Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Diplomat Pharmacy, Inc.

(NPIs: 1043405954, 1063431195, 1427250448, 1548375181, 1558307462)
(PTANs: OP12320, MI1331),
Petitioner,

Vv.

Centers for Medicare & Medicaid Services.
Docket No. C-16-87
Decision No. CR4610
Date: May 17, 2016

DECISION

The Medicare enrollment and billing privileges of Petitioner, Diplomat Pharmacy, Inc.,
are revoked pursuant to 42 C.F.R. § 424.535(a)(1),! effective August 16, 2015.

I. Background

Wisconsin Physicians Service Insurance (WPS), a Centers for Medicare & Medicaid
Services (CMS) Medicare contractor, notified Petitioner by letter dated July 17, 2015,
that its Medicare billing number and billing privileges were revoked effective August 17,
2015. WPS cited 42 C.F.R. § 424.535(a)(1) as the basis for the revocation. WPS alleged
that Petitioner had not complied with “42 C.F.R. § 424.518(C) [sic]” because Petitioner
failed to comply with the April 17, 2015 request of WPS to submit fingerprints for two
individuals with five percent or greater ownership interests in Petitioner. CMS Exhibit
(Ex.) 15 at 1. The two individuals listed in the July 17, 2015 WPS initial determination

' Citations are to the 2014 revision of the Code of Federal Regulations (C.F.R.), unless
otherwise stated.
were Jeffrey Rowe and Philip Hagerman. WPS also notified Petitioner that it was
imposing a one-year bar to re-enrollment pursuant to 42 C.F.R. § 424.535(c). CMS Ex.
15. Petitioner requested reconsideration on July 22, 2015. CMS Ex. 16. On September
11, 2015, WPS upheld the revocation on reconsideration. WPS cited 42 C.F.R.

§ 424.535(a)(1) as the basis for revocation alleging that Petitioner violated 42 C.F.R.

§ 424.518(c)(2)(B) because Petitioner failed to submit fingerprint cards for all of its
owners with a five percent or greater ownership interest in Petitioner. CMS Ex. 17.

Petitioner requested a hearing before an administrative law judge (ALJ) by letter dated
October 27, 2015 that was received by my office on November 4, 2015. On November
12, 2015, the case was assigned Judge Joseph Grow to hear and decide and an
“Acknowledgement and Pre-hearing Order” (Prehearing Order) was issued dated
November 12, 2015. On April 1, 2016, the parties were notified that this case was
reassigned to me upon Judge Grow’s reassignment to a different component of the
Department of Health and Human Services (HHS).

On December 17, 2015, CMS filed a motion for summary judgment (CMS Br.), with
CMS Exs. | through 19. On January 21, 2016, Petitioner filed its opposition to CMS’s
motion for summary judgment (P. Br.), with Petitioner’s Exhibits (P. Exs.) 1 and 2.
Petitioner has not objected to my consideration of CMS Exs. | through 19 and they are
admitted as evidence. On January 27, 2016, CMS filed objections to my consideration of
P. Exs. 1 and 2. CMS argues that Petitioner had not shown good cause to offer the
evidence for the first time before me. Petitioner responded to the objections on February
12, 2016. The CMS objections are overruled and P. Exs. 1 and 2 are admitted. Both P.
Ex. | and P. Ex. 2, show on their face that they are printed from the National Plan and
Provider Enumeration System (NPPES), National Provider Identifier (NPI) registry
which is maintained by CMS. CMS does not object to the authenticity of the documents.
CMS does not object on grounds that the information contained in those documents is not
an accurate representation of the registry maintained by CMS. P. Ex. 1 shows that NPI
1558307462 was issued on June 20, 2006, to Diplomat Pharmacy, Inc., with the
additional name “Diplomat Specialty Pharmacy,” with the mailing address 4100 South
Saginaw Street, Flint, Michigan and a practice address of G3320 Beecher Road, Flint
Michigan; the NPI was in active status; and the last update was October 8, 2015. P. Ex. 2
shows that NPI 1063431195 was issued on July 19, 2006, also to Diplomat Pharmacy,
Inc., with the additional name “Diplomat Specialty Pharmacy,” with the mailing address
4100 South Saginaw Street, Flint, Michigan and a practice address of 214 Fulton Street
E, Grand Rapids, Michigan; the NPI was in active status; and the last update was May 8,
2014. Both P. Ex. 1 and P. Ex. 2 were captured from the NPPES website on January 20,
2016. Although these documents were not previously offered as evidence, the facts
included in the documents are clearly not new evidence or subject to an objection that
they are. The association of Petitioner’s practice locations is also reflected in the CMS
exhibits, e.g., CMS Ex. 4 at 10, 16 (NPI: 1063431195, 214 E. Fulton Street, Grand
Rapids); CMS Ex. 5 (NPI: 1063431195, 214 E. Fulton Street, Grand Rapids); CMS Ex. 6

at 16 (NPI: 1063431195, 214 E. Fulton Street, Grand Rapids), 17 (NPI: 1558307462,
G3320 Beecher Road, Flint, Michigan); CMS Ex. 7; CMS Ex. 8; CMS Ex. 13 at 8 (NPI:
1063431195, 214 E. Fulton Street, Grand Rapids, deleted as a practice location effective
November 22, 2014); CMS Ex. 14 (NPI: 1063431195, 214 E. Fulton Street, Grand
Rapids, deletion as a practice location accepted by WPS effective November 22, 2014);
CMS Ex. 18; and CMS Ex. 19. It may be argued that P. Exs. 1 and 2 are cumulative of
other evidence and not admissible for that reason. However, because P. Exs. 1 and 2
reflect the status of the NPI registry information, that is, information that is part of the of
the records of CMS as of January 20, 2016, the documents are not truly cumulative of
other evidence and subject to exclusion on that basis. The information in P. Exs. 1 and 2
is also relevant to Petitioner’s theory that WPS erred in its April 17, 2015 request for the
submission of fingerprint cards, as discussed hereafter.

IL. 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
WPS. 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.
§ 1395u(h)(1)).

The Act requires the Secretary of HHS (Secretary) to issue regulations that establish a

process for enrolling providers and suppliers in Medicare, including the requirement to
provide 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 Petitioner must be

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

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 re-enrolling 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
Appeals Board (the Board). Act § 1866(j)(8) (42 U.S.C. § 1395ce(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. Issues
Whether summary judgment is appropriate.

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.
1. Summary judgment is appropriate.

CMS requested summary judgment.’ As noted above, a supplier whose enrollment has
been revoked has a right to a hearing and judicial review, and a hearing on the record is
required under the Act. Act §§ 205(b), 1866 (h)(1), (j); 42 C.F.R. §§ 498.3(b)(1), (5), (6),
(8), (15), (17), 498.5; Crestview, 373 F.3d at 748-51. A party may waive appearance at
an oral hearing but must do so affirmatively in writing. 42 C.F.R. § 498.66. In this case,
Petitioner has not waived the right to oral hearing or otherwise consented to a decision
based only upon the documentary evidence or pleadings. Accordingly, disposition on the
written record alone is not permissible, unless summary judgment is appropriate.

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

Summary judgment is appropriate when there is no genuine dispute as to any issue of
material fact for adjudication and/or the moving party is entitled to judgment as a matter
of law. In determining whether there are genuine issues of material fact for trial, the
reviewer must view the evidence in the light most favorable to the non-moving party,
drawing all reasonable inferences in that party’s favor. The party requesting summary

> CMS styled its motion as a motion for summary disposition. Summary disposition is a
broad and non-specific phrase that could refer to any disposition such as dismissal,
remand, or any other means for disposing of a case without a hearing and/or decision on
the merits. Summary disposition is not a term of art and there are no rules or procedures
specific to summary disposition. I treat the CMS motion for summary judgment as
provided for by Prehearing Order paragraph 4; the Civil Remedies Division Procedures

§ 19; Fed. R. Civ. P. 56; and various decisions of the Board cited in this decision.
Petitioner’s opposition to the CMS motion reflects that Petitioner also treated the motion
to be for summary judgment.
judgment bears the burden of showing that there are no genuine issues of material fact for
trial and/or that it is entitled to judgment as a matter of law. Generally, the non-movant
may not defeat an adequately supported summary judgment motion by relying upon the
denials in its pleadings or briefs but must furnish evidence of a dispute concerning a
material fact, i.e., a fact that would affect the outcome of the case if proven. Mission
Hosp. Reg’! Med. Ctr., DAB No. 2459 at 5 (2012) (and cases cited therein); Experts Are
Us, Inc., DAB No. 2452 at 5-6 (2012) (and cases cited therein); Senior Rehab. & Skilled
Nursing Ctr., DAB No. 2300 at 3 (2010) (and cases cited therein); see also Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

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

Viewing the evidence before me in a light most favorable to Petitioner and drawing all
inferences in Petitioner’s favor, I conclude that there are no genuine disputes as to any
material facts pertinent to revocation under 42 C.F.R. § 424.535(a)(1) that requires a
earing in this case. The issues in this case raised by Petitioner related to revocation of
its Medicare enrollment and billing privileges must be resolved against it as a matter of
law. The undisputed evidence shows that there is a basis for revocation of Petitioner’s
Medicare enrollment and billing privileges. Accordingly, summary judgment is
appropriate.

2. Petitioner is responsible to meet and maintain enrollment
requirements to “bill either the Medicare program or its beneficiaries
for Medicare covered services or supplies.” 42 C.F.R. § 424.500.

3. Petitioner was required to submit fingerprints for its owner with a
five percent or greater, direct or indirect, ownership interest in
Petitioner based on the request of the Medicare contractor.

4. Petitioner’s refusal to submit fingerprints within 30 days as
required by 42 C.F.R. § 424.518(d)(1)(ii), triggers 42 C.F.R.

§ 424.518(d)(2)(ii) requiring revocation of Petitioner’s Medicare
enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(1).

5. There is a basis for revocation of Petitioner’s Medicare enrollment
and billing privileges pursuant to 42 C.F.R. § 424.535(a)(1).

6. For purposes of summary judgment, Petitioner’s assertion that the
WPS demand for fingerprints dated April 17, 2015, included clerical
errors is accepted as true; but those errors are no defense to revocation
under 42 C.F.R. § 424.535(a)(1), as required by 42 C.F.R.

§ 424.518(d)(2), as what was required of Petitioner to maintain
compliance was clear despite the clerical errors and Petitioner’s
affirmative election not to comply.

7. The effective date of revocation in this case is August 16, 2015, 30
days after the date of the notice of initial determination to revoke.
42 C.F.R. § 424.535(g).

8. I have no authority to review the imposition or duration of a bar to
re-enrollment. 42 C.F.R. §§ 424.545, 498.5())(1)-(2).

a. Undisputed Facts
The material facts are not disputed.

On January 1, 2005, Philip Hagerman and Jeffrey Rowe signed an application
(CMS-855B) to enroll Petitioner, doing business as (d/b/a) Diplomat Specialty Pharmacy,
in Medicare. The mailing address and practice location listed was G3320 Beecher Road,
Flint, Michigan. CMS Ex. 1. On March 23, 2005, WPS notified Petitioner that it was
assigned “PIN Number” OP12320 effective January 1, 2005. CMS Ex. 2.
In February 2008, Petitioner filed a CMS-855B to enroll a new practice location as
Diplomat Pharmacy, Inc., d/b/a Diplomat Specialty Pharmacy of Grand Rapids. The
practice location was listed as Diplomat Specialty Pharmacy of Grand Rapids, LLC, 214
E. Fulton Street, Grand Rapids, Michigan. The NPI listed was 1063431195. The
application added, effective October 16, 2007, Diplomat Pharmacy, Inc., Phillip
Hagerman, Mark Chaffee, and Jeffrey Rowe, as having a five percent or more ownership
interests. CMS Ex. 4. WPS notified Diplomat Pharmacy, Inc. by letter dated April 10,
2008 and addressed to 214 E. Fulton Street, Grand Rapids, Michigan, that its Medicare
enrollment was changed effective October 16, 2007. The letter listed PTAN: OP12320
and NPI 1063431195. The letter lists Hagerman, Rowe, and Chaffee as owners added
effective October 16, 2007. CMS Ex. 5.

On February 13, 2009, WPS notified Petitioner that its Medicare enrollment application
as a Mass Immunization Roster Biller was approved effective October 21, 2008. The
practice location listed was G-3320 Beecher Road, Flint, Michigan. The PTAN was
MI1331 and the NPI 1558307462. CMS Ex. 18.

In October 2014, Petitioner filed a CMS-855B to revalidate its Medicare enrollment.
Petitioner listed itself as a Mass Immunization (Roster Biller Only) as its supplier type.
Petitioner validated that it continued under the d/b/a Diplomat Specialty Pharmacy name.
Petitioner validated a practice location for Diplomat Specialty Pharmacy at 214 E. Fulton
Street, Grand Rapids, Michigan with the PTAN OP12320 and NPI 1063431195.
Petitioner validated a practice location for Diplomat Specialty Pharmacy at G-3320
Beecher Road, Flint, Michigan, also with the PTAN OP12320 rather than MI1331 as
approved effective October 21, 2008, and NPI 1558307462. Petitioner deleted effective
August 1, 2014, a practice location for Diplomat Specialty Pharmacy at 2029 S. Elms
Road, Swartz Creek, Michigan, also with the PTAN OP12320 but NPI 1043405954.
Philip Hagerman was listed as the only person with a five percent or more ownership
interest. Hagerman was listed as acquiring his ownership January 18, 2005. Jeffrey
Rowe was listed as an owner since February 16, 2005, but not with an ownership interest
of five percent or greater. CMS Ex. 6. On November 15, 2014, WPS advised Petitioner
that its Medicare revalidation enrollment was approved. WPS listed the G3320 Beecher
Road, Flint, Michigan and 214 E. Fulton Street, Grand Rapids, Michigan as practice
locations for Petitioner. WPS acknowledged that the practice location at 2029 S. Elms
Road, Swartz Creek, Michigan was deleted. WPS referred only to NPI 1063431195 and
PTAN OP12320, and did not mention PTAN MI1331 or NPI 1558307462. CMS Ex. 7.

On January 9, 2015, Petitioner filed an “Application Record Data Report” using the CMS
web-based system to revalidate its Medicare enrollment information. Petitioner listed its
NPIs as 1043405954, 1063431195, 1427250448, 1548375181, and 1558307462.
Petitioner listed a single practice location at G3320 Beecher Road, Flint, Michigan with
the NPI 1558307462. Philip Hagerman was the only individual reported to have a five
percent or greater ownership interest. CMS Ex. 8. On February 9, 2015, WPS notified

Petitioner that its Medicare revalidation was approved. Petitioner’s practice location was
listed as G3320 Beecher Road, Flint, Michigan, with NPI 1558307462 and PTAN
MI1331 with an effective date of October 21, 2008. CMS Ex. 19.

On April 17, 2015, WPS sent Petitioner a letter stating that all owners with a five percent
or greater ownership interest needed to submit fingerprints within 30 days. The WPS
letter listed “1063431195” as the reference number. WPS erroneously listed both Jeffrey
Rowe and Philip Hagerman as having a five percent or greater ownership interest in
Petitioner. CMS Ex. 9. The evidence shows that only Philip Hagerman had a five
percent or greater ownership interest and CMS concedes that fact. CMS Br. at 6, n.7.
The April 17, 2015 WPS letter specifically stated that failure to submit fingerprints
within 30 days may result in revocation of Medicare enrollment. CMS Ex. 9.

On May 12, 2015, Petitioner responded to the April 17, 2015 WPS letter. Petitioner’s
Executive Vice President Jeffrey Rowe advised WPS that its April 17, 2015 letter
referenced NPI 1063431195, which Petitioner believes was associated with its Grand
Rapids pharmacy that had ceased operations in November 2014. Petitioner advised WPS
that, therefore, it would not be submitting the requested fingerprints. CMS Ex. 10.

On May 27, 2015, as reflected by the Julian date represented by the first five numerals
printed vertically in the upper left corner of each page of CMS Ex. 11 as well as the UPS
Proof of delivery (CMS Ex. 11 at 51), WPS received a CMS-855B from Petitioner, dated
November 22, 2014, and signed by Jeffrey Rowe. For purposes of summary judgment I
accept that Jeffrey Rowe, in fact, signed and dated the CMS-855B on November 22,
2014; and I need not inquire further as to the cause for the delayed receipt by WPS. The
CMS-855B notified WPS that Petitioner voluntarily terminated its Medicare enrollment.
CMS Ex. 11 at 5. The CMS-855B does not specify that a particular practice location was
to be deleted from Petitioner’s enrollment, suggesting that Petitioner may have
voluntarily terminated its Medicare enrollment for all practice locations. CMS Ex. 11.
WPS sent Petitioner a letter dated June 2, 2015, that memorialized a telephone
conversation in which Petitioner’s representative purportedly told the WPS representative
that the intention was to delete a practice location not terminate Petitioner’s enrollment.
The WPS letter gave direction for how to properly complete the CMS-855B to
accomplish that result. CMS Ex. 12.

On June 22, 2015, Petitioner sent WPS corrected pages for the prior CMS-855B with a
new certification page signed and dated by Rowe on June 19, 2015. The CMS-855B was
corrected to show that Petitioner was changing its Medicare information rather than
voluntarily terminating its enrollment, and specifically listed NPI 1063431195 and PTAN
OP12320. CMS Ex. 13 at 5. The corrected CMS-855B showed that Petitioner deleted its
Diplomat Specialty Pharmacy practice location at 214 E. Fulton Street, Grand Rapids,
Michigan effective November 11, 2014. Petitioner listed NPI 1063431195 and PTAN

OP 12320 as associated with that practice location. On June 25, 2015, WPS sent
10

Petitioner a letter acknowledging the deletion of the 214 E. Fulton Street, Grand Rapids,
Michigan effective November 22, 2014. WPS listed Petitioner’s enrollment information
as including a practice location at G3320 Beecher Road, Flint, Michigan; NPI
1063431195; PTAN OP12320; and an effective date of January 1, 2005. The letter
specifically requested that Petitioner verify the accuracy of its enrollment information
and submit any updates or changes to WPS. CMS Ex. 14. There is no evidence before
me that Petitioner notified WPS of any error in the NPI or PTAN listed for the G3320
Beecher Road practice location.

WPS notified Petitioner by letter dated July 17, 2015, of the initial determination to
revoke Petitioner’s Medicare enrollment and billing privileges effective August 17, 2015,
for failure to provide fingerprints for Hagerman and Rowe. WPS cited 42 C.F.R.

§ 424.535(a)(1) as the legal authority for revocation. The letter advised Petitioner of the
right to submit a corrective action plan and to request reconsideration. CMS Ex. 15.

Petitioner requested reconsideration by letter dated July 22, 2015. CMS Ex. 16.

WPS issued its reconsidered determination by letter dated September 11, 2015, upholding
revocation pursuant to 42 C.F.R. § 424.535(a)(1), on grounds Petitioner failed to submit
fingerprints as requested. The hearing officer rejected Petitioner’s argument that it
voluntarily ceased operations at the 214 E. Fulton Street, Grand Rapids, Michigan
location in November 2014. The hearing officer pointed out that Petitioner continued to
operate its G3320 Beecher Road, Flint, Michigan practice location with the same owners
and that the fingerprints were still required. CMS Ex. 17.

On January 20, 2016, the NPPES NPI registry showed that Petitioner, d/b/a Diplomat
Specialty Pharmacy, was assigned NPI 1558307462, with an enumeration date of June
20, 2006, with Petitioner’s mailing address was 4100 S. Saginaw Street, Flint, Michigan,
and that Petitioner had a practice location of G3320 Beecher Road, Flint, Michigan.

P. Ex. 1. On January 20, 2016, the NPPES NPI registry showed that NPI 1063431195
was also assigned to Petitioner d/b/a Diplomat Specialty Pharmacy, with an enumeration
date of July 19, 2006, Petitioner’s mailing address, and a practice location of 214 Fulton
Street E, Grand Rapids, Michigan. P. Ex. 2. Both NPIs are listed as being active and
there is no mention of the deletion of the Grand Rapids practice location or the revocation
of Petitioner’s enrollment. However, the information for NPI 1063431195 had not been
updated since May 8, 2014, which was before WPS received the CMS-855B deleting the
Grand Rapids practice location. P. Ex. 2. The information for NPI 1558307462 was
updated on October 8, 2015, but the revocation of Petitioner’s enrollment is subject to my
review and appeal to the Board and is not administratively final. P. Ex. 1.

The evidence shows and it is undisputed that:

Petitioner is Diplomat Pharmacy, Inc.
11

Petitioner has operated as many as three practice locations.

Petitioner ceased operating its practice location as Diplomat Specialty Pharmacy at
2029 S. Elms Road, Swartz Creek, Michigan effective August 1, 2014.

Petitioner ceased operating its practice location as Diplomat Specialty Pharmacy at
214 E. Fulton Street, Grand Rapids, Michigan effective November 22, 2014.

Petitioner continued to operate its practice location as Diplomat Specialty
Pharmacy at G3320 Beecher Road, Flint, Michigan until revocation by WPS.

Philip Hagerman is the only owner of Petitioner and its practice locations with a
disclosed ownership interest of five percent or more.

Petitioner has been issued NPIs 1043405954, 1063431195, 1427250448,
1548375181, and 1558307462.

Petitioner has been issued PTANs OP 12320 and MI1331.

WPS demanded on April 17, 2015 that Petitioner submit fingerprints of
Hagerman.

Petitioner received the April 17, 2015 demand for Hagerman’s fingerprints.

On May 12, 2015, Petitioner informed WPS that it would not submit fingerprints
as demanded.

b. Analysis

The requirements for establishing and maintaining Medicare billing privileges are found
in 42 C.F.R. pt. 424, subpt. P. Petitioner is responsible to meet and maintain enrollment
requirements in order to “bill either the Medicare program or its beneficiaries for
Medicare covered services or supplies.” 42 C.F.R. § 424.500. Pursuant to sections 1124
and 1124A of the Act and 42 C.F.R. § 424.502, a provider or supplier is required to
disclose to the Secretary full and complete information regarding an owner of a provider
or supplier, which is any individual or entity that has any partnership interest or a five
percent or more direct or indirect ownership of the provider or supplier.

Voluntary termination means that a provider or supplier submits written confirmation to
CMS that it is discontinuing its enrollment in Medicare. 42 C.F.R. § 424.502. The
evidence does not show that Petitioner, Diplomat Pharmacy, Inc., voluntarily terminated
its enrollment in Medicare.
12

In order to maintain Medicare billing privileges after being enrolled, a provider or
supplier must meet the requirements of 42 C.F.R. § 424.515 for revalidation and
42 C.F.R. § 424.516 for reporting changes, maintaining documents, and other
requirements set forth in that regulation.

Generally, a mass immunization roster biller, such as Petitioner, is categorized by CMS
as a “limited categorical risk.” 42 C.F.R. § 424.518(a)(1)(x). However, in this case
Petitioner was categorized by CMS as a “high categorical risk,” which is permitted by

42 C.F.R. § 424.518(c)(3). The reasons that authorize CMS to adjust a categorization to
high are listed in 42 C.F.R. § 424.518(c)(3)(i)-(iii). It is not clear from the evidence why
CMS designated Petitioner a high categorical risk but Petitioner was aware of the
categorization and does not dispute the classification. P. Br. at 5,9. It is not necessary to
resolve why CMS adjusted Petitioner’s categorization to high, because it is undisputed
that CMS did so. Because Petitioner was categorized as a high categorical risk by CMS,
WPS was required to conduct a fingerprint-based criminal history check on all
individuals with a five percent or greater direct or indirect ownership interest in
Petitioner. 42 C.F.R. § 424.518(c)(2)(B). WPS notified Petitioner by letter dated April
17, 2015, that Petitioner’s owners with a five percent or greater ownership interest had to
submit fingerprints within 30 calendar days from the postmark of the April 17 letter.
CMS Ex. 9. To maintain Medicare enrollment Petitioner’s owners with a five percent or
more ownership interest, either direct or indirect, were required by regulation to submit a
set of fingerprints for a background check upon submission of a Medicare enrollment
application or within 30 days of a request by WPS. 42 C.F.R. § 424.518(d). Petitioner
concedes that it was required to submit a set of fingerprints for any owner with a five
percent or greater, direct or indirect, ownership interest in Petitioner. P. Br. at 5.
Pursuant to 42 C.F.R. § 424.518(d)(2) if fingerprints are not submitted as required the
Medicare billing privileges of an enrolled provider or supplier are revoked pursuant to
42 C.F.R. § 424.535(a)(1). Pursuant to 42 C.F.R. § 424.535(a)(1), CMS may revoke an
enrolled supplier’s Medicare billing privileges and supplier agreement if:

(1) Noncompliance. The provider or supplier is determined
not to be in compliance with the enrollment requirements
described in this section, or in the enrollment application
applicable for its provider or supplier type... .

42 C.F.R. § 424.535(a)(1). However, under 42 C.F.R. § 424.518(d)(2) revocation is
directed if fingerprints are not submitted, the regulation grants no discretion to CMS,
WPS, or me not to revoke pursuant to 42 C.F.R. § 424.535(a)(1).

Petitioner concedes that it received the April 17, 2015 WPS letter directing that Jeffrey
Rowe and Philip Hagerman submit fingerprints. In fact, Petitioner informed WPS by

letter dated May 12, 2015, that it would not submit fingerprints as directed by the April
17 letter. CMS Ex. 10; RFH at 1; P. Br. at 1-2, 3. It is undisputed that only Hagerman
13

ad a five percent or greater, direct or indirect ownership interest in Petitioner.

Therefore, WPS was in error in demanding fingerprints for Rowe. CMS Br. at 6, n.7. It
is undisputed that Petitioner never sent WPS fingerprints for Hagerman, though Petitioner
as repeatedly offered even during this proceeding to submit Hagerman’s prints.
Petitioner stated in its brief “Diplomat remains ready to submit the required fingerprint
information upon any request related to a current and active NPI or practice location.” P.
Br. at 10. In its request for hearing Petitioner states that “[s]hould CMS request
fingerprints for the owners of 5% or more of NPI 1558307462, which is operational at
Beecher Road, Diplomat would be willing to comply.” RFH.

It is undisputed that Petitioner was a high categorical risk. It is undisputed that WPS
made a demand for fingerprints of Hagerman. It is undisputed that Hagerman has a five
percent or greater, direct or indirect ownership of Petitioner. It is undisputed that
Petitioner refused to submit Hagerman’s fingerprints and has not done so. Accordingly,
pursuant to 42 C.F.R. § 424.518(d)(2)(ii), Petitioner’s Medicare enrollment and billing
privileges must be revoked pursuant to 42 C.F.R. § 424.535(a)(1).

The gist of Petitioner’s defense is that the April 17, 2015 WPS letter demanding
fingerprints referred to the incorrect NPI number. In its May 12, 2015 letter to WPS
declining to submit the requested fingerprints, Petitioner acknowledged that Petitioner
ad received a request from WPS dated April 17, 2015 for fingerprints. Petitioner stated
that the “reference number listed on the Letter is the NPI for Diplomat’s Grand Rapids
pharmacy.” CMS Ex. 10. Petitioner went on to state:

However, Diplomat voluntarily ceased operations in
November 2014 at this location. Therefore, Diplomat is not
submitting fingerprints as instructed... .

CMS Ex. 10. Petitioner’s letter is clear. Petitioner did not request clarification.
Petitioner did not request an extension of time to comply. Rather, Petitioner
deliberately refused to comply with the April 17, 2015 WPS request for Petitioner
to submit fingerprints.

In its request for reconsideration, Petitioner stated that on May 12, 2015 it notified WPS
that it had closed the location associated with the NPI listed in the April 17, 2015 WPS
request for fingerprints. Petitioner further stated that “[w]e request that the revocation be
reconsidered based on the facts that notice was provided to WPS by Diplomat Pharmacy,
Inc.” CMS Ex. 16.

In its request for hearing Petitioner argues that because WPS and “CMS never requested
fingerprints for NPI 1558307462, . . . Diplomat believes that its PTAN should be
reinstated.” RFH at 2.
14

In its brief Petitioner also argues that WPS erred by requesting fingerprints for five
percent or greater owners associated with NPI 1063431195, which was the NPI for the
Grand Rapids practice location and Petitioner had ceased operations at that location in
November 2014, prior to the WPS request. Petitioner argues that the WPS request for
fingerprints was exclusive to NPI 1063431195 and WPS should have corrected or
clarified its request for fingerprints. P. Br. at 1,5. Petitioner argues that CMS relies
upon the WPS error as the basis for revocation. P. Br. at 11.

Petitioner also argues that the WPS error is a material fact that prevents deciding this case
on summary judgment. P. Br. at 13. For purposes of summary judgment, I accept that
NPI 1063431195 was listed as the reference number on the WPS April 17, 2015 demand
for fingerprints in error. Therefore, this fact is not in dispute. However, even accepting
that fact as true will not permit a judgment in Petitioner’s favor. Applying the law to the
undisputed facts requires a judgment in favor of CMS as a matter of law, even though all
favorable inferences are drawn in Petitioner’s favor.

Petitioner’s defense is without merit. Revocation of Petitioner’s Medicare enrollment
was not based on any error of WPS. Revocation in this case is based on Petitioner’s
failure to comply with the demand for fingerprints for its owners with a five percent or
greater, direct or indirect, ownership interest in Petitioner.

Petitioner’s revalidations in October 2014 and January 2015 show that Diplomat
Pharmacy, Inc., the Petitioner before me, is the supplier enrolled in Medicare with
Medicare billing privileges. In October 2014, Petitioner changed its enrollment to reflect
two practice locations, one in Flint and one in Grand Rapids, both doing business as
Diplomat Specialty Pharmacy. Petitioner deleted at that time a practice location in
Swartz Creek. The October 2014 revalidation application referred to NPIs 1063431195
and 1558307462 and PTAN OP12320. The January 2015 revalidation application
referred to NPIs 1043405954, 1063431195, 1427250448, 1548375181, and 1558307462.
The October 2014 revalidation also shows that Petitioner and its two practice locations
had only one owner with a five percent or greater ownership, direct or indirect ownership
interest, Philip R. Hagerman. The January 2015 revalidation application listed only one
practice location and the only owner with a five percent or greater ownership interest was
Hagerman. CMS Exs. 6, 8. Therefore, CMS records reflect that Petitioner was the
enrolled supplier with multiple NPIs associated but only one owner, Philip R. Hagerman,
for whom Petitioner concedes it was required to submit fingerprints.

Petitioner’s alleged confusion about the April 17, 2015 WPS demand for fingerprints is
baseless. The April 17, 2015 WPS letter demanding fingerprints (CMS Ex. 9) is
addressed to Petitioner, Diplomat Pharmacy, Inc., at the correspondence address 4100 S.
Saginaw Street, Flint, Michigan listed in its October 2014 and January 2015 revalidation
applications (CMS Ex. 6 at 10; CMS Ex. 8 at 2). The April 17, 2015 WPS letter is not
addressed to and does not make reference to Petitioner’s practice location name,

15

“Diplomat Specialty Pharmacy” or a practice location address. CMS Ex. 6 at 16, 17;
CMS Ex. 8 at 3. The April 17, 2015 WPS letter erroneously demands fingerprints for
Jeffrey Rowe, but Petitioner was clearly not confused by that fact. The letter also
demands fingerprints for Philip Hagerman and Petitioner does not dispute that he was the
only owner of Petitioner and its practice locations with five percent or greater, direct or
indirect, ownership interest. Petitioner also does not dispute that it was required to
submit fingerprints for Hagerman. Even accepting as true that WPS listed the incorrect
NPI as the reference number on its April 17, 2015 letter; and considering the incorrect
demand for fingerprints for Rowe and an incorrect reference to Petitioner as a provider;
the letter was a clear enough demand for Diplomat Pharmacy, Inc., the Medicare enrolled
supplier and Petitioner before me, to produce the fingerprints of Philip R. Hagerman.
Petitioner’s purported confusion and desire to correct WPS are simply no defense to
Petitioner’s failure to submit Hagerman’s fingerprints within 30 days of April 17, 2015.

To the extent Petitioner’s arguments may be construed as a request for equitable relief, I
ave no authority to grant equitable relief. US Ultrasound, DAB No. 2302 at 8 (2010)
(“[nJeither 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) (ALJ is
bound by applicable laws and regulations).

III. Conclusion

For the foregoing reasons, the Medicare enrollment and billing privileges of Petitioner
are revoked pursuant to 42 C.F.R. § 424.535(a)(1) for noncompliance with 42 C.F.R.
§ 424.518(d), effective August 16, 2015.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Dawn Patricia Tamagni
(O.L. File No. H-14-4-2942-9),

Petitioner,
v.
The Inspector General.
Docket No. C-15-3050
Decision No. CR4609

Date: May 16, 2016

DECISION

The Inspector General (IG) of the United States Department of Health and Human
Services notified Dawn Patricia Tamagni (Ms. Tamagni or Petitioner), a California
licensed nurse practitioner, that she was being excluded from participation in Medicare,
Medicaid, and all federal health care programs for a minimum period of five years under
42 U.S.C. § 1320a-7(a)(1) based on her criminal conviction in California of prescribing
controlled substances to patients without the proper state certification/furnishing number
to do so. Petitioner requested a hearing to dispute the exclusion, arguing that she
unwittingly prescribed medications without state authorization based on a paperwork
mishap related to her state certification and because the United States Drug Enforcement
Administration (DEA) had issued her a number to dispense controlled substances.
Because a California court convicted Ms. Tamagni of prescribing controlled substances
during the month of December 2013 without proper authorization from California
authorities, and the IG proved that Ms. Tamagni prescribed a controlled substance for at
least one Medicaid beneficiary in December 2013 and Medicaid paid for that
prescription, I conclude that Ms. Tamagni was convicted of a criminal offense that was
related to the delivery of items or services under the Medicaid program. Therefore, I
affirm the IG’s exclusion under 42 U.S.C. § 1320a-7(a)(1).
I. Background and Procedural History

In 1987, Ms. Tamagni received an Associate Degree in nursing and the California Board
of Registered Nursing (Nursing Board) licensed her to practice as a Registered Nurse.
Petitioner Exhibit (P. Ex.) 29 3; P. Ex. 3 at 2; P. Ex.5 at 5. Later, Ms. Tamagni earned a
Bachelor Degree in nursing and a Master of Science in nursing, and completed a Family
Nurse Practitioner Postgraduate Course. P. Ex. 2 § 3; P. Ex. 3 at 2. In 2001, the Nursing
Board issued a Nurse Practitioner Certificate to Ms. Tamagni. P. Ex. 5 at 5. In 2002,
Ms. Tamagni received a DEA number to prescribe medications. P. Ex.2 9 5.

From 2001 until present, Ms. Tamagni held various nurse practitioner positions, most
recently at the Anderson Walk-In Medical Clinic starting in 2012. P. Ex. 3 at 1.
However, during that time, Petitioner did not have a Nursing Board furnishing number in
order to prescribe medications. Hearing Transcript (Tr.) 36-37, 40. The DEA mistakenly
issued a number to prescribe controlled substances to Petitioner even though she did not
have the state certification. Tr. 37-38; P. Ex.2§ 9. It was not until November 2013 that
the DEA determined that Ms. Tamagni was missing the state certification. P. Ex.2 J 6.
At that point, Ms. Tamagni attempted to obtain a furnishing number. P. Ex.2§ 13. Ms.
Tamagni also continued to prescribe medications in December 2013, was criminally
charged with doing so, and pled no contest to a misdemeanor version of the charge. IG
Exhibits (Exs.) 2, 6-9, 12, 13; P. Ex. 5.

In an April 30, 2015 notice, the IG informed Ms. Tamagni that she was being excluded
from participation in Medicare, Medicaid, and all federal health care programs for five
years. The IG indicated that the legal basis for the exclusion was 42 U.S.C. § 1320a-
7(a)(1). The IG stated that he was taking this action based on Ms. Tamagni’s conviction
in the Superior Court of California (Superior Court), County of Shasta, of a criminal
offense related to the delivery of an item or service under the Medicare or a state health
care program, including the performance of management or administrative services
relating to the delivery of items or services, under any such program. IG Ex. 1.

On June 25, 2015, Petitioner, through counsel, timely requested a hearing before an
Administrative Law Judge (ALJ). Petitioner asserted in her hearing request that there is
no basis for exclusion because her misdemeanor conviction for prescribing medications
without a state certification was due to a paperwork error. Petitioner argued that because
she had a valid prescription number from the DEA, she believed she was authorized to
prescribe medications and did not intentionally violate California law. Petitioner also
pointed out that all of her patients received proper care and that the Superior Court and
the Nursing Board each only imposed probation on her for her offense. Petitioner also
asserted that the exclusion should not take effect until an ALJ heard and decided this
case.
On August 5, 2015, I held a prehearing conference by telephone, the substance of which
is summarized in my August 6, 2015 Order and Schedule for Filing Briefs and
Documentary Evidence (Order). During the conference, I explained that I do not have
any authority to delay the effective date of the exclusion. Order J 1; 42 U.S.C. § 1320a-
7(a)(7), (c)(1); 42 C.F.R. §§ 1001.2002(b); 1005.4(c)(1), (4).

In accordance with the Order, the IG filed a brief (IG Br.) and 13 exhibits (IG Exs. 1-13).
Petitioner then filed a brief (P. Br.) with seven exhibits (P. Exs. 1-7). The IG filed a reply
brief (IG Reply) and objected to P. Exs. 4, 6, and 7 as irrelevant. Because Petitioner did
not object to any of the IG’s exhibits, I admitted them all into the record. Tr. 12; Order

§ 9; Civil Remedies Division Procedures § 14(e). Petitioner did not dispute the IG’s
objections to her exhibits; therefore, I admitted P. Exs. 1 through 3 and 5, but excluded

P. Exs. 4, 6, and 7. Tr. 12-13.

In his reply brief, the IG requested that I issue a decision on the written record in this
case. IG Reply at 7. However, the IG also submitted written direct testimony for two
witnesses, Special Agent Ross Martin of the California Department of Justice’s Bureau of
Medi-Cal Fraud and Elder Abuse (IG Ex. 2) and Jeannette Peralta, an investigations
analyst with the IG’s office (IG Ex. 10). Further, the IG stated that he offered the
declarations pursuant to 42 C.F.R. § 1005.16 (IG Br. at 9), which authorizes witness
testimony in written form so long as the opposing party has the opportunity to cross-
examine the witness. Petitioner requested to cross-examine both of the IG’s witnesses

(P. Br. at 7); therefore, I denied the IG’s motion for a decision on the written record and
scheduled a telephonic hearing for January 29, 2016. Order Scheduling Hearing at 1-2.

Ms. Tamagni requested to testify at the hearing, and she also wanted two witnesses to
testify as to a mistake that the DEA had allegedly made related to authorizing Ms.
Tamagni to prescribe medications. P. Br. at 7. Although Ms. Tamagni submitted a
declaration (P. Ex. 2), I permitted her to testify on direct examination at the hearing.
Order Scheduling Hearing at 2. The IG objected to the testimony of Petitioner’s other
witnesses as potentially only providing irrelevant testimony (i.e., testimony that would
only serve as a basis for making impermissible collateral attacks on Ms. Tamagni’s
criminal conviction). IG Reply at 7. I agreed with the IG and excluded those witnesses
from the hearing. Order Scheduling Hearing at 2.

On January 29, 2016, I held a hearing in this case by telephone at which both of the IG’s
witnesses and Ms. Tamagni testified. Following receipt of the transcript of the hearing,
both the IG and Petitioner filed post-hearing briefs (IG Post-Hearing Br. and P. Post-
Hearing Br.) and reply briefs (IG Post-Hearing Reply and P. Post-Hearing Reply).
II. Issue

Does the IG have a basis to exclude Petitioner from participating in Medicare, Medicaid,
and all federal health care programs for five years under 42 U.S.C. § 1320a-7(a)(1).

III. Jurisdiction

Ihave jurisdiction to decide this case. 42 U.S.C. § 1320a-7(f); 42 C.F.R.
§§ 1001.2007(a)(1)-(2), 1005.2.

IV. Findings of Fact, Conclusions of Law, and Analysis!

The IG indicated that 42 U.S.C. § 1320a-7(a)(1) was the basis for Petitioner’s mandatory
exclusion. IG Ex. 1. 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 1320a—7b(f) of this title):

(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 subchapter XVIII of this chapter or
under any State health care program.

Thus, the elements the IG must prove to sustain Petitioner’s exclusion pursuant to section
1320a-7(a)(1) in this case are: (1) Petitioner was convicted of a criminal offense, and

(2) Petitioner’s offense was related to the delivery of an item or service under Medicare
or a state health care program.

A. Petitioner pled nolo contendere to one count of prescribing controlled
substances from on or about December 1, 2013, to on or about December 31,
2013, without valid certification or authority in violation of California
Business and Professions Code § 2052(a), and the Superior Court sentenced
Petitioner to community release for 12 months and 40 hours of community
service.

' My findings of fact and conclusions of law are set forth in italics and bold font.
On July 23, 2014, the California Attorney General filed a six-count felony complaint
against Petitioner with the Superior Court. IG Ex. 12. Although Petitioner initially pled
not guilty to the charges, in October 2014 Petitioner pled nolo contendere to Count 2 of
the complaint, which had been revised down to a misdemeanor. IG Ex. 13 at 1. Count 2
of the complaint provided:

[Bus. & Prof. Code § 2052, subd. (a) — a Felony]
Practicing Medicine without Certification — 16 months,
2 or 3 years

From on or about December 1, 2013, to on or about
December 31, 2013, defendant DAWN TAMAGNI, did
violate this section by unlawfully prescribing controlled
substances without valid certification or authority, in
violation of section 2052, subdivision (a) of the Business and
Professions Code, a felony.

IG Ex. 12 at 2 (emphasis in original). The Superior Court sentenced Petitioner to 12
months of community release and 40 hours of community service. IG Ex. 13 at 2.

B. Petitioner was convicted of a criminal offense for the purposes of 42 U.S.C.
§ 1320a-7(a)(1).

Under 42 U.S.C. § 1320a-7(a)(1), Petitioner must be “convicted of a criminal offense”
before she can be excluded. An individual is considered “convicted” when a judgment of
conviction has been entered by a federal, state, or local court, or a plea of guilty or no
contest has been accepted in a federal, state, or local court. 42 U.S.C. § 1320a-7(i)(1),
(3). In the present matter, Petitioner entered a no contest plea to a misdemeanor violation
of California Business and Professions Code § 2052(a) and, based on that plea, the
Superior Court issued a judgment and sentence. IG Ex. 13. Petitioner admits that she
was convicted of a criminal offense. P. Br. at 1. Therefore, I conclude that Petitioner
was convicted of a criminal offense for purposes of 42 U.S.C. § 1320a-7(a)(1).

C. Petitioner’s criminal offense of prescribing controlled substances without
valid California state certification or authority is an offense related to the
delivery of an item or service under Medicaid.

An individual must be excluded from participation in any federal health care program if
the individual was convicted under federal or state law of a criminal offense related to the
delivery of an item or service under Medicare or a state health care program. 42 U.S.C.

§ 1320a-7(a)(1); 42 C.F.R § 1001.101(a). A state health care program includes a state’s
Medicaid program. 42 U.S.C. § 1320a-7(h)(1); 42 C.F.R. § 1001.2 (definition of State
health care program). Medi-Cal is California’s Medicaid program. See Jesusa N.
Romero, M.D., DAB CR380, at 1 n.1 (1995); IG Ex. 3. It is significant that the term
“related to” in 42 U.S.C. § 1320a-7(a)(1) simply means that there must be a nexus or
common sense connection. See Quayum v. U.S. Dep’t of Health and Human Servs.,

34 F.Supp.2d 141, 143 (E.D.N.Y. 1998); see also Friedman v. Sebelius, 686 F.3d 813,
820 (D.C. Cir. 2012) (describing the phrase “relating to” in another part of section 1320a-
7 as “deliberately expansive words,” “the ordinary meaning of [which] is a broad one,”
and one that is not subject to “crabbed and formalistic interpretation”’) (internal quotes
omitted).

The IG argues that Petitioner’s conviction for prescribing medications without the proper
state certification in December 2013 is “related to” the delivery of an item or service
under Medicare or a state health care program (i.e., Medicaid) because the clinic
Petitioner worked for in 2013 mostly treated Medicare and Medicaid patients, and
Petitioner prescribed a medication for a Medi-Cal beneficiary on December 18, 2013, and
Medi-Cal paid for that prescription. Petitioner disputes that these are sufficient reasons to
connect her conviction to the Medicare or Medicaid programs. For the reason stated
below, I agree with the IG that he has shown a sufficient nexus between Petitioner’s
conviction and the delivery of an item or service under the Medicaid program.

The IG asserts that I should infer Petitioner illegally prescribed medications to Medicare
and Medicaid beneficiaries because, allegedly, 80 percent of the patients at the Anderson
Walk-In Medical Clinic (i.e., the clinic Petitioner worked for from 2012 to 2014) were
Medicare and Medi-Cal beneficiaries. IG Reply at 5; IG Ex. 11. IG employee Jeannette
Peralta testified that she sent a request for information to the Anderson Walk-In Medical
Clinic and that the clinic responded with dates of Petitioner’s employment and the
percentages of Medicare and Medi-Cal beneficiaries seen at the clinic. IG Ex. 109 3.
On cross-examination, Ms. Peralta admitted that she did not make a “specific inquiry
about the percentage or proportion of patients treated by [Petitioner].” Tr. 31.

I reject the IG’s argument that I should infer Petitioner prescribed medications for
Medicare and Medi-Cal beneficiaries. The document on which the IG’s argument is
based was completed by an unknown individual about an unnamed clinic. See IG Ex. 11.
Further, assuming the unnamed clinic is where Petitioner worked, this document lacks
specific information about Petitioner’s patients. In sum, the IG’s evidence is insufficient.

The IG also asserts that Petitioner’s crime of prescribing controlled substances to patients
in December 2013 without a valid state certification from the Nursing Board is related to
the Medicaid program because Petitioner prescribed a controlled substance to a Medi-Cal
beneficiary referred to as A.P. on December 18, 2013, and the prescription was paid by
the Medicaid program. IG Br. at 6. As the IG points out, Petitioner admitted to this.

IG Reply at 4; P. Br. at 3 (“[O]ne of Ms. Tamagni’s patients, referred to in the I.G.’s brief
as ‘A.P.’, was a Medicaid recipient to whom Ms. Tamagni prescribed the controlled
substance of Norco.”); P. Ex. 2 § 15 (“The patient identified in the I.G.’s brief and
exhibits as ‘A.P.” was provided excellent care by me and the staff of Anderson Walk-In
Clinic. The medications prescribed were indicated, well-tolerated, and he was provided
appropriate dosages, monitoring, and follow-up care.”).

Petitioner was convicted of “unlawfully prescribing controlled substances without valid
certification or authority” under California law. IG Ex. 12 at 2. This conclusion is based
on the text of the statute under which Petitioner was convicted and on numerous
statements made by Ms. Tamagni and her counsel. Hearing Request at 3-4 (“Ms.
Tamagni entered a plea to a single misdemeanor count of violation of Business and
Professions Code section 2052(a), which acknowledged the basic error in omission that
she prescribed medications without a furnishing number.”); P. Br. at 2 (“There is no
dispute that Ms. Tamagni pled no contest to and was convicted of the offense of
prescribing a controlled substance without a valid Nurse Practitioner’s furnishing
certificate.”); P. Ex. 2 § 13 (“I chose to admit to a single charge which factually
acknowledged that I practiced as a nurse practitioner and prescribed medications without
a [Nursing Board]-issued furnishing number. That was factually true and could be
proven.”); P. Ex. 5 at 7,28. Further, Agent Martin testified that his investigation into Ms.
Tamagni’s conduct focused on December 2013 through February 2014 because during
that time period, Ms. Tamagni knew that she was not authorized by the Nursing Board to
prescribe medications. Tr. 42. This investigation was the basis for the criminal
complaint filed against Ms. Tamagni. IG Ex. 2 § 13-15; Tr. 46-47.

I conclude that the charge to which Ms. Tamagni pled no contest, i.e., unlawfully
prescribing controlled substances without authorization during December 2013, is related
to the Norco (Hydrocodone/Acetaminophen) prescription she wrote for Medi-Cal
beneficiary A.P. on December 18, 2013. Agent Martin testified that the DEA referred
Ms. Tamagni’s conduct to his office for investigation. Tr. 34. During his investigation,
Agent Martin accessed the California Department of Justice’s Controlled Substance
Utilization Review and Evaluation System and testified that the number “0” in the
column titled “refills” means that the prescription was an original prescription and not a
refill. Tr. 44-45; IG Ex. 2 § 5; IG Ex. 7. Agent Martin then conducted additional
investigative work to verify the prescriptions from the database he accessed. Tr. 46-47;
IG Ex. 297. In regard to patient A.P., Agent Martin testified that he located the
December 18, 2013 Norco prescription for A.P. that bears Ms. Tamagni’s stamped
signature. IG Ex. 2 § 8; IG Ex. 6. Agent Martin also confirmed that patient A.P. was a
Medi-Cal beneficiary, that A.P. filled the prescription at a Rite Aid on December 18,
2013, and that Medi-Cal paid for the prescription. IG Ex. 2 §§ 10-12; IG Exs. 7-9; see
also Tr. 64-66. I found Agent Martin’s testimony to be credible based on its consistency
with the record and because he answered questions from the parties without evasion.

Contrary to the position that Petitioner took in her prehearing brief and written direct
testimony, Petitioner testified during the hearing that she ceased prescribing medications
in November 2013 when the human resources department of the Anderson Walk-In

Medical Clinic told her that she did not have a Nursing Board’s furnishing number;
however, she also did not withdraw or pull back any previously issued prescription that
had refills. Tr. 77-78, 89-90, 96-97. Petitioner also indicated that her stamped signature
on the December 18, 2013 prescription for A.P. could have been stamped by another
person. Tr. 99-100. However, Petitioner also testified that she did not recall if she issued
the December 18, 2013 prescription to A.P. Tr. 101. In regard to the criminal plea,
Petitioner testified that she only admitted to practicing without a Nursing Board
furnishing number and that her plea did not specifically encompass patient A.P. Tr. 81-
85, 92, 95-96. However, on cross-examination, the IG confronted Petitioner with her
settlement agreement in her Nursing Board disciplinary case in which she admitted to a
charge stating that her criminal conviction was based in part on prescribing 60 tablets of
Norco (10 mg./325 mg.) for a patient on December 18, 2013. Tr. 108-12; P. Ex. 5 at 7,
27-28. This is exactly what Petitioner prescribed for patient A.P. IG Exs. 6,7, 9.

I consider Petitioner’s credibility to have been compromised during the hearing in this
case. Prior to the hearing, Petitioner indicated that she was convicted of prescribing
medications without proper authorization. However, Petitioner altered her position to
stating that she was simply practicing without authorization. Petitioner testified that she
did not prescribe medications after November 2013, but then stated she did not recall
whether she had. This assertion is contradicted by the charge to which she pled no
contest and the settlement agreement she entered into with the Nursing Board. Finally,
even if Petitioner’s testimony is accurate, I am not able to accept Petitioner’s attempt to
change the factual basis for her plea because I am precluded from reconsidering the basis
for the criminal conviction in her case. 42 C.F.R. § 1001.2007(d).

Therefore, I conclude that the evidence of record shows a sufficient nexus between
Petitioner’s criminal conviction for prescribing medication without proper state
certification and the Medicaid program because Petitioner’s conviction was based in part
on a prescription Petitioner gave to patient A.P., a Medi-Cal beneficiary who filled the
prescription using Medi-Cal to pay for it.

D. Petitioner must be excluded for the statutory minimum of five years under
42 U.S.C. § 1320a-7(c)(3)(B).

Because I have concluded that a basis exists to exclude Petitioner under 42 U.S.C.
§ 1320a-7(a)(1), Petitioner must be excluded for a minimum period of five years.
42 U.S.C. § 1320a-7(c)(3)(B); 42 C.F.R. §§ 1001.102(a), 1001.2007(a)(2).
V. Conclusion

I affirm the IG’s determination to exclude Petitioner from participating in Medicare,
Medicaid, and all other federal health care programs for the statutory five-year minimum
period under 42 U.S.C. § 1320a-7(a)(1), (c)(3)(B).

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Sammy W. Kidd
(OI File No. H-15-42958-9),

Petitioner,
v.
The Inspector General.
Docket No. C-16-286
Decision No. CR4608

Date: May 13, 2016

DECISION

Petitioner, Sammy W. Kidd, was a caregiver, working in Bernalillo County, New
Mexico. He pled no contest to one felony count of Medicaid fraud. Based on this, the
Inspector General (IG) has excluded him for five years from participating in Medicare,
Medicaid, and all federal health care programs, as authorized by section 1128(a)(1) of the
Social Security Act (Act). Petitioner appeals the exclusion. For the reasons discussed
below, I find that the IG properly excluded Petitioner Kidd and that the statute mandates
a minimum five-year exclusion.

Background

In a letter dated December 31, 2015, the IG notified Petitioner that he was excluded from
participating in Medicare, Medicaid, and all federal health care programs for a period of
five years because he was convicted of a criminal offense related to the delivery of an
item or service under Medicare or a state health care program. The letter explained that
section 1128(a)(1) of the Act authorizes the exclusion. IG Ex. 1. Petitioner timely
requested review.
Each party submitted a written argument (IG Br.; P. Br.). Petitioner submitted an
additional submission, and the IG submitted a reply. The IG submitted five proposed
exhibits (IG Exs. 1-5). Petitioner submitted four proposed exhibits (P. Exs. 1-4). The IG
objects to my admitting P. Ex. 4, a January 15, 2016 letter from the New Mexico
Department of Health advising that it had granted Petitioner Kidd an “Employment
Clearance.” The IG argues that the state’s determination that Petitioner was “cleared” for
employment as a caregiver is irrelevant to the issue presented here: whether the IG has
properly excluded Petitioner from program participation. I agree and am required to
exclude irrelevant evidence. 42 C.F.R. § 1005.17(c).

In the absence of any other objections, I admit into evidence IG Exs. 1-5 and P. Exs. 1-3.
The parties agree that an in-person hearing is not necessary. IG Br. at 5; P. Br. at 2.
Discussion

Petitioner must be excluded from program participation for
a minimum of five years because he was convicted of a
criminal offense related to the delivery of an item or service
under Medicare or a state health care program, within the
meaning of section 1128(a)(1). '

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

Here Petitioner Kidd provided in-home services to Medicaid beneficiaries in the State of
New Mexico. IG Exs. 4, 5. He submitted claims to the state Medicaid program for
services he did not provide, and, on August 26, 2015, pled “no contest” in state court to a
felony charge of Medicaid fraud. IG Ex. 2. The court accepted his plea, and issued a
“conditional discharge,” which deferred the proceedings for 18 months “without
adjudication of guilt.” The court also sentenced Petitioner to 18 months supervised
probation, ordered him to pay restitution of $1,050, and explicitly excluded him from
program participation pursuant to 42 C.F.R. § 1001.102. IG Ex. 3.”

' T make this one finding of fact/conclusion of law.

> Tam confused as to why this appeal is before me. As part of his plea, Petitioner Kidd
acknowledged that he would be excluded from program participation and agreed that he
would not contest the exclusion. IG Ex. 2 at 2. Then the sentencing court ordered that he
be excluded. IG Ex. 3 at 5. But neither party has addressed the significance of those
provisions of the plea agreement and court judgment.
Petitioner argues that he was not convicted because he completed his probation, paid
restitution, and the charges were dismissed. P. Additional Submission; P. Exs. 1, 3.

Under the Act and regulations, a person is “convicted” when “a judgment of conviction
has been entered” regardless of whether that judgment has been (or could be) expunged
or otherwise removed. Act § 1128(i)(1); 42 C.F.R. § 1001.2(a)(2). Individuals who
participate in a “deferred adjudication or other program or arrangement where judgment
of conviction has been withheld” are also “convicted” within the meaning of the statute.
Act § 1128(i)(4); 42 C.F.R. § 1001.2(d). Based on these provisions, the Departmental
Appeals Board (Board) characterizes as “well established” the principle that a
“conviction” includes “diverted, deferred and expunged convictions regardless of
whether state law treats such actions as a conviction.” Henry L. Gupton, DAB No. 2058
at 8 (2007), aff'd sub nom. Gupton v. Leavitt, 575 F. Supp. 2d 874 (E.D. Tenn. 2008).

The Board explained why, in these IG proceedings, the federal definition of “conviction”
must apply. That definition differs from many state criminal law definitions. For
exclusion purposes, Congress deliberately defined “conviction” broadly to ensure that
exclusions would not hinge on state criminal justice policies. Quoting the legislative
history, the Board explained:

The rationale for the different meanings of “conviction” for state criminal
law versus federal exclusion law purposes follows from the distinct goals
involved. The goals of criminal law generally involve punishment and
rehabilitation of the offender, possibly deterrence of future misconduct by
the same or other persons, and various public policy goals. [footnote
omitted] Exclusions imposed by the I.G., by contrast, are civil sanctions,
designed to protect the beneficiaries of health care programs and the federal
fisc, and are thus remedial in nature rather than primarily punitive or
deterrent. . . . In the effort to protect both beneficiaries and funds, Congress
could logically conclude that it was better to exclude providers whose
involvement in the criminal system raised serious concerns about their
integrity and trustworthiness, even if they were not subjected to criminal
sanctions for reasons of state policy.

Gupton, DAB No. 2058 at 7-8.

Petitioner also complains that he received bad legal advice, having been told that his plea
would not show up as a conviction.* He points to a telephone conversation between his

> Inasmuch as he signed a plea agreement stipulating that he would be excluded,
Petitioner can hardly claim that he did not understand that he would be excluded based on
his plea. IG Ex. 2 at 5.
father and his former employer and claims that the employer admitted that his payroll
clerk committed the fraud. P. Additional Submission at 1-2. But the regulations
explicitly preclude such a collateral attack on an underlying conviction.

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

42 C.F.R. § 1001.2007(d); Donna Rogers, DAB No. 2381 at 4-5 (2011); Joann Fletcher
Cash, DAB No. 1725 (2000); Chander Kachoria, R.Ph., DAB No. 1380 at 8 (1993)
(“There is no reason to ‘unnecessarily encumber the exclusion process’ with efforts to
reexamine the fairness of state convictions.”) (citation omitted); Young Moon, M.D.,
DAB CR1572 (2007).

Petitioner’s conviction thus falls squarely within the statutory and regulatory definition of
“conviction,” and his conviction for Medicaid fraud is obviously related to the delivery of
services under a state health care program. He is therefore subject to exclusion. An
exclusion brought under section 1128(a)(1) must be for a minimum period of five years.
Act § 1128(c)(3)(B); 42 C.F.R. § 1001.102(a).

Conclusion

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

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Natalie Vallot, CRNA,
(PTAN: CA153957),
(NPI: 1811386246)
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-16-337
Decision No. CR4607
Date: May 12, 2016
DECISION
I sustain the determination of the Centers for Medicare & Medicaid Services (CMS) to
assign Petitioner, Natalie Vallot, CRNA, an effective Medicare participation date of April
15, 2015."
I. Background
Petitioner appealed a determination by a Medicare contractor, affirmed on
reconsideration and ratified by CMS, to assign her an effective Medicare participation

date of April 15, 2015. CMS filed a motion for summary judgment that included four
proposed exhibits, identified as CMS Ex. 1-CMS Ex. 4. Petitioner opposed the motion

' CMS incorrectly argues that Petitioner’s effective date of Medicare participation is
March 16, 2015. That is plainly wrong. As I shall discuss, Petitioner’s effective date of
participation is April 15, 2015 because that is the date when a Medicare contractor
received an application for participation from Petitioner that it subsequently approved.
42 C.F.R. § 424.520(d). By contrast, March 16, 2015 is the earliest Medicare service
date for which Petitioner may file reimbursement claims based on her April 15 effective
participation date. 42 C.F.R. § 424.521(a)(1).

and filed four proposed exhibits that I identify as P. Ex. 1 - P. Ex. 4. I receive the parties’
exhibits into the record.

It is unnecessary that I decide whether the criteria for summary judgment are met here.
Neither CMS nor Petitioner offers testimony in their exchanges. I decide the case based
on the written record.

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

The issue is whether a Medicare contractor properly assigned Petitioner an effective
participation date of April 15, 2015.

B. Findings of Fact and Conclusions of Law

There is no meaningful dispute as to the facts. Petitioner submitted an application to
participate in Medicare that was received by a Medicare contractor on January 6, 2015.
CMS Ex. | at 1. The contractor found problems with the application and there was an
exchange of communications with Petitioner or her representative in which Petitioner
attempted to supplement the application. CMS Ex. 4 at 2; P. Ex. 1. Ultimately, the
contractor determined that the application remained incomplete despite Petitioner’s
attempts to correct or supplement it and it rejected the application on April 6, 2015. CMS
Ex. | at 1. Petitioner filed a second Medicare enrollment application that was received
by the contractor on April 15, 2015. CMS Ex. 4 at 2. The contractor accepted this
application and assigned Petitioner an effective enrollment date of April 15, 2015, with
March 16, 2015 being the earliest Petitioner could bill for her services. CMS Ex. 2.

The effective date of participation in Medicare is governed by regulations. For purposes
of this decision, the earliest date when a supplier or a provider such as Petitioner may
participate is the date on which CMS or its contractor receives an application for
participation that it subsequently approves. 42 C.F.R. § 424.520(d). No authority exists
to approve an application for participation at an earlier date.

In this case, Petitioner submitted two applications for participation consisting of an
application that the contractor received on January 6, 2015, and a subsequent application
that the contractor received on April 15, 2015. The contractor rejected the January 6
application because it was incomplete or contained inadequate information. Petitioner
cannot receive an effective date based on the January 6 application because it was
rejected. Nor does Petitioner have a right to challenge the contractor’s rejection of that
application. 42 C.F.R. § 424.525(d).
Thus, the on/y application that the contractor could process was the application that the
contractor received on April 15, 2015 (Petitioner’s second application). It did so, and
assigned Petitioner an effective date of April 15, the date that it received the application.
That is entirely consistent with regulatory requirements and is the correct effective date
of Petitioner’s Medicare participation.

Petitioner seems to argue that the information she provided the contractor in an attempt to
rectify problems with the application that the contractor received on January 6 was
sufficient and that the contractor ought to have accepted the application and processed it
to approval. That is, in fact, a challenge to the contractor’s determination to reject the
application that it received on January 6, 2015. Petitioner has no right to challenge the
contractor’s rejection of that application for the reasons that I have stated, and I have no
authority to decide that the contractor inappropriately rejected that application.

/s/
Steven T. Kessel
Administrative Law Judge