for isolated occurrences
or accidental billing errors. Rather, this basis for revocation
is directed at providers and suppliers who are engaging in a
pattern of improper billing .... We believe that it is both
appropriate and necessary that we have the ability to revoke
billing privileges when services could not have been
furnished by a provider or supplier. We recognize the impact
that this revocation has, and a revocation will not be issued
unless sufficient evidence demonstrates abusive billing
patterns. Accordingly, we will not revoke billing privileges
under § 424.535(a)(8) unless there are multiple instances,
at least three, where abusive billing practices have taken
place .... 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) (emphases added). Based on this regulatory
history, I conclude that CMS must also show as part of its prima facie case that there
were more than one and at least three claims for services that could not have been
delivered. I note that the drafters of the regulation also state that only CMS and not a
Medicare contractor will make the determination to revoke pursuant to 42 C.F.R.
§ 424.535(a)(8). 73 Fed. Reg. at 36,455.°

Petitioners pursue two primary theories in this case:

1. CMS failed to make a prima facie showing of a basis for revocation pursuant to
42 CFR. § 424.535(a)(8); and

2. If CMS made a prima facie showing, Petitioners have shown by a
preponderance of the evidence that they did not abuse billing privileges.

P. Br. at 2, 9-16.
a. Prima Facie Showing by CMS

Petitioners’ argument that CMS has failed to make a prima facie showing is without
merit. The Secretary’s regulations at 42 C.F.R. pts. 424 and 498 do not address the
allocation of the burden of proof or the standard of proof in cases subject to those
regulations. However, the Board has addressed the allocation of the burden of proof in
many decisions applying 42 C.F.R. pt. 498. The standard of proof is a preponderance of
the evidence. CMS has the burden of coming forward with the evidence sufficient to
make a prima facie showing of a basis for the enforcement action. The quantum of
evidence necessary for a prima facie showing is not specified in the regulations or
specifically resolved by prior decisions of the Board. But, the Board has stated that CMS
must come forward with “evidence related to disputed findings that is sufficient (together
with any undisputed findings and relevant legal authority) to establish a prima facie case
of noncompliance with a regulatory requirement.” Evergreene Nursing Care Ctr., DAB
No. 2069 at 7 (2007); Batavia Nursing & Convalescent Ctr., DAB No. 1904 (2004).
“Prima facie” means generally that the evidence is “[s]ufficient to establish a fact or raise
a presumption unless disproved or rebutted.” Black’s Law Dictionary 1228 (18th ed.
2004). I conclude that the CMS evidence is sufficient to establish a prima facie case of a
basis for revocation pursuant to 42 C.F.R. § 424.535(a)(8). CMS relies upon evidence
derived from its database of claims information, specifically claims filed by Petitioners.
CMS also relies upon information derived from the Social Security Administration (SSA)
database.

® On December 5, 2014, 42 C.F.R. § 424.535(a)(8) was amended to add 42 C.F.R.
§ 424.535(a)(8)(ii) effective February 3, 2015. 79 Fed. Reg. 72500 (Dec. 5, 2014). The
amendment of 42 C.F.R. § 424.535(a)(8) does not impact the outcome in this case.
10

FCSO notified Petitioner McDonough on October 28, 2014, that his enrollment and
billing privileges were revoked effective November 27, 2014. The notice alleged abuse
of billing privileges and that revocation was pursuant to 42 C.F.R. § 424.535(a)(8). CMS
Ex. 1 at 4-5. Attached to the FCSO notice was a list of 27 claims for 24 beneficiaries,
with dates of service beginning in April 2012 and running through May 2014. CMS Ex.
lat 6.

FCSO notified Petitioner GPSII on October 28, 2014, that its enrollment and billing
privileges were revoked effective November 27, 2014. The notice alleged abuse of
billing privileges and that revocation was pursuant to 42 C.F.R. § 424.535(a)(8). CMS
Ex. 1 at 7-8. Attached to the FCSO notice was a list of 68 claims for 52 beneficiaries,
with dates of service beginning in May 2013 and continuing through June 2014. CMS
Ex. | at 9-10.

FCSO notified Petitioner McDonough on behalf of GPS on October 28, 2014, that its
enrollment and billing privileges were revoked effective November 27, 2014. The notice
alleged abuse of billing privileges and that revocation was pursuant to 42 C.F.R.

§ 424.535(a)(8). CMS Ex. | at 11-12. Attached to the FCSO notice was a list of 325
claims for 207 beneficiaries, with dates of service beginning in January 2012 and
continuing through February 2014. CMS Ex. 13-20.

The reconsidered determination was issued by the CMS Provider Enrollment Oversight
Group on February 25, 2015. The reconsidered determination upheld revocation for all
three Petitioners concluding that Petitioners failed to disprove that an abuse of billing
privileges occurred. CMS Ex. | at 1-2. Petitioners argue that CMS failed to meet its
burden to make a prima facie showing of a basis for revocation because “[t]here is no
evidence that CMS, rather than its contractor . .. made the decision to revoke Petitioners’
Medical (sic) billing privileges as required by law.” P. Br. at 2, 9-11. Petitioners are in
error both legally and factually. No provision of the Act or the regulations require that
CMS make the decision to revoke for abuse of billing privileges under 42 C.F.R.

§ 424.535(a)(8). Rather, CMS stated as part of the regulatory history for 42 C.F.R.

§ 424.535(a)(8) that CMS would make the determination to revoke for abuse of billing
privileges rather than relying upon its contractors for that determination. At most, the
statement in the regulatory history is evidence of a CMS policy not a statement of law.
CMS did not violate its policy in this case. Pursuant to 42 C.F.R. § 498.5(/)(1) a supplier
dissatisfied with an initial determination to revoke its Medicare enrollment is entitled to
request reconsideration. Ifa supplier is dissatisfied with the reconsidered determination
that upholds revocation, the supplier has the right to request a hearing before an ALJ. 42
C.F.R. § 498.5(/)(2). Therefore, it is the reconsidered determination that is before me for
hearing and decision. In this case the reconsidered determination reflects on its face that
it was made by the CMS Provider Enrollment Oversight Group not FCSO. Accordingly,
I conclude that CMS complied with its policy to make the revocation determination
rather than have FCSO make that decision. Even if the fact that FCSO made the initial
11

determination was considered a violation of the CMS policy, that policy was clearly
remedied by the reconsidered determination made by CMS. [also reject Petitioners’
suggestion that the reconsidered determination was no more than a stamp of the initial
determination by FCSO. The reconsidered determination reflects that the contents of the
record were reviewed and includes a discussion of the basis for the decision to uphold the
revocation of Petitioners’ enrollment and billing privileges. CMS Ex. 1 at 1-2.

CMS submitted the declaration of Maureen Pickering. CMS Ex. 5. Petitioners waived
the right to cross-examine Ms. Pickering by waiving an oral hearing. I have no reason to
question the credibility of Ms. Pickering’s testimony. Ms. Pickering established her
nowledge of CMS and SSA databases and how to extract information from those
databases. Ms. Pickering credibly testified as to the source of the claims related evidence
in CMS Exs. 2, 3, and 4. CMS Ex. 5. The evidence is authentic and relevant.

Based on my review of the CMS evidence, I conclude it is sufficient to show that
Petitioner filed claims for Medicare beneficiaries for dates of service after the dates of
death of those beneficiaries. Therefore, the issue is whether or not Petitioner has
presented sufficient evidence to rebut the prima facie showing or establish an affirmative
defense.

b. Petitioners’ Case

Petitioners submitted for my consideration the July 13, 2015 declaration of Petitioner
McDonough. P. Ex. 1. Petitioner McDonough attests that he examined the books,
records and documents maintained by Petitioners. Petitioner McDonough prepared or
ad prepared P. Ex. 2, a list of claims of GPS cited by CMS as a basis for revocation. He
collected or had collected the documents in P. Ex. 3 in support of the summary regarding
the claim in P. Ex. 2. P. Ex. 4 is a summary chart for the claims of GPSII cited by CMS
and P. Ex. 5 includes the supporting documents. P. Ex. 6 is the summary chart of claims
of Petitioner McDonough cited by CMS and P. Ex. 7 includes the supporting documents.
Petitioner McDonough attests that the summary charts admitted as P. Exs. 2, 4, and 6
contain an explanation for each billing discrepancy raised by CMS, listed by beneficiary
name, Medicare number, date of service, and purported dates of death. Petitioner
McDonough states that the billing discrepancies were identified by Petitioners’ billing
companies after review of the lists of claims submitted by CMS.

Petitioners waived their right to appear and present evidence at an oral hearing and cross
examine witnesses. 42 C.F.R. § 498.66. P. Br. at 1-2. CMS did not request an oral
hearing to cross-examine Petitioner McDonough or show good cause to require the
presentation of oral testimony to rebut the declaration of Petitioner McDonough. I
conclude that CMS waived cross-examination of Petitioner McDonough. Other than his
own self-interest in the outcome of this case, I see no basis to discount the credibility of
Petitioner McDonough. There is nothing to suggest that Petitioner McDonough’s self-
12

interest is sufficient to cause him to risk punishment for commission of perjury.
Furthermore, Petitioner McDonough’s testimony is narrowly limited to describing the
compilation and contents of P. Exs. 2 through 7. Indeed his credibility is bolstered by the
fact that not all the explanations provided in P. Exs. 2, 4, and 6 are in Petitioners’ best
interest. I conclude that Petitioner McDonough’s declaration and P. Exs. 2 through 7 are
fully credible.

My analysis focuses upon P. Exs. 2, 4, and 6, and Petitioners’ admissions with respect to
the claims listed in those exhibits. P. Ex. 2 lists the 207 beneficiaries for whom
Petitioners admit 299 Medicare claims were filed by Petitioner GPS.’ Petitioners note in
P. Ex. 2 that not all claims were actually paid by Medicare. However, whether or not
claims were paid is not relevant to whether there was a basis for revocation under 42
C.F.R. § 424.535(a)(8). The issue is whether or not Petitioners submitted claims for
services that could not have been furnished to a specific individual on the claimed date of
service. 42 C.F.R. § 424.535(a)(8). Whether or not any of the claims were paid is not a
defense. P. Ex. 4 lists 52 beneficiaries for whom Petitioners admit Petitioner GPSII
submitted 66 claims.* Petitioners’ note in P. Ex. 4 that not all claims were paid, but that
is not relevant as previously explained. P. Ex. 6 lists 24 beneficiaries for whom
Petitioners admit Petitioner McDonough submitted 25 claims.°

P. Ex. 2, 4, and 6 list the Medicare beneficiaries cited by CMS, the specific claims cited
by CMS as abusive, and Petitioners’ explanations for each claim. Petitioners’
explanations are admissions, and as already noted, considered to be reliable. Petitioners’
explanations can be divided into three groups for ease of discussion: (1) claims for
services billed when services, including reports were complete, consistent with

7 The October 28, 2014, FCSO notice of revocation listed 207 beneficiaries, the same
isting of beneficiaries as P. Ex. 2, but 325 claims, 26 more than P. Ex. 2. CMS Ex. | at
1-20. Given my decision in this case, I conclude in the interest of judicial economy, it is
not necessary to attempt to determine the reason for the discrepancy.

8 The October 28, 2014, FCSO notice of revocation listed 52 beneficiaries, the same
isting of beneficiaries as P. Ex.4, but 68 claims, 2 more than P. Ex. 4. CMS Ex. | at 9-
0. Given my decision in this case, I conclude in the interest of judicial economy, it is
not necessary to attempt to determine the reason for the discrepancy.

° The October 28, 2014, FCSO notice of revocation listed 24 beneficiaries, the same
isting of beneficiaries as P. Ex.6, but 27 claims, 2 more than P. Ex. 6. CMS Ex. | at 6.
Given my decision in this case, I conclude in the interest of judicial economy, it is not
necessary to attempt to determine the reason for the discrepancy.

13

Petitioners’ interpretation of a Local Coverage Determination (LCD); (2) claims that
were the result of data input errors by Petitioners’ billing services (billing errors); and (3)
claims for services provided by therapists to the wrong person (misidentifications).
Petitioners’ admit that Petitioner GPS had 12 claims billed based on misidentification by
therapists, 93 claims billed according to the LCD, and 191 billing errors.'° P. Ex. 2.
Petitioners admit that GPSII submitted 30 claims billed in accordance with the LCD and
36 billing errors. P. Ex. 4. Petitioners admit that Petitioner McDonough submitted 2
claims billed in accordance with the LCD; 2 claims involving misidentification; and 21
billing errors. P. Ex. 6.

I conclude that Petitioners reliance upon an LCD is reasonable and the claims billed in
accordance with Petitioners’ interpretation of the LCD did not amount to an abuse of
billing privileges on the facts of this case. The Petitioners had a combined total of 125
claims that were billed in accordance with Petitioners interpretation of the LCD.
Petitioners explain in their brief that the LCD claims were for psychological services,
evaluation and testing, done for beneficiaries while they were alive. However, pursuant
to LCD L33688, Medicare claims could not be filed until reports related to those services
were completed and those reports were not complete and claims filed until after the
beneficiaries death. The gist of Petitioners’ argument is that the date on which reports
were prepared was treated as a date of service just like the days on which actual
evaluations and testing were done, which explains how some dates of service were after
the date of death of the beneficiaries. P. Br. at 5, 12, 16; CMS Ex. | at 76.

Petitioners are located in Florida and the claims in issue were for services between
January 2012 and June 2014. CMS Ex. | at 4-20; P. Exs. 2, 4, 6. LCD L33688, titled
Psychological and Neuropsychological Tests, was issued by FCSO in 2013, and
subsequently revised several times.'' The various revisions of LCD L33688 included
under “General Information” “Utilization Guidelines” the following instructions:

'° Petitioners provided explanations for three claims that I cannot decipher. I conclude it
is not necessary to develop further evidence as to those three claims.

" Current and retired LCDs are available at https://www.cms.gov/medicare-coverage-
database/overview-and-quick-search.aspx. The earliest version of LCD L33688 available
online is a draft from May 2013. Whether or not there was an earlier edition of LCD
L33688 dating to January 2012 or before is not reflected in online materials. LCD
L33688 has been retired as of September 30, 2015. LCD L34520 was issued effective
October 1, 2015 with the title “Psychological and Neuropsychological Tests. LCD
L34520 also includes the same guidance as quoted from LCD L33688.

14

Typically, psychological testing/neuropsychological testing
may require four (4) to six (6) hours to perform (including
administration, scoring, and interpretation). If the testing is
done over several days, the testing time should be combined
and reported all on the last date of service. Supporting
documentation in the medical record must be present to
justify the medical necessity and hours tested per patient per
evaluation. If the testing time exceeds eight (8) hours,
medical necessity for the extended testing should be
documented in the report.

The LCD clearly recognizes that psychological and neuropsychological testing may be
performed over several days. The LCD instructs that when testing is done over several
days it should all be combined and reported on the last day of service. Petitioners
interpreted the plain language to mean that the date on which reports of testing and
evaluation were prepared was the last day of service and all hours involved in testing and
reporting were to be combined and reported on that last day. Petitioners’ interpretation of
the LCD provision is reasonable. Petitioners’ assertions that 2 claims filed by Petitioner
McDonough, 93 claims filed by GPS, and 30 filed by GPSII reflect dates of service after
the date of death of the beneficiary is consistent with Petitioners’ interpretation of the
application of the LCD. CMS presented no evidence or legal authority to show that
Petitioner McDonough’s interpretation of the LCD provision was in error. CMS also
waived cross-examination of Petitioner McDonough and failed to present any evidence to
rebut his declaration and the assertions in P. Exs. 2, 4, and 6, that claims were for services
provided while the beneficiaries were alive and billed as services for a date after their
date of death due to Petitioner McDonough’s interpretation of the LCD. The drafters of
42 C.F.R. § 424.535(a)(8) specifically recognized that in some instances a claim for
services after the date of death may be appropriate:

We understand that there are certain situations when the date
of service may legitimately be the day after the date of death
of the beneficiary. Accordingly, Medicare contractors and
CMS will review the specific details associated with each
claim before taking any revocation action.

73 Fed. Reg. at 36,455.

Based upon my review of the specific details, I conclude that the claims billed in
accordance with Petitioners’ interpretation of the LCD do not reflect an abuse of billing
privileges.

However, I conclude that an abuse of billing privileges occurred based on Petitioners’
admissions that:
15

1. Petitioner GPS had 12 claims billed based on misidentification by therapists
and 191 billing errors (P. Ex. 2);

2. Petitioner GPSII had 36 billing errors (P. Ex. 4); and

3. Petitioner McDonough had 2 claims involving misidentification and 21
billing errors (P. Ex. 6).

Petitioners have not presented evidence or argued that any of the beneficiaries identified
with these 243 claims actually received services for which the claims were filed or that
they were not dead prior to the date of service for each claim.

The gist of Petitioners’ defense is that misidentifications by therapists and billing errors
are not an abuse of billing privileges and should be excused. Petitioners also assert that
they have developed procedures to avoid similar errors in the future. Petitioners argue
that the errors were accidental or unintentional and, therefore, do not constitute an abuse
of billing. Petitioners attribute their improper claims and billing errors to: incorrect
billing entries due to similar beneficiary names or Medicare numbers, and inadvertent
typing errors by billing service representatives. P. Br. at 5; CMS Ex. 1 at 75-76.

The Board has upheld determinations that abuse in the context of 42 C.F.R.

§ 424.535(a)(8) occurs when a provider bills Medicare for services that could not have
been provided to the Medicare beneficiary to whom the claim is related. Realhab, Inc.,
DAB No. 2542 at 15. The Board has commented that a common definition of abuse is
misuse, wrong, or improper use, and that the negligent submission of multiple erroneous
claims for services that could not have been delivered to beneficiaries, amounts to abuse.
Louis J. Gaefke, D.P.M., DAB No. 2554 at 9 (2013); Howard B. Reife, D.P.M., DAB No.
2527 at 6. CMS is not required to show that Petitioners intended to defraud Medicare
before it revokes their billing privileged. The regulation only requires the existence of
claims for services that could not have been delivered. 42 C.F.R. § 424.535(a)(8); Louis
J. Gaefke, D.P.M., DAB No. 2554 at 7 (“[T]he plain language of the regulation contains
no requirement that CMS establish that the supplier acted with fraudulent or dishonest
intent. The regulatory language also does not provide any exception for inadvertent or
accidental billing errors.”). Petitioners are ultimately responsible, both as a matter of law
and under the terms of their participation agreements, for ensuring that their claims for
Medicare reimbursement were accurate and for any errors in those claims. Louis J.
Gaefke, D.P.M., DAB No. 2554 at 5-6 (citing 73 Fed. Reg. at 36,455). Petitioners cannot
avoid responsibility for their claims by the simple expedient of shifting responsibility and
liability by contracting with a billing agent. While the language of the regulation does
not require a pattern of improper billing, the preamble states that a “pattern of improper
billing” occurs when there are three or more instances of improper billing. 73 Fed Reg.
at 36,455. Petitioners have admitted that the 243 claims were in error. The claims were

16

for services delivered on dates after the dates of death of the beneficiaries listed in the
claims. Petitioner has not shown that the beneficiaries involved in the claims were not
dead, that the services claimed were delivered on a different date, or that it was otherwise
possible that services claimed were delivered. The number of claims exceeds three and
shows a pattern of improper false claims. Whether or not the 243 false claims were false
due to the intention of Petitioners or the neglect of Petitioners’ billing agents are not
issues under 42 C.F.R. § 424.535(a)(8). Petitioners are responsible to ensure claims are
correct and they are responsible for the conduct of their billing agents. As the drafters of
the regulation stated:

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. at 36,455 (emphasis added).

I conclude that there is a basis to revoke Petitioners’ Medicare enrollment and billing
privileges pursuant to 42 C.F.R. § 424.535(a)(8).

Petitioners submitted a corrective action plan. P. Br. at 3-6; CMS Ex. | at 74-81.
Petitioners note they received no decision on the corrective action plan but assume it was
not accepted by CMS. P. Br. at 6, n.3. Petitioner has no right to request a hearing based
on the denial of a corrective action plan and I have no authority to review such a denial.
42 CFR. §§ 405.809(b)(2), 424.545(a), 498.3(b); Conchita Jackson, M.D., DAB No.
2495 at 6-7 (2013); DMS Imaging, Inc., DAB No. 2313 at 5-8 (2010).

I have no authority to review the exercise of discretion by CMS to revoke where there is
a basis for revocation. Abdul Razzaque Ahmed, M.D., DAB No. 2261 at 19 (2009). To
the extent Petitioners’ arguments are construed as a request for equitable relief, I have no
authority to grant equitable relief. US Ultrasound, DAB No. 2302 at 8 (2010) (“[n]either
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.”). I am also
required to follow the Act and regulations and have no authority to declare statutes or
regulations invalid. 1866/CPayday.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.”).
17

III. Conclusion

For the foregoing reasons, the Medicare enrollment and billing privileges of Petitioners
are revoked pursuant to 42 C.F.R. § 424.535(a)(8).

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

John C. Chen
(O.1 File No. 9-09-40388-9),

Petitioner,
v.

The Inspector General,
Department of Health and Human Services.

Docket No. C-15-2935
Decision No. CR4493

Date: December 17, 2015

DECISION

Petitioner, John C. Chen, is excluded from participation in Medicare, Medicaid, and all
federal health care programs pursuant to section 1128(a)(1) of the Social Security Act
(Act) (42 U.S.C. § 1320a-7(a)(1)), effective May 20, 2015. Petitioner’s exclusion for the
minimum period of five years is required by section 1128(c)(3)(B) of the Act (42 U.S.C.
§ 1320a-7(c)(3)(B)).!

I. Background

The Inspector General (I.G.) notified Petitioner by letter dated April 30, 2015, that he was
being excluded from participation in Medicare, Medicaid, and all federal health care
programs for a period of five years. The I.G. cited section 1128(a)(1) of the Act as the
basis for Petitioner’s exclusion and stated that the exclusion was based on his conviction

' Pursuant to 42 C.F.R. § 1001.3001, Petitioner may apply for reinstatement only after
the period of exclusion expires. Reinstatement is not automatic upon completion of the
period of exclusion.
in the United States District Court, District of North Dakota, of a criminal offense related
to the delivery of an item or service under Medicare or a state health care program.

Petitioner timely requested a hearing (RFH) on June 15, 2015. The case was assigned to
me on July 10, 2015, for hearing and decision. A prehearing telephone conference was
convened on July 23, 2015. The substance of the conference is memorialized in my
Prehearing Conference Order and Schedule for Filing Briefs and Documentary Evidence
dated July 23, 2015 (Prehearing Order). During the prehearing conference, Petitioner
waived an oral hearing and the parties agreed that this matter may be resolved based upon
the parties’ briefs and documentary evidence.

The LG. filed a motion for summary judgment and supporting brief (1.G. Br.) on
September 9, 2015, with IG. Exs. 1 through 3.” Petitioner did not object to my
consideration of I.G. Exs. | through 3 and they are admitted as evidence. The LG. di
not file a copy of the April 30, 2015 notice of exclusion as an I.G. exhibit as required by
my Prehearing Order 7. The I.G. is required by 42 C.F.R. § 1001.2003(a)° to give an
individual or entity to be excluded proper notice. Whether or not Petitioner has a right to
hearing, whether or not I have jurisdiction, and whether or not the I.G. may proceed with
the exclusion action are all dependent upon whether Petitioner was properly notified by
the I.G. The I.G. has the burden under 42 C.F.R. § 1005.15(b) and (c) and my Prehearing
Order 7, to establish that proper notice was given. In this case, Petitioner has raised no
issue related to the sufficiency of the April 30, 2015 notice. Petitioner actually filed with
his request for hearing the first page of the April 30, 2015 notice and a complete copy
with the declaration of Petitioner’s counsel. Petitioner’s Exhibit (P. Ex.) 5E. Therefore, I
conclude that there is no issue to be resolved regarding the sufficiency of the notice
Petitioner received, and there is no prejudice due to the I.G.’s failure to comply with the
Prehearing Order by filing the notice of exclusion as evidence. Counsel for the LG. is
admonished, however, to ensure careful compliance with the Prehearing Order in the
future.

> The LG. also filed a copy of Petitioner’s June 15, 2015 request for hearing without any
of the attachments filed by Petitioner. The copy of the request for hearing was not
marked as evidence by the I.G. The complete original request for hearing and supporting
documents filed by Petitioner are part of the record in this case and there was no need for
the I.G. to offer one page of that document as an exhibit. Therefore, the copy of the
request for hearing filed by the I.G. with its motion for summary judgment is not
accepted or treated as evidence.

> References are to the 2014 revision of the Code of Federal Regulations (C.F.R.), unless
otherwise stated.
On October 26, 2015, Petitioner personally filed three documents in the Departmental
Appeals Board Electronic Filing System (DAB E-File) — documents #14, #14a and #14b.
The documents, three certificates that reflect completion of continuing education, were
not filed by Petitioner’s counsel, not marked as evidence, and not cited by Petitioner’s
counsel in briefing. The documents are not relevant to any issues that I may decide in
this case. Accordingly, I do not consider the three certificates for any purpose in making
this decision.

Petitioner filed a response to the I.G. motion (P. Response) on October 26, 2015, with
five exhibits. Petitioner failed to mark and number the pages of the documents as
required by Civil Remedies Division Procedure § 14. Rather than reject the documents, I
treat them as being marked as follows:

P. Ex. 1: a Wire Transfer Authorization Agreement from Opus Bank dated June
30, 2014, for the amount of $150,000; and page 3 of the judgment in Petitioner’s
criminal case imposing restitution of $56,642.52.

P. Ex. 2: Letter dated April 27, 2015, from the Department of the Treasury to
Petitioner; a document showing a routing transaction posted on May 12, 2015, in
the amount of $207.06 that was transmitted to an officer at the Wells Fargo Bank
in the State of Washington; and a document showing Petitioner’s PMA Prime
checking account transaction history for May 2015.

P. Ex. 3: Letter dated February 18, 2015, from Noridian Healthcare Solutions to
D. Jeffrey Burnham and Petitioner; page 3 of a plea agreement.

P. Ex. 4: Declaration of John C. Chen, M.D., dated October 26, 2015.

P. Ex. 5: Declaration of D. Jeffrey Burnham dated October 26, 2015, and five
attachments marked as Exhibits A, B, C, D, and E, which I treat as being marked
as P. Exs. 5A, 5B, SC, 5D, 5E, respectively.

The I.G. has not objected to my consideration of P. Exs. 1 through 5 and they are
admitted as evidence. On November 9, 2015, the I.G. waived filing a reply brief.

II. Discussion
A. Applicable Law
Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) establishes Petitioner’s rights to a

hearing by an administrative law judge (ALJ) and judicial review of the final action of
the Secretary of Health and Human Services (the Secretary).
The Secretary must exclude from participation in any federal health care program any
individual convicted under federal or state law of a felony or misdemeanor criminal
offense related to the delivery of an item or service under Medicare or a state health care
program. Act § 1128(a)(1). The Secretary has promulgated regulations implementing
these provisions of the Act. 42 C.F.R. § 1001.101(a).

Pursuant to section 1128(i) of the Act, an individual is convicted of a criminal offense
when: (1) a judgment of conviction has been entered by a federal, state, or local court
whether or not an appeal is pending or the record has been expunged; (2) there is a
finding of guilt in a court; (3) a plea of guilty or no contest is accepted by a court; or (4)
the individual has entered into any arrangement or program where judgment of
conviction has been withheld. 42 U.S.C. § 1320a-7(i)(1)-(4); 42 C.F.R. § 1001.2.

Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section
1128(a) of the Act will be for a period of not less than five years. 42 C.F.R.

§ 1001.102(a). The Secretary has published regulations that establish aggravating factors
the I.G. may consider to extend the period of exclusion beyond the minimum five-year
period, as well as mitigating factors that may be considered only if the I.G. proposes to
impose an exclusion greater than five years. 42 C.F.R. § 1001.102(b), (c).

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

B. Issues

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

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

Whether the length of the proposed period of exclusion is unreasonable.
42 C.F.R. § 1001.2007(a)(1).
If, as in this case, the I.G. imposes the minimum authorized five-year period of exclusion

under section 1128(a) of the Act, there is no issue as to whether the period of exclusion is
unreasonable. 42 C.F.R. § 1001.2007(a)(2).
C. Findings of Fact, Conclusions of Law, and Analysis

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

1. Petitioner’s request for hearing was timely and I have jurisdiction.

2. Petitioner waived an oral hearing and a decision on the documents
and briefs is permissible.

Petitioner’s request for hearing was timely and I have jurisdiction pursuant to section
1128(f) of the Act and 42 C.F.R. pt. 1005.

Pursuant to section 1128(f) of the Act, a person subject to exclusion has a right to
reasonable notice and an opportunity for a hearing. The Secretary has provided by
regulation that a sanctioned party has the right to hearing before an ALJ. Pursuant to 42
C.F.R. § 1005.15(a), Petitioner is entitled to a “hearing on the record.” Both the
sanctioned party and the LG. have a right to participate in the hearing. 42 C.F.R.

§§ 1005.2-.3. Either or both parties may choose to waive appearance at an oral hearing
and to submit only documentary evidence and written argument for my consideration.
42 CFR. § 1005.6(b)(5).

During the prehearing conference, Petitioner waived the right to appear at an oral hearing
and elected to rely upon the documentary evidence and briefs. I specified in the
Prehearing Order that this matter would be resolved on the parties’ briefs and
documentary evidence. Prehearing Order § 5. The I.G. did not object to proceeding upon
the briefs and documentary evidence or state any need or desire to call witnesses for oral
testimony. However, the I.G. filed a motion for summary judgment. I do not construe
the filing of a motion for summary judgment by the I.G. to be evidence that the I.G. now
objects to a decision on the merits based only upon the documents. Furthermore, given
my decision in this case, the I.G. suffers no prejudice due to my deciding this case upon
the documents and without oral testimony.

3. Petitioner’s exclusion is required by section 1128(a)(1) of the Act.
a. Facts

On June 30, 2014, a one-count criminal information dated June 11, 2014, was filed
against Petitioner in the U.S. District Court for the District of North Dakota. Petitioner
was charged with possession of an authentication feature (a Medicare claim number) with
the intent to use it to defraud the United States, in violation of 18 U.S.C. § 1028(a)(4).
The criminal information states the charge:
On or about February 19, 2009, [Petitioner] did knowingly
and willfully possess a Medicare Health Insurance Claim
Number (HICN) assigned to F.F. by the Social Security
Administration, with the intent to use the HICN to defraud the
United States, namely, to submit a claim for reimbursement to
Noridian Administrative Services, a Medicare Administrative
Contractor, for services that the defendant did not render. In
violation of Title 18, United States Code, Section 1028(a)(4).

LG. Ex. 1 at 1; 1.G. Ex. 2.

Petitioner entered into a plea agreement with the United States Attorney on May 29,
2014. The agreement provided that Petitioner agreed to plead guilty to the one-count
criminal information. I.G. Ex. 3 at 2, 4, 12. Petitioner stipulated as part of his plea
agreement that between approximately April 2007 and March 2010, he

worked as a physician in skilled nursing facilities, and also
served as a director of a skilled nursing facility for a portion
of that time period. . . . [Petitioner] billed Medicare almost
exclusively for performing procedure code 99309, the third
ighest code . . . for that kind of skilled nursing home visit.
The code describes the performance of at least two of the
following three tasks: (1) a detailed interval history; (2) a
detailed examination, and (3) a medical decision of moderate
complexity. The procedure must be performed in the
presence of a patient in order to be submitted to Medicare for
reimbursement. . . .

For the three years between April, 2007 and March, 2010
Petitioner] billed skilled nursing facility procedure code
99309 in nearly 200 cases in which records indicate the
patient was not present in a skilled nursing facility.

In addition to the types of claims above, [Petitioner]
submitted numerous claims to Medicare, amounting to 600 or
more, that were billed for dates on which [Petitioner] was
physically outside the United States.

Petitioner] admits that during the relevant time period that
the above claims were made, he possessed a Medicare
number belonging to F.F. with the intent to defraud the
United States.
I.G. Ex. 3 at 5-6.

On June 30, 2014, Petitioner entered a guilty plea in the U.S. District Court for the
District of North Dakota to the one-count criminal information. The district court
accepted Petitioner’s guilty plea to possession of an authentication feature with the intent
to use it to defraud the United States in violation of 18 U.S.C. § 1028(a)(4). The district
court entered a judgment of conviction against Petitioner and sentenced him to pay
$56,642.52 in restitution to the Centers for Medicare & Medicaid Services (CMS), one-
year probation, and a $25 assessment. I.G. Ex. | at 2-4.

b. Analysis

The LG. cites section 1128(a)(1) of the Act as the basis for Petitioner’s mandatory
exclusion. The statute provides:

(a) MANDATORY EXCLUSION.—The Secretary shall
exclude the following individuals and entities from
participation in any Federal health care program (as defined
in section 1128B(f)):

(1) Conviction of program-related crimes. — Any individual
or entity that has been convicted of a criminal offense related
to the delivery of an item or service under title XVIII
[Medicare] or under any State health care program.

Act § 1128(a)(1) (emphasis added). The statute requires that the Secretary exclude from
participation any individual or entity: (1) convicted of a criminal offense (whether felony
or misdemeanor); (2) where the offense is related to the delivery of an item or service;
and (3) the delivery of the item or service was under Medicare or a state health care
program. Section 1128(a)(1) includes no language that requires conviction of a felony
offense.

Petitioner does not dispute that he was convicted of a criminal offense within the
meaning of section 1128(i) of the Act (42 U.S.C. § 1320a-7(i)). RFH; P. Response at 2,
5-6. Petitioner’s guilty plea was accepted and he was found guilty based on his plea.

The district court issued a judgment of conviction and sentenced Petitioner for the
offense of which he was convicted. I conclude that Petitioner was convicted of a criminal
offense within the meaning of section 1128(i) of the Act.

The statute requires that Petitioner be excluded if he was convicted of an offense related
to the delivery of an item or service under Medicare or a state health care program. Act
1128(a)(1). Petitioner cannot deny that his criminal offense was related to the delivery
of a health care item or service under Medicare. Petitioner admitted as part of his plea

an

agreement that he billed Medicare for procedures that contained billing and coding errors.
Petitioner admitted that he billed Medicare for services he claimed to have provided to
nursing home residents on dates the residents were not even present at the facility.
Petitioner admitted that he submitted 600 or more claims to Medicare for reimbursement
for services provided that were billed for dates he was actually outside of the United
States. Petitioner admitted that he had a Medicare billing number, not his own, and with
the intent to defraud Medicare. I.G. Ex. 3 at 5-6. Petitioner was ordered to pay
$56,642.52 in restitution to CMS, the federal agency that administers Medicare. I.G. Ex.
1 at 4. The evidence clearly establishes the nexus between the offense of which
Petitioner was convicted and the delivery of a health care item or service under Medicare.

The two essential elements necessary to support an exclusion based on section 1128(a)(1)
of the Act are satisfied. Petitioner was convicted of a misdemeanor criminal offense and
the conduct that formed the basis of his conviction was related to the delivery of a health
care item or service under Medicare. Accordingly, I conclude that there is a basis for
Petitioner’s exclusion. | further conclude that exclusion is mandated by section
1128(a)(1) of the Act.

Petitioner does not deny that he was convicted of a criminal offense related to the
delivery of an item or service under Medicare. However, he argues that the IG. should
ave applied the permissive exclusion provisions of section 1128(b) of the Act and
excluded him for no more than two years. The gist of Petitioner’s argument is that part of
is deal with the government when he pleaded guilty was that any exclusion would be a
permissive exclusion and for less than the five years required for a mandatory exclusion
under section 1128(a)(1). P. Response; P. Ex. 4 at 1; P. Ex. 5 at 1-2. Petitioner also
argues that the offense to which he plead guilty is a misdemeanor and meets the
requirements for a permissive exclusion under section 1128(b)(1)(A) of the Act. P.
Response at 6.

Petitioner’s arguments are without merit. It is important to understand the limited nature
of the review to which Petitioner is entitled in this forum. The judgment of the district
court and the bases for that judgment are not reviewable by me or subject to collateral
attack by Petitioner in this forum. Therefore, Petitioner is bound in this forum by the
facts to which he stipulated in pleading guilty and the resulting conviction. 42 C.F.R.

§ 1001.1007(d). I am limited to deciding whether there is a basis for Petitioner’s
exclusion. Because the I.G. only proposed to impose the minimum authorized period of
five years, there is no issue of whether that period is unreasonable. 42 C.F.R.

§ 1001.2007(a)(1)-(2). Ihave no jurisdiction or authority to review and enforce the terms
of any civil settlement agreement or criminal plea agreement that Petitioner entered with
the United States Attorney or the LG.

Furthermore, I am bound to follow the provisions of the Act and the Secretary’s
regulations. 42 C.F.R. § 1005.4(c)(1). Petitioner’s conviction falls within the scope of
section 1128(a)(1), and Congress mandates that for such a conviction, Petitioner be
excluded for the minimum period of five years. Even if I had jurisdiction to review
Petitioner’s agreements with the government, I could not determine to enforce them
contrary to the specific requirements of the law. Section 1128(a)(1) of the Act and its
application are well established and understood. Appellate panels of the Departmental
Appeals Board (the Board) have recognized in many cases that Congress has mandated
exclusions for convictions that fall within the scope of section 1128(a). The Board has
stated that “the Act expressly provides for mandatory five-year minimum periods of
exclusion whenever an individual has been convicted ‘of a criminal offense related to the
delivery of an item or service’ under specific programs . . . without any requirement that
the offense be a felony.” Craig Richard Wilder, DAB No. 2416 at 7 (2011) (quoting
Tanya A. Chuoke, R.N., DAB No. 1721 at 14 (2000) (italics in original)). Once a
conviction is shown to be within the scope of section 1128(a)(1), the Act requires the I.G.
to impose a mandatory exclusion. See, e.g., Wilder, DAB No. 2416 at 7; Lorna Fay
Gardner, DAB No. 1733 at 6 (2000) (rejecting petitioner’s argument that her
misdemeanor conviction should be considered under the permissive exclusion rather than
the mandatory exclusion provisions of section 1128 of the Act.). The Board has
expressed the opinion that the I.G. also has no discretion to impose a permissive
exclusion when an individual’s conviction satisfies the elements of section 1128(a)(1) of
the Act. See, e.g., Tarvinder Singh, D.D.S., DAB No. 1752 (2000) (rejecting petitioner’s
claim that his misdemeanor conviction was more properly subject to a three-year
permissive exclusion when the threshold provisions of the mandatory provisions of
section 1128(a)(1) have been met).

4. Five years is the minimum authorized period of exclusion pursuant
to section 1128(a)(1) of the Act.

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

I have concluded that there is a basis to exclude Petitioner pursuant to section 1128(a)(1)
of the Act. Therefore, Petitioner must be excluded for a minimum period of five years
pursuant to section 1128(c)(3)(B) of the Act.

Exclusion is effective 20 days from the date of the 1.G.’s notice of exclusion to the
affected individual or entity. 42 C.F.R. § 1001.2002(b).
10

III. Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare,
Medicaid, and all federal health care programs for the minimum statutory period of five
years, effective May 20, 2015.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.

Suzanne Wilson and Richard Wilson
d/b/a Smoke Signals,

Respondent.

Docket No. C-15-2730
FDA No. FDA-2015-H-1893

Decision No. CR4492

Date: December 17, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) initiated a $500 civil money penalty (CMP)
action against Respondent for unlawfully selling cigarettes to minors, on one occasion,
and using a self-service display in a non-exempt facility, on two separate occasions, in
violation of the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seg., and
its implementing regulations, 21 C.F.R. pt. 1140. During the hearing process,
Respondent failed to comply with a judicial direction regarding CTP’s discovery request.
I therefore strike Respondent’s answer and issue this decision of default judgment.

I. Procedural History

Respondent timely answered CTP’s complaint opposing the CMP and requested a
hearing. I issued an Acknowledgement and Prehearing Order (APHO) that set deadlines
for parties’ submissions, including the September 14, 2015 deadline to request that the
opposing party provide copies of documents relevant to this case. Additionally, the
APHO stated that a party receiving such a request must provide the requested documents
no later than 30 days after the request.

CTP served Respondent with its request for documents on September 14, 2015. On
October 21, 2015, CTP filed a motion to compel discovery indicating that Respondent
did not respond to its request for production of documents. See 21 C.F.R. § 17.23(a). On
October 21, 2015, CTP also filed a motion to extend the deadlines. Pursuant to my
direction, an October 22, 2015 letter allowed Respondent until November 6, 2015 to file
a response to CTP’s motion to compel discovery. On October 22, 2015, I also issued an
Order that extended the parties’ pre-hearing exchange deadlines.

On November 18, 2015, I issued an Order that granted CTP’s motion to compel
discovery. I noted that Respondent had not filed a response to CTP’s motion to compel
discovery. In that Order, I stated that Respondent shall comply with CTP’s request for
production of documents by December 9, 2015. I further stated that:

Failure to do so may result in sanctions, including the issuance of an Initial
Decision and Default Judgment finding Respondent liable for the violations
listed in the Complaint and imposing a civil money penalty. Within five (5)
days of Respondent’s deadline to comply with discovery, CTP must file a
status report notifying me whether Respondent has complied with
discovery.

The November 18, 2015 Order granting CTP’s motion to compel discovery also
extended the parties’ pre-hearing exchange deadlines.

On December 15, 2015, CTP filed an updated status report advising me that Respondent
had not complied with my November 18, 2015 Order. On December 15, 2015, CTP also
filed a motion to impose sanctions that asked me to strike the Respondent’s answer and
issue a default judgment in this case.

Il. Striking Respondent’s Answer

Respondent failed to file a response to CTP’s motion to compel discovery, and to comply
with the November 18, 2015 Order compelling discovery responses to be provided by
December 9, 2015. Respondent did not comply with CTP’s discovery requests.
Respondent has not made any contact with this Court since July 17, 2015, the date
Respondent’s counsel timely filed its answer and notice of appearance. Respondent’s
failure to effectively prosecute and defend actions taken over the course of the
proceedings have interfered with the orderly and speedy processing of this case, further
warranting imposition of sanctions. See 21 C.F.R. § 17.35(a) (1)(2) and (3).
Due to Respondent’s noncompliance with the November 18, 2015 Order, I am striking
Respondent’s Answer, issuing this default decision, and assuming the facts alleged in
CTP’s complaint to be true. See 21 C.F.R. § 17.35(c) (3), 17.11(a). The harshness of the
sanctions I impose upon either party must relate to the nature and severity of the
misconduct or failure to comply, and I find the failure to comply here sufficiently
egregious to warrant striking the answer and issuing a decision without further
proceedings. See 21 C.F.R. § 17.35(b). Respondent failed to comply with the November
18, 2015 Order, nor did it provide any adequate justification for not doing so.

Ill. Default Decision

Striking Respondent’s answer leaves the Complaint unanswered. Therefore, I am
required to issue an initial decision by default if the complaint is sufficient to justify a
penalty. 21 C.F.R. § 17.11(a). Accordingly, I must determine whether the allegations in
the Complaint establish violations of the Act.

For purposes of this decision, I assume the facts alleged in the Complaint are true and
conclude that default judgment is merited based on the allegations of the Complaint and
the sanctions imposed on Respondent for failure to comply with my orders. 21 C.F.R.
§ 17.11. Specifically:

e Respondent owns Smoke Signals, an establishment that sells tobacco products and
is located at 409 East Allen Street, Tombstone, Arizona 85638. Complaint { 3.

e During an inspection of Respondent’s establishment on July 22, 2014, an
FDA-commissioned inspector “observed customer-accessible shelving units on the
main sales floor containing cigarette tobacco and smokeless tobacco for sale.”
And, “[d]uring the inspection, the most responsible person on duty told the
inspector that minors were allowed to enter with an adult.” Complaint § 10.

¢ On September 11, 2014, CTP issued a Warning Letter to Respondent regarding the
inspector’s observation from July 22, 2014. The letter explained that the
observation constituted a violation of the regulation found at 21 C.F.R.
§ 1140.16(c), and that the named violation was not necessarily intended to be an
exhaustive list of all violations at the establishment. The Warning Letter went on
to state that if Respondent failed to correct the violation, regulatory action by the
FDA or a civil money penalty action could occur and that Respondent is
responsible for complying with the law. Complaint § 10.

e Suzanne Wilson responded to the Warning Letter by telephone on September 23,
2014. “Ms. Wilson stated that Respondent would change the establishment to an
adult only facility where no minors are present or permitted. Ms. Wilson also
stated that Respondent would add signage and inform its customers and employees
that the establishment is age restricted.” Complaint § 11.

e A subsequent two-part inspection of Respondent’s establishment occurred on
January 27, 2015 and January 28, 2015. On January 27, 2015, at approximately
2:58 PM, an FDA-commissioned inspector documented that “a person younger
than 18 years of age was able to purchase a package of Newport Box cigarettes . . .
[.]” Further, on January 28, 2015, the inspector also “observed
customer-accessible displays of cigarette tobacco and smokeless tobacco on the
main sales floor.” And, “[o]n January 27, 2015, a person younger than 18 years of
age was able to enter the establishment ....” Complaint § 1.

These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is misbranded
if distributed or offered for sale in any state in violation of regulations issued under
section 906(d) of the Act. 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b). The
Secretary of the U.S. Department of Health and Human Services issued the regulations at
21 C.F.R. pt. 1140 under section 906(d) of the Act. 21 U.S.C. § 387a-1; see 21 U.S.C.

§ 387£(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). The regulations prohibit the
sale of cigarettes to any person younger than 18 years of age. 21 C.F.R. § 1140.14(a).
Pursuant to 21 C.F.R. § 1140.16(c), self-service displays are prohibited in facilities
where, at any time, persons younger than 18 years of age are present or permitted to
enter.

Taking the above alleged facts as true, Respondent violated the prohibition against selling
tobacco to persons younger than 18 years of age, 21 C.F.R. § 1140.14(a), on January 27,
2015. Respondent violated the prohibition against using a self-service display in a
facility where minors were permitted to enter, 21 C.F.R. § 1140.16(c), on July 22, 2014,
and January 28, 2015. Therefore, Respondent’s actions constitute violations of law that
merit a civil money penalty.

CTP has requested a fine of $500, which is a permissible fine under the regulations.
21 C.F.R. § 17.2. Therefore, I find that a civil money penalty of $500 is warranted and so
order one imposed.

/s/
Steven T. Kessel
Administrative Law Judge


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

Mary Ann Hanlon,
(O.I. File H-15-4-0332-9),

Petitioner,
v.

Inspector General,
U.S. Department of Health and Human Services.

Docket No. C-15-2153
Decision No. CR4491

Date: December 15, 2015

DECISION

Petitioner, Mary Ann Hanlon, is excluded from participating in Medicare, Medicaid, and
all federal health care programs pursuant to section 1128(a)(1) of the Social Security Act
(Act) (42 U.S.C. § 1320a-7(a)(1)), effective April 20, 2015. Petitioner’s exclusion for the
minimum authorized period of five years is required by section 1128(c)(3)(B) of the Act
(42 U.S.C. § 1320a-7(c)(3)(B)).'

I. Background

The Inspector General of the Department of Health and Human Services (I.G.) notified
Petitioner by letter dated March 31, 2015, that she was being excluded from participation

' Pursuant to 42 C.F.R. § 1001.3001, Petitioner may apply for reinstatement only after
the period of exclusion expires. Reinstatement is not automatic upon completion of the
period of exclusion.
in Medicare, Medicaid, and all federal health care programs for the minimum statutory
period of five years. The LG. advised Petitioner that she was being excluded pursuant to
section 1128(a)(1) of the Act based on her conviction in the Southampton Town Court of
the State of New York of a criminal offense related to the delivery of an item or service
under Medicare or a state health care program. I.G. Exhibit (Ex.) 1.

Petitioner timely requested a hearing on April 20, 2015. Request for Hearing (RFH).
The case was assigned to me on May 18, 2015, for hearing and decision. On June 8,
2015, I convened a prehearing telephone conference, the substance of which is
memorialized in my Prehearing Conference Order and Schedule for Filing Briefs and
Documentary Evidence dated June 9, 2015 (Prehearing Order).

On July 8, 2015, the LG. filed a motion for summary judgment, a brief in support of
summary judgment (I.G. Br.), and I.G. Exs. 1 through 7. Petitioner requested two
extensions of time to file her response to the I.G.’s motion for summary judgment, which
were granted on July 17, 2015 and on September 16, 2015. On October 20, 2015,
Petitioner filed a third unopposed request for a 45-day extension of time to file her
response to the I.G.’s motion for summary judgment citing as grounds for the request that
the state courts are still reviewing her conviction. The pendency of an appeal of a
criminal conviction is not good cause for an extension of time. The regulations provide
that in the event a criminal conviction is reversed or vacated on appeal the excluded
individual is reinstated effective the date of exclusion. 42 C.F.R.

§ 1001.3005. Therefore, if Petitioner’s appeal from her criminal conviction is successful,
she can apply to be reinstated effective the date of her exclusion. Consequently, I
concluded that there was not good cause for a 45-day extension and I denied the third
request for an extension of time. On October 27, 2015, Petitioner filed a one paragraph
response (P. Response) to the I.G. motion for summary judgment with no exhibits. On
November 2, 2015, the LG. waived the filing of a reply. In the absence of objection I
admit as evidence I.G. Exs. 1 through 7.

II. Discussion

A. Applicable Law
Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) establishes Petitioner’s rights to a
hearing by an administrative law judge (ALJ) and judicial review of the final action of

the Secretary of the Department of Health and Human Services (the Secretary).

Pursuant to section 1128(a)(1) of the Act, the Secretary must exclude from participation
in any federal health care program any individual convicted under federal or state law of
a criminal offense related to the delivery of an item or service under Medicare or a state
health care program. The Secretary has promulgated regulations implementing this
provision of the Act. 42 C.F.R. § 1001.101(a).”

Pursuant to section 1128(i) of the Act, an individual is “convicted” of a criminal offense
when a judgment of conviction has been entered by a federal, state, or local court whether
or not an appeal is pending or the record has been expunged; or when there has been a
finding of guilt in a federal, state, or local court; or when a plea of guilty or no contest
has been accepted in a federal, state, or local court; or when an accused individual enters
a first offender program, deferred adjudication program, or other arrangement where a
judgment of conviction has been withheld. 42 U.S.C. § 1320a-7(i)(1)-(4); 42 C.F.R.

§ 1001.2.

Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section
1128(a) of the Act will be for a period of not less than five years. Pursuant to 42 C.F.R.
§ 1001.102(b), the period of exclusion may be extended based on the presence of
specified aggravating factors. Only if the aggravating factors justify an exclusion of
longer than five years are mitigating factors considered as a basis for reducing the period
of exclusion to no less than five years. 42 C.F.R. § 1001.102(c).

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

42 CFR. § 1005.15(b).

B. Issues
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). If, as in this case, the I.G. imposes the minimum authorized

five-year period of exclusion under section 1128(a) of the Act, there is no issue as to
whether or not the period of exclusion is unreasonable. 42 C.F.R. § 1001.2007(a)(2).

> References are to the 2014 revision of the Code of Federal Regulations (C.F.R.),
unless otherwise indicated.
C. Findings of Fact, Conclusions of Law, and Analysis

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

1. Petitioner’s request for hearing was timely and I have jurisdiction.
2. Summary judgment is appropriate in this case.

There is no dispute that Petitioner timely requested a hearing and that I have jurisdiction
pursuant to section 1128(f) of the Act and 42 C.F.R. pt. 1005.

Pursuant to section 1128(f) of the Act, a person subject to exclusion has a right to
reasonable notice and an opportunity for a hearing. The Secretary has provided by
regulation that a sanctioned party has the right to hearing before an ALJ, and both the
sanctioned party and the LG. have a right to participate in the hearing. 42 C.F.R.

§ 1005.2-.3. Either or both parties may choose to waive appearance at an oral hearing
and to submit only documentary evidence and written argument for my consideration.
42 C.F.R. § 1005.6(b)(5). An ALJ may also resolve a case, in whole or in part, by
summary judgment. 42 C.F.R. § 1005.4(b)(12).

Summary judgment is appropriate in an exclusion case when there are no disputed issues
of material fact and when the undisputed facts, clear and not subject to conflicting
interpretation, demonstrate that one party is entitled to judgment as a matter of law.
Tanya A. Chuoke, R.N., DAB No. 1721 (2000); David A. Barrett, DAB No. 1461 (1994);
Robert C. Greenwood, DAB No. 1423 (1993); Thelma Walley, DAB No. 1367 (1992);
Catherine L. Dodd, R.N., DAB No. 1345 (1992); John W. Foderick, M.D., DAB No.

125 (1990). When the undisputed material facts of a case support summary judgment,
there is no need for a full evidentiary hearing, and neither party has the right to one.
Surabhan Ratanasen, M.D., DAB No. 1138 (1990); John W. Foderick, M.D., DAB No.
125. In opposing a properly-supported motion for summary judgment, the nonmoving
party must show that there are material facts that remain in dispute, and that those facts
either affect the proponent’s prima facie case or might establish a defense. Garden City
Medical Clinic, DAB No. 1763 (2001); Everett Rehab. & Med. Ctr., DAB No. 1628
(1997). It is insufficient for the nonmovant to rely upon mere allegations or denials to
efeat the motion and proceed to hearing. See Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 247 (1986).

There are no genuine issues of material fact in dispute in this case. The facts that trigger
exclusion under section 1128(a)(1) of the Act are conceded, undisputed, or not subject to
ispute. Petitioner argues in her hearing request that “the investigation of my billing
practices for one patient did not take into account that I actually provided nursing
services over fourteen hours a day. I did not bill for services that I did not provide.

Instead I unknowingly billed for services that I provided, beyond the amount of total
hours I was allowed to bill.” RFH (italics in original). The gist of Petitioner’s argument
is that there are facts in dispute related to her conduct that caused her prosecution and
conviction. However, as a matter of law Petitioner may not collaterally attack in this
forum her conviction or the facts that were the basis for that conviction. 42 C.F.R.

§ 1001.2007(c), (d). As discussed in more detail in my “Analysis,” I conclude that there
is no genuine dispute as to the facts that support the legal conclusion that Petitioner was
convicted of a criminal offense related to the delivery of an item or service under
Medicare or a state health care program. Furthermore, the period of exclusion imposed is
the minimum permitted by Congress for a mandatory exclusion and whether or not the
five-year minimum period is unreasonable is not an issue before me. 42 C.F.R.

§ 1001.2007(a)(2). Petitioner’s challenge to her exclusion must be resolved against her
as a matter of law. Accordingly, summary judgment is appropriate.

3. Petitioner’s exclusion is required by section 1128(a)(1) of the Act.
a. Facts

The following facts are drawn from the documents which were admitted without
objection. The following facts are undisputed and considered true. Prehearing Order { 9.

Petitioner was a Registered Nurse enrolled in the New York Medicaid program and was
employed by the Dominican Sisters Family Health Services to provide home health care
nursing services. On May 29, 2013, a felony complaint was filed in the Town of
Southampton, County of Suffolk, State of New York, charging Petitioner with one count
of grand larceny in the third degree and three counts of offering a false instrument for
filing with New York Medicaid in the first degree. LLG. Ex. 3 at 1; 1.G. Ex. 4. The
complaint alleges that Petitioner submitted and caused to be submitted three false claims
for reimbursement to New York Medicaid in which she falsely represented that she had
provided nursing services to a Medicaid beneficiary from May 26, 2008 through June 1,
2008, a period during which she was out of the country on vacation. The complaint
further alleges that the State of New York paid Petitioner more than $3000 to which she
was not entitled. I.G. Ex. 3.

On September 23, 2014, Petitioner entered into a global settlement agreement in which
she agreed to plead guilty to a criminal charge; to pay restitution of $3,600 as part of her
sentence; and to confess judgment in the amount of $600,000 to resolve a civil matter
related to audit claims arising from an audit investigation conducted by the Medicaid
Fraud Control Unit. I.G. Exs. 5, 6. Also, on September 23, 2014, Petitioner pleaded
guilty, pursuant to her plea agreement, to one misdemeanor count of offering a false
instrument for filing in the second degree, in violation of New York Penal Law § 175.30.
1G. Ex. 4; .G. Ex. 6 at 3-4; LG. Ex. 7. On December 4, 2014, the criminal court judge
accepted Petitioner’s guilty plea and entered judgment against her. I.G. Ex. 7.
b. Analysis

The LG. cites section 1128(a)(1) of the Act as the basis for Petitioner’s mandatory
exclusion. The statute provides:

(a) MANDATORY EXCLUSION. - The Secretary shall
exclude the following individuals and entities from
participation in any Federal health care program (as defined
in section 1128B(f)):

(1) Conviction of program-related crimes. — Any individual or
entity that has been convicted of a criminal offense related to
the delivery of an item or service under title XVIII or under
any State health care program.

Act § 1128(a)(1) (emphasis added).* The statute requires that the Secretary exclude from
participation any individual or entity: (1) convicted of a criminal offense (whether felony
or misdemeanor); (2) where the offense is related to the delivery of an item or service;
and (3) the delivery of the item or service was under Medicare or a state health care
program.

Petitioner does not deny that she was convicted of a criminal offense within the meaning
of section 1128(i) of the Act. RFH. On September 23, 2014, Petitioner pleaded guilty.
On December 4, 2014, the Court accepted the plea, issued a judgment of conviction, and
sentenced Petitioner for the offense of which she was convicted. I.G. Exs. 6, 7. I
conclude based on these undisputed facts that Petitioner was convicted of a criminal
offense within the meaning of the section 1128(i) of the Act.

The facts that I have found based on the evidence also satisfy the remaining two elements
of section 1128(a)(1) of the Act, i.e., that Petitioner’s offense was related to the delivery
of a health care item or service, and that the delivery was under Medicare or a state health
care program. I consider whether there is a common sense connection or nexus between
the conduct that was the offense and the delivery of an item or service under Medicare or
a state health care program. Berton Siegel, D.O., DAB No. 1467 (1994). To determine
whether there is a nexus or common-sense connection between the offense and the
delivery of an item or service under Medicare or Medicaid, “evidence as to the nature of
an offense may be considered,” including “facts upon which the conviction was
predicated.” Siegel, DAB No. 1467 at 6-7. Therefore it is necessary for me to examine

> Title XVII of the Act established the federal Medicare program which provides health
insurance for the aged and disabled.
the circumstances surrounding Petitioner’s conviction to determine whether it was
program-related. Siegel, DAB No. 1467 at 6-7; Dewayne Franzen, DAB No. 1165 at 6
(1990) (finding that an ALJ’s “task is to examine all relevant conduct to determine if
there is a relationship between the judgment of conviction and the Medicaid program.”).

In this case, the charge to which Petitioner pleaded guilty and of which she was convicted
specifically alleges a relationship or nexus with the state Medicaid program, in that
Petitioner “knowingly and intentionally submitted and caused to be submitted . . . false
claims for reimbursement to . . . the Medicaid program, which falsely presented that
nursing services had been provided to [a Medicaid beneficiary] by [Petitioner] during the
period of May 26, 2008 through June 1, 2008. As a result, the State of New York paid
her more than three thousand ($3,000) to which she was not entitled.” I.G. Ex. 3 at 2.
Petitioner’s admissions as part of her guilty plea also clearly show a nexus between
Petitioner’s offense and the New York State Medicaid program. Petitioner cannot now
disavow the admissions she made as part of her plea agreement in her criminal case.

Petitioner argues in her hearing request that “the investigation of my billing practices for
one patient did not take into account that I actually provided nursing services over
fourteen hours a day. I did not bill for services that I did not provide. Instead I
unknowingly billed for services that I provided, beyond the amount of total hours I was
allowed to bill.” RFH (italics in original). Petitioner did not elaborate on her theory in
her response to the I.G.’s motion for summary judgment. P. Response. Viewed one way,
her argument may be seen as an attack on the basis for her criminal conviction contrary to
her admission of guilt before the criminal court. Petitioner is bound in this forum by the
facts she admitted by virtue of her guilty plea. Petitioner may not collaterally attack her
conviction before me and I have no jurisdiction to review the basis for her conviction. 42
C.F.R. § 1001.2007(d). It is the fact that she was convicted of an offense related to the
delivery of an item or service under New York Medicaid that is controlling. Therefore,
her attempt to recharacterize the facts before me has no impact on the outcome in this
case.

Viewed another way, Petitioner may be arguing that exclusion is not appropriate because
she had no intent to defraud New York Medicaid. Petitioner is correct that there is no
finding in the criminal case that Petitioner intended to defraud or adversely affect
Medicaid. I accept as true for purposes of summary judgment that Petitioner never
intended to defraud Medicaid and that she did not knowingly intend to adversely affect
the Medicaid program. However, these facts and Petitioner’s arguments do not establish
a genuine dispute as to any material fact or a defense and the issue must be resolved
against Petitioner as a matter of law. “Section 1128(a)(1) does not require that the
individual . . . intend to commit a criminal offense, or indeed fraud, for an exclusion to be
proper.” Franzen, DAB No. 1165 at 8. Petitioner’s intent is simply not material under
section 1128(a)(1) of the Act. Section 1128(a)(1) of the Act also “does not require any
knowledge on the part of a petitioner of the relationship between the offense and the
program.” Lyle Kai, R.Ph., DAB No. 1979 at 7 (2005). In Kai, the Board found
“irrelevant” whether the petitioner knew that Medicaid was being billed, his specific role
in the scheme, and the degree of his responsibility. Kai, DAB No. 1979 at 7. All that is
required for a criminal offense to be program-related is that there is some nexus between
the offense of which one is convicted and the delivery of an item or service under
Medicare or a state health care program. There is nothing in the statutory language of
section 1128(a)(1) that imposes a requirement of “intent” or knowledge. Franzen, DAB
No. 1165; Kai, DAB No. 1979. A nexus exists in this case between the offense of which
Petitioner was convicted and Medicaid. Petitioner pleaded guilty to the offense of
offering a false instrument and the false instrument was offered for reimbursement from
New York State Medicaid for services Petitioner falsely claimed were provided to a
Medicaid beneficiary.

I conclude that Petitioner was convicted of an offense that was program-related and
involved the delivery of a health care item or service. Accordingly, all three elements of
section 1128(a)(1) of the Act are met and Petitioner’s exclusion is required.

4. The minimum period of exclusion under section 1128(a) is five
years.

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

I have concluded that there is a basis to exclude Petitioner pursuant to section 1128(a)(1)
of the Act. Therefore, Petitioner must be excluded for a minimum period of five years
pursuant to section 1128(c)(3)(B) of the Act. The LG. has no discretion to impose a
lesser period, and I may not reduce the period of exclusion below five years.

Exclusion is effective 20 days from the date of the I.G.’s written notice of exclusion to
the affected individual or entity. 42 C.F.R. § 1001.2002(b).

II. Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare,
Medicaid, and all other federal health care programs for the minimum statutory period of
five years, effective April 20, 2015.

/s/
Keith W. Sickendick
Administrative Law Judge