Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Keyz EMS, Inc.
(NPI: 1295007904 / PTAN: AMB1296),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-15-1070
Decision No. CR4090
Date: July 31, 2015

DECISION
GRANTING PARTIAL SUMMARY JUDGMENT

The Medicare enrollment and billing privileges of Petitioner, Keyz EMS, Inc., are
revoked pursuant to 42 C.F.R. § 424.535(a)(5)(ii)' because an on-site visit found that
Petitioner had not satisfied all of the applicable Medicare enrollment requirements. The
effective date of the revocation is November 16, 2014, 30 days after Novitas Solutions
(Novitas), a Medicare administrative contractor for the Centers for Medicare & Medicaid
Services (CMS), notified Petitioner of the factual and legal basis for the revocation.

42 C.F.R. § 424.535(g). CMS has imposed a two-year bar on Petitioner’s re-enrollment
in the Medicare program, which is permissible under the applicable regulations.

42 CFR. § 424.545(c).

Summary judgment is not granted upholding revocation with an earlier effective date on
the basis that Petitioner was not operational during various attempted on-site inspections.
Not more than ten days from the date of this decision, CMS may request a hearing on the

' Citations are to the 2013 revision of the Code of Federal Regulations (C.F.R.), unless
otherwise indicated.
merits to attempt to establish Petitioner was not operational and that an earlier effective
date of revocation is justified. Either party may request review of this decision by the
Departmental Appeals Board (Board) within 60 days of receipt. 42 C.F.R. §§ 498.80 -
.82. However, if CMS requests a hearing on the merits regarding whether or not
Petitioner was operational and whether or not an earlier effective date of revocation is
justified, the period for requesting Board review will run from receipt of the decision
following the hearing on the merits.

I. Background

Petitioner was enrolled in the Medicare program as a supplier” of ambulance services in
Texas. CMS Exhibit (CMS Ex.) 4 at 1-2; Petitioner Exhibit (P. Ex.) C. Novitas notified
Petitioner by letter dated July 10, 2014, that Petitioner’s Medicare billing number and
billing privileges were revoked effective June 27, 2014, pursuant to 42 C.F.R.

§ 424.535(a)(5). CMS Ex. | at 7-8. Novitas cited two attempted on-site inspections of
Petitioner’s location in Fresno, Texas, on June 26, 2014, at 1:00 p.m., and June 27, 2014,
at 10:25 a.m., during which the contractor’s inspector found Petitioner’s office closed to
the public with no sign of employees or customer activity. CMS Ex. 1 at 7. Novitas also
notified Petitioner that it was subject to a two-year bar to re-enrollment pursuant to

42 CFR. § 424.535(c). CMS Ex. | at 8.

On July 15, 2014, Petitioner submitted a request for reconsideration to Novitas. CMS
Ex. | at 5-6. Petitioner’s owner stated in the reconsideration request that, on or around
June 20, 2014, he decided to move Petitioner’s office from his residence in Fresno,
Texas, to an office building in Houston, Texas. CMS Ex. 1 at 5. Petitioner’s owner
submitted with the reconsideration a copy of a lease dated June 20, 2014, for the new
office space in Houston. CMS Ex. | at 9-22. The contractor subsequently attempted to
conduct two on-site inspections of the Houston office, first on September 17, 2014, at
11:25 a.m., and again on September 25, 2014, at 12:35 p.m. CMS Ex. 2 at 3-5. During
both on-site inspections, the contractor’s inspector found Petitioner’s office closed and no
one answered when the inspector knocked on the door. CMS Ex. 2 at 3. The inspector

> 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.
photographed a sign on the office door with Petitioner’s name and office hours. CMS
Ex. 2 at 5. On October 17, 2014, a contractor hearing officer issued a reconsidered
determination in which she upheld the revocation pursuant to 42 C.F.R. § 424.535(a)(5).
CMS Ex. | at 1-4.

On November 14, 2014, Petitioner requested a hearing (RFH) before an administrative
law judge (ALJ). On January 30, 2015, the case was assigned to me for hearing and
decision, and an Acknowledgement and Prehearing Order (Prehearing Order) was issued
at my direction.

On March 2, 2015, CMS filed a motion for summary judgment and supporting brief
(CMS Br.), with CMS Exs. | through 4. On April 27, 2015, Petitioner filed an opposition
to CMS’s motion (P. Br.), with three exhibits marked P. Exs. A, B, and (om and another
document not labeled as an exhibit, but labeled as an “Additional Supporting Document.”
On May 13, 2015, CMS filed its reply brief (CMS Reply) with four additional exhibits,
labeled CMS Exs. 5 through 8. Petitioner has not objected to CMS Exs. | through 8 and
they are admitted as evidence. CMS has not objected to P. Exs. A through C, or the
“Additional Supporting Document” that Petitioner filed on April 27, 2015, and they are
admitted as evidence.

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
Novitas. 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 §§ 1834(j)(1) (42 U.S.C. § 1395m(j)(1));
1835(a) (42 U.S.C. § 1395n(a)); 1842(h)(1) (42 U.S.C. § 1395u(h)(1)). Petitioner is a
supplier of ambulance services. 42 C.F.R. § 410.41.

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

5 Petitioner filed three documents on February 20, 2015, but these documents were
unlabeled. I stated in my April 13, 2015 Order to Show Cause that I did not accept these
documents as proposed exhibits or as Petitioner’s prehearing exchange. Petitioner
resubmitted the three documents labeled P. Exs. A through C.
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, a supplier such as Petitioner
must be enrolled in the Medicare program and be issued a billing number to have billing
privileges and to be eligible to receive payment for services rendered to a Medicare-
eligible beneficiary.

Suppliers must submit complete, accurate, and truthful responses to all information
requested in the enrollment application. 42 C.F.R. § 424.510(d)(2). Pursuant to 42 C.F.R.
§§ 424.502 and 424.510(d)(3), a supplier’s application to enroll in Medicare must be
signed by an authorized official, i.e., one with authority to bind the provider or supplier
both legally and financially. Subsection 424.510(d)(3) provides that the signature attests
to the accuracy of information provided in the application. The signature also attests to
the fact that the provider or supplier is aware of and abides by all applicable statutes,
regulations, and program instructions. 42 C.F.R. § 424.510(d)(3). Suppliers must meet
basic requirements depending on their type of service. 42 C.F.R. §§ 424.505, 424.516,
424.517. Suppliers are also subject to additional screening requirements depending upon
the type of service they provide. 42 C.F.R. § 424.518.

The Secretary has delegated authority to CMS or its Medicare contractor to revoke an
enrolled supplier’s Medicare enrollment and billing privileges and any supplier
agreement for any of the reasons listed in 42 C.F.R. § 424.535. Pursuant to 42 C.F.R.

§ 424.535(a)(5), CMS may revoke a supplier’s enrollment and billing privileges if CMS
determines, upon on-site review, that the supplier is no longer operational to furnish
Medicare covered items or services, has failed to satisfy any or all of the Medicare
enrollment requirements, or has failed to furnish Medicare covered items or services as
required by the statute or regulations. 42 C.F.R. § 424.535(a)(5)(ii).

If CMS revokes a supplier’s Medicare billing privileges for not complying with
enrollment requirements, then the revocation is effective 30 days after CMS or its
contractor mails notice of its determination to the supplier. 42 C.F.R. § 424.535(g).
When CMS revokes a supplier’s billing privileges because the supplier is not operational,
the revocation is effective as of the date CMS determined the supplier to be not
operational. 42 C.F.R. § 424.535(g). After a supplier’s Medicare enrollment and billing
privileges are revoked, the supplier is barred from reenrolling in the Medicare program
for one to 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. 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 advising the supplier of its 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. Crestview Parke Care Ctr. v. Thompson, 373 F.3d 743, 748-51
(6th Cir. 2004). The supplier bears the burden to demonstrate that it meets enrollment
requirements with documents and records. 42 C.F.R. § 424.545(c).

B. Issues
Whether summary judgment is appropriate; and

Whether there was a basis for the revocation of Petitioner’s billing
privileges and Medicare enrollment.

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

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

1. Partial Summary judgment is appropriate.

2. Petitioner did not file a CMS-855B with the CMS contractor to
provide notice of a change in Petitioner’s practice location within 90
days of the change as required by 42 C.F.R. § 424.516(e)(2).

3. Petitioner was not in compliance with 42 C.F.R. § 424.516(e)(2)
because an on-site review determined Petitioner changed its
practice location but did not properly notify the CMS contractor of
that change within 90 days as required.

4. There is a basis for revocation of Petitioner’s enrollment and billing
privileges pursuant to 42 C.F.R. § 424.535(a)(5)(ii) for failure to
comply with the Medicare enrollment requirement established by
42 C.F.R. § 424.516(e)(2).

a. Facts

The material facts that establish a basis to revoke Petitioner’s Medicare billing privileges
pursuant to 42 C.F.R. § 424.535(a)(5)(ii) are not disputed. Petitioner enrolled in the
Medicare program as a supplier of ambulance services effective December 6, 2011.

RFH, P. Ex. C. On April 24, 2014, Petitioner’s owner signed a CMS-855B application
that changed Petitioner’s correspondence address and practice location to 1734 Teal Bend
Court in Fresno, Texas. CMS Ex. 3 at 4, 6-9; P. Ex. A. Petitioner argues that the
CMS-855B signed April 24, 2014, provided CMS and its contractor with notice that
Petitioner moved to 9898 Bissonnet Street, Suite 375-H. Petitioner’s argument is not
credible. The CMS-855B signed on April 24, 2014, does not list the 9898 Bissonnet
Street address. P. Br. at 4; P. Ex. A. The CMS-855B that Petitioner submitted to Novitas
only lists the 1734 Teal Bend Court address as Petitioner’s practice location effective
April 1, 2014. Two months later, on June 20, 2014, Petitioner’s owner signed a lease for
9898 Bissonnet Street, Suite 375-H in Houston, Texas. CMS Ex. | at 9, 17; P. Ex. B.
The lease provided Petitioner with the right of occupancy in Suite 375-H as of June 18,
2014. CMS Ex. | at 17; P. Ex. B.

On June 23, 2014, two months after Petitioner notified Novitas of its move to 1734 Teal
Bend Court and three days after Petitioner signed the lease for 9898 Bissonnet, Inspector
Ronald McSwain made an unsuccessful attempt to conduct an on-site visit of Petitioner at
17512 Highway 6, Suite 3 in Manvel, Texas. CMS Ex. 2 at 1-2. That address appears to
have been Petitioner’s location prior to Petitioner’s move to 1734 Teal Bend Court. CMS
Ex. 4. On June 26, 2014, at 1:00 p.m., and again on June 27, 2014, at 10:25 a.m.,
Inspector Paul Farmer made unsuccessful attempts to conduct on-site visits of Petitioner
at 1734 Teal Bend Court. CMS Ex. 2 at 6-7. By the time of the June 26, 2014 attempted
on-site inspection, however, it is undisputed that Petitioner’s owner had already signed
the lease for the 9898 Bissonnet Street, Suite 375-H and Petitioner had moved or was in
the process of moving to that new location. CMS Ex. | at 9-22; P. Br. at 6. At the time
of the June 26 and 27, 2014 failed attempts to conduct an on-site inspection at 1734 Teal
Bend Court, Petitioner had not filed a CMS-855B with Novitas advising the contractor of
the change in practice location from 1734 Teal Bend Court in Fresno to 9898 Bissonnet
Street, Suite 375-H, in Houston. But, pursuant to 42 C.F.R. § 424.516(e)(2), Petitioner
ad 90 days, or until about September 18, 2014, to file a CMS-855B notifying Novitas
and CMS of the move. Based on the failed attempts to complete on-site inspections at
1734 Teal Bend Court, Inspector Farmer determined that he was “unable to ascertain if
Petitioner] is operational since no one was at the location on both visits.” CMS Ex. 2

at 6. Despite stating that he could not conclude the actual operational status of Petitioner,
Inspector Farmer nevertheless checked a box on his report that indicated Petitioner was
not operational. CMS Ex. 2 at 6. On July 10, 2014, Novitas issued an initial
determination revoking Petitioner’s Medicare billing privileges because it had determined
Petitioner was “no longer operational at 1734 Teal Bend Court, Fresno, Texas 77545 to
furnish Medicare covered items or services.” CMS Ex. | at 7.

In its reconsideration request dated July 15, 2014, Petitioner’s owner explained that he
submitted to Novitas a CMS-855B application and EFT-588 form in April 2014 “to
update the bank account information on file and the correspondence, practice location,
and special payments address.” CMS Ex. | at 5. Petitioner’s owner acknowledged that
the address on the CMS-855B he sent in April 2014 was for his residence, 1734 Teal
Bend Court, and further stated that he “decided to move the business from my residence
to an actual office, with the company’s best interests in mind.” CMS Ex. | at 5.
The owner said that the April 2014 application was still being processed at the time he
moved Petitioner’s offices from his residence, and that “he was told that [he] would be
able to make changes to the existing application in the case that another development
letter was issued.” CMS Ex. | at 5. He then explained that Petitioner “had already begun
relocating the company to the new address” at the time of the June 26, 2014 and June 27,
2014 on-site inspection attempts. CMS Ex. 1, at 5.

Petitioner does not allege and has presented no evidence that he ever filed a CMS-855B
reporting a change of practice location from 1734 Teal Bend Court to 9898 Bissonnet
Street. There is no record of “another development letter” having been issued from
Novitas, and no evidence in the record to support an inference that Petitioner attempted to
correct its April 2014 CMS-855B to notify Novitas of its change in location from 1734
Teal Bend Court to 9898 Bissonnet Street. Prior to the reconsidered determination and
apparently based on the allegation in Petitioner’s request for reconsideration, Novitas
directed on-site visits for Petitioner’s 9898 Bissonnet Street location. CMS Ex. | at 1.
On September 17, 2014, at 11:25 a.m., Inspector Farmer found the door to Suite 375-H at
9898 Bissonnet closed and no one answered when he knocked. CMS Ex. 2 at 3. He took
photographs of the sign outside of Suite 375-H, which listed Petitioner’s name, “Keyz
EMS, Inc.,” and listed its hours as “Monday — Friday” from “9:00 a.m. — 5:00 p.m.”
CMS Ex. 2 at 4. Petitioner was also listed on the building directory, which listed
Petitioner’s location in the building as Suite 375-H. CMS Ex. 2 at 5. On September 25,
2014, at 12:35 p.m., Inspector Farmer attempted another on-site inspection and again
found Petitioner’s door closed and no answered when he knocked. CMS Ex. 2 at 3. He
completed a report that indicated Petitioner did not “appear to be operational,” but that
there was a sign that listed Petitioner’s name. CMS Ex. 2 at 3. Petitioner’s owner does
not dispute that the 9898 Bissonnet Street, Suite 375-H office was closed at the times of
both attempted on-site inspections. RFH; P. Br. at 2.

On October 17, 2014, the contractor hearing officer issued a reconsidered determination
that notified Petitioner it “did not pass” the attempted on-site inspections. The hearing
officer cited 42 C.F.R. § 424.535(a)(5) as the basis for revocation and stated next to that
regulatory citation that it related to “On-Site Review — Requirements Not Met.” CMS
Ex. | at 1. The hearing officer accepted the fact that Petitioner had begun to move from
the 1734 Teal Bend Court address to 9898 Bissonnet Street, Suite 375-H, which was “the
reason why the site visit failed at the Teal Bend Court address on June 26, 2014 and June
27, 2014.” CMS Ex. | at 2. Petitioner did not submit, and the contractor did not
consider, a CMS-855B application listing the 9898 Bissonnet Street, Suite 375-H location
as Petitioner’s practice location. The hearing officer found that the only CMS-855B that
Petitioner submitted was dated April 24, 2014, which listed the Teal Bend Court address.
CMS Ex. | at 2.
b. Analysis

CMS requested summary judgment in this case. A provider or supplier denied
enrollment in Medicare or whose enrollment has been revoked has a right to a hearing
and judicial review pursuant to section 1866(h)(1) and (j) of the Act and 42 C.F.R.

§§ 498.3(b)(1), (5), (6), (8), (15), (17); 498.5. A hearing on the record, also known as an
oral hearing, is required under the Act. Act §§ 205(b), 1866 (h)(1) and (j)(8); 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 the CMS motion for summary judgment has merit.

Summary judgment is not automatic upon request but is limited to certain specific
conditions. The Secretary’s regulations that establish the procedures to be followed in
adjudicating Petitioner’s case are at 42 C.F.R. pt. 498. 42 C.F.R. §§ 405.800, 405.803(a);
424.545(a), 498.3(b)(5), (6), (15), (17). The regulations 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 (Fed. R. Civ. P.) 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 within my
authority to regulate the course of proceedings and made available to the parties in the
litigation of this case by my Prehearing Order. The parties were given notice by the
Prehearing Order that summary judgment is an available procedural device and that the
law as it has developed related to Fed. R. Civ. P. 56 will be applied.

Summary judgment is appropriate when there is no genuine dispute as to any material
fact for adjudication and/or the moving party is entitled to judgment as a matter of law.
The party requesting summary judgment bears the burden of showing that there are no
genuine issues of material fact for trial and/or that it is entitled to judgment as a matter of
law. 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,
rawing all reasonable inferences in that party’s favor. Generally, the non-movant may
not defeat an adequately supported summary judgment motion by relying upon the
lenials in its pleadings or briefs but must furnish evidence of a dispute concerning a
material fact, i.e., a fact that would affect the outcome of the case if proven. Mission
Hosp. Reg’! Med. Ctr., DAB No. 2459, at 4 (2012) (and cases cited therein); Experts Are
Us, Inc., DAB No. 2452, at 4 (2012) (and cases cited therein); Senior Rehab. & Skilled

Nursing Ctr., DAB No. 2300, at 3 (2010) (and cases cited therein); see also Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

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

In this case, the reconsidered determination cited 42 C.F.R. § 424.535(a)(5) as the basis
for revocation of Petitioner’s Medicare billing privileges. CMS requests summary
judgment in its favor arguing that there is a basis for revocation of Petitioner’s billing
privileges pursuant to 42 C.F.R. § 424.535(a)(5)(ii) on grounds that Petitioner was not
operational at the time of the multiple site visits. CMS Br. at 1, 6-7. However, the
contract hearing officer did not conclude in the reconsidered determination that Petitioner
was not operational. Rather, the hearing officer stated “Revocation Reason: 42 C.F.R.

§ 424.535(a)(5) — On-Site Review — Requirements Not Met.” CMS Ex. | at 1.

The hearing officer cited to 42 C.F.R. § 424.535(a)(5), and did not limit her
determination to one of the three bases for revocation established by that section. CMS
Ex. | at 1. The hearing officer’s citation to 42 C.F.R. § 424.535(a)(5) is sufficient notice
to Petitioner of the law that the contractor hearing officer relied upon to revoke
Petitioner’s Medicare billing privileges. But it is necessary to consider whether
Petitioner violated any of the three stated bases for revocation in 42 C.F.R.

§ 424.535(a)(5), not simply whether Petitioner was operational. As the Board has noted
in Neb Group of Arizona, LLC, DAB No. 2573, at 7 (2014), in provider and supplier
enrollment cases, an ALJ reviews the basis for revocation cited in the reconsidered
determination. Thus, my review in this case is not limited to whether or not Petitioner
was “operational” simply because that is the focus of the parties’ arguments. The
reconsidered determination cited 42 C.F.R. § 424.535(a)(5) generally as the basis for
revocation, and my de novo review must consider all the bases for revocation established
by that regulation.
10

Subsection 424.535(a)(5)(i) of Title 42 applies only to providers and there can be little
doubt Petitioner understands it is not a provider. 42 C.F.R. § 424.502. Subsection

42 C.F.R. § 424.535(a)(5)(ii) applies to Petitioner as a supplier of ambulance services.
The regulation authorizes CMS to revoke a supplier’s Medicare billing privileges under
the following circumstances, among others:

(5) On-site review. CMS determines, upon on-site review,
that the provider or supplier is no longer operational to
furnish Medicare covered items or services, or is not meeting
Medicare enrollment requirements under statute or regulation
to supervise treatment of, or to provide Medicare covered
items or services for, Medicare patients. Upon on-site
review, CMS determines that —

REE

(ii) A Medicare Part B supplier is no longer operational to
furnish Medicare covered items or services, or the supplier
has failed to satisfy any or all of the Medicare enrollment
requirements, or has failed to furnish Medicare covered items
or services as required by the statute or regulations.

42 C.F.R. § 424.535(a)(5)(ii) (italics in original). The plain language of the regulation
makes clear that there are three separate bases for revocation following an on-site review:
(1) the supplier is no longer operational to furnish Medicare covered items or services;
(2) the supplier has failed to satisfy any or all of the Medicare enrollment requirements;
or (3) the supplier has failed to furnish Medicare covered items or services as required by
the Act or the Secretary’s implementing regulations. CMS has not alleged or presented
any evidence that Petitioner failed to furnish Medicare covered items or services as
required, so that basis for revocation is not at issue. As discussed hereafter, there remains
a genuine dispute about whether Petitioner was operational to provide Medicare covered
items or services at the times of the on-site inspections, so summary judgment is not
appropriate on that basis for revocation. Therefore, the only remaining basis for revoking
Petitioner’s billing privileges pursuant to 42 C.F.R. § 424.535(a)(5)(ii) for which
summary judgment may be appropriate is whether Petitioner failed to satisfy any or all of
the Medicare enrollment requirements.

The reconsidered determination gave the parties adequate notice that Petitioner’s failure
to meet Medicare enrollment requirements was a basis for the revocation in this case.
The hearing officer described in the reconsidered determination that in April 2014,
Petitioner submitted a Form CMS-855B, updating Petitioner’s bank account information,
Petitioner’s correspondence and special payment address, and Petitioner’s practice
11

location. The updated practice address listed in the CMS-855B was a residence on Teal
Bend Court. The hearing officer found that Petitioner was relocating to another address,
9898 Bissonnet Street, Suite 375-H, Houston, when site visits were attempted at the Teal
Bend Court address on June 26 and 27, 2014. After Petitioner’s July 15, 2014
reconsideration request was received by Novitas, site visits were requested for the 9898
Bissonnet Street address. When site visits at 9898 Bissonnet Street were attempted on
September 17 and 25, 2014, signage with Petitioner’s name and hours of operation were

observed, confirming that Petitioner had moved to that ad

be closed. CMS Ex. | at 2. The hearing officer did not sp
facts that Respondent was not operational, but she conclu

Medicare requirements. CMS Ex. | at 1-2.

CMS focused in its motion for summary judgment on whe’
But Petitioner has repeatedly focused on the issue of whet!
proper notification of the location change to 9898 Bissonn

record notified CMS of Petitioner’s change of practice loc
Court, and there is no CMS-855B changing Petitioner’s a

ress, but the office appeared to
ecifically conclude on these
led that Petitioner did not meet

ther Petitioner was operational.
er it provided CMS with
et Street, Suite 375-H. CMS

‘as pointed out in its pleadings that the only CMS-855B enrollment application in the

ation from 1734 Teal Bend
dress to 9898 Bissonnet Street,

Suite 375-H. CMS Br. at 1, 4n.1, 7.2. I conclude that both parties are fully aware of
the issue of whether Petitioner gave Novitas and CMS the required notice of Petitioner’s
change of practice location and have had an adequate opportunity to present argument on
the issue.

The undisputed facts support partial summary judgment

or CMS on the issue of whether

or not Petitioner met the Medicare requirement established by 42 C.F.R. § 424.516(e)(2)

to give CMS and its contractor notice of a change in prac
the change. It is undisputed that on about April 24, 2014.

tice location within 90 days of
, Petitioner’s owner signed a

CMS-855B, notifying CMS and Novitas of Petitioner’s new practice location at 1734
Teal Bend Court, Fresno, Texas. CMS Ex. 3, P. Ex. A. The hearing officer that issued
the reconsidered determination acknowledged that the CMS-855B submitted by
Petitioner in April 2014, was received by Novitas. CMS Ex. | at 2. It is undisputed that
on about June 20, 2014, Petitioner signed a lease for a new practice location at 9898
Bissonnet, Suite 375-H, Houston, Texas. CMS Ex. | at 5, 9-22. It is undisputed that
when the site inspector visited 1734 Teal Bend Court on June 26 and 27, 2014, Petitioner
was no longer at that address. CMS Ex. | at 6-7. There is no dispute that when the site
inspector visited 9898 Bissonnet in Houston on September 17 and 25, 2014, he observed
and photographed signage showing that Petitioner had relocated to that address, even
though the site inspector was unable to gain access to Petitioner’s office on those dates.
CMS Ex. 2 at 3-4. Petitioner asserts that it notified CMS and Novitas of its change of
practice location from 1734 Teal Bend Court to 9898 Bissonnet by the CMS-855B signed
April 24, 2014 (P. Ex. A). P. Br. at 2-3, 5. However, there no genuine dispute that the
CMS-855B signed April 24, 2014, notified CMS and Novitas of Petitioner’s change of
practice location to 1734 Teal Bend Court not to 9898 Bissonnet, the latter a location for

12

which Petitioner did not enter a lease until June 20, 2014. In fact, Petitioner has
presented no evidence that it notified CMS or Novitas at any time of its change of
practice location from 1734 Teal Bend Court to 9898 Bissonnet by filing a CMS-855B.
Therefore, there is no genuine dispute that Petitioner failed to submit a CMS-855B
notifying CMS and Novitas of its June 2014 change of practice location from 1734 Teal
Bend Court, Fresno to 9898 Bissonnet, Houston within 90 days of the change.

Petitioner was required by 42 C.F.R. § 424.516(e)(2) to notify CMS or its contractor
within 90 days of a change of practice location by filing a CMS-855B. There is no
evidence that Petitioner filed the required CMS-855B. Therefore, there is no genuine
dispute that Petitioner failed to file the required CMS-855B notifying Novitas of the
change of address from 1734 Teal Bend Court in Fresno to 9898 Bissonnet in Houston.
Accordingly, there is a basis for revocation of Petitioner’s billing privileges and Medicare
enrollment pursuant to 42 C.F.R. § 424.535(a)(5)(ii) because Petitioner failed to satisfy
the Medicare enrollment requirement under 42 C.F.R. § 424.516(e)(2) to timely notify
CMS of the change in its practice location. Summary judgment in favor of CMS is
appropriate on the issue of whether there is a basis for revocation of Petitioner’s
enrollment and billing privilege.

However, only partial summary judgment may be granted as I also conclude that there is
a genuine dispute about whether Petitioner was “operational” at the time of the attempted
on-site inspections. Whether Petitioner’s enrollment is revoked because Petitioner was
not operational results in a different effective date of revocation than a revocation based
on failure to timely file a CMS-855B notifying CMS and Novitas of a change of practice
location.

It is undisputed that site inspectors never found Petitioner’s office open at the sites they
inspected. CMS Ex. 2; RFH; P. Br. at 1. However, suppliers of ambulance services such
as Petitioner are not required by regulation to have an office open to the public during
posted or at any other specific times and, therefore, a closed office alone is insufficient to
prove that Petitioner was non-operational.* 42 C.F.R. §§ 410.40-.41. The definition of
“operational” requires that a supplier be “open to the public for the purpose of providing
health care related services,” and a supplier of ambulance services is arguably open to the
public if it can be contacted to dispatch an ambulance even when the business office may

4 “Operational” is defined as “the provider or supplier has a qualified physical practice
location, is open to the public for the purpose of providing health care related services, is
prepared to submit valid Medicare claims, and is properly staffed, equipped, and stocked
(as applicable, based on the type of facility or organization, provider or supplier specialty,
or the services or items being rendered), to furnish these items or services.” 42 C.F.R.

§ 424.502.
13

be closed and inaccessible to the public. Petitioner argues that, while its office was not
open to the public it was “operational” at the time of the inspections because it was able
to provide ambulance services to Medicare beneficiaries even though its administrative
offices may not have been open to the general public. P. Br. at 5-6. Drawing all
favorable inferences for Petitioner, as | must on summary judgment and without making
any credibility determinations, I conclude that a reasonable fact finder could find that
Petitioner was operational at the time of the site visits. I conclude that there is a genuine
dispute of material fact as to whether Petitioner was “open to the public for the purpose
of providing health care related services” at the time of the various site inspections.
Accordingly, summary judgment on the issue of whether there is a basis for revocation
on grounds that Petitioner was not “operational” is not appropriate in this case.

5. The effective date of revocation of Petitioner’s enrollment and
billing privileges pursuant to 42 C.F.R. § 424.535(a)(5)(ii), is
determined pursuant to 42 C.F.R. § 424.535(g), and is November 16,
2014, which is 30 days after the reconsidered determination notice
was mailed to Petitioner.

a. Facts

Novitas notified Petitioner that, pursuant to 42 C.F.R. § 424.535(g), its Medicare billing
privileges were revoked effective June 26, 2014, the date Novitas determined Petitioner
was not operational based on the second attempted on-site visit at the 1734 Teal Bend
Court location. CMS Ex. | at 7. On reconsideration, the contractor attempted to conduct
two additional on-site reviews of the 9898 Bissonnet Street, Suite 375-H location. In the
reconsidered determination dated October 17, 2014, the hearing officer concluded that, as
a result of the attempted on-site visits, including the two at the 9898 Bissonnet Street
location, Petitioner had not shown compliance with 42 C.F.R. § 424.535(a)(5). CMS

Ex. | at 2. The hearing officer did not conclude that Petitioner was not operational, nor
did she address the effective date of Petitioner’s revocation. CMS Ex. | at 1-2. The
October 17, 2014 reconsidered determination from the hearing officer was the first notice
to Petitioner that the on-site visits to 9898 Bissonnet Street demonstrated that Petitioner
did not comply with 42 C.F.R. § 424.535(a)(5).

b. Analysis

By regulation, the effective date of revocation is 30 days after CMS or its contractor
mails notice of its determination to the supplier with the exception of four circumstances.
42 C.F.R. § 424.535(g). In its initial determination, Novitas relied on one of the four
listed exceptions to establish June 26, 2014, as the effective date of Petitioner’s
revocation. CMS Ex. | at 7. Ifa supplier is found to be non-operational, then “the
revocation is effective with the date . . . that CMS or its contractor determined that the
provider or supplier was no longer operational.” 42 C.F.R. § 424.535(g).
14

Partial summary judgment is granted in favor of CMS in this case not because Petitioner
was non-operational. Rather, partial summary judgment is appropriate because an on-site
visit revealed that Petitioner had not satisfied all of the Medicare enrollment
requirements. 42 C.F.R. § 424.535(a)(5)(ii). Failure to comply with enrollment
requirements is not an authorized basis for backdating the effective date of revocation.

42 C.F.R. § 424.535(g). Therefore, as a matter of law, the effective date of a revocation
based on a supplier’s failure to comply with enrollment requirements must be 30 days
after CMS or its contractor provided notice of the basis for revocation.

In this case, the contractor’s first notice to Petitioner that revocation was based on failure
to meet all Medicare enrollment requirements was the October 17, 2014 reconsidered
determination. CMS Ex. | at 1. Presuming the reconsidered determination was mailed
on October 17, 2014, a permissible presumption, the 30th day was November 16, 2014.
Accordingly, pursuant to 42 C.F.R. § 424.535(g), the effective date of Petitioner’s
revocation must be November 16, 2014, based on my conclusion that partial summary
judgment for CMS is appropriate.

III. Conclusion

For the foregoing reasons, I conclude that Petitioner’s Medicare enrollment and billing
privileges are properly revoked effective November 16, 2014, pursuant to 42 C.F.R.

§ 424.535(a)(5)(ii) because a September 25, 2014 on-site visit found that Petitioner had
moved its practice location and had not notified CMS or its contractor of the move with
90 days as required by 42 C.F.R. § 424.526(e)(2).

Right to Request an Evidentiary Hearing: CMS may request a hearing for the
presentation of evidence to show that Petitioner was not operational within the meaning
of 42 C.F.R. § 424.502, and that an earlier effective date of revocation is appropriate.
CMS must affirmatively request in writing, an evidentiary hearing within 10 days of the
date of this decision.

Notice of Appeal Rights: Either party may request that the Board review this decision.

A request for review must be filed within 60 days of the date of this decision. 42 C.F.R.
§ 498.82. The parties are presumed to receive a copy of this decision through the
Department Appeals Board’s electronic filing system the same day it is issued. A request
for Board review must be filed electronically at: https://dab.efile.hhs.gov and following
the link for “Appeals of CRD/ALJ Decisions.” Pursuant to regulation, a request for
review must specify the issues, the findings of fact or conclusions of law with which a
party disagrees, and the basis for contending that the findings and conclusions are
incorrect. 42 C.F.R. § 498.82(b).
15

However, in the event that CMS requests an evidentiary hearing within 10 days of the
date of this decision, the 60-day period for requesting Board review will run from the
date of the decision following the hearing on the merits.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Luling Care Center,
(CCN: 67-6292),

Petitioner,
v.
Centers for Medicare & Medicaid Services
Docket No. C-13-884
Decision No. CR4082

Date: July 31, 2015

DECISION

In this case, we again consider a long-term-care facility’s obligation to investigate and
report allegations of abuse made by someone whom facility staff consider unreliable.

Petitioner, Luling Care Center, is a long-term-care facility, located in Luling, Texas, that
participates in the Medicare program. Based on a complaint investigation survey,
completed March 22, 2013, and a follow-up survey, completed May 16, 2013, the
Centers for Medicare & Medicaid Services (CMS) determined that, from March 17
through June 11, 2013, the facility was not in substantial compliance with Medicare
program requirements and that, from March 17 through 22, its deficiencies posed
immediate jeopardy to resident health and safety. CMS imposed civil money penalties
(CMPs) of $6,550 per day for six days of immediate jeopardy, followed by $200 per day
for 81 days of substantial noncompliance that was not immediate jeopardy. Petitioner
appeals, and CMS has moved for summary judgment.

As discussed below, the undisputed evidence establishes that, from March 17 through
June 11, 2013, the facility was not in substantial compliance with Medicare program
requirements and that, from March 17 through 22, 2013, its substantial noncompliance
posed immediate jeopardy to resident health and safety. The penalties imposed are
reasonable.

Background

The Social Security Act (Act) sets forth requirements for nursing facilities to participate
in the Medicare program, and authorizes the Secretary of Health and Human Services to
promulgate regulations implementing those statutory provisions. Act § 1819. The
Secretary’s regulations are found at 42 C.F.R. Part 483. To participate in the Medicare
program, a nursing facility must maintain substantial compliance with program
requirements. To be in substantial compliance, a facility’s deficiencies may pose no
greater risk to resident health and safety than “the potential for causing minimal harm.”
42 CFR. § 488.301.

The Secretary contracts with state survey agencies to conduct periodic surveys to
determine whether skilled nursing facilities are in substantial compliance. Act § 1864(a);
42 C.F.R. § 488.20. Each facility must be surveyed annually, with no more than 15
months elapsing between surveys. Facilities must be surveyed more often, if necessary,
to ensure that identified deficiencies are corrected. Act § 1819(g)(2)(A); 42 C.F.R.

§§ 488.20(a), 488.308. The state agency must also investigate all complaints. Act

§ 1819(g)(4).

In this case, surveyors from the Texas Department of Aging and Disability Services (state
agency) completed a complaint investigation survey on March 22, 2013. Based on their
findings, CMS determined that the facility was not in substantial compliance with
multiple program requirements, specifically:

e 42 CFR. § 483.13 (c)(1)(i)-(iii), (c)(2)-(4) (Tag F225 — staff treatment of
residents: investigate/report allegations of abuse), at scope and severity level L

(widespread immediate jeopardy);

e 42 C.F.R. § 483.13(c) (Tag F226 — policies to prohibit abuse and neglect) at scope
and severity level L;

e 42 C.F.R. § 483.75 (Tag F490 — administration) at scope and severity level L; and
© 42 C.F.R. § 483.75(e)(2)-(3) (Tag F494 — administration: nurse aide training) at
scope and severity level E (pattern of substantial noncompliance that causes no
actual harm with the potential for more than minimal harm).!

CMS Ex. 3.

Surveyors returned to the facility and completed a follow-up survey on May 16, 2013.
Based on these findings, CMS determined that the facility’s deficiencies no longer posed
immediate jeopardy but that its substantial noncompliance continued. CMS exhibits
(Exs.) 2,4. Thereafter, CMS determined that the facility returned to substantial
compliance on June 12. CMS Ex. 5.

CMS imposed against the facility CMPs of $6,550 per day for six days of immediate
jeopardy (March 17 through 22) and $200 per day for 81 days of substantial
noncompliance that was not immediate jeopardy (March 23 through June 11), for a total
penalty of $55,500 ($39,300 + $16,200 = $55,500). CMS Ex. 5.

Petitioner timely requested review.

CMS now moves for summary judgment, which Petitioner opposes. In addition to its
motion and brief (CMS Br.), CMS submits 24 exhibits, which are numbered CMS Exs. 1-
22 and 25-26 (numbers 23 and 24 were not used). Petitioner submits its own brief and
response to CMS’s motion (P. Br.), with no additional exhibits.

Issues
The issues before me are:

1. Was the facility in substantial compliance with Medicare participation
requirements from March 17 through June 11, 2013;

2. If, from March 17 through 22, the facility was not in substantial compliance with
Medicare participation requirements, did its deficiencies then pose immediate
jeopardy to resident health and safety; and

3. If the facility was not in substantial compliance with Medicare participation
requirements, are the penalties imposed reasonable.

' Although Petitioner appealed all four of the deficiencies cited, CMS has not pursued
the deficiencies cited under section 483.75(e)(2)-(3).
Discussion

Summary judgment. Summary judgment is appropriate if a case presents no genuine
issue of material fact, and the moving party is entitled to judgment as a matter of law.
Ill. Knights Templar Home, DAB No. 2274, at 3-4 (2009), and cases cited therein.

The moving party may show the absence of a genuine factual dispute by presenting
evidence so one-sided that it must prevail as a matter of law, or by showing that the non-
moving party has presented no evidence “sufficient to establish the existence of an
element essential to [that party’s] case, and on which [that party] will bear the burden of
proof at trial.” Livingston Care Ctr. v. Dep’t of Health & Human Servs., 388 F.3d 168,
173 (6th Cir. 2004) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)). To
avoid summary judgment, the non-moving party may not simply rely on denials, but must
act affirmatively by tendering evidence of specific facts showing that a dispute exists.
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 n.11 (1986); Zl.
Knights Templar, DAB No. 2274, at 4; Livingston Care Ctr., DAB No. 1871, at 5 (2003).
See also Vandalia Park, DAB No. 1939 (2004); Lebanon Nursing & Rehab. Ctr., DAB
No. 1918 (2004).

In examining the evidence for purposes of determining the appropriateness of summary
judgment, I must draw all reasonable inferences in the light most favorable to the non-
moving party. Brightview Care Ctr., DAB No. 2132, at 2, 9 (2007); Livingston Care
Ctr., 388 F.3d at 172; Guardian Health Care Ctr., DAB No. 1943, at 8 (2004); but see,
Brightview, DAB No. 2132, at 10 (entry of summary judgment upheld where inferences
and views of non-moving party are not reasonable). However, drawing factual inferences
in the light most favorable to the non-moving party does not require that I accept the non-
moving party’s legal conclusions. Cf Guardian Health Care Ctr., DAB No. 1943, at 11
(“A dispute over the conclusion to be drawn from applying relevant legal criteria to
undisputed facts does not preclude summary judgment if the record is sufficiently
developed and there is only one reasonable conclusion that can be drawn from those
facts.”).

1. CMS is entitled to summary judgment because the undisputed evidence
establishes that the facility’s administration and staff did not immediately
report or thoroughly investigate a resident’s allegations of abuse; and they
made no efforts to prevent potential abuse while an investigation was
pending. The facility was therefore not in substantial compliance with 42
CE.R. §§ 483.13(c); 483.13(c)(1)(ii)-(iii),(2)-(4;) and 483.75.

> My findings of fact and conclusions of law are set forth, in bold and italics, as captions
in the discussion section of this decision.
Program requirements. ““Abuse” means the willful infliction of injury, unreasonable
confinement, intimidation, or punishment with resulting physical harm, pain, or mental
anguish. 42 C.F.R. § 488.301.

Facility residents have the right to be free from verbal, sexual, physical, and mental
abuse. 42 C.F.R. § 483.13(b). To this end, a facility must develop and implement
written policies and procedures that prohibit mistreatment, neglect, and abuse of
residents. 42 C.F.R. § 483.13(c). It must ensure that all alleged violations are reported
immediately to the facility administrator and appropriate state officials. The facility must
ave evidence that all alleged violations are thoroughly investigated, and it must prevent
further potential abuse while the investigation is in progress. The results of all
investigations must be reported to the administrator (or designated representative) and to
the appropriate state officials within five working days of the incident. If the violation is
verified, the facility must take appropriate action. 42 C.F.R. § 483.13(c)(2), (3), and (4)
(Tags F225, F226).

The facility must also be governed in a manner that enables it to use its resources
effectively and efficiently to attain or maintain the highest practicable physical, mental,
and psychosocial well-being of each resident. 42 C.F.R. § 483.75 (Tag F490).

The incident. Resident 1 (R1) was a 60-year old man, who suffered from a long list of
impairments, including epilepsy, recurrent seizures, depression, hereditary peripheral
neuropathy, muscle weakness, and anxiety. CMS Ex. 20 at 1, 20, 41. He required total
assistance for activities of daily living. CMS Ex. 10 at 1; CMS Ex. 20 at 12, 16-17.

The parties agree that, on March 16, 2013, two nurse aides (referred to as “A” and “B”)
were providing R1with incontinent care, when he accused Nurse Aide B of inappropriate
touching; he started yelling “rape.” Then or sometime thereafter, he also claimed that
Nurse Aide B put a sheet over his head and hit him in the face.* He repeated the
accusations to a medication aide (referred to as “Medication Aide C”), who entered the
room. CMS Ex. 1 at 4, 6-8; CMS Ex. 10 at 2, 4; CMS Ex. 15 at 1, 3; see P. Br. at 2, 3.
Not one of these staff members reported R1’s allegations. The following day, R1
complained to a third nurse aide, who reported his allegations to the charge nurse on duty
and then called the Director of Nursing (DON) to report the incident. CMS Ex. | at 6;
CMS Ex. 14; CMS Ex. 15 at 4, 6; CMS Ex. 22 at 3 (Martin Decl. 4 7); see P. Br. at 3.

> Petitioner questions when R1 first claimed that a nurse aide hit him and suggests that
he made no such claim to Nurse Aides A and B or Medication Aide C. P. Br. at 2, but
see CMS Ex. 10 at 2, 4. For summary judgment purposes, I accept Petitioner’s position
but find it not material.
In the meantime, an unidentified person or persons reported the abuse allegations to the
state agency. CMS Ex. 22 at 1-2, 4-5 (Martin Decl. fj 3,4, 7). A state survey team
arrived at the facility on March 22 to investigate the charges. CMS Ex. 22 at 1 (Martin
Decl. § 3).

Failures to report. CMS faults the facility for its response to R1’s allegations of abuse.
First, CMS maintains that the facility violated the regulations and its own policies
because Nurse Aide A, Nurse Aide B, and Medication Aide C did not report R1’s
allegations to the facility’s administrators. Second, after a different nurse aide finally
told the DON, neither she nor any other facility representative immediately reported the
allegations to the state agency.

The facility’s written policies require staff to report immediately to the charge nurse any
incident of abuse or suspected abuse. The report should include the resident’s name, time
and place of the incident, name of alleged perpetrator, names of witnesses, an
examination of the resident, and physician notification. CMS Ex. 9 at 2.

Petitioner concedes that the nurse aides and the medication aide failed to report R1’s
allegations to the facility administration or to anyone else. CMS Ex. | at 7-8; CMS

Ex. 12; CMS Ex. 13; CMS Ex. 14; CMS Ex. 22 at 2-5 (Martin Decl. § 7); CMS Br. at 9;
P. Br. at 3. Petitioner also admits that the facility’s DON, who was the facility’s abuse
coordinator, did not report the allegations to the state agency until March 22, after the
survey team arrived at the facility. But, according to Petitioner, these employees were
not required to report the allegations. Petitioner alleges that the nurse aides and
medication aide were not required to report because they were present when R1 made the
allegations and knew them to be false.*

This argument ignores the plain language of the regulation — the facility “must ensure that
all alleged violations are reported immediately to the facility administrator” (emphasis
added) — and makes no practical sense. Individual staff members are not given the option
of deciding whether to report allegations. As Judge Kessel pointed out in Somerset
Place, DAB CR2164, at 3 (2010), there is an “obvious reason” for the regulation’s
categorical requirement: It assures that the allegation will be reviewed by an unbiased
fact finder rather than an employee whose self-interest dictates that she not report.

* According to Petitioner, the nurse aide who finally reported the allegations acted
properly because she did not witness the incident and “could not attest to [the
allegations’] baselessness.” P. Br. at 3-4. But the medication aide did not witness the
incident either; she entered the room as Nurse Aide B was leaving, and R1 repeated the
allegations to her. CMS Ex. | at 8. According to Petitioner’s theory, she should have
reported the allegation. Of course, as this discussion underscores, all staff must report all
such allegations.
Petitioner also argues that, in failing to report the allegations to the state agency, the

DON acted in accordance with state and federal regulations. Under Texas state law, a
facility is required to report only if it “has cause to believe that the physical or mental
ealth or welfare of a resident has been or may be adversely affected by abuse, neglect, or
exploitation caused by another person. ...” P. Br. at 4 (citing 22 Tex. Admin. Code
§ 19.602(a)). According to Petitioner, because the federal regulation instructs facilities to
report allegations “in accordance with state law through established procedures,” the
federal regulation defers to the state law. So, because she ultimately found no abuse, the
DON was not required to report. P. Br. at 3-4.

Petitioner’s argument fails for several reasons. First, the phrase “in accordance with state
law through established procedures” refers to the procedures the facility should follow in
reporting the allegation; it does not address whether the facility must report. The
Departmental Appeals Board has consistently ruled that the facility must report a//
allegations, without regard to a state’s reporting requirements. The pertinent question is
not whether any abuse occurred or whether the facility had reasonable cause to believe

that any abuse occurred, but whether there is an allegation that facility staff abused a
resident. Britthaven, Inc., DAB No. 2018, at 15 (2006) (citing Cedar View Good
Samaritan, DAB No. 1897, at 11 (2003)).

Second, Petitioner’s argument does not consider the regulatory requirement that a facility
report the allegations “immediately.” The facility is required to report before it
completes its thorough investigation and is in a position to know whether the abuse
occurred. See P. Ex. 9 at 4 (facility abuse/neglect policy requiring that the facility
administrator or her designee “immediately obtain basic information required for a
telephonic report to the [state agency] if indicated per regulations . . . and make the report
before further investigation.”).

Third, even if I accepted the premise underlying Petitioner’s argument — that the federal
regulation defers to the state rule — Petitioner would not prevail here. Because R1
complained, the facility necessarily had “cause to believe” that his health or welfare
“may” have been “adversely affected by abuse . . . caused by another person.” I therefore
see no conflict between the state rule and the federal reporting requirement that all
alleged violations be reported.

Inadequate efforts to protect residents. CMS next alleges that the facility did nothing to
prevent potential abuse while its investigation was pending.

According to the facility’s written policies, when the charge nurse learns of the
allegation, she must examine the resident to determine the extent of the injury or the
absence of injury. She must immediately notify the facility administrator “regardless of

the hour or the severity of the allegation and/or injury.” CMS Ex. 9 at 3. “Employees
accused of resident abuse will be suspended from work and prohibited from Luling Care
Center until the administrator completes the investigation and the Quality Assurance
Committee meets to review the results of the investigation.” CMS Ex. 9 at 3 (emphasis
added).

No one examined R1 until the following day. According to the facility, the charge nurse
and DON each assessed R1, but he was not seen by a physician or at the hospital. CMS
Ex. 14; CMS Ex. 22 at 3 (Martin Decl. { 7).

Petitioner concedes that “no staff members were formally suspended” while the
investigation was pending. P. Br. at 4. In fact, the accused, Nurse Aide B, continued
working with residents throughout. CMS Ex. 19 at 3, 7, 8, 11 (showing that Nurse Aide
B worked on March 18, 19, 20).

Petitioner explains that the DON allowed Nurse Aide B to continue working because she
did not realize that Nurse Aide B was the alleged perpetrator. She thought that Nurse
Aide B was a witness, and the facility was not obligated to suspend an employee who
witnessed abuse but did not participate. P. Br. at 4. Petitioner acknowledges that the
DON did not suspend Nurse Aide A either and suggests, without support, that he “would
not be working anyway.” P. Br. at 4. The evidence does not support this assertion.”
Sign-in sheets indicate that Nurse Aide A worked on March 19 and 20. CMS Ex 19 at 3,
8. The Investigative Report, prepared by the DON, says that Nurse Aide A was not
scheduled to work on R1’s hall and would not be assigned to the resident “until [the]
allegation is cleared.” CMS Ex. 10 at 3. That an alleged abuser is not scheduled to work
with the alleged victim does not satisfy the regulation; the facility must protect all
residents from a potential abuser.

In any event, the facility plainly violated federal requirements and its own policies by
allowing an alleged abuser to continue offering resident care while an abuse investigation
was pending.

Inadequate investigation. Finally, CMS characterizes the facility’s investigation as
inadequate. The undisputed evidence amply supports CMS’s position.

> T am not required to accept unsupported allegations. As noted above, to withstand
summary judgment, the non-moving party must furnish evidence of a dispute concerning
a material fact. Illinois Knights Templar, DAB No. 2274, at 4. But even if Petitioner
established that Nurse Aide A were not scheduled to work while the investigation was
pending, that fact would not be material.
Petitioner concedes that, in her investigation report, the DON mistakenly identified Nurse
Aide A, rather than Nurse Aide B, as the alleged perpetrator. P. Br. at 3. I consider this a
serious error that establishes that the DON conducted an inadequate investigation. One
of the most — if not the most — critical elements of a complaint investigation is identifying
correctly the perpetrator of the alleged abuse. Yet, throughout her report, the DON
simply gets it wrong. CMS Ex. 10. To make this mistake, she had to have disregarded
all of the other reports and the witness statements. See CMS Ex. 15.

Preventing abuse. Thus, the facility was not in substantial compliance with 42 C.F.R.

§ 483.13(c). Staff did not immediately report to the facility administrator (or designee)
allegations of abuse. The individual charged with coordinating the facility’s response to
abuse allegations did not timely report to the appropriate state officials. The facility did
not follow its own policies for protecting its residents from abuse while an investigation
was pending and its investigation — which identified the wrong person as the alleged
perpetrator — was woefully inadequate. I also find that the facility failed to implement its
written policies and procedures that prohibit resident abuse. Multiple staff — including
the administrator’s designee — failed to satisfy the reporting requirements set forth in the
facility policies. The designee most responsible for implementing the policies
disregarded them in significant ways. She allowed an accused abuser to continue caring
for residents and she conducted an inadequate investigation. These deficiencies put the
facility out of substantial compliance with 42 C.F.R. § 483.13(c).

Administration. A finding of substantial noncompliance in the facility’s administration
may derive from findings of substantial noncompliance in other areas. Stone County
Nursing & Rehab. Ctr., DAB No. 2276, at 15-16 (2009).

[W]here a facility has been shown to be so out of compliance
with program requirements that its residents have been
placed in immediate jeopardy, the facility was not
administered in a manner that used its resources effectively to
attain the highest practicable physical, mental, and
psychosocial well-being of each resident.

Odd Fellow & Rebekah Health Care Facility, DAB No. 1839, at 7 (2002); Asbury Ctr. at
Johnson City, DAB No. 1815, at 11 (2002). As discussed below, I find that the facility’s
deficiencies posed immediate jeopardy to resident health and safety, which, by itself,
justifies the finding that the facility was not in substantial compliance with 42 C.F.R.

§ 483.75.

Moreover, as the above discussion establishes, the failures here were directly attributable
to administrative, as well as staff, failures. The facility’s administration disregarded
facility policies in failing to investigate thoroughly and report allegations of resident
abuse. It also fell short in protecting residents from a potential abuser. The facility was
10

therefore not administered in a manner that used its resources effectively to attain or
maintain the highest practicable physical, mental, and psychosocial well-being of its
residents and was not in substantial compliance with 42 C.F.R. § 483.75.

2. CMS’s determination that, from March 17 through 22, 2013, the facility’s
deficiencies posed immediate jeopardy to resident health and safety is not
clearly erroneous.

Immediate jeopardy. Immediate jeopardy exists if a facility’s noncompliance has caused
or is likely to cause “serious injury, harm, impairment, or death to a resident.” 42 C.F.R.
§ 488.301. CMS’s determination as to the level of a facility’s noncompliance (which
would include an immediate jeopardy finding) must be upheld unless it is “clearly
erroneous.” 42 C.F.R. § 498.60(c)(2). The Board has observed repeatedly that the
“clearly erroneous” standard imposes on facilities a “heavy burden” to show no
immediate jeopardy, and has sustained determinations of immediate jeopardy where
CMS presented evidence “from which ‘[o]ne could reasonably conclude’ that immediate
jeopardy exists.” Barbourville Nursing Home, DAB No. 1962, at 11 (2005) (citing
Florence Park Care Ctr., DAB No. 1931, at 27-28 (2004)); cf’ Daughters of Miriam Ctr.,
DAB No. 2067, at 7, 9 (2007).

Here, multiple facility employees — including the employee specifically charged with
implementing the facility’s abuse policies — repeatedly disregarded those policies in
critical respects: reporting, protecting the residents, and investigating. Such disregard of
the policies in place to protect residents from abuse puts those residents at risk, and the
situation is likely to cause serious harm. CMS’s determination that the deficiencies posed
immediate jeopardy to resident health and safety is therefore not clearly erroneous.

3. The penalties imposed — $6,550 per day for the days of immediate jeopardy
and $200 per day for the days of substantial noncompliance that was not
immediate jeopardy — are reasonable.

To determine whether the CMPs are reasonable, I apply the factors listed in 42 C.F.R.

§ 488.438(f): 1) the facility’s history of noncompliance; 2) the facility’s financial
condition; 3) factors specified in 42 C.F.R. § 488.404; and 4) the facility’s degree of
culpability, which includes neglect, indifference, or disregard for resident care, comfort
or safety. The absence of culpability is not a mitigating factor. The factors in 42 C.F.R.
§ 488.404 include: 1) the scope and severity of the deficiency; 2) the relationship of the
deficiency to other deficiencies resulting in noncompliance; and 3) the facility’s prior
history of noncompliance in general and specifically with reference to the cited
deficiencies.

I consider whether the evidence supports a finding that the amount of the CMP is at a
level reasonably related to an effort to produce corrective action by a provider with the
11

kind of deficiencies found, and in light of the above factors. I am neither bound to defer
to CMS’s factual assertions, nor free to make a wholly independent choice of remedies
without regard for CMS’s discretion. Barn Hill Care Ctr., DAB No. 1848, at 21 (2002);
Community Nursing Home, DAB No. 1807, at 22 et seg. (2002); Emerald Oaks, DAB
No. 1800, at 9 (2001); CarePlex of Silver Spring, DAB No. 1683, at 8 (1999).

Here, CMS imposed a penalty of $6,550 per day for the period of immediate jeopardy,
which is in the middle of the per-day penalty range for situations of immediate jeopardy
($3,050-$10,000). 42 C.F.R. §§ 488.408(e)(1)(iii), 488.438(a)(1)(i). The $200 per-day
penalty is at the low to very low end of the range for CMPs where substantial
noncompliance does not pose immediate jeopardy ($50-$3,000). 42 C.F.R.

§§ 488.408(d), 488.438(a)(1)(ii).

Although it claims otherwise, the facility has a poor compliance history. For at least the
five years preceding the March 2013 survey, it was consistently out of substantial
compliance with program requirements. In addition to multiple life safety code
deficiencies, the state agency cited it for health deficiencies that included problems with
preventing abuse and with administration.°

e In July 2012, the annual survey that preceded this complaint investigation, the
facility was not in substantial compliance with multiple program requirements at
the immediate jeopardy level: 42 C.F.R. §§ 483.10(b)(11) (Tag F157- notification
of changes); 483.20(k)(3) (Tag F281- services must meet professional standards of
quality); 483.25(/) (Tag F329- unnecessary drugs); 483.75 (Tag F490-
administration); and 483.75(j) (Tag F502- laboratory services). It was not in
substantial compliance with the regulation governing dietary services/sanitary
conditions (42 C.F.R. 483.35(i) — Tag F371) at scope and severity level F
(widespread noncompliance that caused no actual harm with the potential for more
than minimal harm). The facility paid a $7,500 CMP. CMS Ex. 26 at 1.

Petitioner points out that, after a follow-up survey, the state agency agreed to
reduce the immediate jeopardy findings, which I do not doubt. However,
according to the enforcement history, the period of immediate jeopardy ran from
July 3 through July 5. CMS Ex. 26 at 1. This does not establish a good
compliance history.

e In July 2011, the facility was not in substantial compliance with 42 C.F.R.
§ 483.10(b)(11) (Tag F157- notification of changes) at scope and severity level E
(pattern of noncompliance that caused no actual harm with the potential for more
than minimal harm) and 42 C.F.R. § 483.25(i) (Tag F325- nutrition), also at scope
and severity level E. CMS Ex. 26 at 2.

° | indicate in bold those earlier similar deficiencies.
12

e In May 2010, the facility was not in substantial compliance with multiple
requirements, including 42 C.F.R. 483.75(f) (Tag F498- administration:
proficiency of nurse aides) at scope and severity level E. CMS Ex. 26 at 2.

e In November 2009, the facility was not in substantial compliance with 42 C.F.R.
§ 483.13(c) (Tag F225- staff treatment of residents: investigate/report
allegations of abuse) at scope and severity level E. CMS Ex. 26 at 2.

e In April 2009, the facility was not in substantial compliance with 42 C.F.R.
§ 483.65 (Tag F441- infection control) at scope and severity level F. CMS Ex. 26
at 2-3.

e In February 2008, the facility was not in substantial compliance with 42 C.F.R.
§ 483.75()(1) (Tag F514 -administration: clinical records). CMS Ex. 26 at 3.

This history alone justifies increasing the per-day penalties well beyond the minimum
amounts mandated by the regulations.

With respect to financial condition, the facility has the burden of proving, by a
preponderance of the evidence, that paying the CMP would render it insolvent or would
compromise the health and safety of its residents. Van Duyn Home & Hosp., DAB No.
2368 (2011); Gilman Care Ctr., DAB No. 2357 (2010). Petitioner points out that the
facility has filed for bankruptcy but proffers no financial documentation or testimony to
establish its inability to pay. To meet the standard for lowering a CMP based on financial
condition, claims must be supported by compelling financial documentation. In
Guardian Care Nursing & Rehabilitation Center, DAB No. 2260 (2009), for example,
the facility could not even afford to represent itself on appeal. Its Medicaid census was
90%; its annual shortfall was $250,000; and it relied on charitable contributions for its
continuing viability. The Board nevertheless criticized the absence of financial
documentation and concluded that the facility had not established that additional
resources would not be available. But see Columbus Nursing & Rehab. Ctr., DAB No.
2505 (2013) (finding that the absence of documentation regarding the facility’s financial
condition did not preclude ALJ from concluding, based on witness testimony, that
financial condition justified reducing the CMP).

Petitioner has not shown, nor even alleged, that paying the penalty would cause it to go
out of business. The evidence therefore does not justify lowering the CMP based on its
financial condition.

Applying the remaining factors, I find that the facility’s widespread disregard for resident
safety justifies the penalties imposed. The deficiencies went well beyond the actions (or
inaction) of one or two individuals. The DON and multiple staff members repeatedly
13

disregarded facility policies when they declined to investigate, report, and protect the
residents. The facility’s administrator seems to have abdicated all responsibility for the
actions of her designee, taking virtually no role in overseeing the DON’s actions and
insuring that she followed facility policies. The facility is culpable for these failings.

For these reasons, I find that the CMPs are reasonable.
Conclusion

The uncontroverted evidence establishes that, from March 17 through June 11, 2013, the
facility was not in substantial compliance with Medicare participation requirements, and,
from March 17 through 22, 2013, those deficiencies posed immediate jeopardy to
resident health and safety. The penalties imposed — $6,550 per day for the period of
immediate jeopardy, $200 for the period of substantial noncompliance — are reasonable.

I therefore grant CMS’s motion for summary judgment.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Goodwill Home Healthcare, Inc.,
(O.1. File No. 5-09-4-1027-9),

Petitioner,
v.
The Inspector General.
Docket No. C-15-718
Decision No. CR4073

Date: July 27, 2015

DECISION

The Inspector General (IG) of the United States Department of Health and Human
Services notified Goodwill Home Healthcare, Inc. (Petitioner) that it was being excluded
from participation in Medicare, Medicaid, and all other federal health care programs for a
minimum period of five years based on its conviction for a crime under the Anti-
Kickback Statute. Petitioner requested a hearing to dispute the exclusion. For the
reasons stated below, I conclude that the IG has a basis for excluding Petitioner from
program participation and that the five-year exclusion is mandated by law.

I. Background

By letter dated November 28, 2014, the IG notified Petitioner that it was being excluded
from participation in Medicare, Medicaid, and all federal health care programs for the
minimum statutory period of five years pursuant to 42 U.S.C. § 1320a-7(a)(1) because of
its conviction in the United States District Court, Northern District of Illinois, of a
criminal offense related to the delivery of an item or service under 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 Exhibit (Ex.) 4. On December 17, 2014, Petitioner, through counsel, filed a
request for a hearing (RFH) to dispute the exclusion.

On January 21, 2015, I convened a consolidated pre-hearing telephone conference in this
case and in two other cases, Marilyn Maravilla a/k/a Marylin Maravilla v. the Inspector
General, C-15-717, and Junjee L. Arroyo v. the Inspector General, C-15-732. The
substance of the prehearing conference is summarized in my Order and Schedule for
Filing Briefs and Documentary Evidence (Order) dated January 23, 2015. See 42 C.F.R.
§ 1005.6. In compliance with the Order, the IG submitted a brief (IG Br.) together with
six exhibits (IG Exs. 1-6). Petitioner submitted a response brief (P. Br.) and four exhibits
marked P. Exs. A-D. Petitioner requested that its co-owner, Marylin Maravilla, and
twelve other witnesses testify. P. Br. at 3-4. The IG filed a reply brief (IG Reply Br.).
The IG objected to Petitioner’s proffered testimony, arguing it was a collateral attack on
the underlying conviction as well as being irrelevant. IG Reply Br. at 5-6.

I directed Petitioner to submit the written direct testimony of Ms. Maravilla. See

42 C.F.R. § 1005.16(b). As to Petitioner’s other proposed witnesses, I sustained the IG’s
objection and did not permit their testimony because it would have been in the nature of
character testimony relating to Ms. Maravilla, which is not relevant to the narrow issue I
must decide in this case. See 42 C.F.R. § 1001.2007(a). I am required to exclude
irrelevant and immaterial evidence. 42 C.F.R. § 1005.17(c). I provided the IG with the
opportunity to object to Ms. Maravilla’s testimony and/or request to cross-examine

Ms. Maravilla. Petitioner submitted the affidavit of Ms. Maravilla (Maravilla Aff.). The
IG elected not to cross-examine Ms. Maravilla and had no objection to her affidavit.

II. Decision on the Record

Neither party objected to any of the proposed exhibits. Therefore, I admit IG Exs. 1-6
and P. Exs. A-D into the record. The IG indicated that he does not think that an in-person
hearing is necessary and did not have any witness testimony to offer. IG Br. at 5; IG
Reply at 5. In my May 15, 2015 Order permitting Petitioner to submit written direct
testimony, I stated that if the IG did not seek to cross-examine Ms. Maravilla, I would
decide this case on the written record following the final submissions of the parties.
Therefore, I decide this case on the written record.

II. Issue

Whether the IG has a basis for excluding Petitioner for five years from participating in
Medicare, Medicaid, and all other federal health care programs under 42 U.S.C. § 1320a-
T(a)(1). See 42 C.F.R. § 1001.2007(a)(1)-(2).
IV. Jurisdiction

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

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

The IG must exclude an individual or entity from participation in Medicare, Medicaid,
and all other federally-funded health care programs if that individual or entity has been
convicted 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, Petitioner pled guilty in the United States District Court for the Northern
District of [Mlinois (District Court) to one count of Conspiracy to Commit
Offense or to Defraud the United States, and the District Court issued a
Judgment in a Criminal Case adjudicating Petitioner guilty of that crime.

Petitioner was a provider of home health care services located in Lincolnwood, Illinois.
IG Ex. | at 2. Petitioner submitted claims to Medicare for reimbursement for those home
health services. On August 9, 2012, a federal grand jury indicted Petitioner and five
individuals on 29 counts, alleging violations of 18 U.S.C. § 371 and 42 U.S.C. §§ 1320a-
7b(b)(1)(A) and 1320a-7b(b)(2)(A). IG Ex. 1. Petitioner was charged in 17 of the 29
counts. According to the Indictment, from on or about August 2008 through on or about
July 2010, Petitioner and the other individuals conspired to offer and pay illegal
kickbacks to nurses, marketers, and other home health care workers in exchange for the
referral of patients to Petitioner for home health services that were billed to Medicare. IG
Ex. 1 at 4,5. The Indictment alleged that Petitioner billed Medicare for over $5,000,000
of home health care services purportedly provided to patients that Petitioner obtained as a
result of paying approximately $400,000 in illegal kickbacks. IG Ex. | at 5-6. Count
One of the Indictment alleged, in relevant part, that Petitioner and the other individuals
conspired:

to knowingly and willfully offer and pay remuneration, and
cause [Petitioner] to offer and pay remuneration, including
kickbacks and bribes, directly and indirectly, overtly and
covertly, to nurses, marketers, and others known and
unknown to the Grand Jury to induce such persons to refer
patients to [Petitioner] for the furnishing and arranging for the
furnishing of services for which payment may be made in

' My findings of fact and conclusions of law are set forth in italics and bold font.
whole and in part under Medicare, in violation of Title 42,
United States Code, Section 1320a-7b(b)(2)(A); and

to knowingly and willfully solicit and receive
remuneration, including kickbacks and bribes, directly and
indirectly, overtly and covertly, from [Petitioner] in return for
referring patients to [Petitioner] for the furnishing and
arranging for the furnishing of services for which payment
may be made in whole and in part under Medicare, in
violation of Title 42, United States Code, Section 1320a-
7b(b)(1)(A).

IG Ex. | at 4-5.

On November 12, 2013, Petitioner entered into a plea agreement in which it agreed to
plead guilty to Count One of the Indictment and admit it violated 42 U.S.C. § 1320a-
7b(b)(2)(A) and 18 U.S.C. § 371. IG Ex. 2.

On June 17, 2014, the District Court entered a Judgment in a Criminal Case in which the
court acknowledged Petitioner’s guilty plea to Count One of the Indictment and indicated
Petitioner was “adjudicated guilty” of violating 18 U.S.C. § 371 (“Conspiracy to Commit
Offense or to Defraud the U.S.”). IG Ex. 3 at 1. The District Court sentenced Petitioner
to four years of probation and an assessment of $400. IG Ex. 3 at 2-3; IG Ex. 5 at 118.
The District Court also entered a forfeiture order of $264,447 against Petitioner. IG Ex. 3
at 4; IG Ex. 6.

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 it can be excluded. An individual or entity 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 plea of guilty to a charge
of violating 18 U.S.C. § 371, and the District Court “adjudicated [Petitioner] guilty” of
that crime. IG Ex. 2; IG Ex. 3 at 1. I conclude, based on these facts and Petitioner’s
admission that it was convicted of a criminal offense (P. Br. at 1), that Petitioner was
convicted of a criminal offense.

C. Petitioner’s conviction of conspiracy to defraud the United States through
payment of kickbacks for the referral of Medicare beneficiaries is a criminal
offense related to the delivery of an item or service under Medicare.
An individual or entity must be excluded from participation in any federal health care
program if the individual or entity was convicted of a criminal offense related to the
delivery of an item or service under Medicare. 42 U.S.C. § 1320a-7(a)(1); 42 C.F.R

§ 1001.101(a). The requirement that the conviction be “related to” the delivery of health
care items or services simply means that there must be a nexus or common sense
connection. See Quayum v. U.S. Dep’t of Health & 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 “related 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)).

Although Petitioner admits that it violated the Anti-Kickback Statute, it disputes that its
conviction was related to the delivery of an item or service under Medicare or a state
ealth care program. Petitioner argues that its criminal acts involved no loss to the
Medicare or Medicaid programs; its patients did not suffer any harm or receive
unnecessary services; and there was no fraudulent billing. RFH at 2-3; P. Br. at 2-3.

Petitioner’s arguments are without merit. As discussed below, I conclude that an obvious
nexus exists between Petitioner’s conviction and the delivery of an item or service under
Medicare. Petitioner was convicted of conspiring to offer and pay kickbacks, in violation
of 18 U.S.C. § 371. Petitioner was involved in a conspiracy to induce the referrals of
Medicare beneficiaries to its business through illegal kickbacks, and then billed Medicare
for services provided to those Medicare beneficiaries. It is instructive to examine the
specific provision of the Anti-Kickback Statute referred to in Count One to which
Petitioner pled guilty of conspiring to violate, which states:

Whoever knowingly and willfully offers or pays any
remuneration (including any kickback, bribe, or rebate)
directly or indirectly, overtly or covertly, in cash or in kind to
any person to induce such person—to refer an individual to a
person for the furnishing or arranging for the furnishing of
any item or service for which payment may be made in whole
or in part under a Federal health care program . . . shall be
guilty ofa felony....

42 U.S.C. § 1320a-7b(b)(2)(A). Therefore, based on the statutory language, it is clear
that Petitioner’s criminal conspiracy has a nexus to the delivery of an item or service
under a federal health care program. Moreover, Petitioner admitted the following factual
basis in its plea agreement:

Beginning in or about August 2008, and continuing through
in or about July 2010, at Lincolnwood, in the Northern
District of Illinois, Eastern Division, and elsewhere,
Petitioner] conspired with co-defendants . . . and [other
individuals] to knowingly and willfully offer and pay
ickbacks, directly and indirectly, overtly and covertly, to
outside marketers, to induce such persons to refer patients to
Petitioner] for the furnishing and arranging for the furnishing
of services for which payment may be made in whole and in
part under Medicare, in violation of [42 U.S.C. § 1320-
7b(b)(2)(A)].

As [Petitioner] knew, Medicare provided free and below-cost
ealth care benefits, including medically necessary in-home
ealth care services for persons who were deemed
iomebound due to illness or injury that restricted their ability
to leave their place of residence. In addition, [Petitioner] . . .
was a licensed provider of home health care services that
submitted reimbursement claims to Medicare for services
provided to its clients.

Petitioner], through [co-defendants and others], provided
ome health care services to patients. [Petitioner] also
contracted with [other individuals and a separate entity] to act
as marketers. It was part of the conspiracy that, beginning in
or about August 2008 and continuing through in or about July
2010, [Petitioner] agreed with [co-defendants] and others to
make payments to outside marketers . . . in exchange for the
referral of patients to [Petitioner] for home health services for
which [Petitioner] sought reimbursement from Medicare,
knowing that it was illegal to make these payments.

In furtherance of the conspiracy, . . . [Petitioner], through [a
co-defendant], knowingly and willfully offered and paid
approximately $2,000 to [a co-defendant], in exchange for
[the co-defendant’s] referral of four patients to [Petitioner] for
home health services for which [Petitioner] sought
reimbursement from Medicare.

IG Ex. 2 at 2-5.
Petitioner admitted further that “between approximately September 2006 and July 2010,
[Petitioner] paid a total of $109,685 to [other individuals and an entity] in exchange for
referral of patients to [Petitioner] for home health services for which [Petitioner] sought
reimbursement from Medicare, knowing that it was illegal to make those payments.”
Petitioner also admitted that during the same time frame, it paid $298,163 to other
individuals that were based on patient starts of care or recertification of patients for which
it sought reimbursement from Medicare. Petitioner admitted that it “billed Medicare for
services provided to all of these patients and that Medicare paid [Petitioner]
approximately $2,291,000 for these services.” IG Ex. 2 at 6.

The admissions Petitioner made as part of its plea agreement thus conclusively
demonstrate the required nexus between Petitioner’s criminal conduct and the delivery of
items or services under Medicare. I note, moreover, that decisions of the Departmental
Appeals Board have held that a conviction for violating the Anti-Kickback Statute is a
program-related conviction. Dinesh Patel, M.D., DAB No. 2551 at 6 (2013) (citing Boris
Lipovsky, M.D., DAB No. 1363 (1992) and Niranjana B. Parikh, M.D., DAB No. 1334
(1992)).

In its defense, Petitioner makes several arguments, with the primary argument being that
the IG has not properly applied the exclusion statute in this matter. In excluding
Petitioner, the IG proceeded under the mandatory exclusion authorities of 42 U.S.C.

§ 1320a-7(a)(1) based on Petitioner’s conviction; however, Petitioner asserts that its
criminal conduct falls instead under the permissive exclusion provision of 42 U.S.C.

§ 1320a-7(b)(7), which permits exclusion when the Secretary of Health and Human
Services determines that an individual violated 42 U.S.C. § 1320a-7b (the Anti-Kickback
statute). RFH at 1-2; P. Br. at 5-6. Petitioner notes that under 42 U.S.C. § 1320a-7(b)(7),
the IG has the discretion not to impose any exclusion at all, and thus argues that various
“factors” show that no exclusion is warranted in its case. RFH at 1-2; P. Br. at 5-6.

Petitioner’s argument is fundamentally flawed because the IG’s exclusion under

42 U.S.C. § 1320a-7(a)(1) is derivative of Petitioner’s conviction, whereas a permissive
exclusion under 42 U.S.C. § 1320a-7(b)(7) is an original action in which the IG would
need to prove that Petitioner violated 42 U.S.C. § 1320a-7b by a preponderance of the
evidence. Because Petitioner was already convicted of conspiracy to defraud the United
States through payment of kickbacks for the referral of Medicare beneficiaries, the IG no
longer needed to prove such a violation in order to exclude Petitioner.

A federal court addressed this issue in detail.
Plaintiff first contends the ALJ’s imposition of a period of

exclusion under the mandatory exclusion provision of
42 U.S.C. § 1320a—7(a)(1) was an erroneous application of
law, and the ALJ should have applied the permissive
exclusion provisions of 42 U.S.C. § 1320a—7(b)(7).

Plaintiff was convicted of conspiracy to commit kickback
violations, in violation of 18 U.S.C. § 371 and offering and
paying bribes in violation of 42 U.S.C. § 1320a—7b(b), one of
the statutes expressly referenced in the permissive exclusion
provision of 42 U.S.C. § 1320a—7(b)(7).

Pursuant to the plain language of 42 U.S.C. § 1320a—7(a)(1),
the mandatory exclusion provision applies to individuals
convicted of program-related crimes, that is crimes related to
the delivery of an item or service. On the other hand,
42 U.S.C. § 1320a-7(b)(7) provides that the permissive
exclusion provision Plaintiff references applies to individuals
that the Secretary determines has committed an act described
in certain statutes, including the Anti—Kickback Statute.
Obviously, if a jury has convicted an individual of
committing a program-related crime, the Secretary need not
make a determination that the individual has engaged in the
underlying conduct; a jury has found beyond a reasonable
doubt that the person has committed the conduct. Mandatory
exclusion thus applies to those convicted of program-related
crimes, while permissive exclusion applies to those the
Secretary has determined (in an administrative proceeding)
ave committed certain acts described in specific statutes.

If legislative intent was not apparent from the plain language
of the statute, the ALJ could have resorted to legislative
istory. But the legislative history does not support the
interpretation urged by Plaintiff. The legislative history
explains that § 1320a—7(b)(7) is a very different exclusion
authority than the exclusion authority of § 1320a—7(a)(1) for
program-related convictions. Exclusion authority under
§ 1320a—7(b)(7) rests on a determination by the Secretary that
the individual has committed an act described in §§ 1320a—
7a, 1320a-7b, or 1320a-8. A permissive exclusion
proceeding under § 1320a—7(b)(7) is initiated by Defendant’s
Office of Inspector General, and the respondent has the right

to a pre-exclusion hearing in which the Office of Inspector
General must introduce evidence to establish, by a
preponderance of the evidence, that a violation of any of the
enumerated sections has occurred. The legislative history of
section 1320a—7(b)(7) indicates it was enacted as an
alternative to criminal prosecution or where a program-related
conviction does not exist.

Anderson v. Thompson, 311 F. Supp. 2d 1121, 1124-1127 (D. Kan. 2004) (emphases in
original). Based on this analysis, I reject Petitioner’s argument.

Although Petitioner does not dispute that it was convicted of conspiring to defraud the
United States through the payment of illegal kickbacks, it nevertheless emphasizes that
its actions did not harm any patients or negatively impact Medicare or Medicaid.
Moreover, Petitioner asserts that no fraud was involved. RFH at 2; P. Br. at 2. In her
affidavit, Petitioner’s President and co-owner, Marylin Maravilla, asserts that the District
Court judge who sentenced Petitioner in the criminal case “concluded that none of [her]
conduct was fraudulent, that there was no loss to Medicare or Medicaid, with any
referrals for home health services being based on sound medical judgment, and that there
was no harm to patients.” Maravilla Aff. § 27.

Ms. Maravilla’s statements appear to be more an attempt to explain Petitioner’s criminal
conduct rather than an attack on its conviction. However, even if Ms. Maravilla was
suggesting that the illegality of Petitioner’s actions should be minimized, I would
consider such an argument to constitute an impermissible collateral attack on its
conviction. Under the regulations, Petitioner is explicitly prohibited from re-litigating its
criminal offense before me. 42 C.F.R. § 1001.2007(d); see also Travers v. Shalala,

20 F.3d 993, 998 (9th Cir. 1994); Anderson, 311 F. Supp. 2d at 1128.

Moreover, the fact that Petitioner did not commit any fraud through its kickback activity
is irrelevant to my analysis. There is nothing in the statutory language of 42 U.S.C.

§ 1320a-7(a)(1) that requires that an individual or entity be convicted of a criminal
offense involving fraud. All that is required for a criminal offense to be program-related
is that there is a 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. I have concluded that a
nexus exists in this case between Petitioner’s criminal conduct and the Medicare
program.

While the sentencing transcript reflects that the District Court judge did not consider
Petitioner’s crime to be of the most egregious character, the judge nevertheless
recognized that Petitioner’s criminal acts could potentially have had an adverse impact on
the healthcare system. The judge stated, “The crimes that [Petitioner and the other
defendants] have pled guilty to in this case arise from a statute which is, in essence, a
10

prophylactic statute. Payment for referrals on a patient-by-patient basis creates bad
incentives and increases the risk of fraud.” IG Ex. 5 at 98. Although the judge
acknowledged that “[t]here are no fraudulent billings that are attributable to [Petitioner
and the other defendants]” (IG Ex. 5 at 98), he noted that “what makes this crime more
serious than a technical violation of the rules is the requirement of willfulness. The
defendants have admitted that they knew that at least some of their conduct violated the
Anti-Kickback law, but they did it anyway.” IG Ex. 5 at 101. I note that, as part of its
sentence, Petitioner was liable to the United States for a substantial forfeiture judgment —
$264,447 — related to the proceeds of its illegal behavior. IG Ex. 6. Regardless of
Petitioner’s attempt to re-characterize its offense, Petitioner’s criminal acts demonstrate
that it poses a threat to federal health care programs.

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 pursuant to 42 U.S.C.
§ 1320a-7(a)(1), Petitioner must be excluded for a minimum period of five years.
42 US.C. § 1320a-7(c)(3)(B); 42 C.F.R. §§ 1001.102(a), 1001.2007(a)(2).

I note that Petitioner also makes what is essentially an equitable argument in claiming
that its patients will be forced to seek care elsewhere if it is excluded. Petitioner
submitted numerous letters from its patients and their family members, regarding the care
received from Petitioner.” P. Ex. D. I have no authority to reverse or reduce the five-
year exclusion imposed by the IG based upon such equitable considerations. See Donna
Rogers, DAB No. 2381 at 6 (2011). I have found there is a basis for Petitioner’s
exclusion pursuant to 42 U.S.C. § 1320a-7(a)(1). The five-year period of exclusion is the
minimum period authorized by Congress, and I have no authority to reduce the period of
exclusion.

VI. Conclusion

For the foregoing reasons, 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 pursuant to 42 U.S.C. § 1320a-7(a)(1), (c)(3)(B).

/s/
Scott Anderson
Administrative Law Judge

> These letters primarily attest to the good character of Petitioner’s President, Marylin
Maravilla, who provided home health care services through Petitioner.