Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Avita Health and Rehab at Reeds Cove,
(CCN: 36-6313),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-15-364
Decision No. CR4562

Date: March 30, 2016

DECISION

Following a complaint investigation and partial extended health resurvey, the Kansas
Department for Aging and Disability Services (state agency) determined that Avita
Health and Rehab at Reeds Cove (Petitioner or facility) was not in substantial compliance
with Medicare participation requirements for long-term care facilities relating to
prevention of resident abuse, thorough investigation, and timely reporting abuse
allegations. The state agency further determined that Petitioner’s noncompliance posed
immediate jeopardy to the health and safety of its residents. The Centers for Medicare
& Medicaid Services (CMS) agreed with the state agency’s determination and imposed a
$5,650 civil money penalty (CMP) against Petitioner for 13 days of immediate jeopardy
and a $300 per-day CMP for 31 days of substantial noncompliance that was not
immediate jeopardy, for a total CMP of $82,750. Petitioner now appeals. As explained
below, I find that Petitioner was not in substantial compliance with Medicare
participation requirements, CMS’s determination of immediate jeopardy to resident
health and safety was not clearly erroneous, and the CMPs that CMS imposed are
reasonable.
I. Case Background and Procedural History

Petitioner is a long-term care facility located in Wichita, Kansas that participates in the
Medicare program as a skilled nursing facility. The facts giving rise to this case involve
an 87 year-old female resident in Petitioner’s facility, referred to in these proceedings as
“Resident 3.” Resident 3 was originally admitted to the facility on November 1, 2013,
readmitted on April 17, 2014, and again on May 30, 2014, following a general decline in
her medical status. P. Ex. 6 at 5, 8. Resident 3 had a medical history of, among other
medical conditions, metabolic encephalopathy, memory loss, decreased cognitive ability,
dementia, and age-related macular degeneration. Id. at 5.

On July 23, 2014, during an occupational therapy session, Resident 3 verbally reported to
a treating occupational therapist (OT) that a male nurse had sexually abused and
inappropriately touched her. CMS Ex. 1 at 61 (July 23, 2014, OT treatment progress
note). She also reportedly alleged that the abuse had occurred at the facility on an
ongoing basis. /d. Resident 3 stated that she was uncomfortable when the nurse was in
er room, and after some hesitation, she explained that while she was in her bed, the male
nurse “touched her buttocks.” Jd. She alleged that the perpetrator was a “black male
nurse” who worked at night at the facility. Jd. She reported that although the alleged
perpetrator would tell her that he was checking to see if her incontinence pad was dry,
she did not believe he was being sincere. Jd. Resident 3 also reported other incidents
where the male nurse touched her, calling it “therapy,” and allegedly told her that “it was
good for her.” Jd. She reported that during the last holiday [July 4, 2014] after most staff
ad left, the alleged perpetrator had taken her outside to the facility’s courtyard and “was
rough with her and had her in the grass.” Jd. She reported that she was afraid to tell
anyone and was afraid to sleep at night. /d. She stated that there had not been any
occurrences for the past few nights. /d. She reported that she saw the alleged perpetrator
by the nurses’ station when she went to the restroom, but when she exited the restroom
she noticed that he was gone. Jd. The OT indicated that Resident 3 thought the alleged
perpetrator was scared and had not returned to her room because her son had stayed with

er the past Sunday night [July 20, 2014]. Resident 3 also reported to the OT that she was
afraid to report the incidents for fear that the alleged perpetrator would retaliate against
er. Id.; CMS Ex. 1 at 51-52 (notarized statement from the OT who reported the abuse
complaint).

After hearing about the alleged abuse from Resident 3, the OT met with her co-worker, a
certified occupational therapy assistant (COTA), to discuss the conversation. CMS Ex. 1
at 53,54. Both employees then immediately met with the facility administrator to report
the alleged abuse. CMS Ex. | at 51-59; P. Ex. 3 at 2-3 J 14-16. The facility
administrator initiated an internal investigation and met with Resident 3 that same day.
The following day Resident 3 underwent a full body examination with no trauma noted.
P. Ex. 3 at 3 § 20; P. Ex. 6 at 2-3 § 13; P. Ex. 6 at 10. The facility administrator
determined that the allegation was not substantiated, and she did not report the allegation
of abuse to the state agency. P. Ex. 3 at 4 26.

However, someone filed a complaint with the state agency regarding Resident 3’s alleged
abuse, which prompted the state agency to conduct a complaint investigation of
Petitioner’s facility beginning July 31, 2014, and concluding August 14, 2014. CMS Ex.
1 at 1; CMS Ex. 2 § 2. During the complaint investigation, the surveyor conducted staff
interviews, interviewed Resident 3’s son, and reviewed facility records. CMS Ex. 2 § 3;
Tr. at 17-18. The state surveyor informed Petitioner that she found noncompliance,
including noncompliance that posed immediate jeopardy to the health and safety of its
residents. P. Ex. 17 §§ 11-12. Specifically, the surveyor found noncompliance with the
following requirements:

* 42 C.E.R. § 483.13(b), (c)(1)(i) (Tag F223) which requires that each resident be
free from verbal, sexual, physical, and mental abuse, corporal punishment, and
involuntary seclusion and that the facility must not use verbal, mental, sexual, or
physical abuse, corporal punishment, or involuntary seclusion.

* 42 CER. § 483.13(c)(1)(ii)-(iii), (c)(2)-(4) (Tag F225) which requires that the
facility not employ individuals who have been found guilty of abuse, neglect or
mistreating residents; that all allegations of abuse be reported immediately to the
facility administrator and other officials in accordance with state law, including to
the state survey agency; that the facility have evidence that the alleged abuse was
thoroughly investigated and that it took actions to prevent further abuse while the
investigation is in progress; and that the facility report all investigations to the
administrator or designated representative and to other officials in accordance with
state law, including the state survey agency, within five working days of the
incident, and if the alleged violation is verified, take appropriate corrective
actions.

See CMS Ex. | at 2, 21-22.

The state agency cited the facility at a scope and severity level of “G” for Tag F223,
meaning that the surveyor found an isolated instance of actual harm that was not
immediate jeopardy. The state agency further determined that the facility’s
noncompliance with Tag F225 was at a scope and severity level of “L,” indicating
widespread immediate jeopardy to the health and safety of the facility’s residents. The
state agency also determined that the facility had abated the immediate jeopardy as of
August 4, 2014, but it remained out of substantial compliance at a lower scope and
severity until September 5, 2014, as determined upon a revisit to the facility on October
14, 2014. P. Ex. 13. CMS adopted the state agency’s findings and informed Petitioner
by letters dated August 28 and October 22, 2014, that it was imposing a CMP of $5,650

per day from July 2
through September

Petitioner requeste
determination that i
Tags F223 and F22
proposed remedies.
assigned to me for
Hearing Order (Pre.

In accordance with
Hrg. Br.) along wit!

3 through August 4, 2014, and CMP of $300 per-day from August 5
4, 2014.' Id.

an Administrative Law Judge (ALJ) hearing to dispute the

it was not in substantial compliance with program requirements at
5, CMS’s determination of immediate jeopardy, and the associated
Petitioner’s request was received at the Civil Remedies Division,
earing and decision, and I issued an Acknowledgment and Pre-
-Hearing Order).

my Pre-Hearing Order, CMS filed its pre-hearing brief (CMS Pre-
two proposed exhibits (CMS Exs. | and 2). Petitioner then filed its

responsive pre-hearing brief (P. Pre-Hrg. Br.) along with 32 proposed exhibits (P. Exs. 3-
35).° CMS submitted the affidavit of one witness, a state surveyor (CMS Ex. 2).
Petitioner requested that CMS’s witness be made available for cross-examination during
a hearing. Petitioner submitted affidavits for nine witnesses: Petitioner’s Executive
Director (P. Ex. 3); the President of Axiom Healthcare Services (P. Ex. 4), the Medical
Director (P. Ex. 5); an APRN (P. Ex. 6); a Quality Assurance Nurse (P. Ex. 7); a Charge
Nurse (P. Ex. 8); an LPN (P. Ex. 9); a Nurse Liaison (P. Ex. 17); and Resident 3’s son
(P. Ex. 21). CMS declined to request to cross-examine Petitioner’s witnesses.

I conducted a hearing by video conference on September 25, 2015, to allow Petitioner to
cross-examine CMS’s witness. A transcript of the proceedings (Tr.) is incorporated into
the record. I admitted, without objection, CMS Exs. | (Parts 1-4) and 2 and P. Exs. 3-35
(P. Ex. 33 has two parts) into the record. Tr. at 5. Each party submitted a post-hearing
brief (Br.) and Petitioner submitted a reply brief (P. Reply). CMS chose not to file a
reply brief.

' Petitioner does not dispute two of the four deficiency tags identified in the Statement of
Deficiencies (SOD), which include findings that it was not in substantial compliance with
42 C.F.R. § 483.15(b) (Tag F242, Resident self-determination and right to make choices);
and 42 C.F.R. § 483.20(d)(3) and 483.10(k)(2) (Tag F280, Resident right to participate in
care planning). CMS Ex. | at 34, 39. These deficiencies are not subject to further
appeal. See CMS Br. at | (noting that deficiencies cited at 42 C.F.R. §§ 483.15(b),
483.20(d)(3) and 483.10(k)(2) also formed the basis for the sanctions CMS imposed
against Petitioner); see also CMS Ex. | at 1-43 (surveyor’s summary sheet of deficiencies
cited and the SOD for the survey completed on August 14, 2014).

> Petitioner’s exhibit list includes references to P. Exs. 1 and 2. However, these were
references to CMS Exs. 1 and 2 and were not actual exhibits. Therefore, there were no
corresponding exhibits to admit.
IL. Issues

Whether Petitioner was in substantial compliance with Medicare participation
requirements for long-term care facilities during the period cited;

If so, whether CMS’s determination of immediate jeopardy to the health and
safety of Petitioner’s residents was clearly erroneous; and

If Petitioner was not in substantial compliance, whether the CMPs that CMS
imposed are reasonable.

III. Findings of Fact and Conclusions of Law

A, Petitioner was not in substantial compliance with Medicare participation
requirements for long-term care facilities during the period cited.

The parties do not dispute that on July 23, 2014, Resident 3 reported to an OT that a
facility staff member was abusing her on a recurring basis. CMS Ex. | at 61. The parties
do not dispute that Resident 3 reported that the alleged perpetrator had touched her
buttocks and took her outside in the courtyard during a recent holiday and was “rough
with her and had her in the grass.” Jd. at 61, 49-56. The parties also do not dispute that
the facility administrator learned of the abuse complaint from the OT at 4:30 p.m. on July
23, 2014, the same day the resident made the allegations. /d. at 57. The parties do
disagree, however, about whether Petitioner properly reported the alleged abuse to the
state agency, whether Petitioner completed a thorough investigation of the abuse
complaint before determining it was unsubstantiated, and whether Petitioner took
sufficient measures to prevent further potential abuse while the investigation was in
process, as required by 42 C.F.R. § 483.13(b) and (c).

1. Petitioner violated 42 C.F.R. § 483.13(b) and (c)(1)(i) (Tag
F223) because it did not comply with its own policy and
procedures to prevent abuse of residents by staff by attempting
to immediately identify and suspend the alleged perpetrator
pending a proper investigation.

Long-term care residents have the right to be free from verbal, sexual, physical, and
mental abuse, corporal punishment, and involuntary seclusion. 42 C.F.R. § 483.13(b).
To accomplish this, a facility must develop and implement written policies and
procedures that prohibit verbal, sexual, physical and mental abuse, corporal punishment,
and involuntary seclusion, mistreatment, neglect, and abuse of residents. 42 C.F.R.

§ 483.13(c)(1)(i). “Abuse” is defined as “the willful infliction of injury, unreasonable
confinement, intimidation, or punishment with resulting physical harm, pain or mental
anguish.” 42 C.F.R. § 488.301. The Board has explained:

The goal of section 483.13(b) is to keep residents free from abuse. This
goal cannot be achieved if a facility could be found in compliance even
though it failed to take reasonable steps to protect residents from potentially
injurious acts which it knew or should have known might occur and which
might be willful. ...

Western Care Mgmt. Corp. d/b/a Rehab Specialties Inn, DAB No. 1921, at 14 (2004).

Actual abuse need not occur for a facility to violate 42 C.F.R. § 483.13(b) and (c)(1)(i).
It is sufficient for CMS to show that the facility failed to protect residents from
reasonably foreseeable risks of abuse. Western Care Mgmt., DAB No. 1921, at 15.

Petitioner’s abuse policy requires that “[a]ny alleged perpetrator of abuse . . . will be
immediately suspended from employment and will leave the employment property and
not return to the property until the investigation by the facility and law enforcement is
complete and the incident is resolved.” CMS Ex. 1 at 110 (emphasis added). However,
the evidence shows that Petitioner did not attempt to identify, confirm or suspend the
alleged perpetrator until the state survey began on July 31, 2014. P. Ex. 3 4 40.
Petitioner eventually terminated the alleged perpetrator’s employment with the facility on
August 5, 2014, but only after the state surveyor renewed the investigation. CMS Ex. 1
at 44; P. Ex. 3 at 5 § 38 (facility administrator’s affidavit stating, “Ultimately, the
KDADS Surveyor identified an Alleged Perpetrator.”).

Petitioner does not dispute the requirements of its own abuse policy but does maintain
that the policy was not triggered because Resident 3 did not specifically identify the
alleged perpetrator. P. Br. at 4; P. Rely at 5, 6 n.5. However, the record establishes that
Resident 3 provided Petitioner’s staff with enough specific information about the alleged
perpetrator for the Petitioner immediately to have conducted an investigation to identify
the employee. According to Petitioner’s Self-Report, Resident 3 reported the abuse to the
OT and COTA on July 23, 2014 at 4:30 p.m., and at that time, Resident 3 reported that
the alleged perpetrator had worked the evening of July 20, 2014. P. Ex. 3 at 12. The
COTA provided a notarized statement, dated July 31, 2014, wherein she stated that she
accompanied the OT into the facility administrator’s office on the afternoon of July 23,
2014, to discuss Resident 3’s abuse complaint. CMS Ex. 1 at 53-54. According to the
COTA, she and the OT informed the facility administrator on July 23, 2014 of the race
and gender of the alleged perpetrator who had worked the night Resident 3’s son had
stayed overnight with her — July 20, 2014. Instead of taking immediate action to follow
the abuse policy and interview staff members working that night, the facility
administrator commented to the OT and COTA that Resident 3 “was confused.” Jd. at
54.

Petitioner also argues that the SOD does not include any corroborating evidence that
Resident 3 was in fact abused. P. Br. at 5. However, CMS is not required to show actual
abuse occurred for a facility to violate 42 C.F.R. § 483.13(b) and (c)(1)(i). See Holy
Cross Vill. at Notre Dame, Inc., DAB No. 2291, at 7 (2009) (citation omitted). Rather,
CMS only needs to show that a facility did not protect its residents from reasonably
foreseeable risks of abuse. Jd. Here, once Resident 3 alleged that she had been abused
by a staff member, it was reasonably foreseeable that the risk of abuse would continue for
as long as the alleged perpetrator remained on Petitioner’s staff.

Furthermore, the facility administrator had sufficient information on July 23, 2014 to
conduct an investigation to identify the alleged perpetrator and to take decisive action to
suspend the employee pending a proper investigation of the allegations. However, the
administrator chose not to immediately interview staff members, thereby placing
Resident 3 (and other residents) at risk of foreseeable and likely further abuse. Petitioner
claims that due to Resident 3’s diminished capacity she was not a credible reporter, and
er story was not logically possible. P. Br. at 4; P. Reply at 5 n.4. However, evidence in
the record shows that Resident’s 3 cognitive abilities were not totally unreliable. For
example, Resident 3’s June 3, 2014 Minimum Data Set (MDS) assessment shows that
Resident 3 had moderately impaired cognitive skills for daily decision making; she had a
short-term memory problem but that her long-term memory was fine and she could
identify staff names and faces and knew she was in a nursing home (P. Ex. 9 at 20); her
speech was not clear but she was usually understood and could understand others (P. Ex.
9 at 18). Id. at 20.

Resident 3’s health improved and her July 18, 2014 MDS assessment, which was taken
five days before she reported the abuse, also notes that she had moderate cognitive
impairment, inattention; disorganized thinking; minimal depression, but no delusions or
hallucinations; her speech was clear with distinct intelligible words; she was usually
understood and usually understood others; her vision was noted as adequate but she did
wear corrective lenses; she was able to report the correct year and day of week; and there
were no symptoms that she was feeling down, depressed or hopeless. P. Ex. 7 at 30-32,
35. In spite of some evidence that Resident 3 may have had diminished capacity at times,
there is considerable evidence that her allegations were credible, and the fact that she
came forward with an articulated allegation of abuse was sufficient to trigger both
Petitioner’s abuse prevention policy requirements and Medicare program requirements.

2. Petitioner violated the abuse prevention requirements of 42 C.F.R. §
483.13(c)(2) - (4) (Tag F225) because it did not immediately report the
allegation of employee abuse to the state agency, it did not timely and
thoroughly investigate the abuse allegations, and it did not protect
residents from likely further abuse during an investigation.
The survey SOD may constitute prima facie evidence of the undisputed facts asserted in
it. See, e.g., Universal Health Care — King, DAB No. 2383 (2011). The SOD from the
August 14, 2014 complaint investigation states that based on observation, record review,
and interview, Petitioner did not immediately report to the state agency an allegation of
employee-to-resident sexual abuse and inappropriate touching. CMS Ex. | at 22. The
SOD further states as a basis for noncompliance that Petitioner did not thoroughly
investigate the allegation, Petitioner did not submit the results of its internal investigation
to the state agency within five working days, and Petitioner did not protect all residents
from likely abuse during the investigation. Id.

a. Petitioner did not immediately report the alleged abuse to the
state agency as required by 42 C.F.R. § 483.13(c)(2).

A facility must report all allegations of resident abuse. The regulation specifically
requires:

The facility must ensure that all alleged violations involving mistreatment,
neglect, or abuse, including injuries of unknown source . . . are reported
immediately to the administrator of the facility and to other officials in
accordance with State law through established procedures (including to the
State survey and certification agency).

42 C.F.R. § 483.13(c)(2). Appendix PP of the State Operations Manual (SOM), defines
“immediately” to mean “as soon as possible, but ought not exceed 24 hours after
discovery of the incident, in the absence of a shorter State time frame requirement.”
SOM, app. PP, Guidance for Tag F225.

Here, staff reported Resident 3’s abuse allegations to the facility administrator the same
day Resident 3 reportedly informed the staff, on July 23, 2014. CMS Ex. | at 51-59.
Petitioner does not dispute that it did not report the alleged abuse to the state agency until
July 31, 2014 — the date the state surveyor first came to the facility to conduct the
complaint investigation related to the resident’s alleged abuse. P. Ex. 3 at 4 § 30; P. Ex. 3
at 12-14. I find Petitioner did not immediately report the allegations of abuse to the
survey agency as required because it reported the incident well over 5 working days since
Petitioner first discovered the incident.

Petitioner argues that the Kansas Long Term Care Regulation Interpretation Manual
(rev. Feb.14, 2002), which Petitioner relied on, interprets the requirements of 42 C.F.R.

§ 483.13(c) to mean that the requirement to immediately report an allegation of abuse is
only triggered if the facility has “‘reasonable cause to believe that a resident is being or
has been abused.”” P. Br. at 12 citing P. Ex. 28 at 2. According to Petitioner, because the
“reasonable cause” threshold was not reached, Petitioner was not required to immediately
report Resident 3’s allegations of abuse to the state agency. P. Br. at 11-13.
The gist of Petitioner’s argument is that because the federal regulation instructs facilities
to report allegations “in accordance with State law through established procedures,” the
federal regulation defers to the state law. According to Petitioner, because the facility’s
initial investigation results ultimately found no abuse, the facility administrator was not
required to report Resident 3’s allegations of abuse to the state agency. However, I reject
Petitioner’s argument. First, the phrase “in accordance with State law through
established procedures” refers to the procedures the facility should follow in reporting the
allegation; it does not address whether the facility must report the allegations. A facility
must report all allegations, without regard to a state’s reporting requirements. Britthaven,
Inc., DAB No. 2018, at 15 (2006) (citing Cedar View Good Samaritan, DAB No. 1897,
at 11 (2003) (“for reporting allegations of abuse to the state, ‘the salient question is not
whether any abuse in fact occurred or whether [a facility] had reasonable cause to believe
that any abuse occurred, but whether there was an allegation that facility staff had abused
aresident.””). In Britthaven the Board explained that pursuant to section 1819(g)(1)(C)
of the Act, “Congress gave states and facilities concurrent responsibility for investigating
allegations of abuse by staff in long term care facilities.” The Board further explained
that when CMS promulgated section 483.13(c), it stated that the regulation required
facilities to report “all alleged violations.” Britthaven, DAB No. 2018 at 15, citing 56
Fed. Reg. 48843-48844 (Sept. 26, 1991). Requiring the facility to report the allegations
“assures that a neutral third party (the state) will be apprised of the allegations and will be
in a position to take protective action if necessary.” J/linois Knights Templar, DAB No.
2369 at 12-13 (2011).

b. Petitioner did not timely and thoroughly investigate the abuse
allegation and did not protect residents from further likely abuse
as required by 42 C.F.R. § 483.13(c)(3).

A facility must thoroughly investigate any allegation of abuse while also protecting
residents from any further potential abuse during the investigation process. 42 C.F.R.
§ 483.13(c)(3). I find Petitioner’s investigation was not thorough and did not
substantially comply with the Medicare participation requirements. Further, Petitioner
did not take adequate preventative measures to protect Resident 3, or other residents,
from further potential abuse during the investigation.

The facility administrator’s notarized statement, dated July 31, 2014, indicates she took
the following actions in investigating Resident 3’s abuse complaint that she received
notice of the allegation at about 4:30 p.m. on July 23 2014:

+ At 5:00 p.m. on July 23, 2014, the facility administrator went to Resident 3’s
room to speak with her about the allegations. The resident indicated she did not
want to talk because she was waiting for her grandmother to come get her. In
response to questions the facility administrator asked, the resident “kept motioning
10

with her hand and shaking her head,” but did report that she was not afraid of any
of the facility staff because “she didn’t know anyone here.” P. Ex. 3 at 16; see
also P. Ex. 3 at 10 (undated, typed notes admitted with the facility administrator’s
May 12, 2015 affidavit, which contain her notes outlining her initial investigation.
The notes indicate that on July 23, 2014, the facility administrator spoke with two
staff members who reported that they were not aware of any complaints from the
residents “about nights.” The identity of the staff members the facility
administrator interviewed prior to July 31, 2014 are not noted in her July 31, 2014
notarized statement (P. Ex. 3 at 16); and her undated, typed notes relating to her
preliminary investigation only identify the first name and last initial of the two
staff members she spoke with on July 23, 2014 (P. Ex. 3 at 10). However, the
record does contain corroboration that some staff members were interviewed
during the initial investigation. See P. Ex. 12 at | (affidavits from three
employees all signed on August 22, 2014, noting that on July 23, 2014 one
employee was interviewed by the facility administrator, and on July 24, 2014 two
employees report being interviewed by the facility administrator).

+ Mid-morning on July 24, 2014, the facility administrator reported attempting
again to interview Resident 3. The resident reportedly stated that living at the
facility was “good,” that she “liked all the kids who worked here,” and responded

no” when asked if there was anyone she did not like. P. Ex. 3 at 16-17; see also
P. Ex. 3 at 3 § 20 (the facility administrator’s May 15, 2015 affidavit indicates that
on July 24, 2014, a full body physical was performed on Resident 3 and no trauma
was noted); P. Ex. 3 at 10 (the facility administrator’s typed investigation notes
indicating she spoke with three staff members who reported they were not aware
of any problems regarding Resident 3 but that she “doesn’t like men providing
care”); P. Ex. 3 at 4 ¥ 24 (in her affidavit of May 12, 2015, the facility
administrator reports that she, along with staff, “conducted interviews of all alert
and oriented residents,” and that no one “reported being fearful of any staff
member.”).

* On July 25, 2014, the facility administrator interviewed Resident 3. The
resident reported that she was doing “good,” and responded “no” when asked if
she had any problem with anyone working at the facility. Resident 3 began
“talking about someone who wasn’t the same person every time.” During the
interview the resident reportedly indicated that she was not afraid of living at the
facility. P. Ex. 3 at 17-18; see also P. Ex. 3 at 10. In her undated, typed notes of
the preliminary investigation the facility administrator provides only the first
names of the three staff she spoke with on July 24, 2014 but no indication as to
which house they worked in, which shift they worked, or their relationship to
Resident 3. P. Ex. 3 at 10.
11

+ Although the facility administrator’s statement did not indicate dates or names,
she indicated that she also spoke with “primary CNAs” who worked with the
resident and that she spoke with the facility Charge Nurse. The staff informed her
that they were not aware of any issues Resident 3 had with any facility staff, and
they reported that the resident did not want men “taking care of her.” P. Ex. 3 at
18.

In her affidavit, the facility administrator indicates that she determined that the abuse
complaint was not substantiated because: Resident 3 could not corroborate what she had
reported to the OT, other residents in her housing section did not express fear, and there
was no evidence of trauma detected when a body-assessment was conducted on Resident
3. P.Ex.3 at4 9426. The facility administrator stated that she was not able to suspend,
pending investigation, an alleged perpetrator because “I had no information leading me to
an Alleged Perpetrator.” P. Ex. 3 at 4] 27. However, I find she neglected to take this
reasonable step in preventing the potential abuse because the record shows that Resident
3 had been consistent in providing a specific description to others of the alleged
perpetrator with regard to his gender, race, position, and time of shift. CMS Ex. 1 at 49,
51. Further, the OT’s report to the facility administrator included allegations that
Resident 3 was fearful to report abuse due to potential retaliation, and therefore the
facility administrator should not have determined Resident 3’s allegations lacked merit
simply because Resident 3 would not repeat them to her.

The facility’s abuse policy provides that “Administrative staff will have evidence that all
alleged violations of abuse . . . are thoroughly investigated, and must prevent further
potential abuse while the investigation is in progress.” CMS Ex. | at 109. Additionally,
Petitioner’s abuse investigation procedures required that after each interview “the
individual interviewed will complete a witness statement . . . sign and date their witness
statement in front of a Notary Public.” CMS Ex. 1 at 107. However, prior to July 31,
2014, when the state agency initiated its complaint investigation at the facility, Petitioner
only conducted a cursory interview of a few staff members and residents whom the
facility did not specifically identify in its initial investigation. See P. Ex. 3 at 3 421
(facility administrator’s affidavit stating “[o]n July 24, 2014, I spoke with members of the
staff”); P. Ex. 3 at 4 ¥ 24 (facility administrator states that on July 24, 2014 “I worked
with my staff to conduct interviews of all alert and oriented residents.””); P. Ex. 3 at 10
(facility administrator’s undated, typed notes stating that on July 23, 2014, she talked
with “Daniele H and Ralysha L, and on July 24, 2014, she talked with Becca, Morgan &
Angie.” ).

However, in comparing the facility administrator’s undated typed notes of the content of
her investigation prior to July 31, 2014 with her contemporaneous self-report to the state
agency on July 31, 2014, it appears that the latter does not indicate that prior to July 31,

2014 staff or residents were interviewed. Compare P. Ex. 3 at 10 with P. Ex. 3 at 12-14.
The facility administrator’s notes summarizing the interviews that occurred from August
12

2-4, 2014, do provide the full name, position of the employees interviewed, and their
shift. See P. Ex. 3 at 20-23. It was not until after the surveyor arrived to the facility on
July 31, 2014, did both staff and facility contractors speak with Resident 3’s son and also
interviewed all residents and staff whom were able to be interviewed. P. Br. at 9.

Although there appears to be evidence showing that the facility administrator and the
quality assurance nurse interviewed some employees and residents prior to the
commencement of the complaint survey on July 31, 2014, the information initially
documented is not thorough. For example, Petitioner did not interview all staff including
immediately interviewing night staff the evening of July 23, 2014, staff did not check
Resident 3’s bed alarm log to see if there was a pattern of the alarm triggering during the
night shift, staff did not take reasonable measures to confirm the identity of the alleged
perpetrator even though the administrator had sufficient initial information on July 23,
2014 to narrow down a possible perpetrator, and the facility administrator did not
properly document her investigation with written and signed statements from staff.
Based on her cursory investigation the facility administrator reached a premature
determination that Resident 3’s allegations of abuse were unfounded.

Further, Petitioner did not provide the surveyor with a written report documenting the
efforts taken by Petitioner during its initial investigation in response to the surveyor’s
request for this documentation. During an interview on July 31, 2014, the facility
administrator reportedly told the surveyor that she did not obtain written statements from
the individuals who were interviewed during her initial investigation nor did she obtain
any documentation of her investigation outside of an unsigned written statement from the
facility social worker. CMS Ex. | at 29.

It was not until July 31, 2014, in response to the surveyor’s determination that there was
immediate jeopardy to the health and safety of facility residents, that Petitioner took
further, more comprehensive investigative efforts. For example, staff completed resident
“interviews of alert” and oriented residents in Resident 3’s housing section, asking many
more questions specifically based on Resident 3’s abuse allegations. The facility
administrator and a nurse consultant also reviewed surveillance video footage recorded
on July 4, 2014 showing the courtyard area in order to determine if there was footage of
Resident 3 being taken to the courtyard. In addition, staff interviewed male caretakers
after reviewing staff assignment sheets on relevant dates, staff reviewed Resident 3’s bed
sensor alarm log, and staff rearranged assignments so there were no male staff working in

13

Resident 3’s housing section. CMS Ex. | at 30-31. Considering Petitioner did not do
this immediately after learning of Resident 3’s allegation, I find staff did not comply with
Medicare requirements to conduct a thorough investigation.

The regulation also requires prevention of further potential abuse. 42 C.F.R.

§ 483.13(c)(3). Here, the facility administrator, based on her cursory investigation,
reached a premature determination that Resident 3’s allegations of abuse were
unfounded. Consequently, she decided not to take preventive measures to protect the
resident from likely further abuse. As a result, the alleged perpetrator was able to
continue to work in Petitioner’s home, and Resident 3 continued to be in fear of the
alleged perpetrator. In fact, the record shows that Resident 3 mentioned to the OT during
a therapy session on July 28, 2014 that the alleged perpetrator was still coming into her
room in the evening. CMS Ex. | at 62 (“Pt states that the male nurse she complained
about has been in to fix the bed alarm but has not bothered her inappropriately). CMS
Ex. | at 62. Then again on July 29, 2014, Resident 3 expressed to the OT her continued
fear of the alleged perpetrator. An OT progress note dated July 29, 2014 indicates “...pt
stated she was up to 1:00 am, pt was afraid to fall asleep in fear of her male nurse would
come into her room.” Jd. Facility staff assignment sheets show that the alleged
perpetrator worked at Resident 3’s house on July 23-23, 28 and 29. CMS Ex. | at 60,
113-18.

Ultimately, Resident 3 needlessly continued to experience emotional distress as
evidenced by her reports to the OT on both July 28 and July 29, 2014 where, as noted
above, she reported that the alleged perpetrator continued to enter her room, and she was
afraid to go to sleep for fear that the “male nurse would come into her room.” CMS Ex. 1
at 62. Other residents were at risk of potential abuse too because staff did not properly
determine the allegations precluded the required further protective actions and reporting.

Petitioner argues that both Resident 3 and Resident 3’s son have recanted some of the
prior statements they made regarding Resident 3’s allegations of abuse and how they
related to inappropriate touching. P. Br. at 11-12; P. Reply at 5; P. Ex. 21. However, any
later recantations from Resident 3 and her son in 2015 do not excuse Petitioner from its
responsibility to have immediately reported the July 23, 2014 allegation of abuse to the
state agency, to have protected Resident 3 and other facility residents from a reported
alleged perpetrator, and to have performed a thorough investigation of the allegation of
sexual abuse against one of its residents by a staff member.

c. Petitioner did not report the results of its investigation to the state
agency within five working days of the complaint as required by 42
CF.R. § 483.13(c)(4).

The results of all investigations must be reported to the administrator or his designated
representative and to other officials in accordance with State law (including to the State
14

survey and certification agency) within 5 working days of the incident, and if the alleged
violation is verified appropriate corrective action must be taken. 42 C.F.R.
§ 483.13(c)(4).

Here, Petitioner did not timely submit investigation reports to the state agency as
required. The regulation makes clear that a// investigation results are to be reported both
to the administrator of the facility and to the state agency within 5 working days. The
evidence shows, and Petitioner does not deny, that it did not originally report the alleged
abuse to the state agency, nor did it intend to report its investigation results to the state
agency within 5 days. P. Br. at 12, 14-15. The alleged abuse was not reported until the
surveyor arrived at the facility on July 31, 2014, eight days after Petitioner learned of the
abuse allegations, and required Petitioner to report the complaint.

B. CMS’s determination that the facility’s noncompliance with 42 C.F.R.
§§ 483.13 (c)(2)-(4) posed immediate jeopardy to resident health and safety is
not clearly erroneous.

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 “clearly erroneous” standard imposes on facilities a “heavy burden” to
show no immediate jeopardy, and the Board 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. 1931, at 27-28
(2004), citing Koester Pavilion, DAB No. 1750 (2000); Daughters of Miriam Ctr., DAB
No. 2067, at 7, 9 (2007). The facility has the burden to rebut the presumption with
evidence and argument showing that the harm or threatened harm did not meet any
reasonable definition of “serious.” Yakima Valley School, DAB No. 2422, at 8 (2011). I
do not find the facility has met its burden here.

For the reasons detailed above, | find that the facility administrator did not perform a
timely and thorough investigation nor did she take reasonable measures to protect facility
residents from reasonably foreseeable abuse. Consequently, the facility residents,
including Resident 3, remained vulnerable to an abusive employee so long as that
employee remained on staff. In fact, Resident 3 continued to make the OT aware days
after her initial complaint that she believed the alleged perpetrator still had access to her
in the evenings and that she was unable to sleep because she feared the alleged
perpetrator would return to her room.

Even if I accept Petitioner’s argument that no abuse or harm occurred, which I do not, I
find that the facility’s failure to properly investigate the allegation of abuse posed
immediate jeopardy, which does not require a showing of actual harm. The immediate
15

jeopardy was appropriately abated on August 5, 2014 when the facility: (1) completed
their comprehensive investigation of Resident 3’s abuse complaint; (2) provided all
employees with retraining on the requirements of reporting allegations, and (3) suspended
the alleged perpetrator. CMS Ex. | at 34; P. Exs. 29-33; CMS Br. at 12.

C. The CMPs that CMS imposed are reasonable.

CMS imposed a penalty in the amount of $5,650 per day for the period of July 23 through
August 4, 2014, the period of immediate jeopardy, and $300 per day for the period of
August 5 through September 4, 2014, after the immediate jeopardy was abated but the
deficiency remained. Based on a revisit on October 14, 2014, CMS determined Petitioner
corrected the remaining deficiencies and achieved substantial compliance with the
Medicare participation requirements on September 5, 2014. P. Ex. 13 at 1.

CMS must consider several factors when determining the amount of a CMP (factors an
ALJ considers de novo when evaluating the reasonableness of the CMP that CMS
imposed): (1) the facility’s history of noncompliance; (2) the facility’s financial
condition, i.e., its ability to pay the CMP; (3) the severity and scope of the
noncompliance, the “relationship of the one deficiency to other deficiencies resulting in
noncompliance,” and the facility’s prior history of noncompliance; and (4) the facility’s
degree of culpability. 42 C.F.R. §§ 488.438(f), 488.404(b), (c). In addition, the “absence
of culpability is not a mitigating circumstance in reducing the amount of the penalty.” 42
CFR. § 488.438(f)(4).

The Board has repeatedly concluded that “an ALJ or the Board properly presumes that
CMS considered the regulatory factors and that those factors support the amount
imposed.” See, e.g., Pinecrest Nursing & Rehab. Ctr., DAB No. 2446, at 23 (2012). The
burden was on Petitioner “‘to demonstrate, through argument and the submission of
evidence addressing the regulatory factors, that a reduction is necessary to make the CMP
amount reasonable.’” Jd. (quoting Oaks of Mid City Nursing & Rehab. Ctr., DAB No.
2375, at 26-27 (2011)).

Where CMS determines to impose a per-day CMP, the regulation provides for penalties
of $3,050 to $10,000 per day for deficiencies constituting immediate jeopardy. 42 C.F.R.
§ 488.438(a)(1). Therefore, a $5,650 per day CMP for the period of July 23 through
August 4, 2014, is in the mid-level of the range of penalties CMS could impose for
deficiencies constituting immediate jeopardy.

The immediate jeopardy-level violation here evidenced wide-spread disregard for
Resident 3’s well-being, as well as that of the other facility residents, particularly those
least able to defend themselves against abuse. The facility administrator disregarded
facility policy, did not conduct a thorough investigation, and did not immediately report
the allegations of abuse or the facility’s findings. In failing to do a thorough
16

investigation, the facility administrator was not able to sufficiently and immediately rule
out that there was no abusive incident or also that there was a perpetrator at large. I find
a high level of culpability in the facility’s omissions.

Petitioner argues that its compliance history does not support the penalties because the
facility had not previously been penalized for noncompliance. P. Pre-Hrg. Br. at 23; P.
Ex. 3 at 8 § 63. Even if that may be true, the seriousness of Petitioner’s noncompliance
and its culpability here are sufficient to justify the penalty amounts.

Petitioner also argued that the amount of the CMP would present a financial hardship and
would place its facility at risk of closure. P. Ex. 4 9 27; P. Pre-Hrg. Br. at 23-24; P. Br. at
15-16; P. Reply at 9; P. Ex. 15. Petitioner offered the affidavit of the President and Chief
Operating officer of Axiom Healthcare Services (Axiom President), an administrative
support services company that provided services to Petitioner since Petitioner opened in
January 2013, in support of its position that it is unable to pay the CMP. P. Ex. 4 at 1 9{
3-5. The Axiom President states that he is also a member of Petitioner’s governing body.
Id. at § 6. In his affidavit, he references various financial documents that he included
with his statement, including Petitioner’s Independent Auditor’s Report for the period
ending December 31, 2013, stating that the report best represents Petitioner’s “dire
financial position.” Jd. at 3 § 20; see Id. at 7-33. He explains that the report shows that in
2013, Medicare reimbursements account for 78% of Petitioner’s revenue and that
Medicaid reimbursements accounted for 11 % of Petitioner’s total revenue. The Axiom
President states that the “Jndependent Auditor’s Report indicates that ‘[a] significant
reduction in the level of this support, if it were to occur, might have a substantial effect
on the company’s activities.” Jd. at 3 <§ 21-23 citing Jd. at 26.

However, Petitioner submitted its Profit and Loss Statement ending in October 31, 2014,
which covers a 10-month operating period. The statement shows that Petitioner’s
Medicare revenue, including Medicare A, B and Medicare Replacement A, for the 10-
month period in 2014 was $3,478,809. P. Ex. 4 at 10-11. The total penalty here of
$82,750 represents just 2.37% of the facility’s gross Medicare revenues for a 10-month
period, so I do not find this to be a substantial financial burden.

IV. Conclusion
For the reasons set forth above, I sustain CMS’s determinations. I find that Petitioner

was not in substantial compliance with the participation requirement at 42 C.F.R.
§§ 483.13(c), (c)(1)(i) and 483.13(c)(2)-(4), CMS’s determination of immediate jeopardy
17

is not clearly erroneous, and the CMP imposed of $5,650 per day from July 23 through
August 4, 2014, and the CMP of $300 per day from August 5 through September 4, 2014,
are reasonable.

/s/
Joseph Grow
Administrative Law Judge


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

William Wyttenbach, M.D.
(OI File No. H-15-41629-9),

Petitioner,
v.
The Inspector General,
U.S. Department of Health and Human Services.
Docket No. C-16-156
Decision No. CR4561
Date: March 30, 2016
DECISION

The request for hearing of Petitioner, William Wyttenbach, M.D., is dismissed pursuant
to 42 C.F.R. § 1005.2(e)(1),' because it was untimely filed.

I. Background

The Inspector General for the Department of Health and Human Services (L.G.) notified
Petitioner by letter dated August 31, 2015, that he was being excluded from participation
in Medicare, Medicaid, and all federal health care programs, effective September 20,
2015. The I.G. cited section 1128(b)(4) of the Social Security Act (the Act) (42 U.S.C.

§ 1320a-7(b)(4)) as the basis for Petitioner’s exclusion citing the fact that Petitioner’s
license to practice medicine in the State of Kentucky had been revoked, suspended, or
otherwise lost while a formal disciplinary action was pending before the Kentucky Board

' References are to the 2014 revision of the Code of Federal Regulations (C.F.R.) in
effect at the time of the agency action, unless otherwise stated.
of Medical Licensure related to Petitioner’s professional performance, professional
competence, or financial integrity. The I.G. also advised Petitioner that he was excluded
until such time as he regains his medical license in Kentucky and is reinstated by the I.G.
Exhibit (Ex.) 1.

Petitioner filed a request for hearing (RFH) on December 4, 2015. The case was assigned
to me for hearing and decision on December 8, 2015. A prehearing conference was
convened on January 6, 2016. The substance of the prehearing conference is
memorialized in my Prehearing Conference Order and Schedule for Filing Briefs and
Documentary Evidence dated January 6, 2016 (Prehearing Order). During the prehearing
conference, the I.G. requested to file a motion to dismiss prior to case development. I set
a briefing schedule for a motion to dismiss by the LG. Prehearing Order [ 5.

The LG. filed a motion to dismiss and supporting memorandum on February 5, 2016,
with I.G. Exhibit (Ex.) 1. On March 5, 2016, Petitioner filed a response to the I.G.
motion (P. Response). Petitioner did not object to I.G. Ex. 1 and it is admitted as
evidence.

IL. Discussion
A. Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) establishes Petitioner’s rights to a
hearing by an administrative law judge (ALJ) and judicial review of the final action of
the Secretary of the United States Department of Health and Human Services (Secretary).
The Secretary has provided by regulation that an excluded individual has the right to
request a hearing before an ALJ. 42 C.F.R. §§ 1001.2007(a)(1), 1005.2(a). The
regulations require that a request for hearing be in writing and be filed not more than 60
days from the date of receipt of the notice of exclusion. 42 C.F.R. §§ 1001.2007(b),
1005.2(c). The notice of exclusion is presumed to be received five days after the date on
the notice, unless there is a reasonable showing to the contrary. 42 C.F.R. § 1005.2(c). I
am required to dismiss a request for hearing that is not filed timely. 42 C.F.R.

§ 1005.2(e)(1). The regulations grant me no discretion to waive a late filing or to extend
the time for filing.

B. Issue

Whether Petitioner’s request for hearing must be dismissed because it was
not timely filed?
C. Findings of Fact, Conclusions of Law, and Analysis

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

1. Petitioner’s request for hearing was not timely filed.

2. Petitioner’s request for hearing must be dismissed pursuant to
42 C.F.R. § 1005.2(e)(1).

There is no dispute that the I.G. mailed Petitioner a letter dated August 31, 2015,
notifying Petitioner of his exclusion from Medicare, Medicaid, and all federal health care
programs. I.G. Ex. 1. Pursuant to 42 C.F.R. § 1005.2(c), there is a rebuttable
presumption that the August 31, 2015 notice was received by Petitioner on Saturday,
September 5, 2015. As discussed hereafter, Petitioner has not presented credible
evidence or argued that he received the notice of exclusion after September 5, 2015.
Pursuant to 42 C.F.R. §§ 1001.2007(b) and 1005.2(c), Petitioner had 60 days to file his
request for hearing. The 60th day after Petitioner’s presumed receipt of the notice of
exclusion fell on Wednesday, November 4, 2015.

There is no dispute that Petitioner filed his request for hearing using the Departmental
Appeals Board Electronic Filing System (DAB E-File) on December 4, 2015.
Petitioner’s request for hearing had to be filed not later than November 4, 2015, but he
id not file the request for hearing until December 4, 2015, which was 30 days late.
Because Petitioner’s request for hearing was 30 days late, the I.G. has moved that this
case be dismissed.

The regulations grant me no discretion to extend the time for filing a request for hearing
or to excuse the late filing of a request for hearing. I am required to dismiss a hearing
request that is not timely filed. 42 C.F.R. § 1005.2(e)(1). Petitioner’s only possible
lefense to the motion to dismiss is a showing that he received the August 31, 2015 notice
of exclusion not more than 60 days prior to December 4, 2015. Petitioner would need to
show that he received the notice of exclusion on or after October 5, 2015. Petitioner has
failed to make the required showing. Accordingly, I have no discretion but must dismiss
Petitioner’s request for hearing.

Petitioner alleges in his request for hearing that the notice of exclusion was sent to him
first class mail, not certified mail, and it was not forwarded to him promptly at his new
address in Tennessee. He also alleges that he was ill and with limited resources,
essentially in “survival mode” and the notice of exclusion was “filed in a box unread.”
RFH at 3. He argued and presented evidence that he was hospitalized in Knoxville,
Tennessee with “severe life threatening” conditions. RFH at 3, 17 (Attachment D).
However, according to the copy of the bill he provided his treatment began on November
4, 2015, well after his presumed receipt of the notice of exclusion on September 5, 2015.
RFH at 17 (Attachment D). Petitioner does not allege in his request for hearing that he
received the notice of exclusion on or after October 5, 2015. In his response to the
motion to dismiss, he argues that some of the mail sent to him in Florida and forwarded
to Tennessee was “markedly delayed, probably some lost.” P. Response at 2 § 6.
Petitioner does not allege that the notice of exclusion, which was addressed to him in Fort
Myers (I.G. Ex. 1), was received on or after October 5, 2015. Petitioner did not file any
evidence to show the date he actually received the notice of exclusion. Petitioner failed
to show that his request for hearing was filed within 60 days of his receipt of the notice of
exclusion.

Petitioner advances several arguments about his past medical practice, his financial
challenges, his health challenges, the merits of the revocation of his Kentucky medical
license, his attempts to have the action against his license overturned, and the fact he
finds it necessary to proceed without an attorney. RFH; P. Response. However, none of
Petitioner’s arguments may be considered because he failed to show that his request for
hearing was timely filed. I am without jurisdiction to review the merits of this case.
Therefore, I have no option but to dismiss Petitioner’s request for hearing.

Accordingly, I conclude Petitioner did not timely file a request for hearing and dismissal
is required by 42 C.F.R. § 1005.2(e)(1).

III. Conclusion

For the foregoing reasons, Petitioner’s request for hearing is dismissed.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

AMT Ambulance, Inc.
(NPI: 1295007904),

Petitioner,
v.
Centers for Medicare & Medicaid Services.

Docket No. C-14-1477

Decision No. CR4559

Date: March 28, 2016

DECISION

The Medicare billing privileges of Petitioner, AMT Ambulance, Inc., are revoked
pursuant to 42 C.F.R. § 424.535(a)(1)' because Petitioner was not in compliance with
Medicare enrollment requirements for a supplier of ambulance services. The effective
date of the revocation is March 5, 2014, 30 days after a Medicare administrative
contractor acting on behalf of the Centers for Medicare & Medicaid Services (CMS)

notified Petitioner of the revocation. 42 C.F.R. § 424.535(g). CMS established a two
year bar to Petitioner’s re-enrollment in the Medicare program. 42 C.F.R. § 424.545(c).

' Citations are to the 2013 revision of the Code of Federal Regulations (C.F.R.), unless
otherwise indicated.
I. Background

Petitioner was enrolled in the Medicare program as a supplier* of ambulance services,
and operated only in Los Angeles County, California. Palmetto GBA, a Medicare
administrative contractor, notified Petitioner on July 16, 2013, that Petitioner’s Medicare
billing privileges were retroactively deactivated as of January 31, 2012. Petitioner (P.)
Exhibit (Ex.) 4. On February 3, 2014, Noridian Healthcare Solutions (Noridian), the
Medicare administrative contractor that replaced Palmetto GBA for certain functions,
notified Petitioner that its Medicare billing privileges were retroactively revoked as of
January 31, 2012. CMS Ex. | at 9. Noridian determined that Petitioner was “[n]Jot in
compliance with Medicare requirements,” citing 42 C.F.R. § 424.535(a)(1) as the basis
for revocation. Noridian found that Petitioner was “not permitted to operate in the county
of Los Angeles as of January 31, 2012” and subject to an order to cease and desist
ambulance operations that was issued by the Los Angeles County Emergency Medical
Services (EMS) Agency and effective July 12, 2013. CMS Ex. 1 at 9.

On April 4, 2014, Petitioner submitted a request for reconsideration to Noridian. CMS
Ex. | at 4-8. Petitioner did not directly dispute the underlying basis for the revocation,
but argued that reinstatement of Petitioner’s billing privileges would help correct what it
considered to be erroneous overpayment notices that CMS began sending to Petitioner for
services that Petitioner provided between January 31, 2012 and July 12, 2013. CMS

Ex. | at 6. According to Petitioner, the Los Angeles County EMS Agency clarified that
Petitioner was allowed to operate as an ambulance service in Los Angeles County until
July 12, 2013, meaning that any deactivation or revocation of Petitioner’s Medicare
billing privileges prior to that date would be improper. CMS Ex. | at 4-6. On May 13,
2014, Noridian Provider Enrollment issued a reconsidered determination upholding the
revocation pursuant to 42 C.F.R. § 424.535(a)(1). The reconsidered determination states
that Petitioner “did not submit an application as required by the Los Angeles County
Code causing [Petitioner] to not be authorized to continue operation in Los Angeles
County after January 30, 2012.” CMS Ex. 1 at 1.

> A “supplier” furnishes services under Medicare and includes physicians or other
practitioners and facilities that are not included within the definition of the phrase
“provider of services.” Act § 1861(d) (42 U.S.C. § 1395x(d)). A “provider of services,”
commonly shortened to “provider,” includes hospitals, critical access hospitals, skilled
nursing facilities, comprehensive outpatient rehabilitation facilities, home health
agencies, hospice programs, and a fund as described in sections 1814(g) (42 U.S.C.

§ 1395f(g)) and 1835(e) (42 U.S.C. § 1395n(e)) of the Act. Act § 1861(u) (42 U.S.C.

§ 1395x(u)). The distinction between providers and suppliers is important because they
are treated differently under the Act for some purposes.
On July 10, 2014, Petitioner filed a request for hearing (RFH) before an administrative
law judge (ALJ). On July 24, 2014, the case was assigned to me for hearing and
decision, and an Acknowledgement and Prehearing Order (Prehearing Order) was issued
at my direction.

CMS filed a motion for summary judgment and supporting brief. Petitioner opposed
CMS’s motion. In a ruling dated October 22, 2014, I denied the CMS motion for
summary judgment and notified the parties that I would convene a hearing by video
teleconference (VTC). I convened a VTC hearing on May 27, 2015. A transcript (Tr.) of
the proceedings was prepared and is part of the record of this case. During the hearing,
CMS offered CMS Exs. 1, and 3 through 7.° Tr. 25. CMS Ex. 1 was admitted without
objection. Tr. 25. Petitioner objected to CMS Exs. 3 through 7 and they were not
admitted as evidence. Tr. 49, 54, 64. Petitioner offered P. Exs. 1 through 4. Tr. 64.

P. Exs. 2 through 4 were admitted without objection. Tr. 67-68. CMS objected to P. Ex.
1 as being unauthenticated. Tr. 65. Petitioner authenticated the exhibit through witness
testimony and P. Ex. 1 was admitted. Tr. 112. CMS did not call any witnesses.
Petitioner called as witnesses: Eugene Brusilovsky, the former Acting Vice President of
Petitioner, and Zina Kagan, the former Vice President of Petitioner. Following the
hearing, CMS filed a motion to remand this case pursuant to 42 C.F.R. § 498.78 (CMS
Mot. to Remand), but Petitioner opposed (P. Opp. to Remand). I subsequently issued a
ruling deferring a final ruling on the motion to remand until a decision on the merits. The
parties filed post-hearing briefs (CMS Br. and P. Br.) and post-hearing reply briefs (CMS
Reply and P. Reply).

II. Discussion
A. Applicable Law

Section 1831 of the Social Security Act (the Act) (42 U.S.C. § 1395j) establishes the
supplementary medical insurance benefits program for the aged and disabled known as
Medicare Part B. Administration of the Part B program is through contractors, such as
Palmetto GBA and Noridian. Act § 1842(a) (42 U.S.C. § 1395u(a)). Payment under the
program for services rendered to Medicare-eligible beneficiaries may only be made to
eligible providers of services and suppliers. Act §§ 1834(j)(1) (42 U.S.C. § 1395m(j)(1));
1835(a) (42 U.S.C. § 1395n(a)); 1842(h)(1) (42 U.S.C. § 1395u(h)(1)). Petitioner is a
supplier of ambulance services. 42 C.F.R. § 410.41.

> CMS did not offer CMS Ex. 2. Tr. 23.
The Act requires the Secretary of Health and Human Services (Secretary) to issue
regulations that establish a process for the enrollment in Medicare of providers and
suppliers, including the right to a hearing and judicial review of certain enrollment
determinations, such as revocation of enrollment and billing privileges. Act § 1866(j)
(42 U.S.C. § 1395cc(j)). Pursuant to 42 C.F.R. § 424.505, a supplier such as Petitioner
must be enrolled in the Medicare program and be issued a billing number to have billing
privileges and to be eligible to receive payment for services rendered to a Medicare
eligible beneficiary.

Suppliers must submit complete, accurate, and truthful responses to all information
requested in an enrollment application. 42 C.F.R. § 424.510(d)(2). Pursuant to 42 C.F.R.
§§ 424.502 and 424.510(d)(3), a supplier’s application to enroll in Medicare must be
signed by an authorized official, i.e., one with authority to bind the provider or supplier
both legally and financially. Subsection 424.510(d)(3) provides that the signature attests
to the accuracy of information provided in the application. The signature also attests to
the fact that the provider or supplier is aware of and abides by all applicable statutes,
regulations, and program instructions. 42 C.F.R. § 424.510(d)(3). Suppliers must meet
basic requirements depending on their type of service. 42 C.F.R. §§ 424.505, 424.516,
424.517. Suppliers are also subject to additional screening requirements depending upon
the type of service they provide. 42 C.F.R. § 424.518. Suppliers of ambulance services
are subject to the additional requirements of 42 C.F.R. §§ 410.40-410.41.

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

§ 424.535(a)(1), CMS may revoke a supplier’s enrollment and billing privileges if CMS
determines that the supplier is not in compliance “with the enrollment requirements
described in this section or in the enrollment application applicable for its provider or
supplier type.” 42 C.F.R. § 424.535(a)(1).

If CMS revokes a supplier’s Medicare billing privileges for not complying with
enrollment requirements, then the revocation becomes effective 30 days after CMS or its
contractor mails notice of its determination to the supplier. 42 C.F.R. § 424.535(g).
After a supplier’s Medicare enrollment and billing privileges are revoked, the supplier is
barred from reenrolling in the Medicare program for a minimum of one, but no more than
three years. 42 C.F.R. § 424.535(c).

A supplier whose enrollment and billing privileges have been revoked may request
reconsideration and review as provided by 42 C.F.R. pt. 498. A supplier submits a
written request for reconsideration to CMS or its contractor. 42 C.F.R. § 498.22(a).

CMS or its contractor must give notice of its reconsidered determination to the supplier,
giving the reasons for its determination and specifying the conditions or requirements the
supplier failed to meet, and advising the supplier of its right to an ALJ hearing. 42 C.F.R.
§ 498.25. If the decision on reconsideration is unfavorable to the supplier, the supplier
has the right to request a hearing by an ALJ and further review by the Departmental
Appeals Board (the Board). Act § 1866(j)(8) (42 U.S.C. § 1395ce(j)(8)); 42 C.F.R.

§§ 424.545, 498.3(b)(17), 498.5. A hearing on the record, also known as an oral hearing,
is required under the Act. Crestview Parke Care Ctr. v. Thompson, 373 F.3d 743, 748-51
(6th Cir. 2004). The supplier bears the burden to demonstrate that it meets enrollment
requirements with documents and records. 42 C.F.R. § 424.545(c).

B. Issues

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

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

My conclusions of law are set forth in bold followed by the statement of pertinent facts
and my analysis. I have carefully considered all the evidence and the arguments of both
parties, although not all may be specifically discussed in this decision. I discuss the
credible evidence given the greatest weight in my decision-making.* I also discuss any
evidence that I find is not credible or worthy of weight. The fact that evidence is not
specifically discussed should not be considered sufficient to rebut the presumption that

I considered all the evidence and assigned such weight or probative value to the credible
evidence that I determined appropriate within my discretion as an ALJ. There is no
requirement for me to discuss the weight given every piece of evidence considered in this
case, nor would it be consistent with notions of judicial economy to do so. Charles H.
Koch, Jr., Admin. L. & Prac. § 5:64 (3d ed. 2013).

1. The CMS motion to remand is denied as remand is not in the
interest of judicial economy.

On July 20, 2015, CMS filed a motion to remand this case to CMS pursuant to 42 C.F.R.
§ 498.78, “to allow CMS to adjust the effective date of revocation of the Medicare
enrollment of [Petitioner] from January 31, 2012 to March 5, 2014.” CMS Mot. to
Remand at 1. Ina response filed August 10, 2015, Petitioner opposed remand, arguing
that remanding the case to adjust the date of revocation would not result in a satisfactory
outcome for Petitioner but instead result in additional “costly litigation.” P. Opp. to

* “Credible evidence” is evidence worthy of belief. Black’s Law Dictionary 596 (8th ed.
2004). The “weight of evidence” is the persuasiveness of some evidence compared to
other evidence. Jd. at 1625.
Remand at |. Petitioner states that it seeks a “global resolution” of the revocation and
deactivation determinations, but remand may only serve to correct CMS’s revocation
determination, thus leading to further litigation. P. Opp. to Remand at 3.

Petitioner has made clear in its opposition to remand and in its post-hearing briefing that
resolving the effective date of revocation would not be a satisfactory conclusion to this
case. P. Opp. to Remand at 3; P. Br. at 4-7. If this case was remanded to CMS to correct
the effective date of the revocation of Petitioner’s Medicare billing privileges, it is likely
that the case would be re-litigated through the administrative process, i.e., before an ALJ
in this forum. Re-litigating this case means additional time and resources of the parties
and this forum. This litigation, which has lasted close to two years already, has reached a
point where stopping and turning back for a remand to CMS would only serve to delay a
final conclusion for the parties. Moreover, an ALJ has the authority to correct the
effective date of the revocation of billing privileges. 42 C.F.R. §§ 424.535(g),
498.3(b)(17), 498.5(/)(1)-(2). Therefore, there are no issues that CMS stated it will
address on remand that I cannot resolve. Based on the current posture of the case and the
parties’ positions, remanding this case to CMS will most likely be ineffectual,
unproductive, and not in the interest of judicial economy. Accordingly, CMS’s motion to
remand this case pursuant to 42 C.F.R. § 498.78 is denied.

2. Petitioner does not deny that it failed to obtain a license required
for ambulance operators in Los Angeles County, California, a
violation of the requirement for continuing compliance with state
licensure requirements. 42 C.F.R. § 424.516(a)(2).

3. There is a basis to revoke Petitioner’s Medicare billing privileges
pursuant to 42 C.F.R. § 424.535(a)(1) because Petitioner failed to
obtain a Los Angeles County ambulance operator’s business license
and therefore did not continue to comply with all of the enrollment
requirements for a supplier of ambulance services.

a. Facts

The parties stipulated that prior to January 31, 2012, Petitioner was enrolled in Medicare
as a supplier of ambulance services. Tr. 38-39. The parties agree that on July 28, 2011,
the Los Angeles County Board of Supervisors changed certain provisions of the local
ordinances to require ambulance operators intending to operate in incorporated and
unincorporated areas of Los Angeles County to obtain a Los Angeles County business
license. Tr. 39-41; P. Br. at 2; CMS Br. at 2; Los Angeles Cnty. Code § 7.16.030.° Prior
to that time, Los Angeles County only required a license for ambulance operators that
operated in unincorporated areas of the county. Each incorporated area within Los
Angeles County had its own requirements for ambulances. Tr. 94. Los Angeles County
gave ambulance operators until January 30, 2012, to apply for the newly required county-
wide license. Tr. 41; CMS Ex. 1 at 10.

Petitioner presented credible testimony that it submitted an application for a Los Angeles
County business license in 2010. Adult Medical Transportation, a sister corporation to
Petitioner, was granted a license but not Petitioner. Petitioner does not deny that as of
July 12, 2013, it did not have the necessary license to operate as an ambulance service in
both incorporated and unincorporated areas of Los Angeles County. Petitioner agrees
that it was never issued the Los Angeles County license. Tr. 43-44, 95, 101-02, 107. On
July 8, 2013, the Los Angeles County EMS Agency sent Petitioner a cease and desist
letter, stating that Petitioner had not submitted an application for the required business
license and that Petitioner was therefore not permitted to operate an ambulance service in
Los Angeles County beginning January 31, 2012. CMS Ex. 1 at 10. Petitioner has not
operated as a supplier of ambulance services in Los Angeles County since the cease and
desist letter was received. Tr. 137, 150-51.

Petitioner argues that, contrary to what the cease and desist letter states, it was permitted
to operate as an ambulance service throughout Los Angeles County from January 31,
2012 to July 8, 2013, the date of the cease and desist letter because it had filed an
application for the required business license. P. Br. at 2, 9-10; Tr. 95; P. Ex. 2.
Consistent with Petitioner’s argument, on October 24, 2013, the Los Angeles County
EMS Agency issued an amended cease and desist letter, clarifying that it had not received
a “complete and proper” application from Petitioner, and that the cease and desist order
was effective July 12, 2013, and not January 31, 2012, as stated in the prior cease and
desist letter. CMS Ex. | at 63. Petitioner argues that the October 24, 2013 amended
cease and desist letter is evidence that it was permitted to operate in Los Angeles County

> The revised provision of the Los Angeles County Code reads:
7.16.030 - Licenses—Required.

Every ambulance operator shall procure and maintain a
license and pay an annual license fee in the amount set forth
in Section 7.14.010 of this code under the appropriate heading
in order to operate in any incorporated city or unincorporated
area of the county.
until July 12, 2013. P. Br. at 3. I agree and CMS has not presented evidence to the
contrary. However, the fact that Petitioner was allowed to operate as an ambulance
service in Los Angeles County from January 31, 2012 until July 12, 2013, is not relevant
to decide the issue before me, which is whether there was a basis for revocation at the
time CMS revoked Petitioner’s billing privileges on February 3, 2014.° 73 Fed. Reg.
36,448, 36,452 (June 27, 2008) (“[A]ppeal rights are limited to provider or supplier
eligibility at the time the Medicare contractor made the adverse determination.”). The
evidence is undisputed, and I find as fact, that after July 12, 2013, Petitioner did not have
the license required by section 7.16.030 of the Los Angeles County Code and the cease
and desist letter rendered Petitioner unable to operate as an ambulance supplier in Los
Angeles County as of the date of that letter. CMS Ex. | at 63; Tr. 107. Petitioner does
not dispute that it never actually obtained the required business license and it clearly did
not have the required license on February 3, 2014, the date Noridian issued the initial
determination to revoke Petitioner’s enrollment. P. Br. at 24; CMS Ex. 1 at 9; Tr. 102,
107. I further find as fact, that the Los Angeles County EMS Agency’s cease and desist
letter, as subsequently amended, was de facto a denial of any pending business license
application from Petitioner. CMS Ex. | at 10, 63. Former Acting Vice President
Brusilovsky confirmed that Petitioner, in fact, stopped operating as a supplier of
ambulance services following receipt of the July 12, 2013 cease and desist letter.’ Tr.
128.

® As discussed hereafter, Noridian improperly revoked Petitioner’s billing privileges
retroactively rather than prospectively (CMS Ex. | at 9), in violation of 42 C.F.R.

§ 424.535(g). If CMS or its contractor had authority under the Act or regulations to
revoke Petitioner’s billing privileges retroactively, the date Petitioner was allowed to
operate as an ambulance service in Los Angeles County would be relevant to determine
the effective date of revocation. But CMS and its contractor have identified no such
authority in this case. Because the correct effective date of revocation may only be
prospective in this case as a matter of regulation, i.e., 30 days after the date of the initial
determination as provided by 42 C.F.R. § 424.535(g), the fact that Petitioner was not
barred from operating an ambulance service throughout Los Angeles County between
January 31, 2012 and July 8, 2013, is not relevant to my decision.

7 Petitioner argues that multiple CMS overpayment actions caused Petitioner to cease
operations and the fact that Petitioner ceased operations is what prevented it from
obtaining the necessary license. Petitioner suggests that CMS effectively put Petitioner
out of business. P. Br. at 1; P. Reply at 5-6. The evidence, however, does not support
Petitioner’s argument. Petitioner’s own witness testified that the Los Angeles County
EMS Agency’s cease and desist letter is what prompted Petitioner to cease operations.
Tr. 128. CMS began its overpayment actions against Petitioner after the Los Angeles

County EMS Agency’s cease and desist letter directing Petitioner to stop operating as an
(Continued next page.)
b. Analysis

The reconsidered determination states that Petitioner was not permitted to operate as an
ambulance service in Los Angeles County as of January 31, 2012. The factual
determination that Petitioner was not permitted to operate as of January 31, 2012, was
clearly erroneous. The amended cease and desist letter dated October 24, 2013, clearly
shows that the bar to operating an ambulance service in Los Angeles County was
imposed upon Petitioner effective July 12, 2013. CMS Ex. | at 63. The reconsidered
determination upheld the initial determination revoking Petitioner’s billing privileges
citing 42 C.F.R. § 424.535(a)(1). The regulation provides that CMS may revoke the
Medicare billing privileges of a provider or supplier if:

(1) Noncompliance. The provider or supplier is determined
not to be in compliance with the enrollment requirements
described in this section, or in the enrollment application
applicable for its provider or supplier type, and has not
submitted a plan of corrective action as outlined in part 488 of
this chapter... . All providers and suppliers are granted an
opportunity to correct the deficient compliance requirement
before a final determination to revoke billing privileges,
except for those imposed under paragraphs (a)(2), (a)(3), or
(a)(5) of this section ....

42 CFR. § 424.535(a)(1).

The Board has determined that the “enrollment requirements” referred to in section
424.535(a)(1) extend to those in 42 C.F.R. § 424.516 as well as the specific requirements
for each provider and supplier type to be eligible to receive Medicare Part B payments.
Akram A. Ismail, M.D., DAB No. 2429 at 6 (2011); Peter McCambridge, C.F.A., DAB
No. 2290 at 4 (2009). Indeed, a provider or supplier that is ineligible to receive payment
for services it provides to Medicare beneficiaries cannot reasonably obtain or maintain
enrollment in the Medicare program. McCambridge, DAB No. 2290 at 4. Pursuant to
42 C.F.R. § 424.516, CMS must verify and a provider or supplier must certify that it
continues to be in compliance with federal and state requirements. The regulation
provides in relevant part:

(Continued from preceding page.)

ambulance supplier. CMS Ex. | at 12. Because the alleged overpayments are not
properly before me, I render no opinion about the validity of the overpayment claims of
CMS.

10

(a) Certifying compliance. CMS enrolls and maintains an
active enrollment status for a provider or supplier when that
provider or supplier certifies that it meets, and continues to
meet, and CMS verifies that it meets, and continues to meet,
all of the following requirements:

(1) Compliance with title XVIII of the Act and
applicable Medicare regulations.

(2) Compliance with Federal and State licensure,
certification, and regulatory requirements, as
required, based on the type of services or supplies the
provider or supplier type will furnish and bill Medicare

42 C.F.R. § 424.516(a)(1)-(2) (emphasis added).

As a supplier of ambulance services in Los Angeles County, Petitioner was required to
obtain a county business license after January 30, 2012, due to the change in the county
code. Los Angeles Cnty. Code § 16.7.030. Petitioner did not obtain the required license
to operate as an ambulance service in Los Angeles County. Petitioner does not deny that
it could not operate as a supplier of ambulance services after July 12, 2013. Tr. 107;
CMS Ex. 10 at 63. Therefore, after July 12, 2013, Petitioner did not meet and could not
certify that it continued to meet the requirement that it maintain compliance with
“Federal and State licensure, certification, and regulatory requirements, as required,
based on the type of services or supplies the provider or supplier type will furnish and bill
Medicare.” 42 C.F.R. § 424.516(a)(2). The regulation’s reference to “State licensure”
equally applies to Petitioner’s Los Angeles County licensure requirement because
Petitioner only operated in Los Angeles County and there is no evidence that it operated
elsewhere in California. Tr. 120-21; P. Br. at 1. Petitioner was not in compliance “with
the enrollment requirements described in this section, or in the enrollment application
applicable for its provider or supplier type... .” 42 C.F.R. § 424.535(a)(1). Petitioner
was no longer eligible to provide ambulance services and no longer eligible to continue to
be enrolled to receive Medicare Part B payments as a supplier of ambulance services.
Thus, there is a legal basis pursuant to 42 C.F.R. § 424.535(a)(1) for CMS to revoke
Petitioner’s Medicare billing privileges.

Petitioner argues that CMS erred procedurally by not providing it with an opportunity to
correct its noncompliance as required by 42 C.F.R. § 424.535(a)(1), before CMS revoked
Petitioner’s billing privileges. P. Reply at 10. However, the plain language of the initial
determination notice belies this argument. Noridian notified Petitioner in the February 3,
2014 initial determination letter that Petitioner could submit a corrective action plan

11

(CAP) if Petitioner believed it could demonstrate eligibility to participate in the Medicare
program. CMS Ex. 1 at 9. There is no evidence that Petitioner submitted a CAP to
Noridian. Instead, Petitioner requested reconsideration. CMS Ex. | at 4-8. Providing
the opportunity to submit a CAP is sufficient for CMS or its contractor to meet the
requirement of 42 C.F.R. § 424.535(a)(1) that an affected party be given an opportunity
to correct its noncompliance. Conchita Jackson, M.D., DAB No. 2495 at 7-8 (2013).
Noridian provided that opportunity in this case, and there was no procedural error.

4. The effective date of revocation of Petitioner’s Medicare billing
privileges pursuant to 42 C.F.R. § 424.535(a)(1) is determined
pursuant to 42 C.F.R. § 424.535(g), and is March 5, 2014, which is
30 days after the initial determination notice was mailed to
Petitioner.®

a. Facts

The initial determination by Noridian revoking Petitioner’s Medicare billing privileges
was dated February 3, 2014. CMS Ex. | at 9. The thirtieth day after February 3, 2014,
was March 5, 2014.

b. Analysis

Revocation is effect 30 days after CMS or its contractor mails notice of its determination
to the supplier, except in four specific types of cases listed in the regulation. 42 C.F.R.

§ 424.535(g). CMS concedes that the effective date of revocation in this case should be

March 5, 2014, pursuant to 42 C.F.R. § 424.535(g). CMS Br. at 2, 4-5; CMS Reply at 2.

There is no evidence that any of the four exceptions stated in 42 C.F.R. § 424.535(g)
apply in this case. Therefore, as a matter of law, the effective date of revocation based on

® There is no dispute that Petitioner did not have the license required by Los Angeles
County as of July 12, 2013, and Petitioner concedes it was no longer operating as an
ambulance service after that date. Therefore, Petitioner was both legally and factually no
longer operational after about July 12, 2013. A determination by CMS or its contractor
based on an onsite review, or arguably where there is a concession that a provider or
supplier is no longer operation, is an independent basis for revocation of enrollment
pursuant to 42 C.F.R. § 424.535(a)(5). Revocation pursuant to 42 C.F.R. § 424.535(a)(8)
is effective retroactively to the date the supplier or provider is found to be no longer
operational. 42 C.F.R. § 424.535(g). However, this basis was not cited in the
reconsidered determination and is not before me for review under 42 C.F.R. § 498.5(/)(2).
CMS Ex. | at 1-3.
12

Petitioner’s failure to comply with enrollment requirements must be 30 days after the
date of the Noridian initial determination to revoke. In this case, Noridian’s notice of
revocation was dated February 3, 2014. CMS Ex. | at 9. Thirty days after February 3,
2014, was March 5, 2014. Accordingly, pursuant to 42 C.F.R. § 424.535(g), the effective
date of Petitioner’s revocation is March 5, 2014.

5. [have no jurisdiction to review the erroneous deactivation of
Petitioner’s billing privileges, the alleged overpayments based on
the deactivation, or to grant Petitioner equitable relief.

On July 16, 2013, Palmetto GBA notified Petitioner that its Medicare billing privileges
were deactivated retroactively to January 31, 2012. P. Ex. 4. The notice letter explained:

We were made aware of the fact that you did not submit an
application for an Ambulance Operator Business License by
January 30, 2012 and therefore, have been prohibited from
operating in any incorporated city or unincorporated area of
Los Angeles County effective January 31, 2012. Our records
show the only geographic area submitted to Medicare on the
CMS 855B enrollment application was Los Angeles, CA,
therefore you are no longer in compliance with the enrollment
requirements. Any payments made after January 31, 2012 will
be recouped, as those services are considered ineligible for
payment due to non-compliance.

P. Ex. 4. The notice letter did not cite any regulatory basis for the deactivation. Soon
after the July 16, 2013 deactivation notice, Petitioner received multiple overpayment
notices from CMS seeking recovery of the payment for services that Petitioner provided
between January 31, 2012 and July 16, 2013. CMS Ex. 1 at 12-62. Throughout this case
Petitioner has strenuously argued that the deactivation of its billing privileges was
erroneous and CMS has used the deactivation as an excuse to recover millions of dollars
in alleged overpayments. Petitioner also argues it is subject to constant telephone calls
from the U.S. Department of the Treasury attempting to collect debts for claims during
the period of the deactivation that CMS improperly referred for collection. Petitioner
argues that I must consider this erroneous agency action because it is “inextricably
intertwined” with the erroneous deactivation and the revocation actions. P. Br. at 4-7.

It is difficult to disagree with Petitioner’s position. The notice of deactivation is clearly
based on the faulty factual determination that Petitioner was not authorized to operate as
an ambulance supplier in Los Angeles County between January 31, 2012 and July 12,
2013. Further the deactivation in this case is contrary to the plain language of the
regulation authorizing deactivations. The deactivation of billing privileges is governed
13

by 42 C.F.R. § 424.540. Pursuant to that section, there are only three situations in which
CMS or its contractor may deactivate billing privileges:

(a) Reasons for deactivation. CMS may deactivate the
Medicare billing privileges of a provider or supplier for any of
the following reasons:

(1) The provider or supplier does not submit any
Medicare claims for 12 consecutive calendar months.
The 12 month period will begin the 1st day of the Ist
month without a claims submission through the last day
of the 12th month without a submitted claim.

(2) The provider or supplier does not report a change to
the information supplied on the enrollment application
within 90 calendar days of when the change occurred.
Changes that must be reported include, but are not
limited to, a change in practice location, a change of any
managing employee, and a change in billing services. A
change in ownership or control must be reported within
30 calendar days as specified in §§ 424.520(b) and
424.550(b).

(3) The provider or supplier does not furnish complete
and accurate information and all supporting
documentation within 90 calendar days of receipt of
notification from CMS to submit an enrollment
application and supporting documentation, or resubmit
and certify to the accuracy of its enrollment information.

42 C.F.R. § 424.540(a). The drafters of the regulation explained that when a supplier’s
billing number is deactivated, billing privileges are suspended but can be restored by
submission of updated or recertified information. The drafters described deactivation as
a “temporary action to protect the provider or supplier from misuse of their billing
number and to also protect the Medicare Trust Funds from unnecessary overpayments.”
71 Fed. Reg. 20,754, 20,762 (April 21, 2006). The drafters also specified that
“deactivation of a billing number would not have any effect on a provider or supplier’s
participation agreement or conditions of participation.” Id.

There is no regulatory language authorizing deactivation of billing privileges based solely
on a supplier’s alleged noncompliance with an enrollment requirement, other than the
requirement to timely submit information upon a change or request of CMS.
Furthermore, there is no regulatory authority for CMS or its contractor to deactivate
14

billing privileges retroactively. The regulatory authority for revocation of billing
privileges permits retroactive revocation in four limited circumstances. 42 C.F.R.

§ 424.535(a)(1), (g). But the Secretary’s delegation of authority to CMS to deactivate
billing privilege includes no similar provisions permitting retroactive deactivation. 42
C.F.R. § 424.540(a). Thus, any retroactive deactivation of a supplier’s Medicare billing
privileges based on that supplier’s noncompliance is clearly contrary to the controlling
regulation. Any alleged overpayment of Medicare benefits based on such an erroneous
deactivation is also arguably contrary to law.

However persuasive Petitioner’s argument may be on the issues related to deactivation
and the resulting allegations of overpayments, the regulations do not allow for me to
review a deactivation. By regulation, I may hear and decide cases where a party has
requested a hearing from a “reconsidered determination.” 42 C.F.R. § 498.5())(2);
Denise A. Hardy, D.P.M., DAB No. 2464 at 5 (2012). A party may request
reconsideration only in cases where CMS or its contractor has issued an “initial
determination.” 42 C.F.R. § 498.5(/)(1). The list of “initial determinations” does not
include the deactivation of billing privileges. 42 C.F.R. § 498.3(b). Also, the regulation
authorizing deactivation of billing privileges does not provide for any further
administrative review. 42 C.F.R. § 424.540. Therefore, there is no right for a
reconsidered determination or subsequent ALJ review of the deactivation of a provider’s
or supplier’s Medicare billing privileges. Suspension and recoupment of payments to
providers and suppliers and the collection and compromise of overpayments is regulated
by 42 C.F.R. pt. 405, subpt. C. The evidence before me does not reflect that the detailed
procedures for collecting overpayments were followed in this case and Petitioner alleges
it was deprived of due process in this regard. However, the review of the alleged
overpayments is not a matter within my jurisdiction. Review of alleged overpayments
and their collection is governed by 42 C.F.R. pt. 405. subpts. H and I. Accordingly, I
ave not attempted to further develop the record regarding whether the declaration of the
overpayments or their collection was in accordance with the law. Petitioner will need to
seek review of the overpayments in another administrative or judicial forum.

To the extent Petitioner’s arguments may be construed as a request for equitable relief, I
ave no authority to grant equitable relief. US Ultrasound, DAB No. 2302 at 8 (2010)
(“[nJeither the ALJ nor the Board is authorized to provide equitable relief by reimbursing
or enrolling a supplier who does not meet statutory or regulatory requirements.”). I am
also required to follow the Act and regulations and have no authority to declare statutes
or regulations invalid. 1866/CPayday.com, L.L.C., DAB No. 2289 at 14 (2009) (“[a]n
ALJ is bound by applicable laws and regulations and may not invalidate either a law or
regulation on any ground.”).

15

III. Conclusion

Petitioner’s Medicare billing privileges are revoked effective March 5, 2014, pursuant to
42 C.F.R. § 424.535(a)(1) and (g), because Petitioner was not in compliance with the
requirement to have all required state licenses.

/s/
Keith W. Sickendick
Administrative Law Judge