Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Sushil Aniruddh Sheth, M.D.,
(O.L. File No.: 5-05-40662-9),

Petitioner,
v.
The Inspector General.
Docket No. C-12-131
Decision No. CR2540

Date: May 14, 2012

DECISION

This case involves a physician who single-handedly concocted and implemented a
Medicare fraud of enormous proportions. I consider here whether, based on his
subsequent felony conviction, the Inspector General (I.G.) reasonably excluded him from
participation in federal health care programs for a period that unquestionably exceeds his
professional — and even his biological — life.

Petitioner, Sushil Aniruddh Sheth, was a cardiologist with a medical practice in the
Chicago metropolitan area. He devised and executed a highly lucrative scheme to
defraud Medicare and other health insurance programs. Eventually, he was caught. He
pled guilty in United States District Court to felony health care fraud. Based on this
conviction, the Inspector General has excluded him from participation in Medicare,
Medicaid, and all federal health care programs for a period of 95 years, under section
1128(a)(1) of the Social Security Act (Act). Here, Petitioner concedes that he must be
excluded, but he challenges the length of that exclusion.

For the reasons set forth below, I find the 95-year exclusion reasonable.
I. Background

Petitioner was a practicing cardiologist, with a clinical office and two “administrative
offices” that were located in his residences. He had privileges at three Chicago-area
ospitals. 1G. Ex. 3 at 3. Beginning no later than January 2002, he submitted claims to
Medicare and other health insurance programs for services that he did not provide. I.G.
Ex. 3 at 2-3. He claimed to have provided services to patients he never even met. He
claimed to have provided services in the Chicago area at times when he was not even
there. He claimed that he provided more than 24-hours worth of services in a single day.
1G. Ex. 3 at 4.

Exploiting his hospital staff privileges, he was able to expand his fraudulent patient-base
by stealing confidential patient information (patient name, insurance provider,

beneficiary identification number, dates of hospital stays, etc.) from the hospitals’ patient
records. Using this information, he hand-wrote notes that he then faxed to outside billing
companies. He paid those billing companies to submit false claims to Medicare and other
insurers. I.G. Ex. 3 at 4-5.'

He continued the scheme through December 2007 and amassed about $9 million in
fraudulent reimbursement from the Medicare program and “other federal victims” and $4
million from private health insurers. LG. Ex. 3 at 5.

On January 28, 2009, Petitioner Sheth was charged with felony health care fraud (18
U.S.C. § 1347). LG. Ex. 4. On August 19, 2009, he pled guilty to the charge in federal
district court. LG. Exs. 2, 3. The court accepted his plea and entered judgment against
him on August 10, 2010. I.G. Ex. 5. The court sentenced him to 60 months in prison and
ordered him to pay a total of $12,376,310.47 in restitution to Medicare and a long list of
private insurance programs. I.G. Ex. 5 at 2, 5-8.

' The Health Insurance Portability and Accountability Act of 1996 (Pub. L. No. 104-191,
110 Stat. 1936 (1996)) (HIPAA) protects patient privacy rights. A person who
knowingly obtains or discloses individually identifiable health information in violation of
the privacy rule may face a criminal penalty of up to $50,000 and one-year imprisonment,
a criminal penalty of up to $100,000 and five-years imprisonment if the wrongful conduct
involves false pretenses, and a criminal penalty of up to $250,000 and ten-years
imprisonment if the wrongful conduct involves the intent to sell, transfer, or use
identifiable health information for commercial advantage, personal gain, or malicious
harm. Inasmuch as Petitioner stole and disseminated confidential patient information, his
claim that he did not harm patients rings hollow, although, in setting the length of his
exclusion, the I.G. did not cite patient harm as an aggravating factor. See 42 C.F.R. §
1001.102(b)(3).
In a letter dated September 30, 2011, the LG. advised Petitioner that, because of his
conviction, he was excluded from participation in Medicare, Medicaid, and all federal
health care programs for a minimum period of 95 years. 1.G. Ex. 1. The letter explained
that section 1128(a)(1) of the Act authorizes the exclusion. Petitioner timely requested a
hearing to challenge the length of his exclusion.

In compliance with my order, the I.G. has submitted an initial brief (I.G. Br.) and a reply
brief (I.G. Reply). The LG. also submitted seven exhibits (I.G. Exs. 1-7). Petitioner
submitted a brief (P. Br.) and two exhibits (P. Exs. 1-2). In the absence of any objection,
I admit into evidence I.G. Exs. 1-7 and P. Exs. 1-2.

I directed the parties to indicate in their briefs whether an in-person hearing would be
necessary, and, if so, to describe the testimony the party wishes to present, the names of
the witnesses it would call, and a summary of each witnesses’ proposed testimony. I
specifically directed the parties to explain why the testimony would be relevant. Order
and Schedule for Filing Briefs and Documentary Evidence at 2, Attachment 1 (Informal
Brief of Petitioner § IV) and Attachment 2 (Informal Brief of I.G. § II) (December 15,
2011). The I.G. indicated that an in-person hearing is not necessary. Petitioner did not
respond to the question. In correspondence that accompanied his March 26, 2012
submission, he indicated that he hoped to produce “an expert witness.” He did not,
however, identify that witness (even in a most general way), describe the testimony he
hoped to elicit, explain why that testimony relates to his arguments, or explain why that
testimony does not duplicate evidence that is already in the record. Petitioner has thus
not established that an in-person hearing would serve any purpose.

IL. Issue

Petitioner concedes that he was convicted of an offense related to the delivery of an item
or service under Medicare and is therefore subject to an exclusion of at least five years.
P. Br. at 1. The sole issue before me is whether the length of the exclusion in excess of
five years is reasonable.

III. Discussion
Based on the aggravating factors in this case and the
absence of any mitigating factor, the 95-year

exclusion falls within a reasonable range.”

Section 1128(a)(1) of the Act requires that the Secretary of Health and Human Services
exclude an individual who has been convicted under federal or state law of a criminal

>I make this one finding of fact/conclusion of law.
offense related to the delivery of an item or service under Medicare or a state health care
program. See also 42 C.F.R. § 1001.101.

An exclusion brought under section 1128(a)(1) must be for a minimum period of five
years. Act § 1128(c)(3)(B); 42 C.F.R. §§ 1001.102(a); 1001.2007(a)(2). Federal
regulations set forth criteria for lengthening exclusions beyond the five-year minimum.
42 C.F.R. § 1001.102(b). Evidence that does not pertain to one of the aggravating or
mitigating factors listed in the regulations may not be used to decide whether an
exclusion of a particular length is reasonable.

Among the factors that may serve as a basis for lengthening the period of exclusion are
the four that the LG. relies on in this case: 1) the acts resulting in the conviction, or
similar acts, caused a government program or another entity financial losses of $5,000 or
more; 2) the acts that resulted in the conviction, or similar acts, were committed over a
period of one year or more; 3) the sentence imposed by the court included incarceration;
and 4) the convicted individual has been the subject of any other adverse action by any
federal, state or local government agency or board, if the adverse action is based on the
same set of circumstances that serves as a basis for the exclusion. 42 C.F.R. §
1001.102(b). The presence of an aggravating factor or factors, not offset by any
mitigating factor or factors, justifies lengthening the mandatory period of exclusion.

Program financial loss (42 C.F.R. § 1001.102(b)(1)). In his plea agreement, Petitioner
conceded that, by billing for services that he did not perform, he “fraudulently obtained
approximately $9,000,000 from the Medicare program as well as other federal victims . .

. and approximately $4,000,000 from private health benefit programs... .” IG. Ex. 3 at
5. The I.G. does not rely on this admission but points to the slightly lower amount of
restitution ordered by the Court: $12,376,310.47.° Petitioner concedes that the court
ordered him to pay that amount, and that restitution is considered a reasonable measure of
program loss. P. Br. at 1,5. He argues, however, that, unlike other criminals, he paid the
restitution in full, so, in fact, the programs suffered no losses.

I have no idea how often excluded individuals actually pay their ordered restitution, and
nothing in this record or any of the cases cited suggests how often that happens. But the
issue is irrelevant. As the I.G. points out, the regulation explicitly precludes this defense.
It says that the “entire amount of financial loss . . . including any amounts resulting from

> Restitution has long been considered a reasonable measure of program losses. See
Jason Hollady, M.D., DAB No. 1855 (2002). However, where, as here, the Petitioner
specifically admitted to the court that his actions cost these programs more than the
amount of restitution, it should not be necessary to consider less direct measures of the
program losses. Nevertheless, I accept the I.G.’s finding as to the amount of program
losses.
similar acts not adjudicated, will be considered regardless of whether full or partial
restitution has been made.” 42 C.F.R. § 1001.102(b)(1) (emphasis added).

At a minimum, then, Petitioner’s crimes cost Medicare and other insurance programs
financial losses that were more than 2,475 times greater than the $5,000 threshold for
aggravation, a phenomenal amount, particularly considering that those losses are
attributable to just one person. The Departmental Appeals Board (Board) has
characterized amounts substantially greater than the statutory standard as an “exceptional
aggravating factor” that is entitled to significant weight. Jeremy Robinson, DAB No.
1905 (2004); Donald A. Burstein, Ph.D., DAB No. 1865 (2003). Iagree. If even a small
percentage of program participants were capable of this level of fraud, these programs
could not long survive. I therefore consider the enormity of the programs’ financial
losses here an exceptionally aggravating factor that compels a period of exclusion many,
many times longer than the five-year minimum.

Length of criminal conduct (42 C.F.R. § 1001.102(b)(2)). By his own admission,
Petitioner’s criminal activity began no later than January 2002 and continued through
December 2007. I.G. Ex. 3 at 5. Thus, the acts that resulted in Petitioner’s conviction
and similar acts were committed over a period of about six full years or six times longer
than necessary to constitute an aggravating factor.

Incarceration (42 C.F.R. § 1001.102(b)(5)). The sentence imposed by the criminal court
included incarceration. The district court sentenced Petitioner to five years (60 months)
in prison. I consider this significant jail time, and it underscores the seriousness of his

crime. I.G. Ex. 5 at 2; P. Br. at 1.

Other adverse actions (42 C.F.R. § 1001.102(b)(9)). By consent order dated March 26,
2010, the State of Illinois Department of Financial and Professional Regulation
indefinitely suspended Petitioner’s medical license. I.G. Ex. 6. It based the action on the
allegations underlying his guilty plea. 1.G. Ex. 6 at 3-4. In a notice dated August 3,
2010, the Medical Board of California advised Petitioner that his California medical
license was suspended based on the Illinois suspension. I.G. Ex. 7. Thus, based on the
circumstances that underlay his conviction, two state boards imposed additional adverse
actions against Petitioner.

No mitigating factors. The regulations consider mitigating just three factors: 1) a
petitioner was convicted of three or fewer misdemeanor offenses and the resulting
financial loss to the program was less than $1,500; 2) the record in the criminal
proceedings demonstrates that a petitioner had a mental, physical, or emotional condition
that reduced his culpability; and 3) a petitioner’s cooperation with federal or state
officials resulted in others being convicted or excluded, or additional cases being
investigated, or a civil money penalty being imposed. 42 C.F.R. § 1001.102(c).
Characterizing the mitigating factor as “in the nature of an affirmative defense,” the
Board has ruled that a petitioner has the burden of proving any mitigating factor by a
preponderance of the evidence. Barry D. Garfinkel, M.D., DAB No. 1572 at 12 (1996).

Obviously, because Petitioner’s felony conviction involved program financial losses
many times greater than $1,500, the first factor does not apply here. Nor does Petitioner
claim any mental, physical, or emotional condition that reduced his culpability.

Petitioner claims, however, that, “as part of [his] plea agreement,” he was “fully
forthcoming” and therefore cooperated with law enforcement. He also complains that,
because he had no co-defendants or confederates, he was simply not in a position to
provide testimony leading to the conviction of others. Nevertheless, he provided law
enforcement with information that would help them “more promptly identify and
opefully eliminate this criminal pattern of conduct.” P. Br. at 5.

Inasmuch as the underlying purpose of this factor is to help law enforcement and protect
program integrity, Petitioner is entitled to no special consideration simply because he
possessed no information implicating others.

“Tt is entirely Petitioner’s burden” to show that his cooperation resulted in others being
convicted or excluded, or additional cases being investigated, or a civil money penalty
being imposed. Stacey R. Gale, DAB No. 1941 at 9 (2004). Answering questions posed
by investigators in his own case is not a mitigating factor. Petitioner must show that he
provided information that resulted in the investigation of a new target. Marcia C. Smith,
DAB No. 2046 at 9-11 (2006). Here, Petitioner concedes that his “cooperation” did not
lead to any specific conviction, exclusion, or the imposition of additional penalties.

Thus, no mitigating factor offsets the significant aggravating factors present in this case.

Based on the aggravating factors and the absence of mitigating factors, then, I must
determine whether the exclusion period imposed by the I.G. falls within a reasonable
range. So long as that period falls within a reasonable range, my role is not to second-
guess the I.G.’s judgment. Jeremy Robinson, DAB No. 1905 at 5 (ALJ review must
reflect the deference accorded to the I.G. by the Secretary). A ““reasonable range’ refers
to a range of exclusion periods that is more limited than the full range authorized by the
statute [i.e., from a minimum of five years to a maximum of permanent] and that is tied to
the circumstances of the individual case.” Joseph M. Rukse, Jr., R.Ph., DAB No. 1851 at
11 (2002), citing Gary Alan Katz, R.Ph., DAB No. 1842 at 8 n.4 (2002).

I understand Petitioner’s complaint that, as a practical matter, the I.G. has effectively
excluded him permanently from program participation. However, the Board has
consistently ruled — albeit in reviewing substantially shorter periods of exclusion — that an
exclusion of finite duration is not the functional equivalent of a permanent exclusion, and
I may not consider mitigating such factors as the individual’s age, finances, or
employment prospects and their impact on the excluded individual’s chances of returning
to program participation. Jeremy Robinson, DAB No. 1905; Donald A. Burstein, Ph.D.,
DAB No. 1865 at 13; Joann Fletcher Cash, DAB No. 1725 at 19 (2000).

In any event, given the nature of the aggravating factors here, a permanent exclusion
would not have been out of line. Petitioner caused enormous financial losses to health
insurance programs; his criminal conduct lasted six times longer than the threshold for
aggravation; he was sentenced to five years in prison; and he was subject to two adverse
actions by different state boards.

Petitioner nevertheless cites other cases in which the I.G. imposed shorter periods of
exclusion, and argues that his “comparative analysis” shows that the exclusion period is
“extreme and excessive.” P. Br. at 11-12. I do not find such comparisons particularly
helpful. At best, they are of limited value; at worst, they are misleading.

First, our sample is limited. In Jeremy Robinson, the Board faulted the Administrative
Law Judge (ALJ) for comparing the petitioner’s situation to only one other case.* In the
Board’s view, one case represented too small a sample to allow for a meaningful
comparison. It pointed out that the ALJ might have considered other cases involving 15-
year exclusions which could “inform” whether the exclusion falls within a reasonable
range. But, even if we could consider every ALJ and Board decision, we are still looking
at a small number compared to the total exclusions that the I.G. imposes, and we have no
way of knowing if our sample accurately represents a cross-section of all cases.
Certainly, few, if any, reported decisions involve exclusions this long, and few involve
program losses comparable to the amount lost here. Perhaps the LG. rarely imposes such
exclusions, or perhaps the excluded party rarely appeals.> We simply lack the experience
of these cases that the I.G. has. For this reason, we defer to his judgment and should
exercise caution in comparing cases.

A second danger with case comparisons is that they often fail to consider the entire
circumstances of the particular cases. Here, for example, Petitioner cites Goldenheim, et
al., DAB No. 2268 (2009) for the proposition that his exclusion is out of line. His
argument has surface appeal: in Goldenheim, program financial losses attributable to the

4 Robinson involved al5-year exclusion. The ALJ compared it to William D. Neese,
M.D., DAB CR467 (1997), a 10-year exclusion. Neese defrauded Medicare of $600,000
over a period of two years and was sentenced to 18 months in jail; Robinson paid
$205,000 in restitution for criminal activity that lasted three years and was sentenced to a
year and a day in prison.

* The party may reason that an appeal serves no practical purpose. Even if he
successfully persuades the judge to cut his lengthy exclusion in half, he could still not
hope for reinstatement during his professional lifetime.
three individual petitioners were enormous -- nearly $35 million.° Yet, the I.G. proposed
an exclusion of only 15 years (which the Board subsequently reduced to 12 years).

The circumstances of Goldenheim are not comparable to this case. Petitioners were
corporate officers of a pharmaceutical company that introduced misbranded drugs into
interstate commerce. Although no one alleged that the officers had personal knowledge
of the wrongdoing, they were convicted as “responsible corporate officers” under the
Food, Drug, and Cosmetic Act. Their crimes were misdemeanors, not felonies, and their
exclusions were discretionary, not mandatory, so, unlike here, the I.G. was not obligated
by statute to exclude them. See Act § 1128(b)(1). Moreover, Goldenheim represented
the first appeal of an exclusion imposed against a “responsible corporate officer,” so, for
reasons wholly unrelated to whether the period of exclusion was reasonable, the I.G.
might have opted to tread lightly.

Finally, as the Board pointed out in Robinson, the .G. may reasonably determine that
increasingly longer periods of exclusion are necessary, not only to protect federal funds,
but “to staunch an increasing amount of health care fraud.” DAB No. 1905 at 10.8. In
this regard, I recently cited some sobering statistics:

The National Health Care Anti-Fraud Association, an
organization composed of both public and private health
insurers and regulators, conservatively estimates that 3% of
all health care spending in the United States is lost due to
fraud. If such an estimate is accurate, health care fraud cost
our economy a staggering $68 billion in 2007, the most recent
year for which figures are available.

Christopher George Collins, DAB CR2515 at 6 (2012). If we reduce periods of
exclusion because they are longer than those previously imposed under similar
circumstances, we deprive the I.G. of a useful tool for deterring program fraud.

Additional defenses. Petitioner also asks that the effective date of his exclusion be
changed to August 19, 2009, which is apparently the date the Medicare contractor
cancelled his program participation and coincides with the date of his guilty plea. P. Br.
at 9. Asa matter of law, an exclusion becomes effective 20 days after the date of the
1.G.’s notice of exclusion. 42 C.F.R. § 1001.2002. An ALJ has no authority to review
the timing of the I.G.’s determination to impose an exclusion or to alter retroactively the
date of the imposition of the exclusion. Tanya A. Chuoke, R.N., DAB No. 1721 (2000);
Samuel W. Chang, M.D., DAB No. 1198 (1990).

° Losses attributable to the corporation numbered in the hundreds of millions of dollars.
Finally, I have no authority to review Petitioner’s Eighth Amendment claims. Susan
Malady, DAB No. 1816 (2002).

IV. Conclusion

I recognize that 95 years is a substantial period of exclusion and should be imposed on
those posing a grave threat to program integrity. Petitioner Sheth poses such a threat. He
was for many years a cunning and successful fraudster who single-handedly cost health
insurance programs, particularly Medicare, massive amounts of money. Based on all of
the circumstances discussed above, I find that a 95-year exclusion falls within a
reasonable range.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Joseph Ravid, M.D.,
(NPI: 1851680789),
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-12-213
Decision No. CR2539

Date: May 9, 2012

DECISION

Petitioner, Joseph Ravid, M.D., is a Florida physician who sought to enroll in the
Medicare program. The Centers for Medicare & Medicaid Services (CMS) granted his
application effective May 4, 2011. Petitioner now challenges that effective date. The
parties have waived oral hearing and agree to my deciding this case based on the written
record.

For the reasons set forth below, I find that CMS appropriately granted Petitioner’s
enrollment effective May 4, 2011.

CMS properly determined the effective date for Petitioner’s
Medicare enrollment because the evidence establishes that
Petitioner submitted his enrollment application on May 4,

'CMS has submitted a motion/brief (CMS Br.) and 17 exhibits (CMS Exs. 1-17).
Petitioner has submitted a brief (P. Br.) and one exhibit. (P. Ex. 1).
2011, and his effective date can be no earlier than the date
he filed his enrollment application.”

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

When CMS determines that a physician meets the applicable enrollment requirements, it
grants him Medicare billing privileges, which means that he can submit claims and
receive payments from Medicare for covered services provided to program beneficiaries.
For physicians and some other practitioners, the effective date for billing privileges “is
the Jater of the date of filing” a subsequently approved enrollment application or “the
date an enrolled physician . . . first began furnishing services at a new practice location.”
42 C.F.R. § 424.520(d) (emphasis added).*

Here, Petitioner does not challenge CMS’s assertion that its Medicare contractor, First
Coast Service Options, Inc., received his paper enrollment application on May 4, 2011.
CMS Exs. 1, 4. May 4, 2011 is therefore the date of filing unless Petitioner can show that
e submitted an earlier application.

Petitioner maintains that he submitted an enrollment application in late October 2010. He
says that he relied on a third party, Trevor Briede, to file the application. In an August
16, 2011 letter asking that the contractor reconsider the enrollment date, Mr. Briede
writes that a “good faith effort was made” to enroll Petitioner Ravid by means of the
electronic process (Provider Enrollment, Chain and Ownership System or PECOS) “as
early as late October.” He says that, on October 28, 2010, he logged on to PECOS and
sincerely believed he had completed the application. In an attached letter, Petitioner
Ravid confirms that he spoke to a contractor’s agent at about that time, authorizing Mr.
Briede to submit the application on his behalf. CMS Ex. 12 at 1-2.

>I make this one finding of fact/conclusion of law.

*Tf a physician meets all program requirements, CMS allows him to bill retrospectively
for up to “30 days prior to their effective date if circumstances precluded enrollment in
advance of providing services to Medicare beneficiaries.” 42 C.F.R. § 424.521(a)(1).
I do not question Petitioner’s assertion that, in October, he attempted to enroll
electronically; however, he has not shown that he completed a valid application at that
time. The contractor has no record of a PECOS application, and Petitioner Ravid submits
no supporting documentation. See CMS Ex. 17 at 2 (Mercer Decl. § 4).

As CMS explains, the PECOS system specifically instructs the applicant to print out
verifying documentation and mail it to the contractor:

In order to complete the processing of your application, mail
the Certification/Authorization Statement(s) and all required
supporting documentation to the Medicare contractor listed
below within 7 days of your electronic submission. Failure to
do so may result in a rejection.

CMS Ex. 16 at 44; see also CMS Ex. 16 at 45-47. Further, when an applicant hits the
“submit” button on a PECOS application, the system displays a “Submission Receipt”
page that tells the provider to print the receipt page for his/her records. CMS Ex. 15 at
7-8; CMS Ex. 16 at 49-51; CMS Ex. 17 at 3 (Mercer Decl. §j 6). Because Petitioner
provides no such documents, he has not met his burden of establishing that he submitted
a “subsequently approved enrollment application” any earlier than May 4, 2011.

That he may have provided otherwise-billable services to Medicare beneficiaries does not
alter this result. See P. Br. at 1; P. Ex. 1. He is simply not entitled to Medicare payment
for those services because he was not enrolled in the program when he provided them.
See US Ultrasound, DAB No. 2302 at 8 (2010).

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Joshua J. Crabtree, M.D.,
Petitioner
v.
Centers for Medicare and Medicaid Services.
Docket No. C-12-147
Decision No. CR2538
Date: May 4, 2012
DECISION

Dr. Joshua J. Crabtree (Petitioner) appeals the determination of Wisconsin Physicians
Service Insurance Corporation (WPS), a Medicare contractor, that he was not eligible
to reassign his billing privileges as a supplier’ to Sanford Health Network (Sanford),
earlier than May 2, 2011 and could not submit claims for payment to Sanford earlier than
April 2, 2011. I grant the Centers for Medicare and Medicaid Services’ (CMS’s) motion
for summary judgment finding that CMS could not approve Petitioner’s request for
reassignment of billing privileges until it received the appropriate completed application
with Petitioner’s signature.
I. Background
On December 22, 2010, Sanford submitted a CMS 855B application to WPS indicating
that it was adding two practice locations at Luverne and Worthington, Minnesota, to the

Sanford Health Network. Sanford also requested that WPS reassign Petitioner’s billing
privileges from Sanford Clinic, an affiliate, to Sanford effective December 1, 2010.

' A physician is a Medicare “supplier,” which is defined in the Medicare statute to mean
“a physician or other practitioner, a facility, or other entity (other than a provider of
services) that furnishes items or services” under the Medicare statute. Act § 1861(d), 42
U.S.C. § 1395x(d).
Sanford submitted the names of the suppliers whose billings it wanted reassigned in the
form of a list attached to the CMS 855B application. CMS Exhibit (CMS Ex.) 1, at 19.
The list attached to the CMS 855B included Petitioner’s name. However, Petitioner’s
Medicare enrollment had been deactivated, effective May 17, 2008 for inactivity. CMS
Ex. 10; Petitioner Exhibit (P. Ex.) 9. Petitioner had neither reactivated his Medicare
enrollment by submitting a CMS 8551 application nor reassigned his billing privileges by
completing a signed CMS 855R application for the new business entity.

On April 19, 2011, WPS advised Sanford that its CMS 855B application adding the two
practice locations had been approved. CMS Ex. 9. Also on April 19, 2011, WPS
informed Sanford, acting on Petitioner’s behalf, that it could not issue a new Provider
Transaction Access Number (PTAN) for Petitioner without receiving a CMS 855] to
reactivate his enrollment and a CMS 855R to reassign his billing privileges. CMS Ex. 4;
P. Ex. 1. On May 2, 2011, WPS received a completed CMS 8551 and CMS 855R from
Petitioner. CMS Exs. 5, 6. Petitioner’s CMS 8551 indicated that he was reactivating his
Medicare enrollment. CMS Ex. 5, at 2. Petitioner’s CMS 855R application indicated
that Petitioner was reassigning his billing privileges to Sanford for the first time. CMS
Ex. 6, at 2. On May 16, 2011, WPS informed Petitioner that it was granting Petitioner
Medicare billing privileges starting April 2, 2011, thirty days before May 2, 2011, the
date of receipt of Petitioner’s CMS 855I and CMS 855R applications that were processed
to approval. CMS Ex. 7.

Sanford, on behalf of Petitioner, requested reconsideration of WPS’s determination on
July 12, 2011. CMS Ex. 12. An unfavorable reconsideration decision was issued on
September 30, 2011. CMS Ex. 11. Petitioner filed a timely hearing request on
November 9, 2011. On November 29, 2011, this case was assigned to me for hearing and
decision.

CMS filed a prehearing brief and Motion for Summary Judgment (CMS Br.)
accompanied by CMS Exs. 1-13. Petitioner filed a prehearing brief and opposition to
CMS’s Motion for Summary Judgment (P. Br.). Petitioner attached two items to its brief,
emails to and from WPS, which it labeled P. Ex. 9 and which I have relabeled as P. Ex. 1;
and an unlabeled affidavit which I now label as P. Ex. 2. Subsequently, CMS filed a
reply brief. Neither party objected to any exhibit, and I admit all proffered exhibits into
evidence.

II. Issue

The issue in this case is whether CMS had a legitimate basis for determining May 2, 2011
as the effective date of reassignment for Petitioner’s Medicare billing privileges.”

> Petitioner’s hearing request concerns his ability to get reimbursed from Medicare under
a third-party reassignment. This decision does not consider Petitioner’s eligibility for any
Ill. Analysis

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

a. This case is appropriate for summary judgment.

CMS seeks summary judgment. The Departmental Appeals Board (Board) stated the
standard for summary judgment as follows:

Summary judgment is appropriate when the record shows that there is no
genuine issue as to any material fact, and the moving party is entitled to
judgment as a matter of law.... The party moving for summary judgment
bears the initial burden of showing that there are no genuine issues of
material fact for trial and that it is entitled to judgment as a matter of law. . .
. To defeat an adequately supported summary judgment motion, the non-
moving party may not rely on the denials in its pleadings or briefs, but must
furnish evidence of a dispute concerning a material fact — a fact that, if
proven, would affect the outcome of the case under governing law .... In
determining whether there are genuine issues of material fact for trial, the
reviewer must view the evidence in the light most favorable to the non-
moving party, drawing all reasonable inferences in that party’s favor.

Senior Rehab. & Skilled Nursing Ctr., DAB No. 2300, at 3 (2010) (citations omitted).
The role of an Administrative Law Judge (ALJ) in deciding a summary judgment motion
differs from the ALJ’s role in resolving a case after a hearing. The ALJ should not assess
credibility or evaluate the weight of conflicting evidence. Holy Cross Village at Notre
Dame, DAB No. 2291, at 4-5 (2009).

It is undisputed that Sanford’s December 22, 2010 CMS 855B application had a list
attached to it that stated, “[p]lease issue the following providers new PTAN numbers
under group PTAN number C03080 effective 12/1/2010.” Under this statement was a list
of ten individuals, including Petitioner, with their social security and National Provider
Identifier (NPI) numbers. The vice president of Sanford signed his name below this list.
CMS Ex. 1, at 19. Petitioner’s signature does not appear on the December 22, 2010
application or the attached list. /d. It is undisputed that although Petitioner had been
deactivated in 2008, he did not reactivate his enrollment by completing a signed
enrollment application, CMS 8551, prior to May 2, 2011. CMS Ex. 5. Further, it is

individual direct-billing option that may have applied. I also do not have authority to
consider here whether Petitioner was properly deactivated. See 42 C.F.R. § 424.545(a) &

(b).
undisputed that Petitioner had not previously completed a reassignment application, CMS
855R, for Sanford’s Luverne and Worthington locations prior to May 2, 2011, under
Sanford’s tax identification number. CMS Ex. 12. As the parties do not dispute any of
these material facts, summary judgment is appropriate.

b. WPS properly required a completed and signed CMS 855R application
before beginning the reassignment process.

Petitioner argues that Sanford’s December 22, 2010 CMS 855B application should have
been broadly construed and treated as Petitioner’s CMS 855] and CMS 855R
applications. Petitioner states that Sanford received inaccurate information from WPS
staff when Sanford inquired how to go about reassigning Petitioner’s billing privileges
and was told to attach Petitioner’s name with identifying information on a list, along with
other individuals whose billing privileges it wanted reassigned to Sanford’s new business
entity. November 9, 2011 Hearing Request; P. Ex. 2. The CMS 855B form is the
Medicare enrollment application for supplier group practices and supplier organizations
and “is not used to enroll individuals.” Medicare Program Integrity Manual (MPIM), ch.
15, §§ 15.1.2, 15.3. The CMS 855R form is the Medicare enrollment application to
reassign a physician’s Medicare billing privileges. Providers and suppliers must submit
enrollment information on the applicable enrollment application. 42 C.F.R. § 424.510.
These forms serve different functions and require different information. One essential
feature of each of these forms is that each form requires the signature of the applicant. A
contractor must receive a signed CMS 855R form before it can approve a reassignment of
Medicare billing privileges. The CMS 855B form may not substitute for the proper
enrollment form. See Crawford M. Barnett, M.D., DAB CR2233, at 9 (2010).

42 C.F.R. § 424.510(d)(3) requires a signature on enrollment applications and states that
the “signature attests that the information submitted is accurate and that the provider or
supplier is aware of, and abides by, all applicable statutes, regulations, and program
instructions.” The signature certification serves an important legal function to bind the
supplier, both legally and financially, and is not a mere formality. See Jennifer Tarr,
DAB CR2299, at 5 (2010).

The requirement of a signature is also set forth plainly on the reassignment form, CMS
855R:

Title XVIII of the Social Security Act prohibits payment for services provided by
an individual practitioner to be paid to another individual or supplier unless the
individual practitioner who provides the services specifically authorizes another
individual or supplier (employer, facility, or health care delivery system) to
receive said payments in accordance with 42 C.F.R. 424.73 and 42 C.F.R. 424.80.
By signing this Reassignment of Benefits Statement, you are authorizing the
supplier identified in Section 2 to receive Medicare payments on your behalf... .
All individual practitioners who allow another supplier (employer, facility, or
health care delivery system) to receive payment for their services must sign the
Reassignment of Benefits Statement. The signatures below acknowledge that you
will abide by all the laws and regulations pertaining to the reassignment of
benefits.

CMS Ex. 6, at 4 (emphasis added). The form states that the provider or supplier will be
certifying, among other things, that the contents of the application are “true, accurate and
complete.” Jd. Also, the application has the applicant certify that, “I understand that any
misrepresentation or concealment of any information requested in this application may
subject me to liability under civil and criminal laws.” Jd.

The CMS 855B form that was submitted on December 22, 2010, containing different
information than the 855R form, merely included Petitioner’s name on an attached list
without Petitioner’s signature. Until WPS received a signed CMS 855R form from
Petitioner, there was no way that WPS could know that Petitioner was authorizing
Sanford to receive Petitioner’s Medicare payments. On May 2, 2011, WPS received both
the CMS 8551 and 855R forms completed and signed by Petitioner. CMS Exs. 5, 6.
WPS properly began processing the enrollment and reassignment request as of May 2,
2011 and notified Petitioner of the approval of his application reactivating his enrollment
and the reassignment of his billing privileges by letter dated May 16, 2011. CMS Ex. 7.

c. WPS’s receipt of Petitioner’s signed applications necessarily
determines his effective date and retrospective billing privileges.

The determination of the effective date of Medicare billing privileges is governed by 42
C.F.R. §§ 424.520 and 424.521. Section 424.520(d) provides that the effective date for
billing privileges for physicians, among others, is “the /ater of the date of filing of a
Medicare enrollment application that was subsequently approved by a Medicare
contractor or the date an enrolled physician . . . first began furnishing services at a new
practice location.” (Emphasis added). The “date of filing” is the date that the Medicare
contractor “receives” a signed provider enrollment application that the Medicare
contractor is able to process to approval. 73 Fed. Reg. 69,725, 69,769 (Nov. 19, 2008).

In this case, the effective date of Medicare billing privileges depends on the date the
contractor first receives an approvable application. This is consistent with the preamble
to the final rule and the plain language of the regulation. 73 Fed. Reg. 69,769; 42 C.F.R.
§ 424.520(d). Therefore Petitioner’s applications reactivating his enrollment and
assigning his billing privileges to Sanford were not approvable until WPS received the
completed and signed applications. I find that it is undisputed that WPS did not receive
signed, complete, and approvable applications reactivating Petitioner’s enrollment and
assigning his billing privileges to Sanford before May 2, 2011.
Although WPS erroneously referred to April 2, 2011 as Petitioner’s “effective date”
(CMS Ex. 7), regulations actually require the contractor to assign the date of receipt of
the application as the effective date of Petitioner’s enrollment while permitting the
contractor to grant retrospective billing privileges for 30 days prior to the effective date.
42 C.F.R. § 424.521(a)(1). Thus, I am treating WPS’s action as if it intended to set April
2, 2011 as the earliest date for which Petitioner may submit claims reassigned to Sanford
based on an actual effective date of May 2, 2011.

Sanford argues that it relied on inaccurate information from the contractor’s staff and that
it should not be penalized for that reliance. However, even assuming for purposes of
summary judgment that Sanford did receive incorrect information from WPS, Petitioner
does not allege any affirmative misconduct. Petitioner’s arguments amount to claims of
equitable estoppel, and I am unable to grant the relief that Petitioner requests. It is well-
established by federal case law, and in Board precedent, that: (1) estoppel cannot be the
basis to require payment of funds from the federal fisc; (2) estoppel cannot lie against the
government, if at all, absent a showing of affirmative misconduct, such as fraud; and (3) I
am not authorized to order payment contrary to law based on equitable grounds. It is
well-settled that those who deal with the government are expected to know the law and
may not rely on the conduct of government agents contrary to law. See, e.g., Office of
Personnel Mgmt. v. Richmond, 496 U.S. 414 (1990); Heckler v. Cmty. Health Servs. of
Crawford County, Inc., 467 U.S. 51 (1984); Oklahoma Heart Hosp., DAB No. 2183, at
16 (2008); Wade Pediatrics, DAB No. 2153, at 22 n.9 (2008), aff'd, 567 F.3d 1202 (10th
Cir. 2009); U.S. Ultrasound, DAB No. 2303, at 8 (2010).

Petitioner also asserts that WPS did not perform a pre-screening of Sanford’s December
22, 2010 CMS 855B application within the 20-day time limit specified in the MPIM.
Petitioner argues that WPS should be held to the MPIM deadline. However, the pre-
screening process is designed to identify missing information from a particular type of
application. Sanford submitted the CMS 855B form to add two practice locations to the
Sanford Health Network, and the pre-screening was presumably performed with that
purpose in mind. Petitioner claims that too much time elapsed between the receipt of the
December 22, 2010 CMS 855B and the contractor notice in April 2011 informing him
that he needed to file signed enrollment and reassignment applications. This lapse in
time does not allow me to disturb the contractor’s determination. The MPIM is CMS’s
guidance for its affiliated contractors and does not have the force and effect of law, and
therefore is not binding on me. I am bound by the applicable regulations, and the
effective date provision of 42 C F.R. § 424.520(d) is controlling. I have no authority to
grant Petitioner’s request for an earlier effective date than allowed by regulations.

IV. Conclusion

Based on the undisputed fact that it was not until May 2, 2011 when the Medicare
contractor received a complete and signed reassignment application that it could
successfully process, I conclude that Petitioner’s effective date of reassignment of billing
privileges was May 2, 2011, with a retrospective billing period starting April 2, 2011.
Therefore I grant CMS’s motion for summary judgment.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

St. Anne's Convalescent Center,
(CCN: 235415),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-11-283
Decision No. CR2537

Date: May 4, 2012

DECISION

Petitioner, St. Anne’s Convalescent Center (Petitioner or facility), is a long-term care
facility located in Detroit, Michigan, that participates in the Medicare program. After one
of its residents was seriously injured by an improperly-applied hand mitt, the Centers for
Medicare and Medicaid Services (CMS) determined that the facility was not in
substantial compliance with Medicare program requirements governing restraints (42
C.F.R. § 483.13(a)) and staff treatment of residents (42 C.F.R. § 483.13(c)) and that its
deficiencies posed immediate jeopardy to resident health and safety. CMS imposed civil
money penalties (CMPs) of $6,000 per day for 38 days of immediate jeopardy (August
31-October 7, 2010) and $250 per day for four days of substantial noncompliance that
was not immediate jeopardy (October 8-11, 2010).

Petitioner concedes that it was not in substantial compliance for the duration alleged, and
that, on August 31, 2010, its deficiencies posed immediate jeopardy to resident health and
safety. It does not challenge the $250 per day CMP. Petitioner challenges: 1) CMS’s
determination as to the duration of the immediate jeopardy; and 2) the amount of the
penalty imposed for the period of immediate jeopardy.
For the reasons set forth below, I find that, from September 1-October 7, 2010, the
facility’s deficiencies posed immediate jeopardy to resident health and safety and that the
$6,000 per day CMP, imposed for the period of immediate jeopardy, is reasonable.

I. Background

The Social Security Act (Act) sets forth requirements for nursing facility participation 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. The regulations require that each facility be surveyed once every
twelve months, and 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, responding to the facility’s report of a resident injury, the Michigan
Department of Licensing and Regulatory Affairs (State Agency) sent a surveyor to
investigate. The surveyor, James Kriz, R.N., completed an extended survey on October
11, 2010. CMS Exs. 1, 7, 8, 12, 29 at 1-2 (Kriz Decl. 8). Based on his findings, CMS
determined that the facility was not in substantial compliance with Medicare
requirements governing resident behavior and facility practices, specifically, 42 C.F.R.
§§ 483.13(a) (Tag F221-restraints) and 483.13(c) (Tag F225-staff treatment of residents),
and that, from August 31, 2010 through October 7, 2010, its deficiencies under section
483.13(a) posed immediate jeopardy to resident health and safety. CMS Exs. 7, 8. CMS
subsequently determined that the facility returned to substantial compliance on October
12, 2010. CMS Ex. 7.

Based on these deficiencies, CMS imposed CMPs of $6,000 per day for 38 days of
immediate jeopardy (August 31-October 7, 2010) and $250 per day for four days of
substantial noncompliance that was not immediate jeopardy (October 8-11, 2010). CMS
Ex. 7.

In this appeal, Petitioner challenges CMS’s determinations as to the duration of the
immediate jeopardy period (beyond one day) and the amount of the penalty imposed for
that time. P. Cl. Br. at 1-2.

The parties agree that this case should be decided on the written record, without an in-
person hearing. Order Following Prehearing Conference (September 7, 2011); P. Cl. Br.
at 1.

The parties filed opening briefs (CMS Br.; P. Br.), and closing briefs (CMS Cl. Br.; P. Cl.
Br.). I have admitted into evidence CMS Exhibits (Exs.) 1-30 and P. Exs. 1-5. Order
Following Prehearing Conference (September 7, 2011).

IL. Issues
The issues before me are:

1. From September 1-October 7, 2010, did the facility’s deficiencies pose immediate
jeopardy to resident health and safety?

and

2. Was the penalty imposed for the period of immediate jeopardy — $6,000 per day —
reasonable?

III. Discussion

A, CMS’s determination as to the duration of the period of immediate
Jeopardy is consistent with statutory and regulatory requirements.

Program requirements. The Act explicitly limits a facility’s use of restraints. They may
only be imposed to insure the resident’s physical safety and upon the written order of a
physician that “specifies the duration and circumstances under which the restraints are to
be used.” Act § 1819(c)(1)(A)(ii). The regulation governing resident behavior and
facility practices echoes the statutory requirements and mandates that each resident “has
the right to be free from any physical or chemical restraints imposed for purposes of
discipline or convenience, and not required to treat the resident’s medical symptoms.” 42
CFR. § 483.13(a).

The facility’s restraint policy says that “NO restraint should be the cause of injury or the
potential cause of one.” CMS Ex. 13 at 19 (emphasis in original). With respect to hand
mitts, the policy notes that they are used when a resident has a history of injuring himself
or pulling on his PEG (feeding) tube. The policy instructs staff to tie the mitts securely at
the wrist, “but with space — 2 fingers — to allow for some movement and prevent
abrasion.” CMS Ex. 13 at 19.

'My findings of fact/conclusions of law are set forth, in italics and bold, in the discussion
captions of this decision.
Resident 101 (R101). The deficiency here centers around R101. R101 was a 75-year-old
man who had suffered a stroke and was diagnosed with dementia and psychosis. CMS
Ex. 9 at 5. His cognitive skills were severely impaired, and he was unable to answer
questions. CMS Ex. 9 at 17; CMS Ex. 13 at 3. Among his many medications, he took
Coumadin to prevent blood clots. CMS Ex. 9 at 38. He required tube feeding, and had
an increased risk of skin breakdown. CMS Ex. 9 at 6, 20, 23.

R101 also apparently had a problem with scratching himself. In response, on March 23,
2010, his physician ordered bilateral hand mittens to decrease the scratching. The order
directed staff to remove the mitts every two hours to assess his skin and provide range of
motion exercises, then to reapply as needed. CMS Ex. 9 at 7; CMS Ex. 13 at 3.

At approximately 9:00 a.m. on August 31, 2010, Nurse Aide Ernestine Thornton found
that one of R101’s hand mitts was fastened at the wrist with a latex glove. His hand was
swollen and his wrist was black where the latex had rubbed. CMS Ex. 3 at 5; See CMS
Ex. 12 at 2; CMS Ex. 13 at 3, 7.

Facility staff did not immediately and accurately document all the ensuing events, so the
record is a bit muddled as to their sequence. It appears that Nurse Aide Thornton took
R101 to the floor nurse, Licensed Practical Nurse (LPN) Kara Lynch, who assessed the
injury. CMS Ex, 13 at 3. LPN Lynch described the resident’s right hand as “very
swollen,” with a dark bruise around the right wrist and opined that his right hand mitt had
been applied too tightly. CMS Ex. 13 at 3, 5, 13.

They reported the injury to the nurse supervisor, LPN Peggye Jackson, who then reported
to Director of Nursing (DON) Caroline Simmons and gave her the hand mitt and latex
glove. CMS Ex. 3 at 5; CMS Ex. 13 at 3, 7, 11, 12.

The resident’s physician was notified, and, according to LPN Lynch, staff attempted to
contact the resident’s guardian, but they were unable to reach him or to leave a message,
and they apparently did not repeat the effort. CMS Ex. 13 at 13.

The resident was examined by his physician, facility Medical Director Sudhir
Walavalkar, M.D., who described swelling of the right hand and wrist, and “dark multiple
areas” around his wrist “secondary to the pressure of the restraint.” CMS Ex. 9 at 15. X-
rays revealed no fracture.

Someone told LPN Lynch to complete an incident report, which she did that day (August
31, 2010). Her report describes the injury and concludes that the right mitt was too tight,
but it does not mention the latex glove. CMS Ex. 13 at 3, 13. The same day, DON
Simmons completed a report of her “investigation.” That report says that, based on her
interviews with (unidentified) nursing staff, she concluded that “bilateral hand mittens
were applied too snug[ly], causing swelling and discoloration of the right wrist.” To
correct, the “hand mittens have been discontinued” and “staff will be inserviced for
proper application of restraints [and] skin assessments/checks.” CMS Ex. 13 at 6. The
report says nothing about the latex glove, and, apparently, the facility made no effort to
identify the staff member responsible for attaching it. Nor did they report the incident to
the state agency, as required. 42 C.F.R. § 483.13(c)(2). I see no evidence that the DON
(or anyone else) even considered whether staff had periodically checked and removed the
restraint as ordered.

R101’s physician discontinued the mittens on September 1, 2010. CMS Ex. 9 at 13.

By September 2, 2010, blisters had appeared on R101’s wrist. CMS Ex. 13 at 3,10. On
September 8, the facility’s wound care team described the injury to R101’s right wrist:
“1.3 circumferential pink base [and] minimal serosanguineous [composed of serum and
blood] drainage.” CMS Ex. 9 at 33, 53.

The matter might have ended there, except R101’s family member (who had not been
advised of the injury) visited the resident on September 12 and became upset when he
saw the condition of the resident’s wrist. CMS Ex. 13 at 3. As a result of his complaints,
on September 13, the facility’s administrator “became aware of a problem” with R101.”
He launched the kind of investigation that should have been undertaken when the
incident occurred, and he learned about the latex glove on September 15. CMS Ex. 13 at
3,4.

Employee assignment sheets were reviewed. They indicated that Nurse Aide Katrina
Glenn cared for R101 on the afternoon/evening shift (3:00 p.m. to 11:30 p.m.) of August
30. Ina signed statement, she said that the resident wore hand mitts during her shift, but
she did not mention a latex glove. Nurse Aide Cassandra Hunter cared for R101 on the
midnight shift of August 30-31. In her written statement, she did not mention applying
and mitts to R101 or using a latex glove, and she told DON Simmons and Administrator
Beauvais that the resident wore no hand mitts during her shift. CMS Ex. 13 at 4, 8, 9.

All staff questioned denied applying the latex glove. CMS Ex. 13 at 4.

With respect to DON Simmons’ failure to report the incident, Administrator Beauvais
reported that the DON “was extremely busy at her desk and apparently did not
understand in full what nurse supervisor [LPN Jackson] told her” when she reported the

> Administrator Beauvais’s signature, dated September 1, is on the August 31 incident
report, but that report said only that the resident had a swollen hand and bruise. It did not
mention how the injury occurred or indicate the extent of the injuries, so Administrator
Beauvais may not have recognized the seriousness of the problem when he signed that
report. CMS Ex. 13 at 5.

incident on August 31. CMS Ex. 13 at 3. DON Simmons later claimed that she did not
remember being told about the latex glove. CMS Ex. 13 at 3.

On September 16, LPN Lynch finally wrote a nurse’s note describing the incident. The
note says that Nurse Aide Thornton brought R101 to her with a “very swollen” right
hand, and gave her the hand mitt. She called LPN Jackson to the floor to see R101’s
hand. The resident’s physician was notified, and staff attempted to contact his guardian,
but were unable to reach him or leave a message. She does not mention the latex glove,
but says that that resident was slipping [his] hand out of gloves at times” and scratching
himself.” CMS Ex. 13 at 13.°

Facility investigators speculated that someone applied the latex glove to prevent R101
from removing the hand mitt, which he was apparently prone to do, but, as Administrator
Beauvais declared, this “is obviously an incorrect use of the latex glove.” CMS Ex. 13 at
4.

A wound team examined R101’s wrist on September 15, 2010. They described a
circumferential wound with a necrotic base of 0.5 cm, and serous drainage. CMS Ex. 9 at
34, 54.

Facility efforts to correct. In his summary dated September 21, 2010, Administrator
Beauvais says that all residents in the facility with orders for restraints or assistive
devices were checked and “all were applied correctly.” He does not say when this
occurred. He also says that, when questioned, all staff claimed that restraints/devices
were checked every two hours in an appropriate manner. CMS Ex. 13 at 3. But the
facility produced no records or other evidence to establish that it even had a procedure in
place to insure that restraints were checked and the skin assessed as required, and no one
contends that R101’s improperly-applied hand mitt had been removed every two hours
for skin assessment and range-of-motion exercises. Had staff done so, someone might
have noticed the irregularity before the resident’s injuries became so severe.

On September 14, 2010, the therapy department began in-service training on the proper
application of restraints. CMS Ex. 13 at 3, 16-24.4

* According to Surveyor Kriz, the Velcro strap used to secure R101’s mitt was no longer
functional, which violates nursing standards of practice. CMS Ex. 29 at 2 (Kriz Decl. J
8). Isee no evidence that the facility considered or investigated the possibility that the
facility did not have a sufficient number of mitts that were in good repair.

* The parties agree that the training occurred on September 14, and one of the staff sign-in
sheets is dated September 14. CMS Cl. Br. at 12; P. Cl. Br. at 4; CMS Ex. 13 at 23. The
training documents themselves, however, say that the training took place on September
15. CMS Ex. 13 at 16.
On September 15, the facility finally reported the incident to the state agency. CMS Ex.
12 at 1.

On September 16, the facility suspended Nurse Aide Hunter. It counseled LPN Lynch,
and promised “episodic education” for her. CMS Ex. 13 at 2, 4, 14. According to a
report of the counseling session, DON Simmons admonished LPN Lynch for not
documenting the incident in the resident’s record, not notifying the family of the incident,
and not making adequate rounds at the beginning of her shift (which could have meant
earlier discovery of the injuries). As follow-up, the report says that the DON will
monitor incident reports and documentation to assure that “all steps are carried out,” and
the DON will observe for walking rounds. CMS Ex. 13 at 15.

On September 22, verbal disciplinary warnings were issued to DON Simmons and Nurse
Supervisor Jackson for failing to follow-through with an investigation regarding the latex
glove incident. CMS Exs. 14, 15.

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). The Departmental Appeals Board (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); Florence Park Care Center DAB No. 1931 at 27-28 (2004), citing Koester
Pavilion, DAB No. 1750 (2000); Daughters of Miriam Center, DAB No. 2067 at 7, 9
(2007).

The Board has also repeatedly held that, once immediate jeopardy is found, the facility
bears the burden of demonstrating that corrective actions have abated the danger.
Oceanside Nursing and Rehabilitation Center, DAB No. 2382 at 18 (2011); Brian Center
Health & Rehabilitation/Goldsboro, DAB No. 2336 at 8 (2010); Pinehurst Healthcare &
Rehabilitation Center, DAB No. 2246 (2009). CMS’s determination that a facility’s
ongoing noncompliance remains at the level of immediate jeopardy during a given period
“is subject to the clearly erroneous standard of review under [42 C.F.R. §] 498.60(c)(2).”
Life Care of Elizabethton, DAB No. 2367 at 16 (2011), quoting Brian Center, DAB No.
2336 at 7-8 (2010).

Without question, the misuse of the latex glove and improper application of the hand mitt
caused R101 serious injury. More than two weeks after its discovery, R101’s wound had
not healed. Further, as Surveyor Kirz points out, R101 was at heightened risk of injury
because he took the anticoagulant, Coumadin. Pressure from a too-tight mitt can cause
capillaries to break (and, in fact, the resident’s wrist was bruised), and his body’s ability
to stop the bleeding would be compromised by the medication. CMS Ex. 29 at 2-3 (Kriz
Decl. 11).

To its credit, Petitioner does not pretend that the incident was anything other than very
serious. It acknowledges that, as of August 31, 2010, the deficiency posed immediate
jeopardy to resident health and safety. Petitioner claims, however, that staff took
immediate steps to correct and that the deficiency no longer posed immediate jeopardy
after that day, because staff removed the mitt and began treating the injuries. In the
alternative, it argues that it removed the immediate jeopardy on September 14, 2010,
when the facility began training its staff on the appropriate application of restraints and
set up a system for checking restraints once per shift.

R101’s plight exemplifies the serious injury/harm that can occur if facility staff misuse
restraints. But, while what happened to R101 evidences substantial noncompliance at the
level of immediate jeopardy, the incident itself does not constitute the underlying
deficiency. See Oceanside, DAB No. 2382 at 18 (quoting Regency Gardens Nursing
Center, DAB No. 1858 at 21 (2002), and holding that the facility’s failure to meet a
participation requirement “is what constitutes the deficiency, not any particular event that
was used as evidence of the deficiency” ). The facility here was deficient at the level of
immediate jeopardy because:

e Staff did not understand the safe and proper use of restraints;
e Staff did not follow facility policy regarding the application of hand mitts;

e Staff did not follow physician orders regarding releasing a resident from restraint,
assessing the skin, and providing range of motion exercises;

e The facility had no procedures in place to insure that staff safely applied and
periodically checked and removed resident restraints;

e When a resident was injured, facility management botched the required
investigation, failed to report timely the resident’s injury to the state agency and
the resident’s guardian, and created misleading reports of the incident; and

* By not investigating properly, a facility loses the opportunity to analyze and correct its
problems. Century Care of Crystal Coast, DAB No. 2076 at 21 (2007), aff’d No. 07-
1491, 2008 WL 2385505 (4™ Cir. 2008).
e While recognizing the staffs need for training, the facility nevertheless delayed
two weeks before it began to train them on the proper application and use of
restraints.

Thus, that the facility attended to R101’s immediate needs on August 31 did not remove
the immediate jeopardy, because the conditions leading to that injury continued unabated.

Check-off sheets purport to show that, effective September 1, restraints, along with more
than 50 other nurse aide performance standards, were checked once every shift. P. Ex. 5.
But these documents do not establish that the deficiencies no longer posed immediate
jeopardy. The facility does not explain how they were implemented; at best, the
documents address only one of the multiple problems listed above; and, ultimately, we
ave no evidence that they were effective. I note that checking a restraint just once every
eight hours is insufficient to protect resident health and safety. An improperly-applied
restraint can cause enormous harm if left in place for up to eight hours.

Similarly, the first training session did not remove the immediate jeopardy. Until the
facility can demonstrate that the training was effective, i.e., that staff capably put that
training in place and that it resolved the problem, the facility has not met its significant
burden of demonstrating that it has alleviated the level of threat to resident health and
safety. Oceanside, DAB No. 2382 at 19; Premier Living and Rehab. Center., DAB
CR1602 (2007), aff'd DAB No. 2146 (2008).

Petitioner provided the state agency with its immediate jeopardy abatement plan on
October 8, 2010. CMS Ex. 18; CMS Ex. 29 at 3 (Kirz Decl. § 14). In addition to the
staff’s immediate response — removing the hand mitt and sending R101 to the doctor —
the plan calls for additional in-service training, which was first provided in mid-
September and, apparently again on October 9, 2010. CMS Exs. 18, 23, 29 at 3 (Kriz
Decl. § 14).

On October 8, 2010, the facility also implemented compliance logs, which showed that
staff were specifically monitoring the residents who wore hand mitts to insure that the
mitts were properly applied and checked. CMS Ex. 21; CMS Ex. 29 at 3 (Kirz Decl. J
16); P. Cl. Br. at 4. At this point, CMS determined that the immediate jeopardy had been
removed. Surveyor Kriz opined that “it was crucial that [the facility] specifically monitor
its residents who wore hand mitts because this allowed the facility to ensure that the
training it provided to staff regarding the use and application of restraints was being
implemented. Without this type of information, [the facility] would not know whether its
in-service training was effective.” CMS Ex. 29 at 3 (Kirz Decl. 4 17). Petitioner protests
that these documents show little more than did the check-off sheets it started using on
September 1 (P. Ex. 5), and I suppose there is some merit to that argument. The
monitoring logs still do not show that staff removed the restraints, and assessed skin as
necessary. Nevertheless, unlike the check-off sheets, the compliance logs focus

10

specifically on restraints, and CMS presumably understood how they were implemented
(which I do not) and was satisfied that their use, together with the training and other
corrections, removed the immediate jeopardy. It is not my role to second-guess CMS’s
judgment in this regard.

Thus, the facility has not met its burdens of establishing that it alleviated the immediate
jeopardy any earlier than October 8.

B. The penalty imposed for the period of immediate jeopardy — $6,000 per day —
is reasonable.

To determine whether a CMP is reasonable, | 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 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 Center, DAB No. 1848, at 21 (2002); Community Nursing Home, DAB No. 1807, at
22 et seq. (2002); Emerald Oaks, DAB No. 1800, at 9 (2001); CarePlex of Silver Spring,
DAB No. 1638, at 8 (1999).

CMS imposed a penalty of $6,000 per day, which is in the middle range for situations of
immediate jeopardy ($3,050-$10,000). 42 C.F.R. §§ 488.408(e), 488.438(a)(1).

The facility has a significant history of substantial noncompliance, including immediate
jeopardy. Since at least 2006, it has not been found in substantial compliance during any
annual survey. In the annual survey immediately preceding this complaint investigation,
(July 2010), facility deficiencies were widespread and posed immediate jeopardy to
resident health and safety (scope and severity level L). In 2008, an isolated instance of
noncompliance posed immediate jeopardy (scope and severity level J). And, in 2007, a
pattern of noncompliance posed immediate jeopardy. CMS Ex. 24. Thus, facility
history, by itself, justifies a significant increase in the amount of the penalty. Such
consistent and serious noncompliance suggests that a substantial penalty — even an
amount close to the maximum — would be justified to induce sustained corrective action.

With respect to financial condition, Petitioner argues that its financial condition renders it
unable to pay the penalty and claims that “payment of $229,000 would impact the
facility’s continued operation.” P. Cl. Br. at 10. I note first that the penalty imposed
must be at least $3,050 per day for the period of immediate jeopardy, so Petitioner is
11

bound to pay a minimum of $116,900 without regard to its financial condition or any
other factor ($115,900 + $1,000 for the additional four days of noncompliance). 42
C.F.R. § 488.438(a)(1). Thus, the actual amount in question is significantly less than
$229,000.

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 and Hospital, DAB No. 2368 (2011); Gilman Care Center,
DAB No. 2362 (2010). Here, Petitioner submits balance sheets dated December 31,
2010, and the declaration of Certified Public Accountant (CPA) Carol Wright, who says
that, as of December 31, 2010, the facility had assets of $956,265, but “total [current]
liabilities” of $4,112,309. P. Ex. 1 at 2 (Wright Decl. 45); P. Ex. 3. CMS, on the other
and, presents its own set of balance sheets. They show that, in December 2009, the
facility had assets of $ 3,385,610 and “total current liabilities” of $2,998,964. CMS Ex.
28 at 12.

Comparing the balance sheets, I see that “accounts receivable” increased by about 15% —
from $618,376 in December 2009 to $728,314 in December 2010 -- which suggests that
the business was reasonably strong, even growing. Compare CMS Ex. 28 at 12 with P.
Ex. 3 at 1. Its operating revenues declined only slightly (from $6,136,508 to $5,927,510
or by about 3%). Its operating expenses also declined slightly (from $6,241,224 to
$6,094,582 or by about 2%). If anything, the facility should have been in comparable or
slightly better financial shape at the end of 2010. Compare CMS Ex. 28 at 13 with P. Ex.
3 at2.°

So what happened to turn this viable business around so precipitously? It appears that the
facility’s outstanding losses came from its making more than $2 million in loans to its
affiliates and shareholders -- which it subsequently forgave -- not from operating the
nursing home. P. Ex. | at 3 (Wright Decl. § 5). Petitioner offers no details about those
loans; it only maintains that they were extended and then forgiven because the borrowers
are unable to repay them. Obviously, allowing a facility to avoid its financial obligations
by the expedient of transferring assets to related entities presents the potential for much
mischief. At a minimum, a facility must justify such actions, which Petitioner has not
done here.

In any event, it seems that not making bad loans is more critical to the facility’s ongoing
viability than paying a comparatively low CMP. Petitioner has neither claimed nor

° Using what appears to be a different format for reporting assets and liabilities, which
makes meaningful comparisons more difficult, a September 2010 balance sheet shows a
moderate divergence between total assets ($1,356,870.88) and total liabilities
($1,870,729.15). CMS Ex. 28 at 3, 4.
12

established that paying the additional $112,100 above the minimum it must pay would
render it unable to continue its operations and/or jeopardize resident health and safety.

With respect to the other factors, everyone agrees that the deficiency was serious. No
one knows how long R101’s hand was restrained before anyone bothered to check it,’ but
sufficient time elapsed to do considerable damage, which shows disregard for the
resident’s comfort and safety, for which the facility is culpable. Equally disturbing was
the facility’s response to the discovery of the latex glove and R101’s injuries. No one
even told the facility administrator the cause of the injuries; the facility did not report to
the state agency nor to the family. No meaningful investigation ensued. Management
recognized the need for training but, inexcusably, delayed it for two weeks. And the fault
here was not limited to low-level staff, but involved all levels, up to and including the
DON. The facility is culpable for these serious and systemic problems, which justify a
very significant penalty.

IV. Conclusion

From September 1 through October 7, 2010, the facility’s deficiencies posed immediate
jeopardy to resident health and safety; and I affirm as reasonable the penalty imposed for
that period ($6,000 per day).

/s/
Carolyn Cozad Hughes
Administrative Law Judge

7In the alternative, people saw it but did nothing, which is even worse.


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Better Health Ambulance,
Petitioner
v.
Centers for Medicare and Medicaid Services.
Docket No. C-12-107
Decision No. CR2536
Date: May 4, 2012

DECISION

I uphold the reconsideration decision by the Centers for Medicare and Medicaid Services
(CMS) dismissing the request for reconsideration of Petitioner, Better Health Ambulance
(Petitioner). Petitioner has no right to a hearing before an Administrative Law Judge
(ALJ) because Petitioner did not timely request reconsideration of the September 30,
2010 determination by CMS to revoke Petitioner’s Medicare enrollment and Medicare
billing privileges effective August 26, 2010. I therefore grant CMS’s Motion to Dismiss.

I. Background and Procedural History

Petitioner is a supplier of ambulance services in Puerto Rico. CMS Exhibit (Ex.) 1, at 2.
Petitioner submitted a Medicare enrollment application and on September 12, 2009, First
Coast Service Options, Inc. (First Coast), a Medicare contractor, notified Petitioner of the
approval of its enrollment as a supplier in the Medicare program effective June 2, 2009.
CMS Ex. 2. On August 26, 2010, inspectors from SafeGuard Services (SafeGuard), a
Zone Program Integrity Contractor, conducted an on-site review at Petitioner’s practice
location. CMS Ex. 11, at 1; CMS Ex. 3, at 2. The inspectors could not locate a business
office for Petitioner and observed no activity involving ambulances or employees. CMS
Ex. 11, at 1; CMS Ex. 3, at 3. On September 30, 2010, First Coast notified Petitioner by
letter that it was revoking its Medicare billing number pursuant to 42 C.F.R.
§ 424.535(a) based upon the findings of the August 26, 2010 on-site review. CMS Ex. 4,
at 1. The letter informed Petitioner that it could appeal the revocation determination by
requesting reconsideration within 60 days of the date of the letter, submitting a corrective
action plan (CAP) within 30 days of the date of the letter, or both. CMS Ex. 4, at 1-2.
Petitioner did not submit either a CAP or a request for reconsideration within the required
time period. CMS Ex. 5.

Petitioner eventually filed a request for reconsideration dated July 10, 2011, 284 days
after the date of the revocation letter. CMS Ex. 8. First Coast received this request on
August 1, 2011 and advised Petitioner that additional evidence would be received if
submitted within seven days. CMS Ex. 9. Petitioner did not submit any additional
evidence, and on September 14, 2011, First Coast denied Petitioner’s request for
reconsideration on the ground that it was not submitted within 60 days of the initial
revocation determination and therefore was not timely. CMS Ex. 10.

On September 24, 2011, Petitioner filed a hearing request (HR) with the Civil Remedies
Division of the Departmental Appeals Board to appeal the reconsideration decision. The
case was assigned to me for a hearing and a decision. CMS filed a Motion to Dismiss
(CMS Motion), a Pre-Hearing Exchange including a Pre-Hearing Brief (CMS Br.), a List
of Proposed Exhibits and Witnesses, and eleven proposed exhibits that it identified as
CMS Ex. 1-CMS Ex. 11. Petitioner filed a Pre-Hearing Exchange and two proposed
exhibits identified as P. Ex. 1 and P. Ex. 2. In the absence of any objection, I admit CMS
Exs. 1-11 and P. Ex. 1-2 to the record. After filing its Pre-Hearing Exchange, Petitioner
retained counsel and Petitioner’s counsel filed a Motion to Amend Pre-Hearing Exchange
of Petitioner (P. Motion) and an Amended Pre-Hearing Brief and Response to
Respondent’s Motion to Dismiss (P. Br.).

Il. Applicable Law and Regulations

A party has a right to reconsideration of an adverse initial determination only if it files
that request within 60 days of receiving notice of the determination. 42 C.F.R.

§ 498.22(b)(3). The 60-day time period may be extended in the case of an untimely filing
but only on a showing of good cause for a failure to file timely. 42 C.F.R.

§ 498.22(d)(2). If the request for reconsideration is not timely filed, or if the deadline for
filing is not extended, then the adverse initial determination becomes binding. See 42
C.F.R. §§ 498.20(b), 498.22.

Ill. Issue

The issue in this case is whether CMS had a legitimate basis for denying Petitioner’s
request for reconsideration.
IV. Analysis

My finding and conclusion is in the italicized heading supported by the subsequent
discussion below.

Petitioner made no showing of good cause for untimely filing its request for
reconsideration pursuant to 42 C.F.R. § 498.22(d)(2).

It is undisputed that Petitioner did not timely request reconsideration of the initia
revocation determination dated September 30, 2010. P. Br. at 4. Petitioner now argues at
the ALJ level for the first time that there was good cause for its failure to file a timely
request for reconsideration. Petitioner states that the initial revocation letter referenced a
different provider under different ownership, and Petitioner mistakenly thought that the
revocation letter did not apply to it. Petitioner contends that SafeGuard inspectors
conducted an on-site review at the practice location of a different provider, Health Care
Ambulance Corp., located at the same kilometer marker on a street where more than one
business is located. P. Br. at 2. Petitioner contends that both Petitioner and Health Care
Ambulance Corp. have the same address, but the on-site inspection never occurred at
Petitioner’s place of business. P. Br. at 2-3. Petitioner states that it “was mislead or
confused by the revocation letter as it clearly states that the revocation was based on an
on-site inspection of Health Care Ambulance Corp. Petitioner reasonably believed the
notice was sent in error and therefore did not file its reconsideration until July 10, 2011.”
P. Br. at 4.

I do not find good cause to now disturb CMS’s determination. Although the September
30, 2010 notice letter referenced Health Care Ambulance Corp. in the body of the
revocation letter, it was clearly addressed to Petitioner and references Petitioner’s
numbers for Medicare enrollment and billing privileges. A definition of “good cause”
does not exist in the applicable regulations, and the “Board has never attempted to
provide an authoritative or complete definition of the term ‘good cause’... .” Hillcrest
Healthcare, L.L.C., DAB No. 1879, at 5 (2003). Other ALJ’s have interpreted the term
“good cause” as a circumstance or circumstances beyond the party-litigant’s ability to
control. See, e.g., Sedgewick Health Care Ctr., DAB CR596 (1999); Jackson Manor
Health Care, Inc., DAB CR545 (1998). It was certainly within Petitioner’s control to
timely appeal during the reconsideration process and offer its explanation that the
inspectors went to a different ambulance company located on the same street as the
Petitioner. However, Petitioner did not timely appeal the reconsideration decision, and it
is too late to do so now. Petitioner filed a request for reconsideration many months after
the 60-day time period expired, and I conclude that Petitioner has not demonstrated good
cause to grant an extension of time for filing. Moreover, when First Coast gave
Petitioner an opportunity to present additional evidence of its operations at the
reconsideration level, Petitioner did not do so.

V. Conclusion

CMS had a legitimate basis for refusing to consider the merits of Petitioner’s revocation
in its reconsideration decision. Petitioner did not show good cause for its untimely filing.
Therefore, CMS’s September 30, 2010 determination to revoke Petitioner’s Medicare
enrollment and Medicare billing privileges effective August 26, 2010 is administratively
final. I uphold CMS’s September 14, 2011, reconsideration decision and grant CMS’s
Motion to Dismiss.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Timothy P. Ceynowa, M.D.,
Petitioner
v.
Centers for Medicare and Medicaid Services.
Docket No. C-12-146
Decision No.CR2535

Date: May 4, 2012

DECISION

Dr. Timothy P. Ceynowa (Petitioner) appeals the determination of Wisconsin Physicians
Service Insurance Corporation (WPS), a Medicare contractor, that he was not eligible

to reassign his billing privileges as a supplier’ to Sanford Health Network (Sanford),
earlier than April 29, 2011 and could not submit claims for payment to Sanford earlier
than March 30, 2011. I grant the Centers for Medicare and Medicaid Services’ (CMS’s)
motion for summary judgment finding that CMS could not approve Petitioner’s request
for reassignment of billing privileges until it received the appropriate completed
application with Petitioner’s signature.

I. Background
On December 22, 2010, Sanford submitted a CMS 855B application to WPS indicating

that it was adding two practice locations at Luverne and Worthington, Minnesota, to the
Sanford Health Network. Sanford also requested that WPS reassign Petitioner’s billings

' A physician is a Medicare “supplier,” which is defined in the Medicare statute to mean
“a physician or other practitioner, a facility, or other entity (other than a provider of
services) that furnishes items or services” under the Medicare statute. Act § 1861(d), 42
U.S.C. § 1395x(d).
privileges from Sanford Clinic, an affiliate, to Sanford effective December 1, 2010. With
its request, Sanford submitted the names of several physicians whose billing it wanted
reassigned in the form of a list attached to the CMS 855B application. CMS Ex. 1, at 19.
This list included Petitioner’s name. However, Petitioner had not reassigned his billing
privileges by completing the requisite application, a signed CMS 855R.

On April 19, 2011, WPS advised Sanford that its CMS 855B application adding the two
practice locations had been approved. CMS Ex. 3. Also on April 19, 2011, WPS
informed Sanford that it could not issue a new Provider Transaction Access Number
(PTAN) number for Petitioner without first receiving a completed CMS 855R. CMS Ex.
2. Sanford, on Petitioner’s behalf, subsequently submitted a completed and signed CMS
855R on April 29, 2011. CMS Exs. 4, 5. On July 21, 2011, WPS informed Sanford that
it was granting Petitioner Medicare billing privileges starting March 30, 2011, thirty days
before April 29, 2011, the date of receipt of the CMS 855R application that was
processed to approval. CMS Ex. 6.

Sanford requested reconsideration of WPS’s determination on July 25, 2011. CMS Ex. 7.
An unfavorable reconsideration decision was issued on October 6, 2011. CMS Ex. 8.
Petitioner filed a timely hearing request on November 9, 2011. On November 29, 2011,
this case was assigned to me for hearing and decision.

CMS filed a prehearing brief and Motion for Summary Judgment (CMS Br.)
accompanied by eight exhibits, CMS exhibits (CMS Exs.) 1-8. Petitioner filed a
prehearing brief and opposition to CMS’s Motion for Summary Judgment (P. Br.).
Petitioner attached two items to its brief, emails to and from WPS labeled as P. Ex. 9,
which I relabeled as Petitioner’s exhibit (P. Ex.) 1 and an unlabeled affidavit which I
labeled as P. Ex. 2. Subsequently, CMS filed a reply brief. Neither party objected to any
exhibit. I admit all proffered exhibits into evidence.

IL. Issue

The issue in this case is whether CMS had a legitimate basis for determining April 29,
2011 as the effective date of reassignment for Petitioner’s Medicare billing privileges.”

II. Analysis

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

? Petitioner only argues here about the ability to get reimbursed from Medicare under a
group reassignment. This decision does not consider Petitioner’s eligibility for any
individual direct-billing options that may have applied.
a. This case is appropriate for summary judgment.

CMS seeks summary judgment. The Departmental Appeals Board (Board) stated the
standard for summary judgment as follows:

Summary judgment is appropriate when the record shows that there is no
genuine issue as to any material fact, and the moving party is entitled to
judgment as a matter of law.... The party moving for summary judgment
bears the initial burden of showing that there are no genuine issues of
material fact for trial and that it is entitled to judgment as a matter of law. . .
. To defeat an adequately supported summary judgment motion, the non-
moving party may not rely on the denials in its pleadings or briefs, but must
furnish evidence of a dispute concerning a material fact — a fact that, if
proven, would affect the outcome of the case under governing law... . In
determining whether there are genuine issues of material fact for trial, the
reviewer must view the evidence in the light most favorable to the non-
moving party, drawing all reasonable inferences in that party’s favor.

Senior Rehab. & Skilled Nursing Ctr., DAB No. 2300, at 3 (2010) (citations omitted).
The role of an Administrative Law Judge (ALJ) in deciding a summary judgment motion
differs from the ALJ’s role in resolving a case after a hearing. The ALJ should not assess
credibility or evaluate the weight of conflicting evidence. Holy Cross Village at Notre
Dame, DAB No. 2291, at 4-5 (2009).

It is undisputed that Sanford’s December 22, 2010 CMS 855B application had a list
attached to it that stated, “[p]lease issue the following providers new PTAN numbers
under group PTAN number C03080 effective 12/1/2010.” Under this statement was a list
of ten individuals, including Petitioner, with their social security and National Provider
Identifier (NPI) numbers. The vice president of Sanford signed his name below this list.
CMS Ex. 1, at 19. Petitioner’s signature does not appear on the December 22, 2010
application or the attached list. /d. It is also undisputed that Petitioner had not previously
completed a reassignment application, CMS 855R, for Sanford’s Luverne and
Worthington locations prior to April 29, 2011 under Sanford’s tax identification number.
CMS Ex. 7. As the parties do not dispute any of these material facts, summary judgment
is appropriate.

b. WPS properly required a completed CMS 855R application with Petitioner’s
signature before beginning of the reassignment process.

Petitioner argues that Sanford’s December 22, 2010 CMS 855B application should have
been broadly construed and treated as Petitioner’s CMS 855R application. Petitioner
states Sanford received inaccurate information from WPS staff when it inquired how to
reassign Petitioner’s billing privileges and was told to attach Petitioner’s name with
identifying information on a list, along with other individuals whose billing it wanted
reassigned to Sanford’s new business entity. November 19, 2011 Hearing Request; P.
Ex. 2. The CMS 855B form is the Medicare enrollment application for supplier group
practices and supplier organizations and “is not used to enroll individuals.” Medicare
Program Integrity Manual (MPIM), ch. 15, §§ 15.1.2, 15.3.

The CMS 855R form is the Medicare enrollment application to reassign a physician’s
Medicare billing practices. Providers and suppliers must submit enrollment information
on the applicable enrollment application. 42 C.F.R. § 424.510. These forms serve
different functions and require different information. One essential feature of each of
these forms is that each form requires a signature of the applicant. A contractor must
receive a CMS 855R form, including the provider or supplier’s signature, before it can
approve a reassignment of Medicare billing privileges. The 855B form may not
substitute for the proper enrollment form. See Crawford M. Barnett, M.D., DAB
CR2233, at 9 (2010).

42 C.F.R. § 424.510(d)(3) requires signatures on enrollment applications and states that
the “signature attests that the information submitted is accurate and that the provider or
supplier is aware of, and abides by, all applicable statutes, regulations, and program

instructions.” The signature certification serves an important legal function to bind the

supplier, both legally and financially, and is not a mere formality. See Jennifer Tarr,
DAB CR2299, at 5 (2010).

The requirement of a signature is also set forth plainly on the reassignment form, CMS
855R:

Title XVIII of the Social Security Act prohibits payment for services
provided by an individual practitioner to be paid to another individual or
supplier unless the individual practitioner who provides the services
specifically authorizes another individual or supplier (employer, facility, or
ealth care delivery system) to received said payments in accordance with
42 C.F.R. § 424.73 and 42 C.F.R. § 424.80. By signing this Reassignment
of Benefits Statement, you are authorizing the supplier identified in Section
2 to receive Medicare payments on your behalf... . All individual
practitioners who allow another supplier (employer, facility, or health care
delivery system) to receive payment for their services must sign the
Reassignment of Benefits Statement. The signatures below acknowledge
that you will abide by all the laws and regulations pertaining to the
reassignment of benefits.

CMS Ex. 4, at 3 (emphasis added). The form states that the provider or supplier will be
certifying, among other things, that the contents of the application are “true, accurate and
complete.” Jd. Also, the application has the applicant certify that, “I understand that any
misrepresentation or concealment of any information requested in this application may
subject me to liability under civil and criminal laws.” Jd.

The CMS 855B form that was submitted on December 22, 2010, containing different
information than the 855R form, merely included Petitioner’s name on an attached list
without Petitioner’s signature. Until WPS received a signed CMS 855R form from
Petitioner, there was no way that WPS could know that Petitioner was authorizing
Sanford to receive Petitioner’s Medicare payments. On April 29, 2011, WPS received
the correct reassignment form completed and signed by Petitioner. CMS Ex. 4. WPS
properly began processing the reassignment request as of April 29, 2011 and notified
Petitioner of the approval of his application and the reassignment of his billing privileges
by letter dated July 21, 2011. CMS Ex. 6.

c. WPS’s receipt of Petitioner’s signed application necessarily determines his
effective date and retrospective billing privileges.

The determination of the effective date of Medicare billing privileges is governed by 42
C.F.R. §§ 424.520 and 424.521. Section 424.520(d) provides that the effective date for
billing privileges for physicians, among others, is “the /ater of the date of filing of a
Medicare enrollment application that was subsequently approved by a Medicare
contractor or the date an enrolled physician . . . first began furnishing services at a new
practice location.” (Emphasis added). The “date of filing” is the date that the Medicare
contractor “receives” a signed provider enrollment application that the Medicare
contractor is able to process to approval. 73 Fed. Reg. 69,725, 69,769 (Nov. 19, 2008).

In this case, the effective date of Medicare billing privileges depends on the date the
contractor first receives an approvable application. This is consistent with the preamble
to the final rule and the plain language of the regulation. 73 Fed. Reg. 69,769; 42 C.F.R.
§ 424.520(d). Therefore Petitioner’s reassignment application was not approvable until
WPS received his completed and signed application. I find that it is undisputed that
Petitioner did not send a signed, complete, and approvable reassignment application to
WPS before April 29, 2011.

Although WPS erroneously referred to March 30, 2011 as Petitioner’s “effective date”
(CMS Ex. 6), regulations actually require the contractor to assign the date of receipt of
the application as the effective date of Petitioner’s enrollment while permitting the
contractor to grant retrospective billing privileges for 30 days prior to the effective date.
42 C.F.R. § 424.521(a)(1). Thus, I am treating WPS’s action as if it intended to set
March 30, 2011 as the earliest date for which Petitioner may submit claims reassigned to
Sanford based on an actual effective date of April 29, 2011.

Sanford’s argues that it relied on inaccurate information from the contractor’s staff and
that it should not be punished for that reliance. However, even assuming for purposes of
summary judgment that Sanford did receive incorrect information from WPS, Petitioner
does not allege any affirmative misconduct. Petitioner’s arguments amount to claims of
equitable estoppel, and I am unable to grant the relief that Petitioner requests. It is well-
established by federal case law, and in Board precedent, that: (1) estoppel cannot be the
basis to require payment of funds from the federal fisc; (2) estoppel cannot lie against the
government, if at all, absent a showing of affirmative misconduct, such as fraud; and (3) I
am not authorized to order payment contrary to law based on equitable grounds. It is
well settled that those who deal with the government are expected to know the law and
may not rely on the conduct of government agents contrary to law. See, e.g., Office of
Personnel Mgmt. v. Richmond, 496 U.S. 414 (1990); Heckler v. Cmty. Health Servs. of
Crawford County, Inc., 467 U.S. 51 (1984); Oklahoma Heart Hosp., DAB No. 2183, at
16 (2008); Wade Pediatrics, DAB No. 2153, at 22 n.9 (2008), aff'd, 567 F.3d 1202 (10th
Cir. 2009); U.S. Ultrasound, DAB No. 2303 at 8 (2010).

Sanford also asserts that WPS did not perform a pre-screening of Sanford’s December 22,
2010 CMS 855B application within a 20-day time limit specified in the MPIM. Sanford
argues that WPS should be held to the MPIM deadline. However, the prescreening
process is designed to identify missing information from a particular type of application.
Sanford submitted the CMS 855B form to add two practice locations to the Sanford
Health Network and the prescreening was presumably performed with that purpose in
mind, not for reassignment purposes. Petitioner claims that too much time elapsed
between the December 22, 2010 CMS 855B application and the contractor notice in April
2011 informing Petitioner that he needed to file a signed reassignment application. This
lapse in time does not allow me to disturb the contractor’s determination. The MPIM is
CMS’s guidance for its affiliated contractors and does not have the force and effect of
law and therefore is not binding on me. I am bound by the regulations and the effective
date provision of 42 C F.R. § 424.520(d) is clear. I have no authority to grant Petitioner’s
request of an earlier reassignment effective date other than that allowed by regulations.

IV. Conclusion

Based on the undisputed fact that it was April 29, 2011 when the Medicare contractor
received a complete and signed reassignment application that it could successfully
process, I conclude that Petitioner’s effective date of reassignment of billing privileges
was April 29, 2011, with a retrospective billing period starting March 30, 2011.
Therefore I grant CMS’s motion for summary judgment.

/s/
Joseph Grow
Administrative Law Judge