Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Robert D. Oakley, M.D., ) Date: December 29, 2009

)
Petitioner, )
)

-V.- ) Docket No. C-09-581

) Decision No. CR2051
Centers for Medicare & Medicaid )
Services. )
)

DECISION

I sustain the determination of the Centers for Medicare & Medicaid Services (CMS) to
revoke the Medicare enrollment of Petitioner, Robert D. Oakley, M.D., for a period of
three years.

I. Background

Petitioner is a physician who participated in the Medicare program. Petitioner was
licensed to practice medicine in the state of Colorado until May 21, 2008, when an
Interim Agreement for Cessation of Practice reached by Petitioner and the Colorado State
Board of Medical Examiners (Board) became effective. The State Board reviewed
information that raised concerns that Petitioner had a disability that rendered him unable
to practice medicine with reasonable skill and safety to patients. Based on this
information and in lieu of a summary suspension by the Board, Petitioner voluntarily
agreed to cease his practice of medicine while the agreement remains in effect. The
agreement states that it will remain in effect until the Board later determines whether
Petitioner is able to practice medicine with reasonable skill and safety. CMS Ex. 6.
Petitioner did not inform CMS or its Medicare contractor, TrailBlazer Health Enterprises,
that he had agreed to cease the practice of medicine for an indefinite period of time in
lieu of a summary suspension by the Board. CMS Ex. 6.
On February 16, 2009, TrailBlazer, a contractor acting on CMS’s behalf, advised
Petitioner that his Medicare billing privileges were revoked. The grounds for revocation
were that under the applicable regulations, Petitioner was not in compliance with
Medicare enrollment requirements because he did not report the adverse legal action
taken against him by the Board.' Petitioner requested reconsideration of this
determination and reconsideration was denied. Petitioner then requested a hearing and
the case was assigned to me for a hearing and a decision.”

The parties agreed that this matter could be decided on the basis of the written
submissions. CMS therefore submitted its Motion for Summary Disposition of the case,
together with its brief in support of the Motion and CMS Exhibits (Exs.) 1-15. Petitioner
submitted his responsive brief together with Petitioner Exhibits (P. Exs.) 1-7.5. CMS
then submitted its reply. I receive and admit all of the exhibits into the record of this
case.

IL. Issue, findings of fact and conclusions of law
A. Issues

The issue in this case is whether a basis exists for CMS to revoke Petitioner’s Medicare
billing privileges.

B. Findings of fact and conclusions of law

I make findings of fact and conclusions of law (Findings) to support my decision. I set
forth each Finding below as a separate heading.

' The regulation requires that these changes be reported to the CMS contractor
within 30 days. See 42 C.F.R. § 424.516(d)(1). There is no evidence that Petitioner
reported the action taken by the Board at all — either within 30 days or 90 days for
“other changes.”

2. The contractor’s reconsideration decision, at my request, was amended and
reissued on August 26, 2009. Petitioner then filed an amended hearing request on
September 11, 2009.

* CMS argues against the admission of Petitioner’s Exhibits (P. Exs.) 6 and 7
because he is precluded from introducing new evidence before me if it was not presented
to the contractor before it issued its decision. 42 C.F.R. § 405.874(c)(5). As for P. Exs.
1-5, CMS objects to these as well. These documents are copies of CMS issuances which
were issued after the February 2009 revocation action.
I. CMS is authorized to revoke Petitioner’s Medicare billing privileges.

CMS revoked Petitioner’s Medicare billing privileges pursuant to the authority granted
by section 1866(j) of the Social Security Act (Act) and by implementing regulations at 42
C.F.R. § 424.535. The Act empowers the Secretary of this Department to refuse to enter
into an agreement, or to terminate an agreement, with any physician or supplier that is not
in substantial compliance with the provisions of the Medicare program. Act

§ 1866(b)(2). The implementing regulation delegates to CMS the Secretary’s statutory
authority to revoke billing privileges of providers and suppliers. 42 C.F.R. § 424.535(a).

A person whose billing privileges are revoked by CMS for one of the reasons enumerated
at 42 C.F.R. § 424.535 may request a hearing to challenge the determination. 42 C.F.R.

§ 498.3(b)(17). What may be challenged in such a hearing is whether a regulatory basis
exists to revoke the provider’s billing privileges. What may not be challenged is whether
CMS - assuming it has the authority to revoke — properly exercised its discretion to
invoke that authority in an individual case. Nothing in the regulations suggests that I may
look behind CMS’s exercise of discretion and substitute my judgment for that of CMS in
deciding whether to revoke billing privileges in the individual case where the authority to
revoke is present.

Petitioner contends that CMS is not authorized to revoke his billing privileges
notwithstanding these undisputed facts. Petitioner asserts that the Interim Agreement for
Cessation of Practice was not a change that he was required to report to the Medicare
contractor or an “adverse legal action” requiring reporting under the revised regulations.

I disagree. Under the Act, the 2008 regulations or the regulations that became effective
on January 1, 2009, CMS was authorized to revoke Petitioner’s billing privileges because
Petitioner failed to report changes to the information in his Medicare Enrollment
Application. Specifically, at no time prior to receipt of the notice of revocation on
February 16, 2009 did Petitioner inform CMS or TrailBlazer that he had reached an
agreement with the Board to cease practicing medicine for an indefinite period of time.

Petitioner does not dispute that the regulations in effect at the time of execution of the
agreement required Petitioner to report within 90 calendar days any changes to the
information in his enrollment application and that failure to do so can result in revocation
of the provider/supplier’s Medicare billing privileges. 42 C.F.R. § 424.520(b) and 42
C.F.R. § 424.535(a)(1) (2008). Petitioner also does not dispute that in May 2007, he
certified to the following by signing his Medicare enrollment application:

I authorize the Medicare contractor to verify the information contained herein.
I agree to notify the Medicare contractor of any future changes to the
information contained in this form within 90 days of the effective date of the
change.

CMS Ex. 11, at 28 [Petitioner’s application for Medicare enrollment dated May 10,
2007]. That application also put the Petitioner on notice that all adverse legal actions
must be reported, regardless of whether any records were expunged or any appeals were
pending. The application specifically provides that a suspension of a license to provide
health care by any State licensing authority, including a voluntary surrender of such a
license while a formal disciplinary proceeding is pending before a State licensing
authority, is considered an adverse legal action that must be reported. CMS Ex. 11, at 5.

Effective January 1, 2009, the Secretary amended the regulations to require physicians to
now report certain events within a 30-day period; all other changes were to be reported
within the previous 90-day timeframe. That regulation specifically stated that any
adverse legal action, such as suspension or revocation of a license to provide health care
by any State licensing authority, must be reported with 30 days of the event. 42 C.F.R.
§ 424.516(d); 73 Fed.Reg. 69726, 69939 (November 19, 2008). Section 424.535 also
was amended to specifically provide for the revocation of a physician’s enrollment and
billing privileges in Medicare for failure to report any such adverse legal action. Thus,
whatever version of the regulations may arguably control this situation, the result is still
the same: Petitioner was required to report to CMS and the Medicare contractor that his
license was suspended. Under either the 2008 regulations or the 2009 regulations,
Petitioner failed to report the required change within 90 days or the more restrictive 30
day period.

Petitioner contends that the Interim agreement to Cessation of Practice is not a
suspension of his license to practice Medicine and did not affect Petitioner’s eligibility to
provide services. P. Brief, 13-14. Again, I disagree. The distinction that Petitioner seeks
to make is truly a distinction without a difference. The effect of his agreement with the
Board was that he would cease to practice medicine immediately because there were
concerns that Petitioner could not practice medicine with reasonable skill and safety to
his patients because of an alcohol disorder. He further agreed to desist from the practice
of medicine until such time as the Board could evaluate whether Petitioner could resume
the practice of medicine with reasonable skill and safety.’ CMS Ex. 6. Whether the

4 On June 8, 2009, the Board issued its final order and restricted Petitioner from
practicing medicine as a sole practitioner or in any setting as a sole physician and placed
Petitioner on probation for five years with restrictions. CMS Ex. 12.

nomenclature calls the event a cessation of Petitioner’s medical practice or a suspension
of his license to practice medicine, when the duly-empowered state licensing authority
ordered Petitioner to stop practicing medicine and that order continues in effect for an
indefinite period, the event amounted to a suspension of Petitioner’s license and he was
thereafter clearly not eligible for Medicare enrollment. It seems almost unnecessary to
point out that Medicare enrollment is not an entitlement, and that a provider or supplier
must prove its eligibility for enrollment and its continuing eligibility for enrollment.>
Thus, Petitioner was required to report this information and his failure to do so was a
basis for revocation.

2. Petitioner does not have a right to a hearing to challenge the duration
of his billing privileges revocation.

CMS has authority to determine the duration of a provider’s billing privileges revocation
in any case where it has the authority to impose revocation. 42 C.F.R. § 424.535(c):

After a provider, supplier . . . has had their billing privileges revoked, they
are barred from participating in the Medicare program from the effective
date of the revocation until the end of the re-enrollment bar. The re-
enrollment bar is a minimum of | year but not greater than 3 years
depending on the severity of the basis for revocation.

CMS determined to bar Petitioner from re-enrolling for a period of three years, citing this
regulation as authority. Petitioner has no right to a hearing to challenge the duration of
his revocation. As I discuss above, at Finding 1, Petitioner’s right to a hearing in this
case is limited to challenging whether CMS has authority to revoke his billing privileges.

* The Order barring Petitioner from practicing medicine is sufficient in and of
itself as a basis for revocation; if he cannot practice medicine, he cannot possibly be
eligible to enroll in Medicare as a physician. Essentially, if he is not operational he
cannot provide the services to Medicare beneficiaries for which he was enrolled to
provide. See 42 C.F.R. § 424.535(a)(5)(2008). I further note that under section
1128(b)(4) of the Act, and 42 C.F.R. § 1001.501, the Secretary’s Inspector General
would be authorized to exclude Petitioner from participating in Medicare and any state
health care program because his license to practice medicine was suspended or
surrendered while a formal disciplinary proceeding concerning the individual’s
professional competence, professional performance or financial integrity was pending
before a State licensing authority and the length of the exclusion is commensurate with
the period of time during which the license is suspended or otherwise not in effect.
The regulation which establishes Petitioner’s right to a hearing makes this plain. The
right to a hearing is limited to challenging CMS’s determination whether to revoke

billing privileges. It does not extend to challenging CMS’s judgment as to the duration of
revocation. Thus, a provider or a supplier whose billing privileges are revoked may
request a hearing only to challenge CMS’s determination “[w]hether to deny or revoke”
his or her enrollment. 42 C.F.R. § 498.3(b)(17).

/s/
Richard J. Smith
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Decision No. CR2048
Centers for Medicare & Medicaid
Services.

In the Case of: )
)

Medwiz Specialty, LLC., ) Date: December 18, 2009
)
Petitioner, )
)

-V.- ) Docket No. C-09-751

)
)
)
)

DECISION DISMISSING REQUEST FOR HEARING

I dismiss the request for hearing filed by Petitioner, Medwiz Specialty, LLC. Ido
so because the Centers for Medicare & Medicaid Services (CMS) rescinded its
adverse determination. Consequently, nothing is left for me to hear and decide.

I. Background

Petitioner applied to participate in the Medicare program as a supplier of items or
services. That application was denied and, on July 28, 2009, a hearing officer
issued a reconsideration determination sustaining the denial. Petitioner then
requested a hearing and the case was assigned to me for a hearing and a decision.

I ordered the parties to file pre-hearing exchanges of briefs and exhibits addressing
the issues in the case.

However, and in the interim, CMS reviewed the hearing officer’s reconsideration
determination and determined that, in fact, Petitioner was in compliance with
enrollment requirements. Therefore, on October 29, 2009 a Medicare contractor
notified Petitioner that it was in compliance and that Petitioner would be enrolled
as a supplier effective June 4, 2009. CMS then moved to dismiss the request for
hearing arguing that the issues raised by Petitioner were moot. Petitioner did not
reply to the motion.
II. Issue, findings of fact and conclusions of law
A. Issue

The issue in this case is whether Petitioner has a right to a hearing.
B. Findings of fact and conclusions of law

I make findings of fact and conclusions of law (Findings) to support my decision
in this case. I set forth each Finding below as a separate heading.

1. Petitioner has no right to a hearing because CMS rescinded its
adverse determination.

A prospective supplier who is dissatisfied with a determination by CMS or a
Medicare contractor to deny its application for enrollment is entitled to a hearing
to challenge the adverse determination. 42 C.F.R. §§ 498.3(b)(17); 498.5(d)(1),
(2). However, there is no continuing right to a hearing where CMS rescinds its
adverse determination and gives the party requesting a hearing that which it
originally sought.

The undisputed facts of this case are that CMS rescinded the adverse
determination denying Petitioner’s enrollment as a Medicare supplier. That action
by CMS extinguished whatever hearing right Petitioner may have had.

2. I dismiss Petitioner’s hearing request because Petitioner has no
right to a hearing.

An administrative law judge may dismiss a request for a hearing where the party
who files the request has no right to a hearing. 42 C.F.R. § 498.70(b). Petitioner
has no right to a hearing and, therefore, I dismiss its request.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Experts Are Us, Inc., ) Date: December 18, 2009

)
Petitioner, )
)

-V.- ) Docket No. C-09-724

) Decision No. CR2047
Centers for Medicare & Medicaid )
Services. )
)

DECISION

I dismiss Petitioner’s hearing request pursuant to 42 C.F.R. § 498.70 because Petitioner
has no right to a hearing.

Background

Apparently, Petitioner, Experts Are Us, Inc., once participated in the Medicare program
as a supplier of durable medical equipment. However, the Medicare Carrier, National
Supplier Clearinghouse, determined that the supplier was no longer in operation after on-
site inspectors found the business closed and its telephone number disconnected. In a
letter dated December 22, 2003, the Carrier advised Petitioner that its Medicare supplier
number was revoked. The letter also advised Petitioner of its appeal rights. CMS Ex. 1.

Ina letter dated February 28, 2004 (but inexplicably also dated March 27, 2004),
Petitioner requested reconsideration. P. Ex. 1.' In response, the carrier apparently

' Civil Remedies Division procedures and my initial order in this case include
detailed instructions for marking exhibits. Petitioner disregards those instructions, and
attaches to its brief multiple documents that are not marked in any identifiably coherent
fashion. The bulk of its submissions have no apparent relevance to the issues before me.
To assist the reader, I have culled from that jumble those documents that seem relevant,
marked them, and attached them to this decision.
attempted another site inspection, but was again unsuccessful. In a letter dated March 30,
2004, the carrier informed Petitioner that it still was not in compliance with federal
regulations, but, if dissatisfied with that determination, it could request a hearing.” P. Ex.
2. As discussed below, at this time, a supplier could appeal to a carrier hearing officer,
but was not entitled to a hearing before an administrative law judge (ALJ).

Petitioner has not shown that it thereafter requested a hearing. Apparently, in a memo
dated April 8, 2004, it asked the carrier to reopen and complete another inspection of its
premises. P. Ex. 4 (attached to Petitioner’s hearing request, but not submitted with its
brief).

Since then, Petitioner apparently has repeatedly but unsuccessfully applied to reactivate
its supplier number. Responding to a Congressional inquiry, the carrier prepared a list of
those applications, and Petitioner includes some of them with its exhibits. P. Ex. 5.
Petitioner also includes evidence of additional efforts to reactivate its application. P. Exs.
6-11; see also P. Ex. 12. The most recent carrier denials in this record are dated
December 11, 2007. P. Exs. 11, 12.

What we have treated as Petitioner’s hearing request here is dated June 16, 2009, but was
postmarked September 9, 2009, and received in the Civil Remedies Division on
September 15, 2009. It refers to a purportedly pending appeal but does not identify the
exact determination Petitioner wants reviewed in this forum.*

* Petitioner submits with its brief only the first page of the March 30, 2004 letter.
However, attached to its hearing request as Exhibit 19C is what appears to be the entire
letter, which advises Petitioner of its appeal rights (“you must file your request within 90
days from the postmark of this letter”). P. Ex. 3.

> Petitioner has submitted a very peculiar memo, dated May 15, 2009, and
addressed to “health [sic] and Human Services” at an address that is not the correct
address for the Departmental Appeals Board. Petitioner claims, without providing any
supporting documentation, that its appeal was forwarded (apparently by someone
working for Blue Cross/Blue Shield in South Carolina) “to Washington D.C. 20024,
delivered on 09-10-2007@ 10:41 a.m. 20202.” Petitioner also claims to have “called to
inquire on the status of the appeal,” and been informed that “this package was entered as
a change of information.” P. Ex. 13. The Civil Remedies Division has no record that it
received a hearing request from Petitioner prior to September 2009. CMS Ex. 3. I have
no idea what the term “a change of information” refers to; it is not a standard Civil
Remedies Division procedure.

But an even more peculiar submission was submitted on November 5, 2009, via
email, by an attorney who failed to file an appearance. She claimed that an appeal was
mailed to the Department of Education’s Office of Inspector General, who received it
October 26, 2007, and forwarded it to the Department of Health and Human Services
CMS now moves to dismiss, arguing that Petitioner has no right to a hearing. CMS has
filed a motion to dismiss and a reply brief with three exhibits attached (CMS Exs. 1-3).
As noted above, Petitioner has filed a brief accompanied by multiple documents, some of
which I have marked and attached to this decision. (P. Exs. 1-13).

Discussion

Petitioner fails to identify the specific determination it challenges. Under the regulations,
a hearing request must “identify the specific issues, and the findings of fact and
conclusions of law with which the affected party disagrees,” and must specify the basis of
contending that those findings and conclusions are incorrect. 42 C.F.R. § 498.40(b).
Obviously, the documents Petitioner has filed do not satisfy this regulatory requirement.
Nevertheless, I consider whether I have the authority to review any of the determinations
I found among Petitioner’s submissions.

I. Ihave no authority to review the revocation of Petitioner’s supplier number
because it occurred prior to December 8, 2004.4

Section 1866(j)(2) of the Social Security Act creates appeal rights for Medicare providers
and suppliers whose applications for Medicare enrollment or renewal of enrollment have
been denied. That provision was enacted in 2003, as part of the Medicare Prescription
Drug Improvement and Modernization Act (MMA) of 2003. Pub. L. No. 108-173,

§ 936(a)(2). Under the provisions of that statute, hearing rights apply to denials
occurring “on or after such date as the Secretary [of Health and Human Services]
specifies,” but no later than one year after the effective date of the statute. The statute’s
effective date was December 8, 2003. MMA § 936(b)(3); 42 USCA § 1395cc(b)(3). The
Secretary determined that all denials or revocations with a decision date of December 8,
2004, or later, would be reviewable by an Administrative Law Judge. Change in
Provider Enrollment Appeals Process, CMS Manual System, Pub. 100-08, Transmittal 95
(January 14, 2005), available at http://www.cms.hhs.gov/transmittals (follow hyperlink
“2005 Transmittals”); CMS Ex. 2. Because Petitioner’s Medicare enrollment was
revoked prior to December 8, 2004, it is not reviewable in this forum and must be
dismissed. 42 C.F.R. § 498.70(b) (The ALJ may dismiss a hearing request if the party
requesting does not have a right to a hearing).

Office of Inspector General. The submission discusses Petitioner’s unsuccessful efforts
in a federal court lawsuit, and asks that I consider the case “so that there will be no
question of whether there was exhaustion of administrative remedies,” but it does not
identify the determination Petitioner wants considered.

4 My findings of fact/conclusions of law are set forth, in italics and bold, in the
discussion captions of this decision.
2. The denials of Petitioner’s applications for reinstatement are not reviewable
in this forum.

Nor may Petitioner appeal the subsequent denials of her applications for reinstatement.
Only initial determinations, which are listed at 42 C.F.R. § 498.3(b), may be appealed to
this forum, and I have no authority to review actions that are not initial determinations.
42 C.F.R. § 498.3(d). Determinations regarding a supplier’s reinstatement are not among
the initial determinations listed. Moreover, since August 26, 2008, regulations explicitly
have precluded review of a Medicare contractor’s refusal to reinstate a supplier’s billing
privileges. Medicare Program; Appeals of CMS or CMS Contractor Determinations
When a Provider or Supplier Fails to Meet the Requirements for Medicare Billing
Privileges, 73 Fed. Reg. 36,448 & 36,460 (June 27, 2008). 42 C.F.R. § 405.874(e)
provides that a “contractor’s refusal to reinstate a supplier’s billing privileges . . . is not
an initial determination under part 498 of this chapter.”

I note also that requests for review under section 498 must be filed within 60 days from
receipt of the notice of the initial determination. 42 C.F.R. § 498.40(c). I may dismiss an
untimely hearing request. 42 C.F.R. § 498.70(c). The most recent denial of
reinstatement in this record is dated December 11, 2007, one year and nine months prior
to the submission of Petitioner’s hearing request.

Finally, Petitioner raises constitutional claims, which I have no authority to review.
Conclusion

Petitioner has no right to a hearing and its hearing request is dismissed pursuant to 42
C.F.R. § 498.70(b).

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:
Prestige Dialysis Clinics, Inc. Date: December 14, 2009
Petitioner,
-V.- Docket No. C-09-579

Decision No. CR2045
Centers for Medicare & Medicaid
Services.

ee mS SSS ES SS SS DS

DECISION GRANTING MOTION FOR
SUMMARY DISPOSITION

I grant the motion of the Centers for Medicare & Medicaid Services (CMS) for
summary disposition against Petitioner, Prestige Dialysis Clinic, Inc.

I. Background

Petitioner is a dialysis clinic located in Baltimore, Maryland. CMS certified
Petitioner to participate in the Medicare program as a supplier of end stage renal
disease (ESRD) services, effective May 4, 2009. Petitioner requested a hearing to
challenge the effective date of its participation, asserting that it should have been
certified to participate in Medicare on March 25, 2009. The case was assigned to
me for a hearing and a decision.
CMS moved for summary disposition. Petitioner did not answer the motion.'
With its motion CMS filed five proposed exhibits which it identified as CMS Ex.
1—CMS Ex. 5. I receive these into the record of the case.

II. Issues, findings of fact and conclusions of law

A. Issue

The issue in this case is whether CMS properly determined Petitioner’s effective
date of participation in Medicare to be May 4, 2009.

B. Findings of fact and conclusions of law

I make findings of fact and conclusions of law (Findings) to support my decision
in this case. I set forth each Finding below as a separate heading.

' CMS sent a copy of its motion to two attorneys, J. Brian Tansley, Esquire,
and Robert King, Esquire on the apparent belief that they represented Petitioner.
My office had not received a notice of appearance from either of these individuals.
After the time to answer the motion had expired and at my direction, a staff
attorney in my office called Mr. King to determine why he had not filed a notice
of appearance or answered the motion. Mr. King assured the staff attorney that he
would be entering an appearance immediately and would respond to the motion.
Based on that representation, I sent a letter to Mr. King on October 28, 2009
granting him an extension until November 4, 2009 to enter an appearance and
answer the motion. However, Mr. King did not file either a notice of appearance
or an answer. In order to be fair to Petitioner (and also because Petitioner,
evidently, continued to believe that Mr. King represented it) I extended its
deadline to file a reply to the motion until December 2, 2009. On that date Mr.
King finally filed a notice of appearance and asked for an additional week, or until
December 9, 2009 to file a reply to the motion. I sent a fax to Mr. King on
December 3 giving him a final extension until close of business Friday, December
4, 2009 to file a reply. I also sent him notice by regular mail saying the same
thing. He filed nothing. On December 9, 2009 Mr. King called my office and
asserted that he had not received the fax but had just received the mailed copy of
my final extension. However, our office had a fax receipt showing that the fax
was received by Mr. King’s office on December 3, 2009. I directed the staff
attorney to tell Mr. King that at this point he had exceeded his final deadline and I
would not accept an argument from him. I note that December 9 was the date that
Mr. King had requested as a final extension, and yet, as of his call to the staff
attorney on that date, he had still not filed anything.

1. CMS properly determined Petitioner’s effective date of
participation to be May 4, 2009.

The effective date of participation in Medicare of an ESRD supplier such as
Petitioner is governed by regulation. That date will be the earlier of the
following: the date on which the supplier meets all Medicare participation
requirements; or the date on which it is found to meet all conditions of
participation or coverage, but has lower level deficiencies, and CMS or a State
survey agency receives an acceptable plan of correction for the lower level
deficiencies, or an approvable waiver request, or both. 42 C.F.R. § 489.13(c)(2).

The undisputed facts of this case establish that Petitioner was first surveyed for
compliance with participation requirements on March 4, 2009 by an agency of the
Maryland State government, the State of Maryland Department of Health and
Mental Hygiene Office of Health Care Quality (State agency). The State agency
found that Petitioner was not in full compliance with Medicare participation
requirements and, on March 6, 2009, it sent Petitioner a letter advising it of its
findings. CMS Ex. 1, at 1-8.” The letter advised Petitioner that it must submit an
acceptable plan of correction to the State agency in order to qualify for Medicare
certification.

On March 20, 2009 Petitioner submitted a plan of correction. CMS Ex. 1, at 3.
However, in the interim, the State agency conducted a second survey of Petitioner
on March 16, 2009. It determined that there were additional deficiencies at
Petitioner’s facility that had not been detected at the March 4 survey. On March
25, 2009, the State agency sent a second letter to Petitioner. This letter
specifically refers to the deficiencies that were identified at the March 16 survey
and invites Petitioner to submit a plan of correction addressing these deficiencies.
CMS Ex. 2, at 1-2. Petitioner submitted a plan of correction addressing these
deficiencies on May 4, 2009. CMS Ex. 3, at 1-8.

CMS subsequently determined the effective date of Petitioner’s participation to be
May 4, 2009 based on its submission of the May 4 plan of correction addressing
the March 16 deficiencies and on Petitioner’s previous correction of the
deficiencies that had been identified on March 4.

> In its hearing request Petitioner did not contend that the deficiencies
found on March 4, or subsequently, by the State agency were incorrectly
determined. Consequently, there is no issue before me in this case as to whether
Petitioner actually was deficient on the dates in question.
In its hearing request Petitioner argues that its effective date of participation
should have been March 25, 2009. On that date the State agency conducted a
follow up survey to determine whether Petitioner had corrected the deficiencies
that were identified at the March 4, 2009 survey. It determined that Petitioner had
done so, and on April 2, 2009, the State agency sent Petitioner a letter confirming
those findings. CMS Ex. 4. Petitioner construes this letter to be a certification
that Petitioner complied with participation requirements as of March 25, 2009.
Therefore, it contends, it should have been certified to participate as of that date.
But, what Petitioner overlooks is that as of March 25 the State agency had not
certified that Petitioner had corrected the deficiencies that were identified at the
March 16, 2009 survey. The April 2 letter, although it is somewhat ambiguous, is
directed only at the deficiencies which were found to be present on March 4.
Petitioner was not eligible for certification until it had corrected all outstanding
deficiencies and these deficiencies included not only those identified on March 4
but those identified on March 16 as well. The date when Petitioner submitted an
acceptable plan of correction to address the deficiencies that were identified on
March 16, was May 4, 2009.

The earliest date when CMS could have certified Petitioner to participate in
Medicare was May 4, 2009 because that was the date when Petitioner submitted an
acceptable plan of correction addressing the deficiencies identified on March 16.
42 C.F.R. § 489.13(c)(2)(ii). CMS properly certified Petitioner to participate on
May 4.

2. The State agency’s April 2 letter to Petitioner does not exempt
Petitioner from the requirements of 42 C.F.R. § 489.13(c)(2).

In its hearing request Petitioner seems to be arguing that it was misled by the April
2 letter and relied on it to assume that it had been certified to participate effective
March 25, 2009. As I have discussed above, the April 2 letter is ambiguous in that
it states that the March 25 follow up survey “found that . . . [Petitioner’s] facility is
in compliance with the health component requirements.” CMS Ex. 4, at 1. When
read in a vacuum that language might cause one to believe that the State agency
had concluded that Petitioner was complying with all Medicare participation
requirements as of March 25.

But, the letter may not reasonably be read in a vacuum. First, Petitioner knew
that, whatever the April 2 letter said, it had been found to be deficient on March 16
and that it had been told in a separate letter from the State agency that it had to
correct the March 16 deficiencies in order to be certified. Second, the April 2
letter refers specifically to the March 25 follow up survey — and not to the March
16 survey — which Petitioner knew or should have known was performed to
address only the deficiencies that were found on March 4, 2009.
But, Petitioner would not be entitled to an effective date of participation earlier
than May 4, 2009 even if it was misled by the April 2 letter into believing that it
had attained compliance with all participation requirements as of March 25, 2009.
The regulation governing the effective date of certification does not allow for
exceptions. 42 C.F.R. § 489.13(c)(2). Consequently, the fact that the State agency
may have sent Petitioner a misleading or even an incorrect letter does not serve as
any justification for certifying Petitioner earlier than the date on which it
submitted its plan of correction for the deficiencies that were identified on March
16, 2009. Moreover, and as a general rule, estoppel does not lie against CMS.
Consequently, arguments of estoppel or for its equitable counter part, laches,
provide no basis for giving Petitioner an effective date of certification that is
earlier than May 4, 2009.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Dyer Nursing and Rehabilitation Center, )
(CCN: 15-5220), ) Date: December 11, 2009
)
Petitioner, )
)
-Vv.- ) Docket No. C-09-316
) Decision No. CR2044
Centers for Medicare & Medicaid )
Services. )
)
DECISION

Petitioner, Dyer Nursing and Rehabilitation Center (Petitioner or facility), is a long term
care facility located in Dyer, Indiana, that participates in the Medicare program. Based on
a survey completed November 26, 2008, the Centers for Medicare and Medicaid Services
(CMS) determined that the facility was not in substantial compliance with 22 Medicare
requirements, and imposed a civil money penalty of $100 per day for 126 days of non-
compliance, along with a denial of payment for new admissions (DPNA). Petitioner here
appeals just one of the deficiencies cited, and CMS has moved for summary judgment.

For the reasons set forth below, I find that CMS is entitled to summary judgment; the
facility was not in substantial compliance with Medicare requirements, and I sustain as
reasonable the CMP imposed.

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.

Here, the Indiana State Department of Health (state agency) completed the facility’s
annual survey on November 26, 2008. Based on the survey findings CMS determined
that the facility was not in substantial compliance with the following Medicare

participation requirements:

42 C.F.R. § 483.10(b)(11) (Tag F157 — notification of changes) at an E level
of scope and severity (pattern of noncompliance that causes no actual harm
with the potential for more than minimal harm);

42 C.F.R. 483.13(c)(1)(ii)-(iii), (c)(2)-(4) (Tag F225 — staff treatment of
residents) at a D level of scope and severity (isolated instance of
noncompliance that causes no actual harm with the potential for more than
minimal harm);

42 C.F.R. 483.13(c) (Tag F226 — staff treatment of residents) at a D level of
scope and severity;

42 C.F.R. § 483.15(a) (Tag F241 — dignity) at a D level of scope and
severity;

42 C.F.R. § 483.15(f)(1) (Tag F248 — activities) at a D level of scope and
severity;

42 C.F.R. §§ 483.20, 483.20(b) (Tag F272 — comprehensive assessments) at
an E level of scope and severity;

42 C.F.R. § 483.20(k)(3)(ii) (Tag F282 — comprehensive care plans) at an E
level of scope and severity;

42 C.F.R. § 483.20(1)(1), (2) (TagF283 — discharge summary) at a D level of
scope and severity;
42 C.F.R. § 483.25(a)(2) (Tag F311 — activities of daily living) at an E level
of scope and severity;

42 C.F.R. § 483.25(c) (Tag F314 — pressure sores) at an E level of scope and
severity;

42 C.F.R. § 483.25(e)(1) (Tag F317 — range of motion) at a G level of scope
and severity (isolated instance of noncompliance that causes actual harm
that is not immediate jeopardy);

42 C.F.R. § 483.25(h) (Tag F323 — accidents and supervision) at an E level
of scope and severity;

42 C.F.R. § 483.25(i) (Tag F325 — nutrition) at a D level of scope and
severity;

42 C.F.R. § 483.25(m)(1) (Tag F332 — medication errors) at a D level of
scope and severity;

42 C.F.R. § 483.35(i) (Tag F371 — sanitary conditions) at a D level of scope
and severity;

42 C.F.R. § 483.60(a),(b) (Tag F425 — pharmacy services) at a D level of
scope and severity;

42 C.F.R. § 483.60(b), (d), (e) (Tag F431 — pharmacy services) at a D level
of scope and severity;

42 C.F.R. § 483.65(a) (Tag F442 — infection control) at a D level of scope
and severity;

42 C.F.R. § 483.65(b)(3) (Tag F444 — preventing spread of infection) at a D
level of scope and severity;

42 C.F.R. § 483.75(j)(1) (Tag F502 — laboratory services) at a D level of
scope and severity;

42 C.F.R. § 483.75(j)(2)(i) (Tag F504 — laboratory services) at a D level of
scope and severity; and
. 42 C.F.R. § 483.75(1)(1) (Tag F514 — clinical records) at an E level of scope
and severity.

CMS Ex. 2.

Surveyors returned to the facility on February 19, 2009, but, based on the survey findings,
CMS determined that the facility’s substantial noncompliance continued. CMS Ex. 4.
CMS subsequently determined that the facility returned to substantial compliance with
certification requirements as of April 1, 2009. CMS has imposed against the facility a
CMP of $100 per day for 226 days of substantial noncompliance ($12,600 total). CMS
Exs. 3, 4. CMS also denied payments for new admissions to the facility from February 26
through March 31, 2009, and advised the facility that its Nurse Aide Training and
Competency Evaluation Program would have to be denied or withdrawn. CMS Ex. 4, 5.!

Petitioner now requests a hearing.’ Petitioner limits its appeal to just one of the
deficiency findings: that it was not in substantial compliance with 42 C.F.R.

§ 483.25(e)(1), which requires that a resident not experience any reduction in his range of
motion unless his clinical condition makes is unavoidable.

With its motion for summary judgment and brief (CMS Br.), CMS has submitted sixteen
exhibits (CMS Exs. 1-16). Petitioner has submitted a cross-motion for summary
affirmance, along with a brief (P. Br.), but no additional exhibits.

IL. Issues

As a threshold matter, Petitioner has not appealed the bulk of the deficiencies cited, any
one of which would justify the imposition of penalties (see discussion below).

Curiously, however, after listing all 22 of the deficiencies cited, CMS virtually ignores
the majority of them, asserting that the case presents “no genuine disputes of material fact
with respect to at least 4 of the deficiencies cited... .” CMS Br. at 1. In fact, because
Petitioner appeals only one deficiency here, this case presents no disputes (material or
otherwise) of law or fact with respect to 21 of the 22 deficiencies cited, and presumably
CMS would have been entitled to summary judgment on at least those 21. Yet, for

' Denial of nurse aide training program approval stems from the denial of payment
for new admissions. CMS Ex. 5, at 1; Act §§ 1819(£)(2)(B); 1919(f)(2)(B).

> Petitioner timely requested a hearing by letter dated March 2, 2009. On March
4, 2009, it filed a waiver of hearing, opting for a 35% reduction in the CMP. But, ina
letter dated April 8, 2009, Petitioner withdrew its waiver and, with CMS’s apparent
acquiescence, reinstated its hearing request. CMS Exs. 1, 5.
reasons it does not explain, CMS bases its motion for summary judgment on just four of
the deficiencies cited, including the only one that Petitioner challenges. Although I find
CMS’s strategy somewhat baffling, I limit this decision to the deficiencies CMS relies on
in its motion.

In any event, Petitioner has not appealed three of the four deficiencies that CMS relies on
here. As discussed below, based on those three, CMS’s determination that, from
November 26, 2008, through March 31, 2009, the facility was not in substantial
compliance with Medicare requirements is final and binding, and CMS was authorized to
impose penalties. The sole issue before me, then, is whether, based on the three
deficiencies, the CMP imposed -- $100 per day — is reasonable.

II. Discussion

A, CMS is entitled to summary judgment because its determinations regarding
the unchallenged deficiencies are final and binding and any one of them, by
itself, provides a sufficient basis for imposing a penalty.

Summary judgment is appropriate here because this case turns on questions of law and
presents no genuine dispute as to any material fact. Anderson v. Liberty Lobby, Inc., 477
USS. 242, 247-48 (1986); Livingston Care Center v. United States Department of Health
and Human Services, 388 F.3d 168, 173 6" Cir. 2004).

CMS’s findings of noncompliance that result in the imposition of a remedy are considered
initial determinations that an affected party, such as Petitioner, may appeal. The
regulations governing such actions dictate that CMS send notice of the initial
determination to the affected party, setting forth the basis for and the effect of the
determination, and the party’s right to hearing. 42 C.F.R. §§ 498.20(a)(1); 498.3; 498.5.
The affected party may then challenge the determination by filing a hearing request
within 60 days of its receiving the notice. 42 C.F.R. § 498.40. An initial determination is
final and binding unless reversed or modified by a hearing decision (or under
circumstances not applicable here). 42 C.F.R. § 498.20(b).

In this case, CMS sent the appropriate notice, and Petitioner requested a hearing. In both
its hearing request and brief, Petitioner emphasizes that it challenges only the deficiency
cited under Tag F317, which corresponds to the regulation governing resident range of
motion, 42 C.F.R. § 483.25(e)(1). P. Br. at 1, 6. CMS’s determinations as to the other
deficiencies cited are therefore final and binding. Petitioner was therefore not in
substantial compliance with: 42 C.F.R. §§ 483.10(b)(11) (notification of changes);

>My findings of fact/conclusions of law are set forth, in italics and bold, in the
discussion captions of this decision.
6

483.20(k)(3)(ii) (comprehensive care plans); and 483.20(1)(1),(2) (discharge summary).
Because we have a final and binding determination that the facility was not in substantial
compliance, CMS has the discretion to impose one or more of the enforcement remedies
listed in 42 C.F.R. § 488.406, which include the remedies imposed here -- a CMP and
DPNA. Act § 1819(h); 42 C.F.R. § 488.402. So long as CMS has a basis for imposing a
remedy, I have no authority to review its determination to do so. 42 C.F.R. § 488.438(e).
Nor may I review CMS’s choice of remedy. 42 C.F.R. § 488.438(a)(1)(ii).

Petitioner nevertheless points to section 7400E1 of the State Operations Manual (SOM),
and argues that, but for the “G” level deficiency cited under Tag F317, CMS would not
ave imposed a CMP nor denied payment for new admissions. That section reflects
regulatory provisions found at 42 C.F.R. § 488.408.4 Section 488.408(d)(2), mandates
that CMS impose a “Category 2” remedy (which includes a DPNA or CMP between $50
and $3000) whenever it finds a deficiency with a scope and severity of “F” or greater
(widespread deficiency, causing no actual harm with the potential for more than minimal
arm). However, it does not follow that CMS is therefore precluded from imposing such
a remedy unless it finds actual harm. To the contrary, section 488.408(d)(3) authorizes
CMS to apply any “Category 2” remedy except when the facility is in substantial
compliance or the deficiencies pose immediate jeopardy (in which case the CMP must be
in the higher “Category 3” range). Thus, so long as the facility is not in substantial
compliance, CMS may deny payment for new admissions and impose a CMP.°

+ Although Petitioner did not cite to the regulation, I discuss it here because I am
bound by the regulations, although not by provisions of the SOM. The SOM may
provide useful guidance as to CMS’s interpretations of applicable law, but its provisions
do not constitute enforceable, substantive rules. Beverly Health and Rehabilitation
Services v. Thompson, 223 F. Supp. 2d 73, at 99-106 (D.D.C. 2002); Oakwood
Community Center, DAB No. 2214, at 16 (2008); Aase Haugen Homes, Inc., DAB No.
2013, at 15 (2006).

* Since I find that the three un-appealed deficiencies justify the CMP imposed, I
do not consider the facility’s compliance with 42 C.F.R. § 483.25(e)(1). I note however,
that, even if I were to consider the issue, I have no authority to review the scope and
severity findings here because a successful challenge would not affect “the range of civil
money penalty amounts that CMS could collect” nor cause the facility to lose approval of
its nurse aide training program. 42 C.F.R. § 498.3(b)(14). The regulations provide for
only two ranges of CMP amounts — the lower range of $50 to $3000, and the upper range
of $3,050 to $10,000. 42 C.F.R. § 488.438(a). The facility loses approval of its nurse
aide training program, without regard to scope and severity, because CMS imposed a
DPNA. See footnote 1.
B. I sustain, as reasonable the CMP imposed.

I next consider whether the CMPs are reasonable by applying 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.

In reaching a decision on the reasonableness of the CMP, I consider whether the evidence
supports a finding that the amount of the CMP is at a level reasonably related to an effort
to produce corrective action by a provider with the kind of deficiencies found, and in light
of the above factors. I am neither bound to defer to CMS’s factual assertions, nor free to
make a wholly independent choice of remedies without regard for CMS’s discretion.
Barn Hill Care 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 has imposed a CMP of $100 per day, which is at the very low end of the penalty
range for per-day CMPs ($50-$3000) and, under any rationale, is quite modest. 42
C.F.R. §§ 488.408(d); 488.438(a)(ii).

With respect to facility history, CMS documentation, which Petitioner does not challenge,
shows that the facility has a significant history of substantial noncompliance. Throughout
2007, surveys found substantial noncompliance. In January, March, May and August
2008 the facility was again found out of compliance, and the August 2008 deficiencies
posed immediate jeopardy to resident health and safety. CMS Ex. 15. The facility
history, by itself, is sufficient to sustain these minimal penalties, without regard to any
other factor.

Petitioner has not argued that its financial condition affects its ability to pay the penalty.
With respect to the remaining factors, I note that two of the three deficiencies were cited
at the “E” level of scope and severity (pattern of noncompliance with the potential for
more than minimal harm). These, by themselves, justify a penalty above the regulatory

minimum.

The $100 per day CMP is therefore reasonable.
IV. Conclusion

For the reasons discussed above, I find that CMS is entitled to summary judgment; the
undisputed evidence establishes that the facility was not in substantial compliance with
Medicare program requirements and that the $100 per day penalty is reasonable.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the case of: )
)
Cornerstone Family Healthcare, ) Date: December 9, 2009

(CCN: 10-3913), )
)

Petitioner, ) Docket No. C-09-271

) Decision No. CR2043
“Vee )
)
Centers for Medicare and Medicaid )
Services. )
)

DECISION

Until December 15, 2008, when its provider agreement was terminated, Petitioner,
Cornerstone Family Healthcare, (Petitioner or Cornerstone) was a rural health clinic
located in Umatilla, Florida that participated in the Medicare program as a provider of
services. Because it determined that Cornerstone was no longer providing services to the
community, the Centers for Medicare and Medicaid Services (CMS) advised Petitioner
that its Medicare provider agreement was terminated. Petitioner now seeks review of that
determination, and CMS has moved to dismiss Petitioner’s hearing request, or, in the
alternative, asks that I grant summary judgment.!

I deny CMS’s motion to dismiss, but I grant its motion for summary judgment because
the undisputed evidence establishes that Cornerstone stopped furnishing services to the
community and thereby voluntarily terminated its Medicare provider agreement. 42
C.F.R. § 405.2404(a)(3).

' CMS has filed its motion and brief (CMS Br.), along with eight exhibits. (CMS
Exs. 1-8). Petitioner filed its own brief in response (P. Br.) with six exhibits (P. Ex. 1-6).
Discussion

1. Petitioner is entitled to review because its termination is
“in accordance with 42 C.F.R. § 405.2404” and is therefore
a reviewable initial determination. 7

Under sections 1866(h)(1) and 1866(b)(2) of the Social Security Act (Act), an institution
or agency has a right to a hearing to challenge CMS’s determination to terminate a
provider agreement. Act §§ 1866(h)(1); 1866(b)(2).° Under the statute’s implementing
regulations, found at 42 C.F.R. Part 498, a provider dissatisfied with CMS’s initial
determination is entitled to further review, but administrative actions that are not initial
determinations are not subject to appeal. 42 C.F.R. § 498.3(d); Wesley Long Nursing
Center, DAB No. 1937, at 2 (2004). The regulation lists all of CMS’s initial
determinations. 42 C.F.R. § 498.3(b).

Here, CMS argues that Petitioner is not entitled to a hearing because the challenged
determination is not among the initial determinations listed in section 498.3(b). I
disagree. Section 498.3(b)(8) provides that “the termination of a rural health clinic
agreement in accordance with § 405.2404” is an initial determination. Although, as
discussed below, cessation of business is considered a voluntary termination by the rural
health clinic, and not a termination by CMS, it nevertheless falls within section 405.2404
and Petitioner is therefore entitled to review.

2. CMS is entitled to summary judgment because the
undisputed facts establish that Cornerstone stopped

furnishing services to the community and thereby
voluntarily terminated its Medicare provider agreement.
42 CF.R. § 405.2404(a)(3).

Summary judgment is appropriate because this case presents no genuine issue of material
fact, and its resolution turns on a question of law. Anderson v. Liberty Lobby, Inc., 477
US. 242, 247-48 (1986); Livingston Care Center v. United States Department of Health
and Human Services, 388 F.3d, 168, 173 6" Cir. 2004). See also, Illinois Knights

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

* “Provider agreement” is defined in 42 C.F.R. § 489.3 as “agreement between
CMS and one of the providers specified in § 489.2(b) [which includes clinics] to provide
services to Medicare beneficiaries and to comply with the requirements of section 1866
of the Act.”
Templar Home, DAB No. 2274, at 3-4 (2009), citing Kingsville Nursing Center, DAB
No. 2234, at 3-4 (2009).

A rural health clinic is a facility located in an area that is not urbanized and in which
there are an insufficient number of healthcare practitioners. It is “primarily engaged” in
furnishing physician and other services to outpatients. Act § 1861(aa)(1) and (2). It may
participate in the Medicare program if it satisfies the statutory definition and meets
certain regulatory requirements. 42 C.F.R. § 405.2402; 42 C.F.R. Part 491. A rural
health clinic’s Medicare agreement is valid for a term of one year, and is renewable
annually by mutual consent of the Secretary of Health and Human Services (on whose
behalf CMS acts) and the clinic. 42 C.F.R. § 405.2402(e). However, if the clinic “ceases
to furnish services to the community,” it voluntarily terminates its Medicare agreement.
42 CFR. § 405.2404(a)(3).

Cornerstone was a rural health clinic located at 356 N. Central Street, Umatilla, Florida.
CMS Exs. 5, 6. It last submitted a claim to its Medicare fiscal intermediary (Riverbend
Government Benefits Administrator) on June 25, 2008. CMS Ex. 7. On December 15,
2008, an employee of the fiscal intermediary went to 356 N. Central Street during regular
business hours to conduct an appraisal visit, but found no clinic open for business. CMS
Exs. 3, 8. He returned to the location on December 18, 2008. Again, the building was
closed, and he saw no evidence that services were provided at the location.

CMS Exs. 4, 8.

Petitioner does not claim to have been providing services, but points out that, even
though its activity ceased in March 2007, it was allowed to maintain its agreement
following an April 2007 change of ownership. P. Ex. 2. Petitioner asks that its
agreement be reinstated so that it can again change owners. That Cornerstone previously
managed to avoid voluntary termination is irrelevant to the question of whether it ceased
furnishing services in 2008. Since the undisputed evidence establishes that it did, I must
sustain the termination.

Conclusion

Because Cornerstone ceased providing services to the community, it voluntarily
terminated its Medicare agreement. I therefore grant CMS’s motion for summary
judgment.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Marilyn June McCullough, a/k/a, )
Marilyn June Knight, ) Date: December 10, 2009
)
Petitioner, )
)
-V.- ) Docket No. C-09-587
) Decision No. CR2042
The Inspector General. )
)
DECISION

This matter is before me on the Inspector General’s (1.G.’s) Motion for Summary
Disposition that, if granted, would affirm the I.G.’s determination to exclude Petitioner
pro se Marilyn June McCullough, a.k.a. Marilyn June Knight, from participation in
Medicare, Medicaid, and all other federal health care programs for a period of five years.
The I.G.’s Motion and determination to exclude Petitioner are based on section
1128(a)(1) of the Social Security Act (Act), 42 U.S.C. § 1320a-7(a)(1). The facts in this
case mandate the five-year exclusion, and for that reason I grant the I.G.’s Motion for
Summary Disposition.

I. Procedural Background

Petitioner pro se Mary June McCullough was licensed to practice nursing in the State of
Kansas and employed as a nurse at Medicalodges, a skilled nursing facility, located in
Eureka, Kansas, in 2006. On or about May 1, 2006, Petitioner stole 15
Lortabs/Hydrocodone tablets, Schedule III controlled substances intended for a Medicaid
beneficiary residing in the nursing facility.

As a result of Petitioner’s theft of the drugs intended for a Medicaid beneficiary, a
criminal complaint/information was filed, on May 16, 2006, in the District Court of
Greenwood County, Kansas, charging Petitioner with one count of Theft, in violation of
KAN. STAT. ANN. § 21-3701(a)(1) and (a)(2), one count of Possession of Narcotic Drugs,
in violation of KAN. STAT. ANN. § 65-4160, and seventeen counts of Giving a Worthless
Check, in violation of KAN. STAT. ANN. § 21-3707. On June 30, 2006, Petitioner
pleaded guilty to the Theft charge and two counts of Giving a Worthless Check. The
2

District Court of Greenwood County, Kansas accepted Petitioner’s guilt pleas, entered a
judgment of conviction and sentenced Petitioner to 12 months probation, along with 20
hours of community service, and required Petitioner to pay court costs, fees and to make
restitution.

On May 29, 2009, the I.G. notified Petitioner that she was to be excluded from
participation in Medicare, Medicaid and all Federal health care programs pursuant to the
terms of section 1128(a)(1) of the Act for the mandatory minimum period of five years.
Petitioner timely sought review of the I.G.’s action by her pro se letter dated July 1, 2009.

I convened a telephonic prehearing conference on August 10, 2009, pursuant to 42 C.F.R.
§ 1005.6, in order to discuss procedures for addressing the case. By Order of August 11,

2009, I established a schedule for the submission of documents and briefs. All briefing is
now complete, and the record in this case is closed under the circumstances set out in my
Order of August 11, 2009.

The evidentiary record on which I decide the issues before me contains seven exhibits
proffered by the I.G. and marked I.G. Exhibits 1-7 (1.G. Exs. 1-7). Petitioner proffered
three unmarked exhibits of her own. I have marked a September 4, 2009 letter from the
Kansas Nurse Assistance Program as Petitioner’s Exhibit (P. Ex.) 1. I have marked a
March 24, 2009 Order Terminating Probation Successfully Completed as P. Ex. 2.
Petitioner’s third exhibit is identical to I.G. Ex. 7 and therefore not received into
evidence. In the absence of objection, I admit I.G. Exs. 1-7 and P. Exs. 1-2.

II. Issues

The issues before me are limited to those set out at 42 C.F.R. § 1001.2007(a)(1). In the
context of this record, they are:

1. Whether the I.G. has a basis for excluding Petitioner from participating in
Medicare, Medicaid, and all other federal health care programs pursuant to
section 1128(a)(1) of the Act; and

2. Whether the proposed five-year period of exclusion is unreasonable.

Both issues must be resolved in favor of the L.G.’s position. Because her predicate
conviction has been established, section 1128(a)(1) of the Act mandates Petitioner’s
exclusion. A five-year period of exclusion is reasonable as a matter of law, since it is the
minimum period established by section 1128(c)(3)(B) of the Act, 42 U.S.C. § 1320a-

1(c)(3)(B).
III. Controlling Statutes and Regulations

Section 1128(a)(1) of the Act, 42 U.S.C. § 1320a-7(a)(1), requires the mandatory
exclusion from participation in Medicare, Medicaid, and all other federal health care
programs of any “individual or entity that has been convicted of a criminal offense
related to the delivery of an item or service under title XVIII or under any State health
care program.” The terms of section 1128(a)(1) are restated in regulatory language at
42 C.F.R. § 1001.101(a). This statutory provision makes no distinction between felony
convictions and misdemeanor convictions as predicates for mandatory exclusion.

A “conviction” is defined under section 1128(i) of the Act to include: (1) when a
judgment of conviction has been entered against an individual by a federal, state, or local
court, regardless of whether there is an appeal pending or whether the judgment of
conviction or other record relating to criminal conduct has been expunged; (2) when there
has been a finding of guilt against the individual by a federal, state or local court; (3)
when a plea of guilty or nolo contendere by the individual has been accepted by a federal,
state, or local court; or (4) when the individual has entered into participation in a first
offender, deferred adjudication, or other arrangement or program where judgment of
conviction has been with-held. 42 U.S.C. § 1320a-7(i)(1)-(4). These definitions are
repeated at 42 C.F.R. § 1001.2.

An exclusion based in section 1128(a)(1) is mandatory and the I.G. must impose it for a
minimum period of five years. Section 1128(c)(3)(B) of the Act, 42 U.S.C. § 1320a-
7(c)(3)(B). The regulatory language of 42 C.F.R. § 1001.102(a) affirms the statutory
provision.

IV. Findings and Conclusions
I find and conclude as follows:

1. On her guilty pleas of June 30, 2006, in the District Court of Greenwood County,
Kansas, Petitioner Marilyn June McCullough was found guilty of one count of the
criminal offense of Theft, in violation of KAN. STAT. ANN. § 21-3701(a)(1), and two
counts of the criminal offense of Giving a Worthless Check, in violation of KAN. STAT.
ANN. § 21-3707. I.G. Exs. 4, 6, 7.

2. The guilty plea, the finding of guilt, and the judgment of conviction as to Petitioner’s
violation of KAN. STAT. ANN. § 21-3701(a)(1) described above constitute a “conviction”
within the meaning of sections 1128(a)(1) and 1128(i)(1), 1128(4)(2), and 1128(i)(3) of
the Act, and 42 C.F.R. § 1001.2.
4

3. A nexus and a common-sense connection exist between Petitioner’s conviction, as
noted above in Findings 1 and 2 above, and the delivery of an item or service under a
State health care program. I.G. Exs. 4, 5,6, 7. Berton Siegel, D.O., DAB No. 1467

(1994).

4. By reason of Petitioner’s conviction, a basis exists for the I.G.’s determination to
exclude Petitioner from participation in Medicare, Medicaid, and all other federal health
care programs, pursuant to section 1128(a)(1) of the Act.

5. Because the five-year period of Petitioner’s exclusion is the mandatory minimum
period provided by law, it is not unreasonable. Section 1128(c)(3)(B) of the Act;
42 C.F.R. §§ 1001.102(a) and 1001.2007(a)(2).

6. There are no disputed issues of material fact and summary disposition is appropriate in
this matter. Michael J. Rosen, M.D., DAB No. 2096 (2007); Thelma Walley, DAB No.
367 (1992); 42 C.F.R. § 1005.4(b)(12).

V. Discussion

The essential elements necessary to support an exclusion based on section 1128(a)(1) of
the Act are: (1) the individual to be excluded must have been convicted of a criminal
offense; and (2) the criminal offense must have been related to the delivery of an item or
service under title XVIII of the Act (Medicare) or any state health care program. Tamara
Brown, DAB No. 2195 (2008); Thelma Walley, DAB No. 1367; Boris Lipovsky, M.D.,
DAB No. 1363 (1992). These two essential elements are fully established in the record
before me.

The first essential element is conclusively established by the District Court records,
which include the Greenwood County Sheriff's Office Incident Narrative (I.G. Ex. 4), a
March 3, 2009 letter from the President and CEO of Medicalodges, Inc. (I.G. Ex. 5), the
May 16, 2006 Complaint/Information filed in the District Court of Greenwood County
(LG. Ex. 6), and the District Court’s Journal Entry of Plea and Sentencing (I.G. Ex. 7).
Pursuant to section 1128(i) of the Act, an individual is “convicted” of a criminal offense
when a judgment of conviction has been entered by a federal, state, or local court whether
or not an appeal is pending or the record has been expunged; or when there has been a
finding of guilt in a federal, state, or local court; or when a plea of guilty or no contest
has been accepted in a federal, state, or local court; or when an accused individual enters
a first offender program, deferred adjudication program, or other arrangement where a
judgment of conviction has been withheld. Petitioner was clearly convicted within the
meaning of section 1128(i)(1), 1128(i)(2), and 1128(i)(3) of the Act when her guilty pleas
were accepted by the District Court. The I.G. has proved the first essential element.

5

The second essential element — the nexus or common-sense connection to the delivery of
an item or service under a protected health care program, for section 1128(a)(1) applies
only in the context of a protected program — is present when a caregiver or administrator,
acting in a setting where care is being provided by that person or under that person’s
supervision, steals from the person or persons being cared for who are either Medicare or
Medicaid beneficiaries. Catherine R. Kinnunen, DAB CR1889 (2009); see also Kim
Anita Fifer, DAB CR1016 (2003). It is true that the statute that Petitioner pleaded guilty
to violating is not on its face specific to the Kansas Medicaid program, and it is also true
that the court records of Petitioner’s conviction do not explicitly charge that the drugs she
stole were intended for Medicaid beneficiaries. But the record in this case does include a
report of the investigation conducted by the Greenwood County Sheriff’s Office (I.G. Ex.
4) that led to Petitioner’s conviction. That report reflects that along with the missing
narcotic medication, one of the medication record sheets was missing. The medication
record sheet was later discovered shredded into strips. When put together the strips
showed that the medication record sheet was for a resident that was a Medicaid
beneficiary. I.G. Exs. 4, 5. In addition, the I.G. has submitted a letter from the President
and CEO of Medicalodges, Inc. that states that the resident whose Schedule III
medication was stolen was a Medicaid beneficiary. I.G. Ex. 5. I may properly consider
these exhibits — even though they are not part of the official court records — for I find
that that these exhibits are reliable and credible to show the underlying context of
Petitioner's conviction: Narendra M. Patel, M.D., DAB No. 1736 (2000); Tanya A.
Chuoke, R.N., DAB No. 1721 (2000); Salmon Daniels, DAB CR1380 (2005); Neitra
Maddox, DAB CR1218 (2004). I find that the report, the letter from Medicalodges, Inc.,
and the court records demonstrate the requisite nexus and common-sense connection
between the criminal act and the program. Berton Siegel, D.O., DAB No. 1467.

The record thus shows that on or about May 1, 2006, the staff at Medicalodge noted
discrepancies in the count of Hydrocodone doses. Hydrocodone is a Schedule III
controlled substance and is regarded as a narcotic drug by KAN. STAT. ANN. § 65-4101
et seq. This drug was intended for use by a resident in Medicalodge who was a Medicaid
beneficiary. I.G. Exs. 4,5. Medicalodge reported the missing Hydrocodone to the
Greenwood County Sheriff's Office. Pursuant to execution of a search warrant of
Petitioner’s home, the missing Hydrocodone was located resulting in Petitioner being
charged with Theft in the District Court of Greenwood County. LG. Ex. 3, 4, 5, 6, 7.
There is ample support for my finding that the required nexus or common-sense
connection exists when private property is converted by criminal means or stolen from
Medicare or Medicaid beneficiaries. Andrew L. Branch, DAB CR1359 (2005); Tenisha
Taylor, a/k/a Tenisha Carter, DAB CR1132 (2004); Dorothy A. Woodrum, DAB CR956
(2002); Roberta E. Miller, DAB CR367 (1995); Teri L. Gregory, DAB CR336 (1994);
Gary Gregory, DAB CR274 (1993); Jerry L. Edmonson, DAB CRS59 (1989). The LG.
has proved the second essential element.

6

It should be noted here, however, that I base no part of this Decision or the analysis on
which it is based on Petitioner’s convictions for violating KAN. STAT. ANN. § 21-3707:
The two counts of Giving a Worthless Check do not appear to have occurred in a context
where a connection or nexus to a protected program has been suggested.

Petitioner admits her crime. Pet. Answer Brief, at 1. Petitioner’s pro se defense to the
proposed exclusion is that she has taken responsibility for her crime, made restitution, has
worked since her conviction without any blemish to her work record, completed the
probation period and the Kansas Nurse Assistance Program successfully. Further,
Petitioner argues that a five-year exclusion is too long — and thus, presumably,
unreasonable — since her conviction was on a misdemeanor theft charge. She also
argues that the period of exclusion should have been calculated from the date of her
conviction, or from the date of the incident itself, and not from the date of the I.G.’s
notice letter. Pet. Answer Brief, at 1.

Petitioner’s argument that she was convicted merely of a misdemeanor is unavailing.
The Act and the regulations make no distinction between felony convictions and
misdemeanor convictions as predicates for mandatory exclusion. 42 C.F.R. §
1001.101(a).

I have no authority to alter the effective date of the exclusion. As another Administrative
Law Judge (ALJ) of this forum has trenchantly observed: “It is well-settled that an [ALJ]
is without authority to change the effective date of an exclusion, no matter how
inexplicable or unfair the delay.” Jeffrey N. Fadel, M.DI, DAB CR1925 (2009)
(emphasis added). Although the jurisprudence of this forum provides examples of such
unfair or inexplicable delays in abundance, the Departmental Appeals Board (Board) has
resolutely held to its doctrine that the applicable statute and regulations give an
Administrative Law Judge (ALJ) no authority to adjust the beginning date of an
exclusion period by applying it retroactively. Lisa Alice Gantt, DAB No. 2065

(2007); Thomas Edward Musial, DAB No. 1991,at 4-5 (2005), citing Douglas Schram,
R.Ph., DAB No. 1372, at 11(1992) (“Neither the ALJ nor this Board may change the
beginning date of Petitioner’s exclusion.”); David D. DeFries, DAB No.1317, at 6 (1992)
(“The ALJ cannot . . . decide when [the exclusion] is to begin.”); Richard D. Phillips,
DAB No. 1279(1991) (An ALJ does not have “discretion . . . to adjust the effective date
of an exclusion, which is set by regulation.”); Samuel W. Chang, M.D., DAB No. 1198,
at 10 (1990) (“The ALJ has no power to change . . . [an exclusion’s] beginning date.”).
Moreover, a delay between the conviction date on which the exclusion is based and the
1.G.’s notice letter of exclusion does not render the exclusion invalid. Lisa Alice Gantt,
DAB No. 2065.

Nor can I consider Petitioner’s other assertions and change the length of Petitioner’s
period of exclusion. Once an individual has been convicted of a criminal offense within
the meaning of section 1128(a)(1), exclusion from participation in Medicare, Medicaid,

7

and all federal health care programs for a minimum period of five years is mandatory and
cannot be shortened. Act, section 1128(c)(3)(B).

Because Petitioner appears here pro se, I have taken additional care in reading her brief
and her request for hearing, guided by the Board’s reminders that pro se litigants should
be offered “some extra measure of consideration” in developing their records and their
cases. Louis Mathews, DAB No. 1574 (1996); Edward J. Petrus, Jr., M.D., et al, DAB
No. 1264 (1991). Ihave searched for any arguments or contentions that might raise a
valid defense to the proposed exclusion. I have found nothing that could be so construed.

Resolution of a case by summary disposition is appropriate when there are no disputed
issues of material fact and when the undisputed facts, clear and not subject to conflicting
interpretation, demonstrate that one party is entitled to judgment as a matter of law.
Michael J. Rosen, M.D., DAB No. 2096; Thelma Walley, DAB No. 1367. Summary
disposition is authorized by the terms of 42 C.F.R. § 1005.4(b)(12). This forum looks to
FED. R. CIV. P. 56 for guidance in applying that regulation. Robert C. Greenwood, DAB
No. 1423 (1993). The material facts in this case are undisputed, clear, and unambiguous.
They support summary disposition as a matter of law, and this Decision is issued
accordingly.

VI. Conclusion

For the reasons set out above, the I.G.’s Motion for Summary Disposition should be, and
itis, GRANTED. The I.G.’s exclusion of Petitioner Marilyn June McCullough a.k.a.
Marilyn June Knight from participation in Medicare, Medicaid, and all other federal
health care programs for a period of five years, pursuant to the terms of section
1128(a)(1) of the Act, 42 U.S.C. § 1320a-7(a)(1), is thereby affirmed.

/s/
Richard J. Smith
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
William Johnson, M.D., ) Date: November 25, 2009

)
Petitioner, )
)

-V.- ) Docket No. C-09-453

) Decision No. CR2039
The Inspector General. )
)

DECISION

I sustain the determination of the Inspector General (I.G.) to exclude Petitioner, William
Johnson, M.D., from participating in Medicare, Medicaid, and all federal health care
programs for a period of five years. I find that the I.G. is authorized to exclude Petitioner
pursuant to Section 1128(a)(1) of the Social Security Act (Act), and that the five-year
exclusion imposed by the LG. is the minimum period of exclusion mandated by the Act.

I. BACKGROUND

The LG. notified Petitioner by letter dated April 30, 2009, that as a result of his
conviction in the Circuit Court of Cook County, Illinois, of a criminal offense related to
the delivery of an item or service under the Medicare, Medicaid, or a state health care
program, he was being excluded from Medicare, Medicaid, and all other federal health
care programs for a period of five years. Petitioner requested a hearing by letter dated
May 12, 2009.

I held a prehearing conference, by telephone, on July 7, 2009, which is memorialized in
my Order dated July 8, 2009. At the conference, both Petitioner and the I.G. agreed that
this matter could be decided on the basis of written submissions and that an in-person
hearing was unnecessary. I set a schedule for the submission of briefs and documentary
evidence, but I allowed that after reviewing the I.G.’s brief, if Petitioner reconsidered the
necessity of an in-person hearing, he could raise it in his brief. Petitioner did not
subsequently request an in-person hearing.
The I.G. submitted a brief (I.G. Br.) accompanied by eight exhibits (I.G. Exs.) 1-8.
Petitioner submitted a brief in response (P. Br.) accompanied by four exhibits (P. Exs.)
1-4. The I.G. submitted a reply brief (I.G.Reply). Neither party objected to the exhibits
of the other, and I admit I.G. Exs. 1-8 and P. Exs. 1-4.

II. FINDINGS OF FACT AND CONCLUSIONS OF LAW
A. Applicable law

Section 1128(a)(1) of the Act requires the Secretary of Health and Human Services
(Secretary) to exclude from participation in Medicare, Medicaid, and all other federal
health care programs, any individual or entity that has been convicted of a criminal
offense related to the delivery of an item or service under the Medicare or Medicaid
programs. 42 U.S.C. § 1320a-7(a)(1).

Petitioner’s right to a hearing by an administrative law judge (ALJ) and judicial review of
the final action of the Secretary is provided by Section 1128(f) of the act (42 U.S.C.
§ 1320a-7(f)).

An exclusion imposed under Section 1128(a)(1) must be for a period of at least five years.
Act, Section 1128(c)(3)(B); 42 U.S.C. § 1320a-7(c)(3)(B). Pursuant to 1128(c)(3)(B) of
the Act, no exclusion based on Section 1128(a)(1) may be for less than five years. See
also 42 C.F.R. § 1001.102(b).

Conviction is defined by the Act as follows: (1) when a judgment of conviction has been
entered against the individual or entity by a Federal, State, or local court; (2) when there
has been a finding of guilt against the individual or entity by a Federal, State, or local
court; (3) when a plea of guilty or nolo contendere by the individual or entity has been
accepted by a Federal, State, or local court; or (4) when the individual or entity has
entered into participation in a first offender, deferred adjudication, or other arrangement
or program where judgment of conviction has been withheld. Act, Section 1128(i); 42
U.S.C. § 1320a-7(i).

42 C.F.R. § 1001.2007(a)(1)(i) grants an ALJ the authority to address whether a legal
basis for the imposition of an I.G. sanction exists, and 42 C.F.R. § 1001.2007(a)(1)(ii)
grants an ALJ the authority to address whether the length of the exclusion imposed is
reasonable. However, where the exclusion imposed under Section 1128(a)(1) of the Act
is for five years, that is the minimum, mandatory period of exclusion contemplated by the
Act, the ALJ does not have the authority to consider whether the length of the exclusion
is unreasonable. 42 C.F.R. § 1128(c)(3)(B).

B. Issue
The legal issues before me in this case are:
Whether there is a basis for the imposition of the exclusion; and,
Whether the length of the exclusion is unreasonable.
42 C.F.R. §1001.2007(a)(1).
C. Findings and Discussion

I make findings of fact and conclusions of law (Findings) to support my decision in this
case. I set forth each Finding in italics and bold below as a separate heading. I discuss
each Finding in detail.

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

Petitioner has a right to notice and a hearing pursuant to 1128(f) of the Act. Petitioner's
request for a hearing was timely filed, and it is properly before me.

Petitioner has a right to a hearing before an ALJ pursuant to 42 C.F.R. § 1005.2. Either
party may waive appearance at an in-person hearing and submit written argument and
documentary evidence for ALJ review. 42 C.F.R. § 1005.6(b)(5). Or, the ALJ may
resolve a case by summary judgment. 42 C.F.R. § 1005.4(b)(12). Summary judgment is
appropriate and no hearing is required when there are no disputed issues of material fact
and the only questions that must be decided involve application of law to the undisputed
facts, or when the moving party must prevail as a matter of law even if all disputed facts
are resolved in favor of the party against whom the motion is made. A party opposing
summary disposition must allege facts which, if true, would refute the facts relied upon
by the moving party. See Fed. R. Civ. P. 56(c); Michael J. Rosen, M.D., DAB No. 2096
(2007); Thelma Walley, DAB No. 1367 (1992).

Summary judgment is appropriate in this case. Petitioner does not dispute any issue of
material fact. In fact, Petitioner concedes the fact of his conviction. P. Br. at 2.
Moreover, Petitioner and the I.G. averred that this matter could be decided on the basis of
written submissions and that an in-person hearing was unnecessary. As there are no
material facts in dispute, and because the parties have requested it, I decide this case
based solely on the written arguments and documentary evidence.
3. There is a basis to exclude Petitioner pursuant to 1128(a)(1) of the Act.

Petitioner is a licensed physician practicing in the State of Illinois. I1.G. Ex. 5. In
September 2005, Petitioner was charged with one count of public vendor fraud in excess
of $500,000, and one count of theft in excess of $500,000. I.G. Ex. 6, at 1-2. Petitioner
was alleged to have been involved in a scheme to submit "false billing invoices" to the
Illinois Department of Public Aid. See I.G. Ex. 6. The Illinois Department of Public Aid
was the agency responsible for administering the Medicaid program in Illinois. On
September 4, 2008, petitioner pleaded guilty in the Circuit Court of Cook County, Illinois
to one count of public aid vendor fraud less than $150, which is a misdemeanor. I.G.
Ex.2 Petitioner was sentenced to 24 months probation and ordered to pay $146,000 in
restitution to the Illinois Department of Healthcare and Family Services.* 1.G. Ex.7, at 2.

The LG. relies on Section 1128(a)(1) of the Act as the basis for Petitioner's mandatory
exclusion. In order to sustain Petitioner's exclusion from participation in Federal health
care programs pursuant to Section 1128(a)(1), Petitioner must have been convicted of a
criminal offense as defined at Section 1128(i) of the Act; and the criminal offense must be
related to the delivery of an item or service under title XVIII (Medicare) or under any
state health care program (e.g., Medicaid).

Petitioner concedes that he was convicted in the Circuit Court of Cook County, Illinois of
vendor fraud, and that his conviction falls within the definition of conviction in the Act.
P. Br. 1, 2. And, it is clear that Petitioner's conviction was related to the delivery of and
item or service under Medicaid, because his conviction was for causing false billing
invoices to have been submitted to the Illinois Medicaid Program. Moreover, Petitioner
agreed to pay restitution to the Illinois Medicaid program in the amount of $146,000. I.G.
Ex. 7, at 2. Therefore there is a basis for Petitioner's exclusion from Federal healthcare
programs.

4. Petitioner’s exclusion is mandatory pursuant to 1128(a)(1)and he is
therefore not subject to permissive exclusion pursuant to Section 1128(b)
of the Act.

But Petitioner argues, rather than requiring his exclusion pursuant to Section 1128(a)(1),
his conviction "... more aptly falls under Section 1128(b)(1) of the Act." P.Br. 4.
Petitioner argues that his exclusion should fall under Section 1128(b)(1) of the Act
because he was convicted of a misdemeanor fraud, the I.G. should have applied the
permissive exclusion criteria of Section 1128(b)(1)(A) of the Act. Pursuant to this section
of the Act, the I.G. has discretion to fix a period of exclusion at three years unless
aggravating or mitigating factors for a basis for shortening or lengthening that period. 42
C-F.R. § 1001.201(b)(1).

* The Illinois Department of Public Aid was renamed.
Petitioner's argument is unavailing. Section 1128(a) does not exclude misdemeanors
from those offenses that subject a person to mandatory exclusion, it matters only that the
conviction was program-related. Travers v. Sullivan, 801 F. Supp. 394, at 405
(E.D.Wash. 1992). And, it is has been discussed often in the decisions of this forum that
when a conviction falls into the categories enumerated in both the "permissive statute"
1128(b)(1), and the "mandatory statute" 1128(a)(1), the mandatory period required by
1128(a)(1) must be imposed and neither the ALJ nor the I.G. may proceed under any
other provision. Jay Phillip Parker, DAB CR1853 (2008); Scott D. Augustine, DAB No.
2043 (2006); James Randall Benham, DAB No 2042 (2006); Lorna Fay Gardener, DAB
No. 1733 (2000). Because, in this matter there is no dispute that Petitioner's
misdemeanor conviction was program-related, the application of Section 1128(a)(1) is
inescapable.

5. Petitioner's exclusion for a period of five years is the mandatory
minimum period as a matter of law.

An exclusion under Section 1128(a)(1) of the Act must be for a minimum mandatory
period of five years, as set forth in Section 1128(c)(3)(B) of the Act:

Subject to subparagraph (G), in the case of an exclusion under subsection
(a), the minimum period of exclusion shall be not less than five years. . . .

When the I.G. imposes an exclusion for the mandatory five-year period, the
reasonableness of the length of the exclusion is not an issue I may decide. 42 C.F.R. §
1001.2007(a)(2). Aggravating factors that justify lengthening the exclusion period may
be applied, however the five-year period of exclusion is a mandatory minimum.
Petitioner was convicted of a criminal offense related to the delivery of an item or service
under Medicaid. As a result of Petitioner’s program-related conviction, the I.G. was
required to exclude him for at least five years.

IH. CONCLUSION

Sections 1128(a)(1) and 1128(c)(3)(B) of the Act mandate that Petitioner be excluded
from Medicare, Medicaid, and all federal health care programs, for a minimum,
mandatory period of five years because of his conviction of a criminal offense related to
the delivery of an item or service under Medicaid. I conclude therefore, that I.G. had a
basis for the exclusion, and I conclude that the five-year exclusion imposed by the LG. is
the minimum period of exclusion mandated by the Act.

/s/
Alfonso J. Montaiio
Administrative Law Judge