Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
CARI Reproductive Institute, ) Date: January 21, 2010

(CLIA Number: 14D1056871), )
)
Petitioner, )
)

-Vv.- ) Docket No. C-09-407

) Decision No. CR2060
Centers for Medicare & Medicaid )
Services. )
)

DECISION

The certificate of registration issued to Petitioner, CARI Reproductive Institute, to
engage in the testing of human specimens pursuant to the Clinical Laboratory
Improvement Amendments of 1988 (CLIA)! is revoked. Pursuant to 42 C.F.R. §§
493.1840(e) and 493.1844(d)(2), the revocation of Petitioner’s CLIA certificate is
effective the date of this decision. By operation of law, the owners and operators of
Petitioner are prohibited from owning or operating a CLIA laboratory for two years
pursuant to 42 U.S.C. § 263a(i)(3) due to the revocation of Petitioner’s CLIA certificate.
The two-year prohibition runs from the date of the revocation of the laboratory’s
certificate pursuant to 42 U.S.C. § 263a(i)(3) — the date of this decision.

I. Background
Petitioner applied for a CLIA certificate on January 17, 2008 and was issued a certificate

on February 27, 2008. Request for Hearing at 4; Centers for Medicare and Medicaid
Services (CMS) exhibit (CMS Ex.) 9, at 5. Petitioner indicated in its application that it

' Codified at 42 U.S.C. §§ 263a, 1302, 1395x(e). “CLIA” when used in this
decision refers to both statutory and regulatory provisions governing the program, unless
otherwise indicated.
intended to conduct general immunology testing of approximately 200 samples annually.
CMS Ex. 9, at 3. The Illinois Department of Public Health (state agency) conducted an
initial survey of Petitioner’s laboratory on July 21, 2008, and concluded that the
laboratory failed to meet two condition-level requirements and numerous standard-level
requirements that are cited in the Statement of Deficiencies dated July 21, 2008 (SOD).
CMS Exs. 10, 11. The state agency notified Petitioner by letter dated August 4, 2008 of
the results of the survey and that it could submit a plan of correction within ten days.
CMS Ex. 4, at 6-8.

Petitioner advised the state agency by letter dated August 25, 2008, that because it was
not provided with the required 10 days to correct and respond to the cited deficiencies, it
was withdrawing its application for a CLIA certificate and that it would remain a research
and development laboratory without performing any tests on patient samples. CMS Ex.
5. On October 24, 2008 a revisit survey was attempted at Petitioner’s laboratory but the
surveyors were informed by Petitioner’s staff that the laboratory director was out of the
country, they were asked to return at a later dated, and they were not allowed to review
Petitioner’s records to determine if Petitioner was in compliance with CLIA
requirements. CMS Ex. 2, at 1; CMS Ex. 15.

CMS notified Petitioner by letter dated November 4, 2008, that based on the July 21,
2008 survey findings, Petitioner was found not to be in compliance with two condition-
level requirements and numerous standard level requirements. Petitioner was further
advised that its request to withdraw or limit its CLIA certification would not be
considered a correction of the deficiencies found during the July 2008 survey and that
Petitioner could submit an acceptable plan of correction within ten days or be subject to
sanctions. CMS Ex. 1. Petitioner requested and was granted an extension of time to
submit the plan of correction, and on December 5, 2008, Petitioner submitted its plan of
correction. CMS Ex. 2, at 2; CMS Ex. 6; CMS Ex. 7, at 3; CMS Ex. 11.

CMS notified Petitioner by letter dated December 19, 2008 that its plan of correction was
not acceptable. The letter advised Petitioner that it could provide additional information
and the letter listed the additional information required. CMS Ex. 2, at 3-5. The letter
further notified Petitioner that CMS proposed the following alternative and principal
sanctions: a directed plan of correction effective January 3, 2009; suspension and
revocation of Petitioner’s CLIA certificate effective January 3, 2009 subject to any
request for hearing filed by Petitioner; and cancellation of Petitioner’s approval to receive
Medicare payments for laboratory services performed on or after January 3, 2009. The
laboratory was further advised that pursuant to 42 U.S.C. § 263a(i)(2)(A) and 42 C.F.R.

§ 493.1849(d)(2)(ii), if Petitioner failed to submit a credible allegation of compliance by
December 29, 2008, the suspension of its CLIA certificate would become effective
January 3, 2009, even if Petitioner did file a request for hearing. CMS Ex. 2, at 5-6.

Petitioner requested and was granted an extension of time to submit the additional
information, and on January 19, 2009, Petitioner sent CMS its additional information.
CMS Ex. 3, at 2; CMS Ex. 12. CMS then notified Petitioner by letter dated February 25,
2009 that its submission was not acceptable. The letter provided Petitioner with a
detailed analysis of why Petitioner’s submission was not acceptable. The letter further
notified Petitioner that its CLIA certificate was revoked effective February 25, 2009,
subject to the filing of a request for hearing. CMS Ex. 3, at 2.

Petitioner timely requested a hearing before an administrative law judge (ALJ) on April
23, 2009. Petitioner attached to its request for hearing documents marked as Exhibit A
through Exhibit G (P. Exs. A through G) as well as various notice letters that were not
marked as exhibits but are included in the CMS exhibits. The request for hearing was
docketed and assigned to me on May 4, 2009 for hearing and decision. An
Acknowledgement and Prehearing Order (Prehearing Order) was issued at my direction
on May 4, 2009.

On September 1, 2009, CMS filed a motion for summary judgment (CMS Brief) with
CMS Ex. | through CMS Ex. 19.” Petitioner filed a response in opposition to the CMS
motion and a cross-motion for summary judgment on October 5, 2009 (P. Brief).
Petitioner did not file any exhibits with its brief but did include an attachment titled
Waiver of Hearing, waiving its right to hearing. CMS filed a motion for leave to file a
reply brief with its reply brief on October 19, 2009 (CMS Reply). CMS’s reply brief is
accepted. No objections have been made and CMS exhibits 1 through 19 and Petitioner
exhibits A through G are admitted and considered. Petitioner’s waiver of its right to a
hearing is accepted and this decision is based upon the documentary evidence and the
pleadings of the parties.

II. Discussion
A. Applicable Law

CLIA establishes requirements for all laboratories that perform clinical diagnostic tests
on human specimens and provides for federal certification of such laboratories. Pub. L.
No. 100-578, amending section 353 of the Public Health Service Act, codified at 42
U.S.C. §§ 263a, 1302, 1395x(e). The purpose of CLIA is to ensure the accuracy and
reliability of laboratory tests, and hence, the public health of all Americans. CLIA was
intended by Congress to establish a single set of standards to govern all providers of
laboratory services, including those which provide services to Medicare beneficiaries.

> On September 1, 2009, CMS moved for a stay of proceedings in this case until
30 days after my ruling on its motion for summary judgment. The CMS motion was
denied on September 16, 2009.
See H.R. Rep. No. 100-899, 100th Cong. 2d Sess. 8, 18 (1988), reprinted in 1988
U.S.C.C.A.N. 3828, 3839. CLIA grants the Secretary of Health and Human Services (the
Secretary) broad enforcement authority, including the ability to suspend, limit, or revoke
the CLIA certificate of a laboratory that is out of compliance with one or more
requirements for certification. The Secretary has exercised this authority under 42 U.S.C.
§ 263a(f) and issued regulations implementing CLIA. See 42 C.F.R. Part 493.

Under CLIA, the Secretary is authorized to inspect clinical laboratories and license them
to perform tests. The Act prohibits a clinical laboratory from soliciting or accepting
specimens for testing unless it has first received from the Secretary a certificate
authorizing it to perform the specific category of tests that the laboratory intends to
perform. 42 U.S.C. § 263a(b). The Act directs the Secretary to establish standards to
assure that clinical laboratories certified by the Secretary perform tests that are valid and
reliable. 42 U.S.C. § 263a(f).

The Secretary’s regulations delegate to CMS broad authority to ensure that laboratories
perform as Congress intended, including authority to inspect and sanction laboratories
that fail to comply with the regulatory requirements. CMS certification of a laboratory
under CLIA is dependent upon whether the laboratory meets the conditions for
certification set out in the statute and regulations. 42 U.S.C. § 263a(f)(1); 42 C.F.R.

§ 493.1 et. seq. Pursuant to the enforcement provisions of the regulations, CMS may
impose principal or alternative sanctions when it finds that a laboratory has a “‘condition-
level” deficiency. 42 C.F.R. § 493.1804(b)(2). Principal sanctions are suspension,
limitation, or revocation of a CLIA certificate. 42 C.F.R. § 493.1806(b). Alternative
sanctions are a directed plan of correction, state on-site monitoring, and a civil money
penalty. 42 C.F.R. § 493.1806(c). Cancellation of Medicare payments is also authorized
as a principal sanction when condition-level deficiencies are found (42 C.F.R.

§§ 493.1807(a) and 493.1842(a)(2)) and required when CMS suspends or revokes a
laboratory’s certificate (42 C.F.R. § 493.1842(a)). Standard-level deficiencies are not an
adequate basis for the imposition of a sanction, except when the laboratory fails to correct
such deficiencies within 12 months after the last day of inspection. 42 C.F.R.

§ 493.1816(b).

Each condition-level requirement of the regulations represents a major division of
laboratory services to be offered by the laboratory or establishes an important
environmental protection for the laboratory. Since each “condition” represents a major
division of laboratory services to be offered by the laboratory or an important safety
requirement, it has been held that a failure by a laboratory to comply with even a single
applicable condition can represent a critical breakdown in one of the major health care
delivery or safety systems of the laboratory. Ward General Practice Clinic, DAB No.
1624, at 2 (1997). Therefore, violation of just one condition-level deficiency can be
grounds for a principal sanction, including revocation of a laboratory’s CLIA certificate.

42 C.F.R. § 493.1804(b); Edison Medical Laboratories, DAB No. 1713 (1999), aff'd,
Edison Medical Laboratories, Inc., v. Thompson, 250 F.3d (3rd Cir. 2001).

If, on inspection, a laboratory is found to have condition-level deficiencies that pose
immediate jeopardy, CMS requires the laboratory to take immediate action to remove the
jeopardy and may impose alternative sanctions to assist. If immediate jeopardy is not
removed, CMS may suspend or limit and later revoke the laboratory’s CLIA certificate.
CMS is also delegated authority to bring a civil suit for an injunction against a laboratory
in specified circumstances where there is immediate jeopardy. 42 C.F.R. § 493.1812.
Condition-level deficiencies that do not constitute immediate jeopardy and standard-level
deficiencies that do not rise to condition-level, are treated differently and a laboratory is
generally accorded 12 months to correct such deficiencies before action is taken to
suspend, limit, or revoke the laboratory’s CLIA certificate. 42 C.F.R. §§ 493.1814,
493.1816.

CLIA provides at 42 U.S.C. § 263a(i)(1) that a laboratory’s certificate may be suspended,
revoked, or limited only after reasonable notice and opportunity for hearing to “the owner
or operator of the laboratory.” The implementing regulations provide that a laboratory or
prospective laboratory dissatisfied with an initial determination listed in 42 C.F.R.

§ 493.1844(b) is entitled to a hearing before an ALJ. 42 C.F.R. § 493.1844(a). The
hearing procedures found in subpart D of Title 42, Part 498 are incorporated by reference.
42 C.F.R. § 493.1844(a)(2). The “suspension, limitation, or revocation of the
laboratory’s CLIA certificate . .. because of noncompliance . . .” is the first listed initial
determination subject to hearing before an ALJ. 42 C.F.R. § 493.1844(b)(1). The
imposition of alternative sanctions is also an initial determination subject to appeal (42
C.F.R. § 493.1844(b)(3)), but the determination as to which alternative sanctions to
impose and the amount of the CMP to be imposed are not. 42 C.F.R. §§ 493.1844(b)(3)
and (c)(4). The general rule is that suspension, limitation, or revocation of a CLIA
certificate does not go into effect if appealed, and is not imposed until the ALJ issues a
decision, unless CMS declares immediate jeopardy, or if the laboratory has refused a
reasonable request for information and then there is no delay in the suspension or
limitation of the offending laboratory’s CLIA certificate. 42 C.F.R. §§ 493.1840(e),
493.1844(d)(2). Additionally, a laboratory may not appeal a determination by CMS not
to reinstate a suspended CLIA certificate where CMS has concluded that the reason for
the suspension had not been removed or that there is insufficient assurance that the reason
for the suspension will not recur. 42 C.F.R. § 493.1844(c)(3). My decision is final
unless one of the parties requests and receives review by the Departmental Appeals
Board (Board). 42 C.F.R. § 493.1844(d)(4).

In addition to sanctions directed against laboratories, CLIA provides the following with
respect to the owners and operators of non-compliant laboratories:

No person who has owned or operated a laboratory which has
had its certificate revoked may, within 2 years of the
revocation of the certificate, own or operate a laboratory for
which a certificate has been issued under this section.

42 U.S.C. § 263a(i)(3).

The implementing regulations do not include any express provision implementing or
imposing this two-year prohibition against an offending owner or operator. However, the
regulations provide that CMS may suspend, limit, or revoke a laboratory’s CLIA
certificate if it finds that the owner or operator has —

[w]ithin the preceding two-year period, owned or operated a
laboratory that had its CLIA certificate revoked. (This provision
applies only to the owner or operator, not to all of the laboratory’s
employees.)

42 CFR. § 493.1840(a)(8).

CLIA does not include a definition of the term operator. However, the regulations define
an “operator” as:

the individual or group of individuals who oversee all facets
of the operation of a laboratory and who bear primary
responsibility for the safety and reliability of the results of all
specimen testing performed in that laboratory. The term
includes —

(1) A director of the laboratory if he or she meets the stated criteria .

42 C.F.R. § 493.2. The “stated criteria” for a laboratory director to be considered an
operator are those criteria described in the introductory sentence of the above-quoted
section, i.e., whether a person oversaw all facets of the operation of the laboratory and
bore primary responsibility for the safety and reliability of the results of specimen testing
performed in the laboratory. Sentinel Medical Laboratories, Inc., DAB No. 1762, at 13
(2001), aff'd, Teitelbaum y. Health Care Financing Admin., No. 01-70236 (9th Cir. Mar.
15, 2002), reh’g denied, No. 01-70236 (9th Cir. May 22, 2002); Sol Teitelbaum, M.D.,
DAB No. 1849, at 8, n.7 (2002). It is a condition-level requirement that a CLIA-certified
laboratory have a qualified laboratory director who is required to assume oversight and
responsibility for the laboratory and the results of its testing. See 42 C.F.R. §§ 493.1403,
493.1405, 493.1407, 493.1441, 493.1443, and 493.1445. Thus, the regulation creates a
rebuttable presumption that a laboratory director is an operator of the laboratory within
the meaning of the regulations and CLIA.

The allocation of the burden of proof in an appeal of CMS’s sanctions is set forth in
Hillman Rehabilitation Center, DAB No. 1611 (1997), aff'd, Hillman Rehabilitation
Center v. HHS, No. 98-3789 (GEB), slip. op. (D.N.J. May 13, 1999); Edison Medical
Laboratories, Inc., DAB No. 1713 (Hillman burden of proof applicable in CLIA
appeals), aff'd 250 F.3d (3rd Cir.). CMS has the burden of coming forward with
sufficient evidence to prove a prima facie case of noncompliance with one or more CLIA
conditions. The petitioner then has the ultimate burden of showing by a preponderance
of the evidence that it was not out of compliance with the conditions placed at issue by
CMS in its prima facie case. Regarding the imposition of sanctions, the issue to be
resolved by the ALJ is not whether CMS properly exercised discretion in imposing either
principal or alternative sanctions, but rather, whether a basis existed for the imposition of
sanctions under governing statutory and regulatory authorities based upon the evidence
before the ALJ, i.e. the ALJ resolves these issues de novo. Rustom Ali, Jahan Ferdous,
and Scottsdale Medical Laboratory, DAB 2016, at 20 (2006) citing Emerald Oaks, DAB
No. 1800, at 16 (2001).

B. Issue

Whether there is a basis for revocation of Petitioner’s CLIA certificate.

C. Findings of Fact, Conclusions of Law, and Analysis
1. Petitioner has waived its right to an in-person hearing.
2. Petitioner does not dispute that it was not in compliance with the
CLIA condition of participation established by 42 C.F.R. § 493.1441
(Laboratory Director, High-Complexity Testing).
3. Petitioner does not dispute that it was not in compliance with the
CLIA condition of participation established by 42 C.F.R. § 493.1447
(Technical Supervisor, High-Complexity Testing).

4. There is a basis for the revocation of Petitioner’s CLIA certificate.

5. Revocation of Petitioner’s CLIA certificate is effective the date of
this decision. 42 C.F.R. § 493.1838(d)(2)(ii).
6. Petitioner’s owner and operator are prohibited from owning or
operating a laboratory for at least a two-year period from the effective
date of revocation. 42 U.S.C. § 263(a)(i)(3); 42 C.F.R. §§ 493.2,
493.1840(a)(8).

The surveyors concluded based upon the initial survey of Petitioner’s laboratory
completed on July 21, 2008, that Petitioner was not in compliance with two condition-
level participation requirements established by 42 C.F.R. §§ 493.1441 and 493.1447. If
founded, either violation is a sufficient basis for suspension and revocation of Petitioner’s
CLIA certificate. 42 C.F.R. § 493.1804(b); Edison Medical Laboratories, Inc., DAB No.
1713; Ward General Practice Clinic, DAB No. 1624.

The regulation at 42 C.F.R. § 1441 provides:

Sec. 493.1441 Condition: Laboratories performing high
complexity testing; laboratory director.

The laboratory must have a director who meets the
qualification requirements of Sec. 493.1443 of this subpart
and provides overall management and direction in accordance
with Sec. 493.1445 of this subpart.

Section 493.1445 lists the laboratory director’s responsibilities. The surveyors allege that
the regulation was violated based on a lack of technical oversight, and that Petitioner’s
laboratory director failed to provide “overall management and direction of the
laboratory” based upon findings of violation of various standards for participation listed
in the SOD. CMS Ex. 10, at 8; CMS Ex. 11, at 8.

The regulation at 42 C.F.R. § 493.1447 provides:

Sec. 493.1447 Condition: Laboratories performing high
complexity testing; technical supervisor.

The laboratory must have a technical supervisor who meets
the qualification requirements of Sec. 493.1449 of this
subpart and provides technical supervision in accordance with
Sec. 493.1451 of this subpart.

Section 493.1451 sets forth the technical supervisor’s responsibilities. The surveyors
allege that the regulation was violated because Petitioner did not have a technical
supervisor who provided technical oversight of the laboratory as evidenced by the facts
that staff did not follow written quality control procedures, there was a lack of
performance of verification procedures, staff was incompetent, proficiency testing was
not performed, and there was a lack of quality assessments — findings that were based
upon various standard-level deficiency findings set forth in the SOD. CMS Ex. 10, at 13;
CMS Ex. 11, at 13.

Petitioner was given an opportunity to correct the deficiencies and Petitioner submitted to
CMS allegations of compliance and supporting evidence. However, CMS determined
that Petitioner continued to have the condition-level deficiencies cited by the survey.
CMS Exs. 2, 3, 11, and 12.

Petitioner does not dispute that it was not in compliance with the two condition-level
requirements and the standard-level requirements cited during the July 21, 2008 survey.
Request for Hearing at 7; P. Brief at 2. Rather, Petitioner argues that it applied for CLIA
certification by mistake based on information provided by the state agency; that pursuant
to 42 C.F.R. § 493.3(b)(2) it did not need a CLIA because it is “simply a research and
development laboratory and did not perform tests on patient samples;” and that its CLIA
certificate should have been terminated rather than suspended and revoked. Request for
Hearing at 7, 8; P. Brief at 4-5. Petitioner admits that prior to the July 21, 2008 survey it
tested seven human serum samples obtained from the Acacio Fertility Center. Request
for Hearing at 7; P. Brief at 2-3.

The undisputed facts satisfy the CMS burden to make a prima facie showing of a
violation of the two condition-level requirements established by 42 C.F.R. § 493.1441
and 42 C.F.R. § 493.1447. Petitioner has conceded that its laboratory was not in
substantial compliance with the CLIA requirements. Accordingly, I conclude that CMS
had a basis for the suspension and revocation of Petitioner’s CLIA certificate.

7. Petitioner cannot avoid revocation of its CLIA certificate by
withdrawal of its application or voluntary termination of its
participation in CLIA.

8. Petitioner does not have a right to review on the issues of whether or
not it was properly subject to CLIA or whether CMS should have
permitted Petitioner to withdraw from participation in CLIA.

Petitioner argues that it is not subject to CLIA because it was purely a research and
development laboratory and that its application should be treated as void or terminated
rather than subject to suspension and revocation. Petitioner argues that its primary focus
since 2006 has been the development of sHLA-G [serum histocompatibility antigen class
G] testing principles for the determination of the level of secretion of sHLA-G in media
surrounding individually cultured embryos for use as a marker to predict the capacity for
implantations without rejection. Request for Hearing at 2; P. Ex. A. Based on the belief
that it could further develop and perfect the theory of embryo well-being, Petitioner
applied for CLIA certification in order to measure the concentration of sHLA-G proteins
10

in serum samples. Request for Hearing at 2. Petitioner points-out that it had previously
been issued a CLIA certificate in July 2006, and on July 27, 2007 its CLIA certificate
was simply terminated when Petitioner was found not ready for an initial CLIA
inspection. Petitioner argues that the same result should have occurred with the CLIA
certificate at issue before me. Request for Hearing at 2; P. Ex. B. Petitioner states that it
pplied for the second CLIA certificate after consultation with the state agency because a
Czechoslovakian company had developed a kit that was commercially available that
improved the sHLA-G testing procedure and therefore Petitioner believed that the
procedure could be improved and test results would be more reliable if serum testing was
performed. Request for Hearing at 3. In its January 19, 2009 letter to CMS, Petitioner
clearly states that it initially intended to test human specimens and to offer the test for
diagnostic purposes. Petitioner stated in its letter to CMS that “CARI has applied for
CLIA certificate to have an option in the future to offer this test [the sHLA-G level in
serum/plasma] as indicator for normal pregnancy.” CMS Ex. 12, at 1. Petitioner also
does not deny that it conducted tests on seven human specimens before allegedly
abandoning the idea. CMS Ex. 12 at 1-2; CMS Ex.16, at 4.

2

CMS argues that it did not make any determination as to whether Petitioner needed a
CLIA certificate. Rather, a CLIA certificate was issued to Petitioner based on
Petitioner’s application for a CLIA certificate and its representations in its application,
specifically, Petitioner represented in its application that it intended to engage in
diagnostic tests related to general immunology and that it expected to conduct 200
diagnostic tests per year in order to “diagnose complications of pregnancy.” CMS Reply
at 1; CMS Ex. 9, at 3 and 5. CMS argues that in Petitioner’s January 18, 2008
application and during the application process, Petitioner did not represent itself as a
“purely research laboratory.” According to CMS, Petitioner is attempting to avoid the
penalty of revocation, and it is trying to withdraw its application for a CLIA certification
after receiving unfavorable survey results. CMS Brief at 7.

lam not persuaded by Petitioner’s arguments. Petitioner applied for a CLIA certificate
and when the certificate was issued, Petitioner was subject to survey or inspection and a
variety of civil penalties for failing to comply with CLIA conditions for participation. 42
U.S.C. § 263a(g), (h), (i); see also, H.R. Rep. No. 100-899, 100th Cong. 2d Sess. 8, 18
(1988), reprinted in 1988 U.S.C.C.A.N. 3828, 3839. The regulation is clear that a
laboratory issued a registration certificate “must permit an initial inspection to assess the
laboratory’s compliance with the [CLIA] requirements . . .” and that “[t]he inspection
may occur at any time during the laboratory’s hours of operation.” 42 C.F.R.

§ 493.1777(a)(1), (2). When Petitioner obtained a certificate of registration, it subjected
itself to an initial certification survey by CMS or the state agency as CMS’s agent. 42
C.F.R. §§ 403.1777(a)(2), 493.1773(a).
11

CMS argues that despite Petitioner’s wish to withdraw its CLIA application, CMS is
entitled to impose the revocation sanction against Petitioner as CMS is responsible to
protect the public from Petitioner’s owner and/or operator owning or operating another
laboratory for a two-year period. CMS relies on two Board decisions to support its
assertions, HRT Laboratory Inc., DAB No. 2118, at 14 (2007); Center Clinical
Laboratory, DAB No. 1526, at 11 (1995), citing 42 U.S.C. § 263a(i)(3). Both Board
decisions support CMS’s position. The Board’s decision in Rosewood Living Centre,
also supports the CMS position that a provider may not avoid a termination action
imposed by CMS by “voluntarily” terminating its participation or withdrawing from the
Medicare program, thereby avoiding the consequences of involuntary termination.
Rosewood Living Center, DAB No. 2019 (2006), citing Crescent Healthcare, DAB No.
1888 (2003) (upholding CMS’s right to terminate “without regard to any post-survey
effort to effect a voluntary termination.”). I find the Board’s prior decisions persuasive.
Petitioner cannot avoid revocation of its CLIA certificate by now claiming it was only
conducting testing of human specimens purely for research purposes and by requesting
voluntary withdrawal from CLIA or termination of its CLIA certificate. Furthermore,
Petitioner’s right to hearing before an ALJ is limited to the four initial determinations
listed in 42 C.F.R. § 493.1844(b)(1).

9. CMS is not estopped from denying Petitioner’s attempted
withdrawal from CLIA and CMS is not estopped from suspension and
revocation of Petitioner’s CLIA certificate due to conduct of the state
agency.

Petitioner argues that it was not knowledgeable as to CLIA requirements and Petitioner’s
owner was misled when advised by a state government employee that Petitioner needed
to obtain a CLIA certificate. P. Brief at 3. Petitioner argues that it applied for and was
issued a CLIA certificate on July 26, 2006. Petitioner alleges that during a July 23, 2007
survey of its laboratory, a state surveyor told one of Petitioner’s owners that if the
laboratory was not performing tests on human serum it did not need to be CLIA certified.
P. Brief 1; Request for Hearing at 2. Petitioner subsequently received a letter from the
state agency dated July 27, 2007 stating that its CLIA certificate was being terminated
effective the date of application and instructing Petitioner: “[w]hen your laboratory is
fully operational, you may contact our office again to reapply for CLIA certification and
schedule the mandatory compliance survey at that time....” P. Brief at 1; P. Ex. B at 1;
CMS Ex. 8, at 3. Petitioner alleges that its owner subsequently contacted William Garrett
at the state agency who advised Petitioner’s owner that a CLIA certificate was required.
P. Brief at 2. Petitioner argues that its owner was unfamiliar with the law and the
procedures and did apply for a CLIA certificate that was issued on February 27, 2008. P.
Brief at 2; CMS Ex. 9.
12

Petitioner’s argument is that Mr. Garret and the surveyor should have known that
Petitioner was not subject to CLIA and should have simply terminated Petitioner’s CLIA
certificate as was done in 2007. P. Brief at 5. Petitioner never specifically asserts that
CMS is estopped from revoking Petitioner’s CLIA certificate, but that is a possible
interpretation of Petitioner’s argument. The defense is without merit. Even if the state
agency officials made the statements attributed to them by Petitioner and Petitioner’s
prior participation in CLIA was simply terminated, estoppel will not lie in this case.
Based upon the facts alleged by Petitioner, it is clear that the state surveyor and her boss
Mr. Garret, gave Petitioner’s owner inconsistent advice as to whether or not a CLIA
certificate was required. Petitioner cannot argue in the face of such inconsistency that it
acted reasonably based upon the advice of either state official. Furthermore, assuming
for the sake of discussion that one or both state officials were wrong in their
interpretation of CLIA, I do not find CMS bound or equitably estopped. Heckler v. Cmty.
Health Srvs. of Crawford County, 467 U.S. 51, 63 (1984); Office of Personnel
Management v. Richmond, 496 U.S. 414 (1990). The Board has relied on Heckler for the
proposition that when a party has knowledge of the truth, or had means by which with
reasonable diligence he could acquire the knowledge so that it would be negligence on
his part to remain ignorant by not using those means, he cannot claim to have been
misled by relying on the representation or concealment. Wade Pediatrics, DAB No. 2153
(2008), at 24-25 (2008), aff'd, 567 F3d 1202 (10th Cir. 2009) (citing 467 U.S. 51 at 61,
n.10). The statute and implementing regulations unambiguously set forth the
requirements for CLIA certification. Petitioner’s asserted ignorance is no excuse and no
basis for upsetting revocation of its CLIA certificate. Accordingly, I will not interfere
with the CMS action based on a theory of estoppel.

II. Conclusion

Based on the foregoing, I conclude that there was a basis for revocation of Petitioner’s
CLIA certificate and it is revoked effective the date of this decision.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:

Promedics, Inc.,
(Supplier No. 4431810001) Date: January 19, 2010
Petitioner,

Docket No. C-09-722
Decision No. CR2059

-V.-

Centers for Medicare & Medicaid
Services.

See SSS SH ES SS ES ES SL

DECISION

This supplier appeal is back before me following my May 2009 remand. I remanded the
case so that, as provided for in 42 C.F.R. § 498.22, the Medicare contractor could
reconsider its determination to revoke Petitioner’s Medicare supplier number. Thereafter,
in a reconsideration decision dated July 28, 2009, a Medicare hearing officer affirmed the
revocation. Petitioner appeals. The Centers for Medicare and Medicaid Services (CMS)
has moved for summary judgment, which Petitioner opposes.

As discussed below, the uncontroverted facts compel revocation of Petitioner’s supplier
number. I therefore grant CMS’s motion for summary judgment.

I. Background

Until its Medicare supplier number was revoked on November 30, 2008, Petitioner,
Promedics, Inc., participated in the Medicare program as a supplier of durable medical
equipment, prosthetics, orthotics and supplies (DMEPOS). See, 42 C.F.R. § 424.57. Ina
letter dated October 31, 2008, its Medicare carrier, Palmetto GBA National Supplier
Clearinghouse, notified Petitioner that its supplier number would be revoked pursuant to
42 C.F.R. § 424.535(a)(5)(ii) and other regulations because the carrier determined that it
was no longer operational. CMS Ex. 1. Petitioner timely appealed, but, in error, the
carrier declined to reconsider its determination. CMS Exs. 3, 4, 5; P. Ex. 6. Petitioner
then timely requested a hearing before an administrative law judge, and its appeal was
assigned to me (Docket No. C-09-354). Thereafter, the parties jointly requested remand
2

to the carrier for reconsideration of the revocation. By order dated May 19, 2009, I
remanded the matter.

In her subsequent reconsideration determination, dated July 28, 2009, the Medicare
hearing officer affirmed the revocation of Petitioner’s supplier number. Petitioner now
appeals that determination.

CMS moves for summary judgment. With its motion and brief, CMS submits eight
exhibits (CMS Exs. 1-8). Petitioner opposes, and with its brief submits nine exhibits (P.
Exs. 1-9).

II. Discussion

CMS is entitled to summary judgment because the undisputed
evidence establishes that the supplier, Promedics, did not satisfy
Medicare enrollment requirements."

Summary judgment. The Departmental Appeals Board has, on multiple occasions,
discussed the well- settled principles governing summary judgment. See, e.g.,
18661CPayday.com, L.L.C., DAB No. 2289, at 2-3 (2009). Summary judgment is
appropriate if a case presents no genuine issue of material fact, and the moving party is
entitled to judgment as a matter of law. 1866/CPayday at 2; Illinois Knights Templar
Home, DAB No. 2274, at 3-4 (2009), and cases cited therein.

The moving party may show the absence of a genuine factual dispute by presenting
evidence so one-sided that it must prevail as a matter of law, or by showing that the non-
moving party has presented no evidence “sufficient to establish the existence of an
element essential to [that party’s] case, and on which [that party] will bear the burden of
proof at trial.” Livingston Care Center v. Dep’t of Health & Human Services, 388 F.3d
168, 173 (6th Cir. 2004) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986)).
To avoid summary judgment, the non-moving party must then act affirmatively by
tendering evidence of specific facts showing that a dispute exists. Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 n.11 (1986); see also Vandalia Park,
DAB No. 1939 (2004); Lebanon Nursing and Rehabilitation Center, DAB No. 1918
(2004).

To defeat an adequately supported summary judgment motion, the non-moving
party may not rely on the denials in its pleadings or briefs, but must furnish

evidence of a dispute concerning a material fact... .

Illinois Knights Templar, at 4; Livingston Care Center, DAB No. 1871, at 5 (2003).

' [make this one finding of fact/conclusion of law.
3

In examining the evidence for purposes of determining the appropriateness of summary
judgment, I must draw all reasonable inferences in the light most favorable to the non-
moving party. 1866/CPayday, L.L.C. at 3; Brightview Care Center, DAB 2132, at 2,9
(2007); Livingston Care Center, 388 F.3d at 172; Guardian Health Care Center, DAB
No. 1943, at 8 (2004); but see, Brightview, DAB 2132, at 10 (entry of summary judgment
upheld where inferences and views of non-moving party are not reasonable). Moreover,
drawing factual inferences in the light most favorable to the non-moving party does not
require that I accept the non-moving party’s legal conclusions. Cf Guardian Health
Care Center, DAB No. 1943, at 11 (“A dispute over the conclusion to be drawn from
applying relevant legal criteria to undisputed facts does not preclude summary judgment
if the record is sufficiently developed and there is only one reasonable conclusion that
can be drawn from those facts.”’)

Requirements fora DMEPOS supplier’s Medicare participation. In order to be eligible to
receive payment for a Medicare-covered item, a DMEPOS supplier must submit to the
carrier (which acts on behalf of CMS) a completed application. 42 C.F.R. § 424.57(b)(1).
The supplier must also maintain a physical facility on an appropriate site and, if it has
more than one, must separately enroll each physical location. 42 C.F.R. §§ 424.57(b)(1),
424.57(c)(7).

The supplier must meet and certify in its application for billing privileges that it operates
in compliance with all applicable federal and state licensure and regulatory requirements.
42 C.F.R. § 424.57(c)(1). It must have in place a comprehensive liability insurance
policy that covers its place of business as well as all customers and employees. “Failure
to maintain required insurance at all times will result in revocation of the supplier’s
billing privileges retroactive to the date the insurance lapsed.” 42 C.F.R. § 424.57(c)(10).

The supplier must permit CMS or its agents to conduct on-site inspections to ascertain its
compliance with governing regulations. Its location must be accessible during reasonable
business hours, and it must maintain a visible sign and post its hours of operation. 42
C.F.R. § 424.57(c)(8). It must maintain a primary business telephone, its number listed
under the name of the business. Exclusive use of a beeper number, answering service,
pager, facsimile machine, car phone, or answering machine does not satisfy this
requirement. 42 C.F.R. § 424.57(c)(9).

CMS will revoke a supplier’s billing privileges if it fails to meet these and the other
requirements set forth in 42 C.F.R. § 424.57(b) and (c). 42 C.F.R. § 424.57(d); 42 C.F.R.
§ 424.535(a)(1). CMS may also revoke billing privileges if it determines, based on on-
site review, that the supplier is no longer operational to furnish Medicare covered items
or services, or is not otherwise meeting Medicare enrollment requirements. 42 C.F.R.

§ 424.535(a)(5).

Undisputed facts and application of law to those facts. Here, the basic and dispositive
facts are not in dispute. Prior to July 31, 2008, Petitioner was a Medicare-enrolled
DMEPOS supplier located at 1120 Commerce Drive, Richardson, Texas. CMS Ex. 3, at

4

1. For summary judgment purposes, I accept Petitioner’s assertion that it relocated the
business to 2121 West Northwest Highway, Suite 115, Garland, Texas, on August 1,
2008. P. Br. at 1; P. Ex. 2; but see, P. Ex. 1, at 13, 15, 16, 28 (enrollment application
listing October 1, 2008, as the effective date of the change in location). According to
Petitioner, it “immediately called and notified” the carrier about the relocation, including
the new address and telephone number, and, for purposes of summary judgment, I accept
this as true. P. Br. at 2.

However, Petitioner concedes that it did not submit to the carrier the documentation
required of a relocating supplier — an enrollment application (CMS Form 8558S) and
supporting documents — until October 29, 2008. P. Ex. 1; CMS Ex. 3, at 1; P. Br. at 2.
Petitioner was unable to submit the required documentation because it had not yet
obtained a state license nor certificate of liability insurance. P. Br. at 2. Carrier staff
advised Petitioner that all required documents (including the liability insurance policy
and necessary licenses) had to be submitted with the enrollment application. P. Br. at 9,
10-11; P. Ex. 1, at 10, 13, 31.

In the meantime, on September 2, 2008, the carrier’s fraud investigator, Larry Seals,
attempted an onsite inspection at Petitioner’s former location -- 1120 Commerce Drive,
Richardson, Texas — and determined that the supplier was not operational at that address.
CMS Ex. 2, at 2, 7, 8; CMS Ex. 8, at 2 (Seals Decl.). Because the investigator could not
inspect the premises, Petitioner’s supplier number was revoked.

Petitioner does not dispute any of this, but argues that the carrier should have accepted its
enrollment application at the time of its move, without requiring the supporting
documentation. I note first that the carrier’s insistence that the supplier submit all
documentation with its enrollment application is fully supported by the regulations. 42
C.F.R. § 424.57(b)(1) (supplier must submit a completed application). Moreover, here,
Petitioner’s inability to submit timely a complete enrollment application was not simply a
question of paperwork. By its own admission, Petitioner could not submit the necessary
certifications because it did not meet the requirements underlying those certifications. Its
state license was not issued until September 30, 2008. P. Ex. 4. Its certificate of liability
insurance was issued on October 28, 2008, with an effective date of October 14, 2008. P.
Ex. 5. Either one of these factors, by itself, justified revocation of Petitioner’s supplier
number. 42 C.F.R. § 424.57(c)(1) and (c)(10). So, without regard to the filing of its
enrollment application, from the time of its relocation until at least October 14, 2008, the
supplier was not eligible to participate in the Medicare program.

Nor has Petitioner established that it became operational at its new location. At 3:00 p.m.
on December 16, 2008; at 10:15 a.m. on December 17, 2008; at 1:23 p.m. and 3:26 p.m.
on May 13, 2009; and at 2:25 p.m. on May 14, 2009, Investigator Seals went to the new
location — 2121 W. Northwest Highway, Garland, Texas — to conduct the onsite
inspection. The office was closed on every one of these occasions. He also attempted to
call the supplier’s listed telephone number, but no one answered and no answering
machine picked up the call. CMS Exs. 2, at 10-27.
5

On May 13, 2009, Investigator Seals called an after-hours number that was listed on the
supplier’s door; the supplier’s owner answered and told Investigator Seals that he had an
appeal pending before the Departmental Appeals Board. The owner called Investigator
Seals back the following day and said that his shop was not open because his supplier
number had been revoked and Medicare would not pay him; he was, however, available
by telephone to respond to previous customers’ requests for service. CMS Ex. 2, at 23;
CMS Ex. 8, at 3.

Petitioner complains about the carrier’s efforts to inspect its new location. Petitioner
admits that it is “not open to provide healthcare related services” because revocation of
its supplier number “made it impossible . . . to sustain the cost of operation.” P. Br. at 14.
It also suggests that, because an appeal is pending, an on-site inspection is improper
unless ordered by the administrative law judge. P. Br. at 18-19. These positions are
without merit. To sustain its supplier number, Petitioner must be accessible during
reasonable business hours and it must permit CMS or its agents to conduct on-site
inspections. 42 C.F.R. §§ 424.57(7) and (8). By its own admission, it does not meet
these requirements, and is therefore ineligible to participate in the Medicare program.

Il. Conclusion

Because the undisputed facts establish that Petitioner has not satisfied Medicare
enrollment requirements since its August 1, 2008 relocation, I grant CMS’s motion for
summary judgment and sustain the revocation of Petitioner’s supplier number.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Ellyn J. Baergen, ) Date: January 15, 2010

)
Petitioner, )
)

-V.- ) Docket No. C-09-630

) Decision No. CR2058
Centers for Medicare & Medicaid )
Services. )
)

DECISION

I sustain the determination of the Centers for Medicare & Medicaid Services (CMS)
contractor, as was affirmed on reconsideration, to deny the request of Petitioner, Ellyn J.
Baergen, to participate in the Medicare program.

I. Background

On November 20, 2008, Petitioner applied to participate in the Medicare program as a
speech-language pathologist. CMS Ex. 1. The CMS contractor denied her application.
Petitioner requested reconsideration, and on reconsideration, she was again denied
enrollment on May 26, 2009. By letter dated July 26, 2009, she requested a hearing, and
the case was assigned to me for a hearing and a decision.

On August 21, 2009, I held a pre-hearing conference in this case. During the conference,
Diane Todd, PT, MBA, who is Petitioner’s former employer, informed me that she
initiated the appeal. I directed her to submit a document with Ms. Baergen’s signature
authorizing Ms. Todd to represent her, otherwise we would not be able continue with the
proceedings. Petitioner submitted the authorization with her signature, and on September
21, 2009, I held a second pre-hearing conference. Both parties agreed that this matter
could be decided based on written submissions and that an in-person hearing in the case
was not necessary. I issued an order on September 21, 2009, directing the parties to file
exchanges of evidence and argument.
CMS filed a brief and seven proposed exhibits which it identified as CMS Ex. 1 - CMS
Ex. 7. Petitioner filed a letter in reply on November 16, 2009, and filed two exhibits
which it identifies as Exhibit A and Exhibit B. To conform with Civil Remedies Division
procedures, my office has marked Exhibit A as P. Ex. 1 and Exhibit B as P. Ex. 2. CMS
has not submitted a reply. I receive into the record CMS Ex. 1 — CMS Ex. 7 and P. Ex. 1
—P. Ex. 2.

Il. = Applicable Law

Part B of the Medicare program is a voluntary supplemental insurance program covering
outpatient services and is the program in which Petitioner seeks to provide her services.
Social Security Act (Act) §§ 1831-1848. The program provides reimbursement for
physician services and certain “medical and other health services” provided by non-
physician practitioners. See Act §§ 1861(s); 1842(b)(18)(C); 1861(bb); 1861(I). The
entities or individuals furnishing such healthcare services are known as “suppliers.” 42
C.F.R. § 400.202.

The Act requires the Secretary to issue regulations establishing a process for the
enrollment of suppliers. Act § 1866(j). To receive payment, a supplier must be enrolled
in the Medicare program. 42 C.F.R. § 424.505. The Medicare Program Integrity Manual
(MPIM) lists the types of non-physician practitioners that may be enrolled in the
Medicare program as suppliers, referencing the statutory and regulatory basis for
Medicare payment to these suppliers. CMS Pub. 100-8, Ch. 10, section 12.4, available at
http://www.cms.hhs.gov/Manuals (then follow hyperlink for internet only manuals). The
MPIM lists the qualifications for each non-physician practitioner type and represents
current CMS policy.

Ill. Issue, findings of fact and conclusions of law
A. Issue

The issue in this case is whether CMS is authorized to deny Petitioner’s application for
enrollment as a Medicare supplier.

B. Finding of fact and conclusions of law

I make findings of fact and conclusions of law to support my decision in this case. I set
forth each Finding below as a separate heading.
1. At the time Petitioner applied, she was not eligible to enroll in
the Medicare program as a supplier and CMS is thus authorized
to deny her application for enrollment.

Petitioner submitted an application for enrollment in Medicare on November 20, 2008.
CMS Ex. 1. Petitioner stated her intent to enroll as a speech-language pathologist. CMS
Ex. 1, at 17.

On February 18, 2009, after reviewing Petitioner’s application, First Coast Service
Options (FCSO), the Medicare contractor with the initial authority to approve or deny
enrollment, denied her application, stating that she did not meet the conditions for
enrollment or meet the requirements to qualify as a speech-language pathologist. CMS
Ex. 2, at 1. FCSO stated that, per 42 C.F.R. § 405.400, the specialty speech-language
pathologist is not a covered healthcare provider under the Medicare program.' CMS Ex.
2, at 1. Petitioner requested reconsideration of the decision, and on May 26, 2009, FCSO
reaffirmed its decision stating that “Speech Language Pathologist is not a covered
healthcare provider for the purposes of Medicare enrollment.” CMS Ex. 4, at 1-2. In the
reconsideration decision, FCSO again referred to 42 C.F.R. § 405.400, but also referred
to CMS Publication 100-8, Medicare Program Integrity Manual, Chapter 10, which
outlines requirements for enrollment in the Medicare program. CMS Ex. 4, at 2.

At the time Petitioner applied for enrollment, speech-language pathologists were not
among non-physician practitioners listed in the Act or in the MPIM.

Section 143 of the Medicare Improvements for Patients and Providers Act of 2008
(MIPPA) amended several sections of the Social Security Act that applied to speech-
language pathologists. Pub. L. No. 110-275, § 143, 122 Stat. 2494 (2008). The
amendments would “apply to services furnished on or after July 1, 2009.”? MIPPA

§ 143(c). MIPPA amended section 1832(a)(2)(C) of the Act by adding that Medicare
would now pay for outpatient speech-language pathology services. MIPPA § 143(b)(1).

' Pursuant to 42 C.F.R. § 405.400, a non-physician practitioner “means a
physician assistant, nurse practitioner, clinical nurse specialist, certified registered nurse
anesthetist, certified nurse midwife, clinical psychologist, clinical social worker,
registered dietitian or nutrition professional, who is currently legally authorized to
practice in that capacity by each State in which he or she furnishes services to patients or
clients.”

> MIPPA § 143(d), provides that: “Nothing in this section shall be construed to
affect existing regulations and policies of the Centers for Medicare & Medicaid Services
that require physician oversight of care as a condition of payment for speech-language
pathology services under part B of the Medicare program.”
It also amended section 1861(s)(2)(D) by adding outpatient speech-language pathology
services.» MIPPA § 143(b)(6).

In response to the MIPPA amendments, CMS issued an updated payment policy. CMS
announced that it would begin enrolling speech-language pathologists as suppliers of
Medicare services as of June 2, 2009, and that once enrolled, speech-language
pathologists would be allowed to bill Medicare for outpatient speech-language pathology
services furnished in private practice beginning July 1, 2009. After that date, enrolled
speech-language pathologists in private practice would be allowed to bill Medicare and
receive direct payment for their services. Speech-Language Pathology Private Practice
Payment Policy, CMS Pub 100-02, Transmittal 106, C.R. 6381, April 24, 2009, available
at http://www.cms.hhs.gov/Transmittals.

Before this change, the Medicare program could only pay for speech-language pathology
services if an institution, physician or non-physician practitioner billed them.* Id.; see
Speech-Language Pathology Private Practice Payment Policy, MLN Matters Number:
MM6381, April 24, 2009, available at http://www.cms.hhs.gov/MLNMattersArticles
(then follow hyperlink for 2009 MLN Matters Articles).

Petitioner contends that she applied for individual and group speech-language pathology
in November 2008, and that upon completion of her application she called enrollment
customer support to determine where on the form she should indicate the supplier type.
She was instructed to enter speech-language pathologist on the form on the blank line
below undefined non-physician practitioner type. She also states that she was not told
that outpatient speech therapy was not an allowed outpatient specialty provider. P. Br. at
2; see P. Ex. 2, at 1-2.

I accept Petitioner’s assertion that she was told, by an employee of FCSO, that she should
enter speech-language pathologist on the form, and that no one at FCSO told her that
outpatient speech therapy was not an allowed outpatient specialty provider. However,
any such representations cannot bind CMS or estop CMS from following clear statutory

> Thus, Medicare currently covers services provided by non-physician
practitioners, including physician assistants, nurse practitioners, physical therapists,
occupational therapists, clinical nurse specialists, certified nurse-midwives, clinical social
workers, clinical psychologists, registered dietitians or nutrition professionals,
anesthesiology assistants, and speech language pathologists and audiologists.

* CMS also updated its policy on non-physician practitioners by listing the
qualifications necessary for speech-language pathologists in private practice to enroll as
of July 1, 2009. Incorporation of Physician Fee Schedule Regulatory Changes, CMS Pub
100-08, Transmittal 289, C.R. 6310, April 15, 2009, available at
http://www.cms.hhs.gov/Transmittals.
provisions. Physicians Medical Center of Santa Fé, DAB CR1790, at 7-8 (2008);
Oklahoma Heart Hospital, DAB CR1719, at 10-11 (2008); Prime Care Home Health
Agency, Inc., DAB CR1678, at 7 (2007); Danville HealthCare Surgery Center, DAB
CR892 (2002).

IV. Conclusion

I have no authority, nor does CMS, to grant Petitioner the remedy she seeks. The
decision to allow reimbursement for outpatient speech-language pathology services must
be made by Congress through amendment of the Act. Here, Congress recognized the
value of the services Petitioner provides and amended the Act, but the amendments were
not effective until several months after Petitioner applied for enrollment. As CMS points
out in its brief, if Petitioner were to reapply, she would likely be eligible for enrollment.
Because speech-language pathology was not covered at the time of her application, CMS
is authorized to deny her application for enrollment as a Medicare supplier.

/s/
Alfonso J. Montafio
Administrative Law Judge


The Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Robert L. Nold, M.D., ) Date: January 13, 2010

)
Petitioner, )
)

-Vv.- ) Docket No. C-09-690

) Decision No. CR2054
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 Robert L. Nold, M.D., 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 Robert L. Nold, M.D. practiced medicine in the State of Kentucky.
Beginning in 2003, he took part in a scheme to sell samples of prescription medications
which he obtained in his capacity as a physician. He accomplished his part in the scheme
by diverting the samples to a local pharmacy, where the samples were repackaged and
resold to their ultimate users, some of whom were Medicare or Medicaid beneficiaries.

Federal law-enforcement authorities became aware of the scheme, and eventually
Petitioner and his attorney negotiated an arrangement whereby Petitioner, on October 6,
2008, pleaded guilty in the United States District Court for the Western District of
Kentucky to one count of Health Care Fraud, in violation of 18 U.S.C. § 1347, and one
count of the Sale or Trade of Prescription Drug Samples, in violation of 21 U.S.C.

§§ 331(t), 333(b)(1)(B), and 353(c)(1). He also agreed to the forfeiture provisions of 18
U.S.C. § 982(a)(7). Petitioner’s pleas were accepted, he was adjudged guilty, and was
sentenced in the same proceeding.

On June 30, 2009, the I.G. notified Petitioner that he 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 his pro se letter of July 1, 2009.

I convened a telephonic prehearing conference on September 18, 2009, pursuant to 42
C.F.R. § 1005.6, in order to discuss procedures for addressing the case. By Order of that
date, I established a schedule for the submission of documents and briefs. All briefing is
now complete, and the record in this case closed on December 31, 2009.

The evidentiary record on which I decide this case contains six exhibits proffered by the
1.G. and marked LG. Exhibits 1-6 (LG. Exs. 1-6), and one exhibit proffered by Petitioner
and marked Petitioner’s Exhibit 1 (P. Ex.) 1. In the absence of objection, I admit I.G.
Exs. 1-6 and P. Ex. 1.

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 I.G.’s position. Because his 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).

II. 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 (Medicare) 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.

The Act defines “conviction” as including those circumstances “when a judgment of
conviction has been entered against the individual . . . by a Federal . . . court,” (section
1128(i)(1) of the Act); “when there has been a finding of guilt against the individual . . .
by a Federal . . . court,” (section 1128(i)(2) of the Act); or “when a plea of guilty .. . by
the individual . . . has been accepted by a Federal . . . court,” (section 1128(i)(3) of the
Act, 42 U.S.C. §§ 1320a-7(i)(1)-(3)). 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 his guilty plea of October 6, 2008, in the United States District Court for the
Western District of Kentucky, Petitioner Robert L. Nold, M.D., was found guilty of one
count of the criminal offense of Health Care Fraud, in violation of 18 U.S.C. § 1347, and
one count of the criminal offense of Sale or Trade of Prescription Drug Samples, in
violation of 21 U.S.C. §§ 331(t), 333(b)(1)(B), and 353(c)(1). LLG. Exs. 2-6.

2. The guilty plea, the finding of guilt, and the judgment of conviction as to Petitioner’s
violations of 18 U.S.C. § 1347 and 21 U.S.C. §§ 331(t), 333(b)(1)(B), and 353(c)(1)
described above constitute a “conviction” within the meaning of sections 1128(a)(1) and
1128(i)(1), 1128(i)(2), and 1128(i)(3) of the Act, and 42 C.F.R. § 1001.2.

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 the
Medicare and Medicaid health care programs. I.G. Exs. 2-6. 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.
1367 (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 conclusively established by the District Court records.
Those records include a 15-page memorandum reflecting the plea agreement, the first
three pages of which detail the process by which Petitioner took part in the scheme (LG.
Ex. 2); the Indictment to which Petitioner pleaded guilty, two counts of which recite
similar details and the first count of which is expressly linked to the Medicare and
Medicaid programs (1.G. Ex. 4); and a transcript of the proceedings on October 6, 2009,
during which Petitioner acknowledged his role in the scheme and specifically
acknowledged its effect on the Medicare and Medicaid programs (1.G. Ex. 6, at 6-7). The
1.G. has proved the two essential elements.

Moreover, while I find the required nexus and common-sense connection between
Petitioner’s criminal acts and the protected programs present here as a matter of fact,
Berton Siegel, D.O., DAB No. 1467, I believe that Petitioner's conviction for violating 18
U.S.C. § 1347 is a program-related crime as a matter of law.

Petitioner admits his conviction here, as he admitted his crimes in the District Court. P.
Ans. Br. at 1; P. Ex. 1. The core of Petitioner’s pro se defense to the proposed exclusion
is set out fully in his then-attorney’s letter to the I.G. on April 2, 2009. P. Ex. 1. That
defense rests on the assertion that Petitioner’s role in the scheme was minimal, and that
he acted chiefly as an aider and abetter of other — and presumably more culpable —
participants. Further, Petitioner argues that the five-year exclusion is too long, and thus
unreasonable, because of his present age and his belief that he will be too old to practice
medicine by the time it ends.

Whatever the quantum of Petitioner’s actual culpability in the three-year-long scheme to
repackage and resell for a personal gain of $649,600 the drugs he received gratis as
samples, the fact remains that he may not now challenge his plea-based and counsel-
assisted conviction on two felony charges related to the delivery of items under the
protected programs. To the extent that Petitioner attempts to do so, it is well-settled that
such collateral attacks are simply not permitted in exclusion proceedings. 42 C.F.R.
§ 1001.2007(d); Johnnelle Johnson Bing, DAB No. 2251 (2009); Lyle Kai, R. Ph., DAB
No. 1979 (2005).

And assuming arguendo that Petitioner was convicted as an aider and abetter, rather than
as a principal (an assertion not supported by the citation of 18 U.S.C. § 2 at any point
whatsoever in the District Court’s records, and implicitly contradicted by the language of
both charges asserting that he was “aided and abetted by others . . .”), there are three very
serious reasons why that argument gains Petitioner nothing. First, by its terms 18 U.S.C.
§ 2 is pellucid: “Whoever commits an offense against the United States or aids, abets,
counsels, commands, induces or procures its commission, is punishable as a principal.”
Second, and as the I.G. correctly points out, this forum does not distinguish between
convictions based on conduct that aids and abets others in crimes against the protected
programs and on convictions based on crimes committed directly against those programs.
Nina Joanne Gram a/k/a Nina Regan, DAB CR1168 (2004). But the most
comprehensive answer to this part of Petitioner’s defense lies in the language of section
1128(a)(1) of the Act: the operant words of the statute are “a criminal offense related to
the delivery of an item or service ....” Whether his actions were those of an aider and
abetter or those of a principal, they were incontestably “related” to the scheme to sell,
repackage, and resell the drug samples, and thus squarely within the scope of section
1128(a)(1).

Nor can | accept Petitioner’s other arguments and reduce the period of Petitioner’s
exclusion. Once an individual has been convicted of a criminal offense within the
meaning of section 1128(a), including 1128(a)(1), exclusion from participation in
Medicare, Medicaid, and all federal health care programs for a minimum period of five
years is mandatory and reasonable as a matter of law. The five-year mandatory minimum
period of exclusion cannot be shortened. Act, section 1128(c)(3)(B). Joni D. Sisodia,
M.D., DAB No. 2224 (2008); Mark K. Mileski, DAB No. 1945 (2004); Salvacion Lee,
M.D., DAB No. 1850 (2002).

Because Petitioner appears here pro se, I have taken care in reading his brief, his exhibit,
and his request for hearing, guided by the Departmental Appeals 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 Robert L. Nold, M.D., 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


The Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the case of: )
)

Tan D. Nguyen, ) Date: January 8, 2010
)
Petitioner, )
)

-Vv.- ) Docket No. C-10-24

) Decision No. CR2053
The Inspector General. )
)

DECISION

Petitioner, Tan D. Nguyen, asks review of the Inspector General’s (1.G.’s) determination
to exclude him for five years from participation in the Medicare, Medicaid, and all
federal health care programs under section 1128(a)(4) of the Social Security Act. The
1.G. has moved for dismissal, arguing that the appeal is untimely. I am not convinced
that Petitioner’s appeal is untimely; however, I dismiss his hearing request pursuant to 42
C.F.R. § 1005.2(e)(4) because it fails to raise any issue that I may properly address.

Discussion

Petitioner’s hearing request fails to raise an issue that may
properly be addressed in a hearing.’

Petitioner was a California podiatrist who, on January 10, 2008, pled guilty to one felony
count of prescribing an unlawful controlled substance, in violation of section 1153(a) of
the Health and Safety Code of California. 1.G. Ex. 1.

In a letter dated June 30, 2009, the LG. advised Petitioner that, based on his felony
conviction, he was excluded from participation in Medicare, Medicaid, and all federal
health care programs for the minimum statutory period of 5 years. CMS Ex. 4. With the
notice letter, the I.G. sent Petitioner an explanation of his appeal rights: he was entitled

' [make this one finding of fact/conclusion of law.
to a hearing before an administrative law judge if he filed a written request for review
within sixty days after receipt of the notice. CMS Ex. 1, at 3.

Thereafter, Petitioner, who is not represented by counsel and is obviously confused by
the entire appeals process, sent out a series of letters requesting a waiver under 42 C.F.R.
§ 1001.1801(b), which authorizes the I.G. to waive certain exclusions. Petitioner sent
one such letter, dated August 4, 2009, to the Office of Inspector General. On August 11,
2009, the I.G. responded, explaining that he could waive exclusion only “upon the
request of the administrator of the federal health care program.” Not unreasonably,
Petitioner assumed that “administrator of the federal health care program” referred to a
federal official, and, on September 3, 2009, he sent his waiver request to the Medicare
Administrator at the Centers for Medicare and Medicaid Services. In a September 22,
2009 letter, a customer services representative for the Centers for Medicare and Medicaid
Services told Petitioner (not wholly accurately) that his waiver request should be sent to
the Departmental Appeals Board. Thereafter, Petitioner submitted his waiver request to
us in a letter dated September 29, 2009, postmarked October 2, 2009. 2

The I.G. moves to dismiss under 42 C.F.R. § 1001.2007(b), arguing that Petitioner’s
request is untimely.? Assuming five days for delivery of its notice letter, the I.G. asserts
that Petitioner’s request should have been filed on or before September 3, 2009.

By itself, a hearing request dated September 29, 2009, would be considered untimely.
However, twice prior to the 60-day deadline, Petitioner sent essentially the same request
for relief to offices within the Department of Health and Human Services, although he
did not address those requests to the Departmental Appeals Board. To the extent that
Petitioner’s waiver request can be considered a request for hearing at all, I consider it
timely, based on those earlier submissions.

Nevertheless, Petitioner’s request must be dismissed because he raises no issues that are
reviewable in this forum. He requests a waiver under 42 C.F.R. § 1001.1801(b). That
regulation authorizes the I.G. to grant or deny a state health care program’s request that
exclusion be waived “if the individual . . . is the sole community physician or the sole
source of essential specialized services in a community.” So a state health care official
must present the request to the 1.G. But “the decision to grant, deny, or rescind a request
for a waiver is not subject to administrative or judicial review.” 42 C.F.R.

* Petitioner sent his argument via electronic mail to I.G. counsel, who forwarded
it to the Civil Remedies Division. Accompanying Petitioner’s argument are his
September 3, 2009 letter to the Medicare Administrator and the September 22, 2009
response. Petitioner attached to his hearing request the August 4, 2009 letter to the I.G.
and the I.G.’s August 11, 2009 response.

> With his motion and brief, the I.G. submits four exhibits (I.G. Exs. 1-4).
§ 1001.1801(f); Social Security Act § 1128(c)(3)(B). The regulations require dismissal
of any hearing request that fails to raise any issue that “may properly be addressed in a
hearing.” 42 C.F.R. § 1005.2(e)(4).

I therefore dismiss Petitioner’s request for a hearing.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)

Professional Medical Center, ) Date: January 8, 2010
)
Petitioner, )
)

-V.- ) Docket No. C-09-594

) Decision No. CR2052
Centers for Medicare & Medicaid )
Services. )
)

DECISION

For the reasons set forth below, I dismiss as untimely the hearing request filed by
Petitioner, Professional Medical Center (hereafter Petitioner).

I. Background

Petitioner is a multi-specialty clinic located in Miami, Florida. First Coast Service
Options, Inc. (FCSO), a Medicare contractor for the Centers for Medicare and Medicaid
Services (CMS), denied Petitioner’s enrollment application by letter dated October 15,
2008, pursuant to 42 C.F.R. § 424.530. On December 16, 2008, Petitioner requested
reconsideration of FCSO’s determination. By letter dated March 4, 2009, FCSO issued
its reconsideration decision upholding the denial. Petitioner appealed the unfavorable
decision by an undated letter, which was received by the Departmental Appeals Board,
Civil Remedies Division, on July 20, 2009.

The case was assigned to me for hearing and decision on July 27, 2009. I held a
telephone prehearing conference with the parties on August 27, 2009. With the
assistance of the parties I set a briefing schedule to addresses the issues in this case.

Pursuant to the briefing schedule I set, CMS filed a Brief In Support of First Coast
Service Options, Inc. Reconsideration Decision with 10 exhibits, CMS Exs 1-10, on
September 11, 2009. Petitioner filed a Brief (P. Brief), with seven exhibits, P. Exs. 1-7,
on October 1, 2009. CMS filed a Reply Brief on October 9, 2009. The parties have not
objected to my consideration of the offered exhibits. Therefore, I admit CMS Exs. 1-10
and P. Exs. 1-7 into evidence. While I do not decide this case on its merits, I will admit
the exhibits submitted by the parties to ensure a complete record in this matter in the
event my decision is appealed.

IL. Issues, Findings of fact and conclusions of law, and Discussion

A. Issues
-- Whether Petitioner filed a timely request for hearing; and if not,

-- Whether Petitioner has shown good cause for extending the time to file
a request for hearing.

B. Findings of fact and conclusions of law, and Discussion

In its brief, CMS alleges that, as an initial matter, Petitioner’s request for hearing is
untimely, and therefore, should be dismissed. CMS states that the FCSO’s
reconsideration decision upholding the denial of Petitioner’s enrollment application is
dated March 4, 2009, and that Petitioner’s request for hearing was received by the Civil
Remedies Division on July 20, 2009, more than 120 days from the date of the
reconsideration decision. CMS maintains that Petitioner’s request for hearing was filed ,
well beyond the 60-day time limit mandated in the regulations. 42 C.F.R. §
498.40(a)(2). CMS contends that, in accordance with the regulatory presumption,
Petitioner is presumed to have received the March 4, 2009 reconsideration decision on
March 9, 2009. 42 C.F.R. §§ 498.40(a)(2); 498.22(b)(3). CMS asserts that Petitioner did
not file a request for an extension of time to file its request for hearing pursuant to 42
C.F.R. § 498.40(c)(1). Further, CMS asserts that Petitioner has not claimed any delay in
receiving the notice nor attempted to justify in any way the late filing.

CMS further maintains that even if Petitioner had filed its request for hearing in a timely
manner, FCSO acted properly in denying Petitioner’s enrollment application. CMS
contends that FCSO made onsite visits to Petitioner’s medical clinic on July 15, 2008,
August 4, 2008, August 6, 2008, and September 4, 2008, and no medical providers were
present at Petitioner’s business address.

CMS asserts that Petitioner’s clinic was thus not operational and that FCSO properly
determined that Petitioner did not meet the requirements to qualify as a provider of
services in the Medicare program. 42 C.F.R. § 424.530.
In its brief, Petitioner argues that the timeliness of its hearing request should not be at
issue because the “DAB has already accepted jurisdiction of this matter and has assigned
an ALJ to hear the merits of the case.” P. Brief at 6-7. Petitioner also cites 42 C.F.R. §
498.56(b), which states that the ALJ will not consider any issue that arose on or after the
date on which it is determined that a supplier no longer meets the conditions for coverage
of its services. P. Brief at 7. Further, Petitioner argues that the issue of the timeliness

of the filing of the hearing request was not raised at the prehearing conference, when the
issues in the case were discussed.

With respect to the merits of the case, Petitioner asserts that it was fully operational at the
time of the site visits. Petitioner contends that there are no Medicare rules or regulations
or Florida rules or regulations that require a clinic such as Petitioner to be seeing patients
any specific number of hours per week, or on any particular days of the week. Petitioner
states that it submitted a Medicare re-enrollment application, not an initial application,
and that CMS could have examined past billing records for proof that patients were being
seen.

1. Petitioner’s hearing request was filed more than 60 days after receipt
of FCSO’s March 4, 2009 reconsideration decision, and was therefore
untimely.

Petitioner’s right to a hearing is governed by the provisions of the regulations at 42
C.F.R. Part 498. Section 498.40(a)(2) of 42 C.F.R. expressly provides that:

[an] affected party or its legal representative or other authorized official must file
the request [for hearing] in writing within 60 days from receipt of the notice of
initial, reconsidered, or revised determination unless that period is extended in
accordance with paragraph (c) of this section.

The FCSO’s March 4, 2009 letter containing the reconsideration decision is an “initial,
reconsidered, or revised determination” within the meaning of 42 C.F.R. § 498.40(a)(2).
The letter concluded by advising Petitioner that if it was not satisfied with the decision, it
could file an appeal to an ALJ for further administrative review. The letter further
advised Petitioner that it must file a written appeal with the Departmental Appeals Board
“within 60 days after the date of receipt of this decision” and listed the information that
was required to be included in the request for a hearing. The letter advised Petitioner that
“[flailure to timely request a review by the ALJ is deemed a waiver of all rights to further
administrative review.”
Petitioner is presumed to have received the FCSO’s March 4, 2009 letter five days after
the date of the notice, unless it is shown that the letter was received earlier or later. 42
C.F.R. §§ 498.40(a)(2), 498.22(b)(3). Petitioner did not mention in its hearing request
any delay in receiving the letter or state when the letter was received. Therefore, in
accordance with the regulatory presumption, Petitioner is presumed to have received the
FCSO’s March 4, 2009 letter on March 9, 2009.

Thus, the latest date by which Petitioner could have filed a timely hearing request
consistent with 42 C.F.R. § 498.40(a)(2) was May 8, 2009, 60 days after March 9, 2009.
Petitioner’s request for hearing was undated. It was received by the Departmental
Appeals Board, Civil Remedies Division, on July 20, 2009. The filing of Petitioner’s
request was clearly beyond the 60 days stipulated in the regulations. Therefore,
Petitioner’s hearing request was untimely.

2. Petitioner has not shown good cause for its untimely hearing request.

Petitioner has not filed a request for an extension of time for filing its request for hearing
pursuant to 42 C.F.R. § 498.40(c)(1). To extend the period for filing, the “affected party
or its legal representative . . . may file with the ALJ a written request for extension of
time stating the reasons why the request was not filed timely.” 42 C.F.R. § 498.40(c)(1).
I may extend the time for filing the request “for good cause shown.” 42 C.F.R.

§ 498.40(c)(2). Good cause has been interpreted by the Departmental Appeals Board as
circumstances beyond the ability of the party litigant to control. Hillcrest Healthcare,
L.L.C., DAB No. 1879 (2003); Hospicio San Martin, DAB No. 1554 (1996).

In this case, Petitioner has not even attempted to advance an argument as to why its
request for hearing was filed late. Petitioner has presented no arguments that its late
filing was due to circumstances beyond its control.

As a “defense” to the timeliness issue, Petitioner claims that because the “DAB has
already accepted jurisdiction of this matter” and assigned me to hear it, I can no longer
consider issues related to the timeliness of the hearing request. P. Brief at 6-7. Petitioner
argues further that the timeliness issue “was not an issue which was raised at the
prehearing conference, when the issues in the case were announced.” P. Brief at 7.

Petitioner’s arguments are misguided and flawed. Under 42 C.F.R. § 498.70(c), an ALJ
may “[o]n his or her own motion, or on the motion of a party to the hearing . . . dismiss a
hearing request either entirely or as to any stated issue” when the affected party has not
filed a hearing request timely and the time for filing has not been extended. Thus, when
a hearing request has not been filed timely, dismissal by an ALJ is appropriate, and a
decision on the merits will not be issued. Further, the purpose of the telephonic
prehearing conference that I convened with the parties was to discuss the manner in
which this case would proceed. That CMS may not have raised the timeliness issue at the
conference does not mean it was precluded from doing so in its initial brief. Moreover, I
find no prejudice to Petitioner because it had the opportunity to respond to the timeliness
issue in its response brief.

I find that Petitioner has not demonstrated good cause for its untimely hearing request.
Petitioner has not shown that it filed the hearing request after the 60-day requirement due
to circumstances beyond its control.

Il. Conclusion

Because Petitioner did not timely file its hearing request, and no good cause justifies
extending the time for filing, I grant CMS’s motion and order this case dismissed. 42
C.F.R. § 498.70(c).

/s/
Alfonso J. Montafio
Administrative Law Judge