Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Main Street Pharmacy, LLC,
Petitioner
Vv.
Centers for Medicare and Medicaid Services.
Docket No. C-10-359
Decision No. CR2160

Date: June 18, 2010

DECISION

By a hearing request (HR) received January 20, 2010, Petitioner Main Street Pharmacy,
LLC (MSP), timely appealed the November 27, 2009 reconsideration decision of a
Medicare contractor hearing officer, which upheld the revocation of MSP’s Medicare
supplier enrollment. For the reasons explained below, I uphold the revocation.

I. Undisputed Facts and Procedural History

The following facts are undisputed. MSP is an Ohio pharmacy formed in 2004 as a
limited liability corporation that Brian L. Martin and Kristina Gundler originally owned
equally. On March 11, 2008, Mr. Martin was indicted on multiple counts of health care
fraud of which he was convicted on September 22, 2008 and which consisted of filing
false Medicaid claims for drugs never prescribed or dispensed to patients. CMS Ex. 10,
at 41-77. Neither Ms. Gundler nor MSP itself was charged with any knowledge of, or
involvement in, the crime (and the court found that Ms. Gundler helped uncover the
scheme). Id. at 58, 64-67.

2

On June 16, 2008, Ohio’s Medicaid agency suspended MSP’s Medicaid provider number
because of the indictment. Jd. at 103-104. By letter dated September 15, 2008, Ms.
Gundler notified CMS of the suspension of MSP’s Medicaid number due to the
indictment of one of its owners. Jd. at 105. On October 3, 2008, eleven days after Mr.
Martin’s conviction, Ms. Gundler purchased Mr. Martin’s interest in MSP and became
sole owner. Jd. at 87-102.

By letter dated August 6, 2009, CMS’s contractor, the National Supplier Clearinghouse
(NSC), notified MSP that its Medicare supplier number “will be revoked 30 days from
the postmark of this letter.” CMS Ex. 8, at 1. The letter then states that the “effective
date of this revocation has been made retroactive to September 22, 2008, which is the
date your felony conviction became effective.” Jd. The notice states that the reason for
revocation was that “your company was convicted on September 22, 2008 of federal
health care fraud charges” and cites “supplier standard number one,” which requires
suppliers to be “in compliance with all applicable Federal and State licensure and
regulatory requirements.” Jd. The notice advised MSP that it could complete a
corrective action plan within 30 days to achieve full compliance and that it had the right
to request reconsideration within 60 days. Jd. at 2.

By letter dated August 21, 2009, Ms. Gundler filed a request for reconsideration of
MSP’s revocation in which she pointed out that neither she nor the pharmacy was
convicted of a felony and that Mr. Martin, who was convicted, had not owned MSP since
October 2008. CMS Ex. 4. A copy of the purchase agreement was enclosed. CMS

Ex. 5.

On November 27, 2008, the hearing officer issued a reconsideration decision upholding
the revocation. CMS Ex. 1. The reconsideration decision quoted the explanation that
Mr. Martin, not Ms. Gundler or MSP, was charged and convicted and noted that Mr.
Martin was no longer an owner, as the purchase agreement reflected. Jd. at 1-2.
“However,” the hearing officer concluded, “based upon the documentation in the case
file, the NSC was not properly notified of the change,” because no copy of the CMS
Form 855S was found reflecting a notification of changed ownership. Jd. at 2. The
hearing officer further stated that MPS did not respond to a request for additional
documentation and that Ms. Gundler’s statement did not sufficiently substantiate
compliance with supplier standard 1, because neither the letter nor the documentation in
the case file explained “Ms. Gundler’s status during the time period Mr. Martin was
convicted” of health care fraud. /d. The hearing officer’s acknowledgment of the
reconsideration request and second letter notifying MPS of its “opportunity to submit
additional evidentiary documentation to be reviewed in the reconsideration” are also in
the record. CMS Ex. 2, at 1-3.

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On January 12, 2010, MSP submitted a CMS 8558, reporting the change of ownership as
well as the previous owner’s conviction and the Medicaid suspension.’ CMS Ex. 10, at
2, 16, 25. A week later, MSP timely requested a hearing before an Administrative Law
Judge (ALJ) to review the November 27, 2009 reconsideration decision by a Medicare
Hearing Officer that sustained revocation of its Medicare enrollment and billing
privileges. HR at 1. A copy of the reconsideration decision, identified as Exhibit A,
accompanied the hearing request. The case was originally assigned to ALJ Richard J.
Smith and then transferred to me pursuant to 42 C.F.R. § 498.44.

On April 28, 2010, CMS filed a motion for summary judgment and accompanying
memorandum (MSJ), along with 11 Exhibits. On May 19, 2010, MSP filed its answer
brief (P. Answer), opposing CMS’s motion and indicated that it had no objection to, and
might rely on, any of CMS’s exhibits (while reserving the possibility of submitting
supplemental exhibits or witness lists if the case proceeded to hearing). On June 1, 2010,
CMS submitted a reply brief (CMS Reply).

I admit Petitioner’s Exhibit A and CMS Exhibits 1 — 11 for purposes of resolving the
motion for summary judgment.

IL. Issues

The central issue in this case is whether CMS is entitled to summary judgment that the
revocation of Petitioner’s enrollment in Medicare was legally authorized.

Before me, CMS contends that the revocation was legally authorized on two bases.

First, CMS argues that the original basis for the revocation — that the supplier was
convicted of a felony offense within the scope of section 424.535(a)(3) — was proper,
because it is undisputed that Mr. Martin was an owner of MSP when he was convicted of
health insurance fraud. MSJ at 6-9. CMS argues that the reconsideration decision’s
conclusion that MSP was not in compliance with supplier certification standard | in
section 424.57(c)(1) (standard 1) was essentially the same reason for revocation, because
the basis for finding that MSP was not operating in compliance with all legal
requirements was the felony conviction. Second, CMS argues that revocation for failure
to report timely that ownership in MSP changed was also proper, because any delay in

' CMS states that a new supplier number was issued on February 17, 2010 to Ms.
Gundler “under the name ‘Kfph LLC’ located at the same address as ‘Main Street
Pharmacy.’” MSJ at 5 (citing CMS Ex. 11). Neither party explains why the new number
was issued under a different name, when the January 12, 2010 CMS 8555S used the name
Main Street Pharmacy. Further, CMS does not explain how a new number was issued
after a revocation that purported to impose a three-year bar against MSP filing an
application to re-enroll in Medicare. Since neither party sought any action from me
concerning this new enrollment, I have not developed the record and do not make any
decision in regard to it.

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raising this ground resulted from the fact that CMS was not aware of the change of
ownership at the time the initial revocation notice was mailed and MSP had an adequate
opportunity to respond to this basis. MSJ at 9-11.

Petitioner denies that either basis supports revocation and asserts that its due process
rights have been violated.

Ill. Findings of fact and conclusions of law with supporting discussion
A. Applicable Standard

The Departmental Appeals Board (Board) has set out the standard for summary judgment
as follows:

Summary judgment is appropriate when the record shows that there is no
genuine issue as to any material fact, and the moving party is entitled to
judgment as a matter of law. . .. While the Federal Rules of Civil
Procedure (FRCP) are not binding in this administrative appeal, we are
guided by those rules and by judicial decisions on summary judgment in
determining whether the ALJ properly granted summary judgment. ... The
party moving for summary judgment bears the initial burden of showing
that there are no genuine issues of material fact for trial and that it is
entitled to judgment as a matter of law. ... If the moving party carries its
initial burden, the non-moving party must “come forward with ‘specific
facts showing that there is a genuine issue for trial.” Matsushita Elec.
Industrial Co. v. Zenith Radio, 475 U.S. 574, 587 (1986) (quoting FRCP
56(e)). To defeat an adequately supported summary judgment motion, the
non-moving party may not rely on the denials in its pleadings or briefs, but
must furnish evidence of a dispute concerning a material fact — a fact that, if
proven, would affect the outcome of the case under governing law. ... In
determining whether there are genuine issues of material fact for trial, the
reviewer must view the evidence in the light most favorable to the non-
moving party, drawing all reasonable inferences in that party’s favor.

Senior Rehab. & Skilled Nursing Ctr., DAB No. 2300, at 3 (2010) (citations omitted).
The role of an ALJ in deciding a summary judgment motion differs from the ALJ’s role
in resolving a case after a hearing. The ALJ should not assess credibility or evaluate the
weight of conflicting evidence. Holy Cross Vill. at Notre Dame, Inc., DAB No. 2291, at
4-5 (2009).
B. Analysis
1. CMS had a valid basis to revoke based on the felony conviction.

On August 6, 2009, the Medicare contractor notified MSP that its enrollment was
revoked based on failure to comply with standard 1, which requires that a Durable
Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) supplier? “operates
its business and furnishes Medicare-covered items in compliance with all applicable
Federal and State licensure and regulatory requirements.” CMS Ex. 8, at 1 (citing 42
C.F.R. § 424.57(c)(1)). The notice specified that MSP failed to meet this standard,
because, according to the United States Department of Justice (DOJ), the supplier “was
convicted on September 22, 2008 of federal health care fraud charges.” CMS Ex. 8, at 1;
CMS Ex. 6.

It is undisputed that the fraud consisted of co-owner Mr. Martin knowingly and willfully
billing Medicaid using MSP’s Medicaid number for drugs never actually prescribed by a
doctor and never dispensed by Mr. Martin. P. Answer at 3. MSP’s Medicaid number
was suspended as a result of the indictment, and MSP notified CMS of that suspension as
regulations required. /d.; CMS Ex. 10, at 103-105. MSP does not argue that a conviction
for health care fraud in Medicaid cannot properly form the basis for finding a violation of
standard 1. I conclude that such a conviction demonstrates on its face that a business is
not being operated in compliance with applicable Federal and state regulatory
requirements.

Petitioner does argue, however, that Mr. Martin’s conviction should not be imputed to the
entity, MSP, which was not itself indicted or convicted. P. Answer at 3. CMS relies for
the contrary position on 42 C.F.R. § 424.535(a)(3), which provides for revocation of a
currently enrolled supplier’s billing privileges in the following circumstance:

The provider, supplier, or any owner of the provider or supplier, within the
10 years preceding enrollment or revalidation of enrollment, was convicted
of a Federal or State felony offense that CMS has determined to be
detrimental to the best interests of the program and its beneficiaries.

(Emphasis added); MSJ at 7, citing Fady Fayad, M.D., DAB No. 2266 (2009).

No dispute exists that Mr. Martin was an owner of MSP during the period that he
committed, was charged with, and was convicted of defrauding Medicaid. MSP does not
deny that this crime is an offense covered by section 424.535(a)(3)(i)(B), i.e., a financial
crime similar to insurance fraud.

> A DMEPOS supplier, such as MSP, is an entity that sells or rents Medicare-covered
durable medical equipment, prosthetics, orthotics, and supplies. 42 C.F.R. § 424.57(a).
Such suppliers must meet the certification requirements set out in section 424.57(c).
It is true that the contractor did not cite section 424.535(a)(3) as a separate basis for
revoking MSP’s enrollment. Nevertheless, I find that section informative in
understanding what it means for a supplier not to be operating in compliance with Federal
regulatory requirements under standard 1. Any owner's conviction of a crime detrimental
to Medicare establishes that the supplier is in violation of section 424.535(a)(3). Section
424.535(a) is a Federal regulatory requirement. A supplier is in violation of standard 1 if
it operates in violation of any Federal regulatory requirement. It therefore follows that
MSP is in violation of standard 1, because having a co-owner convicted of a felony under
section 424.535(a) put it in violation of a Federal regulatory requirement, even though the
supplier entity was not itself charged or convicted of a felony.

I therefore reject Petitioner’s argument that the fact that MSP itself was not charged or
convicted of a crime precluded its revocation based on violation of standard 1.

2. CMS was not required to reverse the revocation.

Petitioner next argues that its revocation should be reversed under section 424.535(e),
which provides:

If the revocation was due to adverse activity (sanction, exclusion, or
felony) against an owner, managing employee, or an authorized or
delegated official; or a medical director, supervising physician, or other
personnel of the provider or supplier furnishing Medicare reimbursable
services, the revocation may be reversed if the provider or supplier
terminates and submits proof that it has terminated its business
relationship with that individual within 30 days of the revocation
notification.

(Emphasis added). Petitioner argues that MSP complied with this requirement, because
its business relationship with Mr. Martin was terminated within 30 days of the revocation
notice. P. Answer at 5. Petitioner points to a purchase agreement, which it submitted
timely to the contractor with the August 21, 2009 request for reconsideration, showing
that Ms. Gundler bought Mr. Martin’s share of the business on October 3, 2008, while the
notice of revocation was received on August 6, 2009. Jd. at 6, citing CMS Exs. 4 and 5.

CMS contends that section 424.535(e) is permissive, not mandatory, vesting in CMS the
discretion to decide whether to reverse a revocation, when a supplier timely terminates a
business relationship with an individual whose adverse activity caused the revocation.
MSJ at 8. CMS also asserts that its discretion in this regard is not subject to review and
that I may not substitute my judgment as to whether a revocation should have been
reversed under section 424.535(e). Jd. In addition, CMS argues that, even if I were to
review the exercise of discretion, I should uphold it here, because the false claims were
submitted under MSP’s Medicaid number. In addition, Ms. Gundler was “not
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forthcoming” in reporting to CMS either the felony conviction or the change of
ownership. /d. CMS also suggests that I should attribute responsibility for the false
claims to Ms. Gundler as co-owner and noted that another ALJ has imputed an
employee’s knowledge of a false claim to the employer. Id. at 9.

Petitioner does not deny that section 424.535(e) is permissive in nature, and I find that
the use of the word “may” in the context of this regulation implies that a reversal is not
necessarily required whenever proof of timely termination of relationship is provided.
Petitioners question, however, whether the contractor or CMS ever actually considered
section 424.535(e) or consciously exercised any discretion to reach a decision on whether
to apply it. P. Answer at 6. Petitioner further argues that, “[e]ven if there is something in
the record that proves CMS exercised its discretion, CMS abused that discretion.” Jd.
Petitioner bases that position on the grounds that MSP’s “only mistake was its failure to
file a timely CMS 855S showing the change in ownership and conviction,” which it has
since corrected. Jd. (citing CMS Ex. 10).

I do not find in the regulations a basis for requiring that CMS or the contractor document
a decision not to provide a supplier with the benefit of reversing a revocation under
section 424.535(e). I agree with CMS that the regulation simply allows CMS to reverse a
revocation under certain circumstances. However, the regulation does not require CMS
to do so, or even to demonstrate that it considered whether to do so and documented its
reasons not to. See CMS Reply at 3. I need not resolve the question of whether an abuse
of discretion under section 424.535(e) is ever subject to review, because I find that
Petitioner has presented no persuasive reason to view CMS’s declining to reverse this
revocation as abusive, arbitrary, or capricious.

l accept for purposes of this motion that Ms. Gundler was entirely innocent in her
partner’s scheme, even to the point of being a victim of and material witness against him.
Lalso decline to accept CMS’s invitation to impute responsibility to her for actions of
another co-owner, which is in any case not entirely analogous to an employer’s liability
for the actions of an employee.

Nevertheless, the crime constituted a serious felony by an owner of MSP against a federal
health care program involving fraudulent claims for payment processed through the
supplier itself (as opposed to, for example, a less severe or non-criminal sanction, a
conviction unrelated to the business or to health care finance, or a lower level staff
person). Those factors provide reasonable bases for CMS to have rejected the option of
reversing the revocation and are not arbitrary or capricious in nature. Petitioner’s
argument that its mistake was failing to timely report the conviction or the change of
ownership simply amounts to a concession of additional reasons why CMS might
reasonably lack confidence in MSP sufficient to reinstate it after the former co-owner’s
felony conviction.
8

I conclude that section 424.535(e) does not provide a basis for me to reverse Petitioner’s
revocation.

CMS’s argues that an alternative basis exists for revocation. CMS argues that MSP’s
failure to report the change of ownership within 30 days violates supplier standards 1 and
2. MSJ at 10-11, citing 42 C.F.R. § 424.57(c)(2). CMS asserts, and MSP does not deny,
that MSP did not provide notice of the conviction (as opposed to the resulting Medicaid
suspension) or the change of ownership, until it submitted the purchase agreement to the
hearing officer in August 2009 and then filed an application reporting the change and the
conviction in January 2010, over a year late. MSJ at 11; CMS Ex. 10.

he hearing officer found that this constituted an independent basis for revocation. CMS
x. 1, at 2. MSP contends that it lacked notice and an opportunity to correct under 42
C.F.R. § 424.535(a)(1), because this ground was not raised before the reconsideration
decision. P. Answer at 5. This contention is somewhat disingenuous. MSP did not
disclose the change of ownership to the contractor prior to the reconsideration process,
when it sought to use the purchase agreement as a defense against the charge that it had
violated supplier standard 1. See CMS Exs. 1, 5, and 10. Hence, the contractor could
hardly have notified MSP prior to the reconsideration process that late reporting was an
additional basis for revocation.

T
E

I find it unnecessary, however, to resolve whether failure to report constitutes a second
valid basis for revocation in light of my resolution on standard 1.

3. Ido not find a violation of due process.

MSP contends that CMS violated its due process rights, because the grounds on which
the hearing officer upheld the revocation differed materially from the grounds set out in
the initial notice of revocation. P. Answer at 7-8; see CMS Exs. 1 and 8.7 MSP bases
this position on its view that the hearing officer accepted MSP’s contention that it was
never convicted of a felony, as alleged in the notice, and based its affirmance of the
revocation on two new grounds: (1) that MSP failed to report the ownership change and
(2) that Ms. Gundler failed to explain her “status during the time period of Martin’s
criminal conviction.” Jd. at 2, 8; CMS Ex. 1.

MSP does not accurately represent the basis for the hearing officer’s decision. The initial
notice based the revocation on a violation of supplier standard 1 in light of health care
fraud conviction of MSP that DOJ reported. The hearing officer accepted MSP’s
documentation that the conviction was of a co-owner, rather than the company, while
concluding that this information did not undercut the evidence that MSP was in violation

> MSP states that it raises its due process arguments, as well as its abuse of discretion
arguments, to preserve them for appeal, even if this tribunal lacks authority to review
them.
9

of standard 1. Had MSP timely reported the conviction of its co-owner as the law
required, the contractor would have been able to include the correct identity of the felon
in the initial notice. I do not find that MSP lacked adequate notice of the basis for
revocation, which continued to be the violation of supplier standard | resulting from the
felony conviction as the reconsideration decision sets out. CMS Ex. 1, at 1-2.

I have addressed the question of MSP’s failure to report as an independent basis for
revocation above and do not revisit it here. For the same reason, I need not resolve
MSP’s claim that its failure to report could not be the basis of a revocation, because it
was not offered an opportunity to correct it and that it did correct it by submitting the new
application. P. Answer at 5. I note, however, that showing that a provider or supplier has
returned to compliance is part of the corrective action plan process. As the Board has
held, a contractor has discretion as to whether to accept such later correction and reverse
a revocation. DMS Imaging, Inc., DAB No. 2313 (2010). During the reconsideration and
appeal process, the issue is whether a basis existed at the time of the revocation notice
that supports CMS’s action, not whether that basis was later eliminated.

I do not find that the hearing officer’s comment that Ms. Gundler did not explain her
“status” to be a separate basis for revocation. CMS Ex. 1, at 2. The statement is not
entirely clear and adds little to the decision. The essential point is that the documentation
and letter that Ms. Gundler submitted did “not substantiate . .. compliance . . . with
supplier standard 1.” Jd. Lagree. The conclusion of the hearing officer’s decision is
simply that MSP’s revocation stands, because MSP “has not provided evidence to show
they have fully complied with the standard for which they were non-compliant... .” Id.
The standard is the same as that for which they were cited in the initial notice, and the
correction of the identity of the convicted felon was information entirely within MSP’s
control.

In any case, I have provided MSP with ample opportunity to present any arguments or
evidence that it was precluded from presenting below, due to the change in the charges
resulting from the new information, which MSP provided to the contractor during the
reconsideration process. New evidence on appeal in these proceedings can be accepted
only on a showing of good cause under 42 C.F.R. § 498.56(e). MSP, however, proffered
no showing that it needed to submit new documentation, much less that it had good cause
to do so. Hence, MSP has received due process during this proceeding.

I therefore find no violation of due process as MSP alleged.
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IV. Conclusion

The undisputed facts entitle CMS to summary judgment as a matter of law. Petitioner
has identified no material fact in dispute that, if resolved in its favor, could support a
different outcome. I therefore grant summary judgment in favor of CMS.

/s/
Leslie A. Sussan
Board Member


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Rockie C. McDaniel
(O.L. File Number 4-09-40137-9),

Petitioner,
Vv.
The Inspector General
Docket No. C-10-327
Decision No. CR2157

Date: June 15, 2010

DECISION

I find that the Inspector General (I.G.) was authorized by section 1128(b)(4) of the Social
Security Act (Act) to exclude Petitioner, Rockie C. McDaniel, from participating in
Medicare, Medicaid, and all federal health care programs. Petitioner’s exclusion will
remain in effect until he regains his license as a registered nurse (RN) or advanced
registered nurse practitioner (ARNP) in the State of Kentucky.

I. Background

By letter dated December 31, 2009, the I.G. notified Petitioner that he was being
excluded from participation in Medicare, Medicaid, and all federal health care programs
pursuant to section 1128(b)(4) of the Act, 42 U.S.C. § 1320a-7(b)(4). By letter dated
January 6, 2010, Petitioner requested a hearing. Following a telephonic prehearing
conference and issuance of my Order of February 17, 2010, the I.G. filed a motion for
summary disposition and brief in support (I.G. Br.), accompanied by four exhibits (I.G.
Exs. 1-4). Petitioner filed an answer brief (P. Br.), accompanied by one exhibit (P. Ex.
1). The LG. filed a reply brief (I.G. Reply). In the absence of objection, I receive I.G.
Exs. 1-4 and P. Ex. 1 in evidence. Although offered the opportunity, Petitioner did not
file a response brief.
II. Issue

The only issue in this case is whether the I.G. is authorized to exclude Petitioner pursuant
to section 1128(b)(4)(A) of the Act. Petitioner acknowledges that if I find the LG. is
authorized to exclude him, the length of his exclusion is “a matter of the way the law is
written” and thus not unreasonable. P. Br. at 2.

Ill. Controlling Law

Section 1128(b)(4)(A) of the Act, 42 U.S.C. § 1320a-7(b)(4)(A), authorizes exclusion
from participation in Medicare, Medicaid, and all federal health care programs of any
individual or entity “whose license to provide health care has been revoked or suspended
by any State licensing authority . . . for reasons bearing on the individual’s or entity’s
professional competence, professional performance, or financial integrity.” The terms of
section 1128(b)(4)(A) are restated in similar regulatory language at 42 C.F.R.

§ 1001.501(a)(1).

An exclusion under section 1128(b)(4)(A) of the act is discretionary. If the I.G. exercises
his discretion to proceed, then the mandatory minimum period of exclusion to be imposed
“shall not be less than the period during which the individual’s or entity’s license to
provide health care is revoked, suspended, or surrendered... .” Act, section
1128(c)(3)(E) (42 U.S.C. § 1320a-7(c)(3)(E). Regulatory language at 42 C.F.R.

§ 1001.501(b)(1) echoes the statute.

The terms of 42 C.F.R. § 1001.2007(d) provide that in exclusion appeals:

When the exclusion is based on the existence of a criminal conviction or a civil

judgment imposing liability by [a] Federal, State or local court, a determination by
another Government agency, or any other prior determination where the facts were
adjudicated and a final decision was made, the basis for the underlying conviction,
civil judgment or determination is not reviewable and the individual or entity may
not collaterally attack it either on substantive or procedural grounds in this appeal.

IV. Findings and Conclusions

I make findings and conclusions to support my decision in this case. I set forth each
below as a separate heading.
3

1. The I.G. is authorized to exclude Petitioner pursuant to section 1128(b)(4) of
the Act.

Petitioner was a licensed RN and a registered ARNP in the State of Kentucky.’ The
Kentucky Board of Nursing (Nursing Board) initiated an investigation of Petitioner on
November 19, 2003, based on allegations indicating that Petitioner practiced outside the
scope of his ARNP registration and illegally prescribed controlled substances. As a result
of this investigation, and in order to protect the public, the Nursing Board entered an
order of immediate temporary suspension of Petitioner’s RN license and ARNP
registration. On July 7, 2005, the Nursing Board found that Petitioner had practiced as an
ARNP in violation of the order of temporary suspension. On December 14, 2005,
Petitioner surrendered his ARNP registration and signed an agreed order issued by the
Nursing Board to resolve the investigation and avoid a formal administrative hearing.
The Nursing Board approved the surrender on December 20, 2005. The agreed order
reinstated Petitioner’s RN license on a probationary basis, subject to certain conditions.
Petitioner specifically waived his right to hearing or appeal for any violation of the
conditions of the agreed order. LG. Ex. 2.

By letter dated February 18, 2009, the Nursing Board notified Petitioner that his RN
license was suspended (and noted that Petitioner had voluntarily surrendered his ARNP
registration on December 20, 2005) based on violations of four conditions of the agreed
order. The Nursing Board found that Petitioner had: failed to seek prior written approval
from the President of the Nursing Board, or his designee, by seeking employment as an
RN prior to completion of the first three years of practice required by the agreed order;
misrepresented to a potential employer facts relating to the terms and conditions of the
agreed order; did not appear for a meeting with his Nursing Board case manager on
January 8, 2009; and failed to submit written notification of a change in nursing
employment within 15 days of the event. The Nursing Board suspension prohibits
Petitioner from “engaging in the practice of nursing within the Commonwealth of
Kentucky for a period of at least four (4) years.” LG. Ex. 3.

There are two essential elements necessary to support an exclusion based on section
1128(b)(4)(A) of the Act. First, the I.G. must prove that the license to provide health care
of the individual to be excluded has been revoked or suspended by a state licensing
authority. Second, the I.G. must prove that the license was revoked or suspended for

' Kentucky statutes define ARNP practice as “the performance of additional acts by
registered nurses who have gained knowledge and skills . . . [which] include but [are] not
limited to prescribing treatment, drugs, devices and ordering diagnostic tests. Ky. REV.
STAT. ANN. § 314.011(8) (Michie 2004) (amended 2006 and 2007). Practitioners
allowed to engage in ARNP practice include nurse anesthetists, nurse midwives, clinical
nurse specialists and nurse practitioners. KY. REV. STAT. ANN. § 314.011(7) (Michie
2004) (amended 2006 and 2007). Petitioner’s RN license was a pre-requisite to obtaining
his ARNP registration.
4

reasons bearing on the individual’s professional competence, professional performance,
or financial integrity. Leonard R. Friedman, M.D., DAB No. 1281 (1991); Thomas I.
DeVol, Ph.D., DAB CR1652 (2007); Sherry J. Cross, DAB CR1575 (2007); Michele R.
Rodney, DAB CR1332 (2005); Edmund B. Eisnaugle, D.O., DAB CR1010 (2003);
Marcos U. Ramos, M.D., DAB CR788 (2001); Allison Purtell, M.D., DAB CR781
(2001).

The suspension of Petitioner’s RN license clearly satisfies the first element under section
1128(b)(4)(A), and Petitioner does not contest that his RN license was suspended by the
Nursing Board (or that he surrendered his ARNP registration to avoid a formal
disciplinary hearing as outlined in the agreed order). Further, he does not contest that the
Nursing Board had the authority to take action against his registration and license.
Instead, Petitioner asserts that he did not lose his RN license for reasons bearing on his
professional competence, professional performance, or financial integrity. Petitioner
specifically addresses each of the violations of the agreed order cited in the Nursing
Board’s February 18, 2009 letter in an attempt to show that they do not bear on his
professional competence, professional performance, or financial integrity.

First, Petitioner admits that he failed to get written approval from the Nursing Board prior
to seeking employment as an RN, which was a violation of the agreed order. However,
Petitioner asserts that this failure has nothing to do with his professional competence,
professional performance, or financial integrity. Petitioner asserts there is no allegation
of theft or financial misfeasance on his part. And he asserts that the terms professional
competence and professional performance “must mean his work as a nurse, whether he
was negligent in treating patients in some manner.” P. Br. at 3.

Next, Petitioner asserts that he did not misrepresent the terms of the agreed order to a
potential employer. He contends that he could lawfully administer medication “like any
other RN”, and the agreed order did not restrict him from administering medication. P.
Br. at 3-4.

Third, Petitioner admits that he failed to attend a monitoring meeting with the Nursing
Board. Petitioner asserts this was because he got the dates “mixed up.” Petitioner admits
this was a violation of the agreed order, but he argues it does not bear on his professional
competence, professional performance, or financial integrity. P. Br. at 4.

And finally, Petitioner admits he failed to notify the Nursing Board of a change of
employment within fifteen days of his being relieved of nursing duties by the employer
for whom he had worked for thirty-three months. While he agreed this failure violated
the agreed order, he maintains that it does not bear on his professional competence,
professional performance, or financial integrity. P. Br. at 4.

Petitioner also asserts that the surrender of his ARNP registration was an entirely separate
incident and the reasons for that surrender were not the reasons his RN license was
suspended. Petitioner notes that he surrendered his ARNP registration on December 20,
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2005, but that the I.G. did not exclude him at that time. Petitioner notes that the I.G. cited
the decision in the case of Maureen Felker, DAB CR1110 (2003) in arguing for
Petitioner’s exclusion.? However, Petitioner asserts that the Felker case is different from
his, as Felker lost her license in part because she failed a licensure exam twice, which is
an indication of a lack of competence to practice social work. And Petitioner points out
that Felker held only one license and lost it. Petitioner lost his ARNP registration, but did
not lose his RN license until three years later. Petitioner asserts that the I.G. “basically
admits that the violations of the Agreed Order do not bear on Petitioner’s professional
competence or performance but relies on connecting the RN loss to the ARNP loss.” P.
Br. at 5-6. Petitioner notes the I.G.’s comment that Petitioner’s loss of his ARNP
registration was for reasons bearing on his professional competence or professional
performance, but that the ultimate loss of his RN license also related to his professional
competence or professional performance. P. Br. at 6.

Petitioner’s arguments are unavailing. The issue before me is not whether the suspension
of Petitioner’s RN license was explicitly for professional competence or professional
performance, or for some financial malfeasance. The issue is whether the suspension was
for reasons “bearing on” his professional competence, professional performance, or
financial integrity. Significantly, the Departmental Appeals Board (Board) has held that

[W]hen a health care license has been revoked for a violation of conditions placed
on the license, it is appropriate, in determining whether the revocation was for
reasons bearing on professional competence, professional performance or financial
integrity, to look at the reasons why conditions were placed on the license in the
first place. Those reasons resulted in the immediate basis for the license
revocation and are thus reasonably viewed as reasons for the license revocation.

Tracey Gates, R.N., DAB No. 1768 (2001); Roy Cosby Stark, DAB No. 1746, at 4
(2000). This reasoning applies in a license suspension action as well.

Thus, in evaluating whether the suspension of Petitioner’s license is related to
professional competence, professional performance, or financial integrity, I am obliged to
look both at the events surrounding the suspension of Petitioner’s ARNP registration and
then his RN license.

The I.G. asserts that the Nursing Board suspended Petitioner’s ARNP registration and RN
license for reasons bearing on his professional competence or professional performance,
but does not suggest that the Nursing Board’s action was for reasons bearing on

> Felker concerned a license surrender under section 1128(b)(4)(B) of the Act. Felker’s
social work license had been placed on probation. The licensing board determined to
revoke her probation for failure to comply with conditions of her probation, which
included twice failing to pass state license examinations and failing to pay mandated
restitution. The licensing board entered into a stipulation with Felker in which she
surrendered her license as a precondition for reapplying for a license later.
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Petitioner’s financial integrity. IG. Br. at 6. For that reason, I do not address the issue of
financial integrity.

The I.G. notes that the Board has found that the plain meaning of the terms “professional
competence” and “professional performance” “encompasses the ability to practice a
licensed service with reasonable skill and safety.” Jerry D. Harrison, D.D.S., DAB No.
1365 (1992). Petitioner surrendered his ARNP registration because the Nursing Board
concluded, and Petitioner stipulated to, these facts: a physician with whom Petitioner had
a collaborative agreement provided him with forty-two controlled substance prescription
forms that the physician had pre-signed; the pre-signed prescription forms were to be
used for patients seen by Petitioner; Petitioner acknowledged that he used the forms to
prescribe controlled substances for patients; Petitioner asserted that he used the forms in
conjunction with the physician for patients who had established treatment plans; a
Nursing Board consultant reviewed the medical records of Petitioner’s patients and
opined that he did not meet the standard of care for an ARNP in the community in terms
of assessment, documentation of physical findings, diagnosis rendered, and prescribing of
medications; and Petitioner later practiced as an ARNP in direct violation of the Nursing
Board’s March 2, 2005 Order of Immediate Temporary Suspension. Not meeting the
standard of care for an ARNP certainly bears on Petitioner’s professional competence and
professional performance. I.G. Ex. 2.

The surrender of his ARNP registration and the suspension of his RN license are not, as
Petitioner would have it, entirely separate incidents. P. Br. at 5. Instead, there is a causal
link between Petitioner’s surrender of his ARNP registration and his license suspension.
The suspension of his RN license, as was the case with the final proceedings in the Felker
case, “sprang from findings of professional incompetence and poor performance.”
Maureen Felker, DAB CR1110. As a result of the surrender of his ARNP license, the
Nursing Board imposed requirements on Petitioner’s RN license. Petitioner’s nursing
practice would be monitored and evaluated for several years to give the Nursing Board
time to decide whether to fully reinstate his ARNP registration and RN license. I.G. Ex.
2, at 2-4. Petitioner understood he was subject to discipline if he violated these
conditions. He was on notice that any violation of the agreed order would be an
independent basis for the Nursing Board to impose discipline. Petitioner admittedly
violated these conditions. P. Br. at 3-4; P. Ex. 1. The I.G. notes that one violation, the
denial of any restriction on his ability to administer medications, conflicts with the agreed
order’s stipulation that he lost his ARNP registration in part because he was using pre-
signed prescription forms to prescribe controlled substances.? Moreover, not seeking

> Petitioner does assert that there is nothing in the agreed order restricting his
administration of medication and that he thus did not misrepresent facts to a potential
employer. P. Br. at 3-4. Petitioner, however, in the agreed order, waived the right to
appeal the Nursing Board’s findings of violation or non-compliance with regard to the
conditions and provisions of the agreed order and cannot now collaterally attack the
findings of the Nursing Board. I.G. Ex. 2, at 2; 42 C.F.R. § 1001.2007(d).
7

employment without written approval from the Nursing Board, missing — for no better
reason than carelessness — monitoring meetings after being notified of their dates, and
ailing to timely notify the Nursing Board of changes of employment, are unprofessional
actions for an ARNP or an RN, and bear on Petitioner’s professional performance.
Because they do, the second essential element is satisfied.

Finally, although the I.G. did not impose an exclusion when Petitioner’s ARNP
registration was suspended, that does not mean that I cannot consider the reasons why the
registration was suspended. Had the LG. done so, the Nursing Board’s decision to allow
Petitioner to practice as an RN with probationary restrictions would have been, as the LG.
notes, “null.” LG. Reply at 4. The passage of time between the agreed order and the
final order suspending Petitioner’s RN license does not, as the I.G. recognizes, negate the
relationship between the ARNP registration and the RN license, nor disprove that the
final proceedings sprang from findings made against Petitioner in the agreed order. LG.
Reply at 4, citing Felker, DAB CR1110, at 4.

2. Petitioner’s exclusion is reasonable as a matter of law.

While the LG. has discretion to exclude an individual pursuant to section 1128(b)(4) of
the Act, the LG. has no discretion in determining the term of that exclusion. Section
1128(c)(3)(E) of the Act provides than any exclusion imposed under section 1128(b)(4)
of the Act must be for no less than the period during which the excluded individual’s
license to provide health care is revoked, suspended, or surrendered. Since I have found
that the I.G. is authorized to exclude Petitioner pursuant to section 1128(b)(4) of the Act,
an exclusion coterminous with the period during which his license is suspended is
mandated by law.

V. Conclusion

The I.G.’s Motion for Summary Disposition must be, and it is, GRANTED. The LG. is
authorized to exclude Petitioner from participating in Medicare, Medicaid, and all federal
health care programs until he regains his RN license or ARNP registration in the State of
Kentucky.

/s/
Richard J. Smith
Administrative Law Judge