Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Joni-Isabell Ahlbeck,
(OI File No. 5-09-41032-9),

Petitioner,
v.

Inspector General,
U.S. Department of Health and Human Services,

Respondent.
Docket No. C-15-377
Decision No. CR3857
Date: May 13, 2015
DECISION
Petitioner, Joni-Isabell Ahlbeck, is excluded from participating in Medicare, Medicaid,
and all federal health care programs pursuant to section 1128(a)(1) of the Social Security
Act (Act) (42 U.S.C. § 1320a-7(a)(1)), effective September 18, 2014. Petitioner’s

exclusion for a minimum period of five years is required by section 1128(c)(3)(B) of the
Act (42 U.S.C. § 1320a-7(c)(3)(B)).

' Pursuant to 42 C.F.R. § 1001.3001, Petitioner may apply for reinstatement only after
the period of exclusion expires. Reinstatement is not automatic upon completion of the
period of exclusion.
I. Background

The Inspector General (1.G.) for the Department of Health and Human Services notified
Petitioner by letter dated August 29, 2014, that she was being excluded from participation
in Medicare, Medicaid, and all federal health care programs for a period of five years.
The LG. cited section 1128(a)(1) of the Act as the basis for Petitioner’s exclusion and
stated that the exclusion was based upon her conviction in the State of Minnesota,
District Court, Fourth Judicial District, County of Hennepin, of a criminal offense related
to the delivery of an item or service under Medicare or a state health care program. I.G.
Exhibit (Ex.) 1.

Petitioner timely requested a hearing by letter dated October 10, 2014. The case was
assigned to me on November 18, 2014. On December 19, 2014, I convened a prehearing
conference by telephone, the substance of which is recorded in my Prehearing Order
dated December 22, 2014. On February 2, 2015, the I.G. filed a motion to dismiss and a
motion for summary judgment with a supporting brief (I.G. Br.) and six exhibits marked
1.G. Exs. 1 through 6. Petitioner filed her opposition to the I.G.’s motions (P. Br.) on
March 17, 2015, with eight exhibits marked as Petitioner’s exhibits (P. Exs.) 1 through
8.2 The LG. filed a reply brief on April 3, 2015 (1.G. Reply). There have been no
objections to my consideration of I.G. Exs. 1 through 6 and P. Exs. | through 8 and they
are admitted as evidence.

II. Discussion
A. Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) establishes Petitioner’s rights to a
hearing by an administrative law judge (ALJ) and judicial review of the final action of
the Secretary of Health and Human Services (the Secretary).

Pursuant to section 1128(a)(1) of the Act, the Secretary must exclude from participation
in any federal health care program any individual convicted under federal or state law of
a criminal offense related to the delivery of an item or service under Medicare or a state

> Petitioner’s exhibits were not properly marked as required by the Prehearing Order § 8,
which incorporates by reference the Civil Remedies Division Procedures. Because there
is little likelihood of confusion due to the incorrect marking of Petitioner’s exhibits, I
have not required that Petitioner file correctly marked exhibits.
health care program. The Secretary has promulgated regulations implementing these
provisions of the Act. 42 C.F.R. § 1001.101(a).°

Pursuant to section 1128(i) of the Act, an individual is “convicted” of a criminal offense
when a judgment of conviction has been entered by a federal, state, or local court whether
or not an appeal is pending or the record has been expunged; or when there has been a
finding of guilt in a federal, state, or local court; or when a plea of guilty or no contest
has been accepted in a federal, state, or local court; or when an accused individual enters
a first offender program, deferred adjudication program, or other arrangement where a
judgment of conviction has been withheld. 42 U.S.C. § 1320a-7(i)(1)-(4); 42 C.F.R.

§ 1001.2.

Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section
1128(a) of the Act will be for a period of not less than five years. 42 C.F.R.

§ 1001.102(a). Pursuant to 42 C.F.R. § 1001.102(b), the period of exclusion may be
extended based on the presence of specified aggravating factors. Only if the aggravating
factors justify an exclusion of longer than five years are mitigating factors considered as a
basis for reducing the period of exclusion to no less than five years. 42 C.F.R.

§ 1001.102(c).

The standard of proof is a preponderance of the evidence, and there may be no collateral
attack of the conviction that provides the basis of the exclusion. 42 C.F.R.

§ 1001.2007(c), (d). Petitioner bears the burden of proof and the burden of persuasion on
any affirmative defenses or mitigating factors, and the I.G. bears the burden on all other
issues. 42 C.F.R. § 1005.15(b).

B. Issues

The Secretary has by regulation limited my scope of review to two issues:
Whether the I.G. has a basis for excluding an individual or entity from
participating in Medicare, Medicaid, and all other federal health care programs;

and

Whether the length of the proposed exclusion is unreasonable.

> References are to the revision of the Code of Federal Regulations (C.F.R.) in effect at
the time of the I.G. action, unless otherwise indicated.
42 C.F.R. § 1001.2007(a)(1). If the 1.G. imposes the minimum period of exclusion
authorized for a mandatory exclusion under section 1128(a)(1) of the Act, then there is no
issue of whether the period of exclusion is unreasonable. 42 C.F.R. § 1001.2007(a)(2).
The I.G. proposes to exclude Petitioner for five years, the minimum authorized period.
Therefore, the length of the proposed exclusion is not at issue.

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

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

1. Petitioner timely filed her request for hearing, and I have
jurisdiction.

2. Summary judgment is appropriate in this case.

There is no dispute that Petitioner timely requested a hearing and that I have jurisdiction
pursuant to section 1128(f) of the Act and 42 C.F.R. pt. 1005.

Pursuant to section 1128(f) of the Act, a person subject to exclusion has a right to
reasonable notice and an opportunity for a hearing. The Secretary has provided by
regulation that a sanctioned party has the right to hearing before an ALJ, and both the
sanctioned party and the LG. have a right to participate in the hearing. 42 C.F.R.

§§ 1005.2-.3. Either or both parties may choose to waive appearance at an oral hearing
and to submit only documentary evidence and written argument for my consideration. 42
C.F.R. § 1005.6(b)(5). An ALJ may also resolve a case, in whole or in part, by summary
judgment. 42 C.F.R. § 1005.4(b)(12).

Summary judgment is appropriate in an exclusion case 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.
Tanya A. Chuoke, R.N., DAB No. 1721 (2000); David A. Barrett, DAB No. 1461 (1994);
Robert C. Greenwood, DAB No. 1423 (1993); Thelma Walley, DAB No. 1367 (1992);
Catherine L. Dodd, R.N., DAB No. 1345 (1992); John W. Foderick, M.D., DAB No.
1125 (1990). When the undisputed material facts of a case support summary judgment,
there is no need for a full evidentiary hearing, and neither party has the right to one.
Surabhan Ratanasen, M.D., DAB No. 1138 (1990); John W. Foderick, M.D., DAB No.
1125 (1990). In opposing a properly-supported motion for summary judgment, the
nonmoving party must show that there are material facts that remain in dispute, and that
those facts either affect the proponent’s prima facie case or might establish a defense.
Garden City Med. Clinic, DAB No. 1763 (2001); Everett Rehab. & Med. Ctr., DAB No.
1628 (1997). It is insufficient for the nonmovant to rely upon mere allegations or denials
to defeat the motion and proceed to hearing. See Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 247 (1986).

There are no genuine issues of material fact in dispute in this case. Petitioner does not
dispute that she was convicted within the meaning of section 1128(i) of the Act, or that
the state court accepted her pleas of guilty to two criminal offenses. Petitioner also does
not deny that the criminal offenses of which she was convicted relate to the delivery of an
item or service under a state health care program. P. Br. at 2. Petitioner asks instead that
I consider the hardship the exclusion will cause and asks that the exclusion be set aside
because it is unreasonable. P. Br. at 3-4, 5. The period of exclusion imposed is the
minimum permitted by Congress for a mandatory exclusion and whether or not the five-
year minimum period is unreasonable is not an issue before me. 42 C.F.R.

§ 1001.2007(a)(2). Petitioner’s challenge to her exclusion must be resolved against her
as a matter of law. I conclude that summary judgment is appropriate as there are no
genuine disputes as to any material facts and the I.G. prevails as a matter of law on the
issue of whether there is a basis for exclusion based on the undisputed facts.

The LG. also filed a motion to dismiss pursuant to 42 C.F.R. § 1005.2(e)(4) arguing that
Petitioner failed to raise any issue that may be properly addressed in a hearing. The I.G.
conflates raising an issue that one must lose as a matter of law with failure to raise an
issue that may be properly addressed by the ALJ. Whether or not there is a basis for
exclusion is an issue properly before me under the regulations, even when Petitioner
concedes as she does here that she was convicted and the conviction provides the
requisite basis. Petitioner timely filed her request for hearing and her hearing request
preserved her right to ALJ review of the issue of whether or not there is a basis for
exclusion. The I.G.’s motion to dismiss is denied.

3. Petitioner’s exclusion is required by section 1128(a)(1) of the Act.
a. Facts

The material facts of this case are undisputed. Petitioner worked as a personal care
assistant for several personal care provider organizations that were registered with the
Minnesota Medicaid program. LG. Ex. 2 at 3; I.G. Ex. 3 at 3; P. Ex. 6 at 3. Prior to
2010, the Medicaid Fraud Control Unit of the Minnesota Attorney General’s Office
initiated an investigation that determined that Petitioner was submitting and aiding and
abetting the submission of false timesheets to the organizations for which she worked.
1G. Ex. 2 at 3-10; I.G. Ex. 3 at 3-10. On March 27, 2012, a four-count criminal
complaint was filed in the District Court, Fourth Judicial District, County of Hennepin,
Minnesota, charging Petitioner with one count of theft of over $35,000 by false
representation and three counts of theft over $5,000 by false representation. I.G. Ex. 2 at
1-3, 15; P. Ex. 6 at 1-3, 15. An Amended Complaint was filed on December 12, 2013,
but the charges against Petitioner were essentially unchanged. I.G. Ex. 3 at 1-3.
Petitioner entered guilty pleas to two counts of theft of more than $5,000 by false
representation on June 4, 2014. I.G. Exs. 4-5. Petitioner admitted by her guilty pleas that
from October 28, 2008 to February 18, 2009 and from August 4, 2009 to February 2,
2010, she intentionally submitted and/or aided, advised, hired, counseled, or conspired
with others to submit false timesheets to her employer claiming she delivered personal
care assistant services. Petitioner admitted further that the timesheets were then relied
upon by her employers who submitted them for reimbursement to the Minnesota
Department of Human Services resulting in the payment of false claims. I.G. Ex. 3 at 2-
3; LG. Ex. 4 at 1; P. Ex. 3 at 1.

Petitioner’s plea agreement provided that the charges to which she did not plead guilty
would be dismissed and that the offenses to which she pleaded guilty would be treated as
gross misdemeanors for purposes of sentencing. I.G. Ex. 4 at 3; I.G. Ex. 5 at 1; P. Ex. 3
at 3; P. Ex. 6 at 1. The court accepted Petitioner’s guilty pleas and entered judgment
against her on June 4, 2014. The court sentenced Petitioner to pay restitution of $20,000;
confinement, which was stayed in part; two years of probation; and 60 days of home
detention with electric monitoring or work release. The court also restricted Petitioner
from seeking employment with any individual or entity that received Medicare or
Medicaid funds. I.G. Ex. 5 at 2; I.G. Ex. 6; P. Ex. 5.

b. Analysis

The LG. cites section 1128(a)(1) of the Act as the basis for Petitioner’s mandatory
exclusion. The statute provides:

(a) MANDATORY EXCLUSION.—The Secretary shall
exclude the following individuals and entities from
participation in any Federal health care program (as defined
in section 1128B(f)):

(1) Conviction of program-related crimes.—Any individual
or entity that has been convicted of a criminal offense related
to the delivery of an item or service under title XVIII or under
any State health care program.

Act § 1128(a)(1). Thus, the plain language of section 1128(a)(1) of the Act requires that
the Secretary exclude from participation in Medicare, Medicaid, and all federal health
care programs, any individual or entity: (1) convicted of a criminal offense; (2) where
the offense is related to the delivery of an item or service; and (3) the delivery of the item
or service was under Medicare or any state health care program. The definition of a
“{s]tate health care program” includes state Medicaid plans. Act § 1128(h) (42 U.S.C.

§ 1320a-7(h)).
Petitioner does not deny that she was convicted of two criminal offenses within the
meaning of 1128(i) of the Act (42 U.S.C. § 1320a-7(i)). RFH at 1-2; P. Br. at 2-3, 4, 5;
P. Ex. 1 at 1-2; P. Ex. 2 at 2-3, 4,5. As noted above, an individual is “convicted” of an
offense when a plea of guilty is accepted by a state court. Act § 1128(i)(3) (42 U.S.C.

§ 1320a-7(i) (3). Petitioner’s guilty pleas were accepted by the court. The court issued a
judgment of conviction and sentenced Petitioner for the offenses of which she was
convicted. I.G. Ex. 5 and 6. Accordingly, I conclude that Petitioner was convicted of a
criminal offense within the meaning of 1128(i) of the Act (42 U.S.C. § 1320a-7(i)).

Petitioner does not deny that her conviction of theft by false representation involved
offenses that were related to the delivery of an item or service. Petitioner also does not
deny that her criminal offenses related to the delivery of an item or service under the
Minnesota Medicaid program. Petitioner admitted by her pleas that she submitted to her
employer false time sheets for personal care assistant services and that those false
timesheets were the basis for claims submitted to the state Medicaid program for
payment. I.G. Ex. 3 at 2-3; LG. Ex. 4; LG. Ex. 5 at 1; P. Ex. 3. The submission of false
claims to the Medicaid program constitutes a program-related crime. Dewayne Franzen,
DAB No 1165 (1990) (the inquiry is whether the conviction is related to Medicaid fraud,
not whether the petitioner was convicted of Medicaid fraud.). I conclude that Petitioner’s
offenses related to the delivery of an item or service and that the delivery of these
services was under a state health care program, here the Minnesota Medicaid program.

Accordingly, I conclude that all three elements of section 1128(a)(1) of the Act are met
and there is a basis for Petitioner’s exclusion.

Petitioner raises several arguments related to her guilty pleas and her conviction. RFH at
1-2; P. Br. at 3; P. Ex. 1 at 1-2, 4; P. Ex. 2 at 3. However, Petitioner may not collaterally
attack her conviction in this forum and I have no authority to review the underlying
conviction. 42 C.F.R. § 1001.2007(d).

I have concluded that there is a basis to exclude Petitioner pursuant to section 1128(a)(1)
of the Act. The LG. has no discretion under the Act not to exclude Petitioner when the
elements of section 1128(a)(1) are satisfied as they are in this case.

4. Five years is the minimum authorized period of exclusion for an
exclusion pursuant to section 1128(a) of the Act.

5. Petitioner’s exclusion for five years is not unreasonable as a matter
of law.

Congress established five years as the minimum period of exclusion for exclusions
pursuant to section 1128(a) of the Act. Act § 1128(c)(3)(B). Pursuant to 42 C.F.R.
§ 1001.2007(a)(2), when the I.G imposes an exclusion pursuant to section 1128(a) of the
Act for the statutory minimum period of five years, there is no issue of whether or not the
period is unreasonable. Accordingly, I conclude that Petitioner’s exclusion for a period
of five years is not unreasonable as a matter of law.

Petitioner argues that she should not be excluded because it will create a financial
ardship for her family as the exclusion prohibits her from employment in the health care
field, precludes her from applying her associates degree in human services, and creates an
impediment to her pursuit of a degree in criminal justice. RFH at 1-2; P. Br. at 2-3, 4, 5;
P. Ex. 1-2 at 1 P. Ex. 2 at 2-3, 4, 5. I appreciate that exclusion will adversely impact
Petitioner’s ability to obtain employment and provide for her family. But the five-year
period of exclusion is the minimum period authorized by Congress. The LG. has no
discretion to impose a lesser period, and I may not reduce the period of exclusion below
five years. Petitioner’s hardship argument cannot be considered to reduce the period of
er exclusion. The Departmental Appeals Board (Board) observed in Joann Fletcher
Cash, DAB No. 1725 (2000) that the point of exclusion is to prevent untrustworthy
individuals from involvement with protected health care programs. The fact that
exclusion will have a limiting effect on an excluded individual’s future employment is a
natural and predictable consequence of an exclusion. The closing of certain occupations
to Petitioner for five years and the probable loss of earnings from those occupations are
no bar to the mandatory imposition of this exclusion. Salvacion Lee, M.D., DAB No.
1850, at 4 (2002).

Petitioner claims that the I.G. could have imposed a civil monetary penalty in lieu of the
exclusion. RFH at 1; P. Br. at 5; P. Ex. 1 at 1; P. Ex. 2 at 5. Petitioner is in error. When
an individual’s conviction is “related to the delivery of an item or service under Medicare
or a State health care program,” within the meaning of section 1128(a)(1) of the Act,
exclusion is mandatory as is the five-year minimum exclusion established by section
1128(c)(3)(B) of the Act. The I.G., the ALJ, and the Board can impose no lesser
exclusion. Salvacion Lee, M.D., DAB No. 1850, at 4; Lorna Fay Gardner, DAB No.
1733, at 6 (2000); Douglas Schram, R.Ph., DAB No. 1372 (1992); Napoleon S. Maminta,
M.D., DAB No. 1135 (1990). [also find unavailing Petitioner’s argument that she should
not be excluded because she is already paying a fine and other penalties related to her
sentencing. RFH at 1; P. Br. at 5; P. Ex. 1 at 1; P. Ex. 2 at 5. Exclusions imposed by the
1.G. are civil sanctions, remedial in nature and neither punitive nor criminal. There is no
issue of prohibited double punishment for the same offense. The exclusion remedy
serves twin congressional purposes: the protection of federal funds and program
beneficiaries from untrustworthy individuals and the deterrence of health care fraud.

S. Rep. No. 100-109, at 1-2 (1987), reprinted in 1987 U.S.C.C.A.N. 682, 686 (“clear and
strong deterrent”); Joann Fletcher Cash, DAB No. 1725 at 18 (discussing trustworthiness
and deterrence).

Petitioner submitted a letter written by the mother of a child for whom she provided
services. The letter was written in support of Petitioner’s return to employment in the
ealth care field. P. Ex. 7. However, I have no authority to reduce the period of

exclusion below the mandatory minimum of five years based on the letter. Act
§ 1128(c)(3)(B); 42 C.F.R. § 1001.102(a).

Exclusion is effective 20 days from the date of the I.G.’s written notice of exclusion to
the affected individual or entity. 42 C.F.R. § 1001.2002(b).

III. Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare,

Medicaid, and all other federal health care programs for the minimum statutory period of
five years, effective September 18, 2014.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Jocelynn Lorenzo Mayuga,
(OI File No. H-14-42339-9),

Petitioner,
v.
The Inspector General.
Docket No. C-15-363
Decision No. CR3852

Date: May 11, 2015

DECISION

Petitioner, Jocelynn Lorenzo Mayuga, pled no contest to one misdemeanor count of petit
larceny for submitting false claims to the state Medicaid programs for services that were
not provided to her minor child. Based on this, the Inspector General (1.G.) has excluded
her for five years from participating in Medicare, Medicaid, and all federal health care
programs, as authorized by section 1128(a)(1) of the Social Security Act (Act).
Petitioner appeals the exclusion. For the reasons discussed below, I find that the I.G.
properly excluded Petitioner Mayuga and that the statute mandates a minimum five-year
exclusion.

Background

Ina letter dated September 30, 2014, the LG. notified Petitioner that she was excluded
from participating in Medicare, Medicaid, and all federal health care programs for a
period of five years because she had been convicted of a criminal offense related to the
delivery of an item or service under the Medicare or state health care program. The letter
explained that section 1128(a)(1) of the Act authorizes the exclusion. LG. Ex. 1.
Petitioner requested review.
Each party submitted a written argument (I.G. Br.; P. Br.). The I.G. submitted four
exhibits (I.G. Exs. 1-4) and a reply brief (I.G. Reply). Petitioner submitted two exhibits
(P. Exs. 1-2). In the absence of any objection, I admit into evidence I.G. Exs. 1-4 and
P. Exs, 1-2.

The L.G. indicates that an in-person hearing is not necessary and submits no declarations
from any proposed witness. I.G. Br. at 7. Petitioner, on the other hand, asserts that an in-
person hearing is necessary, but lists no witnesses. P. Br. at 7. Because there are no
witnesses to examine or cross-examine, I decline to schedule a hearing that would serve
no purpose.

Discussion

Petitioner must be excluded from program participation for
a minimum of five years, because she was convicted of a
criminal offense related to the delivery of an item or service
under Medicare or a state health care program, within the
meaning of section 1128(a)(1).'

Under section 1128(a)(1) of the Act, the Secretary of Health and Human Services must
exclude an individual who has been convicted under federal or state law of a criminal
offense related to the delivery of an item or service under Medicare or a state health care
program. 42 C.F.R. § 1001.101(a). A plea of nolo contendere (no contest) is considered
a conviction for purposes of a section 1128 exclusion. Act § 1128(i)(3); 42 C.F.R.

§ 1001.2.

Petitioner submitted false claims to the Virginia Medicaid program, claiming payment for
personal and respite care services purportedly provided to her minor child between July
2008 and December 2011. The services were not provided. I.G. Ex. 4 at 1-2. Petitioner
was charged with stealing funds from the Medicaid program. I.G. Ex. 2. On June 28,
2013, she pled no contest to one count of petit larceny, in violation of section 18.2-96 of
the Virginia Code; the court accepted her plea. 1.G. Ex. 3. Petitioner subsequently
agreed to pay the United States and the Commonwealth of Virginia $202,443.57 to settle
their claims against her. LG. Ex. 4.

Petitioner concedes that she was convicted of a criminal offense for which exclusion is
required. P. Br. at 1,2. At the same time, she argues that her offense was not related to
the delivery of an item or service under the Medicaid program because it arose in her
personal capacity as the mother of a child beneficiary, not in her professional capacity

' [make this one finding of fact/conclusion of law.
(she is apparently a doctor). P. Br. at 2. The statute makes no such distinction. So long
as a conviction is “related to” the delivery of an item or service under the state healthcare
program — as Petitioner’s conviction unquestionably was — section 1128 applies.

Further, because exclusion under section 1128(a)(1) is mandatory, the I.G. has no
discretion. He may not opt to impose a less onerous period of exclusion under section
1128(b), as Petitioner suggests he do here.

Petitioner also complains that the I.G. did not give her sufficient notice of the proposed
exclusion. She charges that this omission represented a departure from his usual practice,
violating the Administrative Procedures Act, because the change was made without
affording notice and comment. P. Br. at 2, 7-11. But not every procedural change
requires notice-and-comment rule-making, and the regulations already address the issue
of when the I.G. should send a proposed notice. They provide that the I.G. send a notice
to exclude if he intends to impose a period of exclusion that is greater than five years (or
under other circumstances not applicable here). 42 C.F.R. § 1001.2001(a). Nothing in
the statute or regulations compels the I.G. to afford an individual advance notice that he
intends to impose a mandatory exclusion for the minimum period required by statute.

The distinction makes sense. Because the I.G. considers aggravating and mitigating
circumstances in determining the length of any exclusion beyond five years, affording the
individual an opportunity to present mitigation in advance gives him the opportunity to
consider mitigating evidence he may not be aware of. However, because this exclusion
must be for five years, mitigating evidence is irrelevant. 42 C.F.R. §§ 1001.102(c);
1001.2007(a)(2). And, if the LG. errs in imposing a five-year exclusion, the individual
has ample opportunity to point that out by means of the administrative review process.
Act § 1128(c)(3)(B); 42 C.F.R. § 1001.102(a).

Conclusion

Because she was convicted of a criminal offense related to the delivery of an item or
service under a state health care program (Medicaid), Petitioner Mayuga must be
excluded from participation in Medicare, Medicaid, and all federal health care programs
for a minimum period of five years.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Royal Care of Avon Park,
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-960
Decision No. CR3835

Date: May 6, 2015

DECISION

The Florida Agency for Health Care Administration (AHCA or state agency) found that
Royal Care of Avon Park (Petitioner or facility) was out of substantial compliance with
Medicare participation requirements, after determining that hazardous physical
conditions existed in the facility in violation of the National Fire Protection
Association’s (NFPA’s) Life Safety Code (LSC). The Centers for Medicare & Medicaid
Services (CMS) adopted the state agency’s findings and imposed a per day civil money
penalty (CMP) in the amount of $100, effective December 6, 2013, and continuing until
Petitioner returned to substantial compliance on January 30, 2014. Petitioner appealed
these findings. I find below that Petitioner was not in substantial compliance with the
LSC during the period cited, and the CMP that CMS imposed is reasonable in amount
and duration.

I. Background and Procedural History

The Social Security Act (Act) authorizes the Secretary of Health and Human Services to
issue regulations “as may be necessary to carry out the administration” of the Medicare
program. Act § 1871(a)(1) (42 U.S.C. § 1395hh(a)(1)). One of those regulations, 42
C.F.R. § 483.70, governs the physical environment of long-term care facilities and
requires a facility to be designed, constructed, equipped, and maintained to protect the
health and safety of residents, personnel, and the public. With regard to protecting the
facility, its residents, personnel, and the public from fire, the regulation states:

(a) Life safety from fire. (1) Except as otherwise provided in this
section —

(i) The facility must meet the applicable provisions of the 2000
edition of the [LSC] of the [NFPA]. The Director of the Office of
the Federal Register has approved the NFPA 101® 2000 edition of
the [LSC], issued January 14, 2000, for incorporation by reference in
accordance with 5 U.S.C. 552(a) and 1 CFR part 51....

Petitioner is a long-term care facility located in Avon Park, Florida, that participates in
the Medicare and Medicaid programs. On December 6, 2013, the state agency conducted
a recertification and LSC survey at the facility. The survey determined that Petitioner
was not in substantial compliance with Medicare participation requirements, including
the LSC requirement documented as Tag K 018 on the survey’s statement of deficiencies
(Form CMS 2567). CMS Exhibits (Exs.) 5, at 11, 16; 10, at 2; 11, at 1.

On January 14, 2014, the state agency revisited the facility to follow-up on its December
6, 2013 survey findings and also to conduct a complaint investigation survey. The
complaint investigation concerned an anonymous complaint the state agency received
alleging:
The facility had constructed a new 4’ by 15’ closet after the new
addition to the building was finished and after AHCA Plan and
Construction and the Highlands County Fire Marshall left the
facility. Construction on a storage closet began on 12/23/2013. This
closet also enclosed a fire alarm strobe light and did not have any
fire suppression devices such as sprinkler heads inside of [the] closet
for protection. Power Strips or Surge Protector Strips were being
attached to medical equipment in the new therapy department. The
closet was built with metal frame construction and included new
electrical outlets, coaxial and lighting, in which all was done without
permits drawings or approval from regulatory agencies.

CMS Ex. 12, at 1. The complainant included a photograph of the storage closet. CMS
Brief (CMS Br.) at 3; CMS Ex. 2.

Based on the January 14, 2014 survey visit, the state agency found Petitioner out of
substantial compliance with four Medicare participation requirements under 42 C.F.R.
§ 483.70, documented on the January 14, 2014 statement of deficiencies under: Tag K
018, LSC Standard 101, Corridor Doors; Tag K 052, LSC Standard 101, Fire Alarm
Systems; Tag K 056, LSC Standard 101, Sprinkler Systems; and Tag K 147, LSC
Standard 101, Electrical Wiring and Equipment. CMS Br. at 2; CMS Closing Brief
(CMS Closing Br.) at 1-2; CMS Ex. 1, at 1-7.

On February 10, 2014, CMS notified Petitioner that based on the January 14, 2014 survey
findings it was imposing enforcement remedies, including a $100 per day CMP effective
December 6, 2013. CMS Ex. 5, at 9-13. On March 28, 2014, CMS notified Petitioner
that based on the state agency’s second revisit on March 17, 2014, CMS determined
Petitioner to be back in substantial compliance effective January 30, 2014, and the only
remedy CMS would impose was the CMP, effective up through January 29, 2014. CMS
Ex. 5, at 16.

On March 31, 2014, Petitioner appealed, and the case was assigned to me for hearing and
decision. In response to my Acknowledgment and Initial Pre-Hearing Order, CMS filed
its pre-hearing brief on July 29, 2014, accompanied by CMS Exs. 1-12. On August 27,
2014, Petitioner filed its pre-hearing brief (P. Br.), accompanied by P. Exs. A, B, “CEE,”
and D.

The parties filed a joint motion for disposition on the written record consistent with 42
C.F.R. § 498.66. The motion documents the parties’ agreement that the written record
consists of the parties’ initial briefs, proposed exhibits, and the direct written testimony of
the parties’ proposed witnesses: for CMS, Life Safety Code Surveyor and Fire Protection
Specialist RG,' a member of the survey team surveying Petitioner on January 14, 2014
(CMS Ex. 9); and, for Petitioner, its Environmental Service/Maintenance Director, MR
(P. Ex. A). The motion also documents the parties’ agreement to forego cross-
examination of the two witnesses.

I granted the parties’ joint motion and gave them the opportunity to file closing briefs.
CMS filed its closing brief on October 15, 2014, and Petitioner filed its closing brief (P.
Closing Br.) on November 13, 2014. In the absence of objection, I admit CMS Exs. 1-12
and P. Exs. A, B, “CEE,” and D to the record.

CMS alleges that Petitioner failed to comply with four LSC requirements, cited at Tags K
018, 052, 056, and 147, as documented on the January 14, 2014 statement of deficiencies.
CMS Ex. 1, at 1-7; CMS Br. at 1-2. CMS alleges that three of the four deficiencies relate
to a storage room or closet that Petitioner constructed and began to use without a
construction permit.? CMS Ex. 1, at 1-5; CMS Br. at 2. CMS states that the storage

' Trefer to witnesses by their initials.

> CMS asserts that the failure to install a door to the storage room created an accident
hazard for ambulatory, cognitively impaired residents. See CMS Ex. 9, at 3 4 8. CMS
argues that Petitioner was therefore also noncompliant with 42 C.F.R. § 483.25(h)(1),
which requires a resident’s environment to be as free of accident hazards as is possible.
closet measured 15 feet by 4 feet, lacked a door, and was accessible to residents. CMS
Ex. 1, at 2; CMS Br. at 2. CMS alleges that the storage room was not protected by the
facility’s sprinkler system and that a fire alarm strobe light, which should alert staff and
residents to a fire, was located in the storage room, not in the corridor or resident area
where it could be seen. CMS Ex. 1, at 3-5; CMS Br. at 2; see CMS Ex. 9, at 2 § 2.
Additionally, it was undisputed that the facility was using a multi-outlet surge protector
in a resident area, rather than fixed wiring, to power electrical equipment. CMS Ex. 1, at
5-7; CMS Br. at 2.

IL. Issues Presented

1. Whether Petitioner was in substantial compliance with Medicare
program requirements between December 6, 2013 and January 29, 2014;
and

2. If Petitioner was not in substantial compliance, whether the $100 per-
day CMP that CMS imposed is reasonable in amount and duration.

III. Findings of Fact and Conclusions of Law

A. Petitioner was not in substantial compliance with Tag K 018, LSC
Standard 101, because Petitioner did not install a corridor door on its
storage room to prevent residents from injury due to passage of fire
and smoke in the event of fire.

To participate as Medicare providers, long-term care facilities are required to design,
construct, equip, and maintain adequate fire protection and alert systems in conformance
with the 2000 edition of the NFPA LSC. 42 C.F.R. § 483.70(a). The LSC requires that
“spaces larger than 50 [square feet], including repair shops, used for storage of
combustible supplies and equipment in quantities deemed hazardous by the authority
having jurisdiction” have a “self-closing or automatic closing” door. LSC § 19.3.2.1(7);
CMS Ex. 8, at 6.

While Petitioner was not cited for this violation during the survey, CMS argues that CMS
may raise, and an administrative law judge may sustain, regulatory citations not
contained in the original statement of deficiencies, so long as a petitioner has adequate
notice of the factual findings on which the citations are based, citing Azalea Court, DAB
No. 2352, at 12 (2010), aff'd, Azalea Court v. U.S. Dep’t of Health and Human Servs.,
482 Fed. Appx. 460 (11th Cir. 2012). Considering that I am upholding Petitioner’s
noncompliance, and associated CMP, regarding the LSC violations, I do not specifically
address whether Petitioner was also noncompliant with 42 C.F.R. § 483.25(h)(1).
Petitioner was required to install an appropriate door to limit access to the closet because
its closet was larger than 50 square feet, and the surveyor deemed the situation hazardous
due to its storage of combustible supplies and equipment. Specifically, Petitioner’s
storage closet measured 15 feet by 4 feet, or 60 square feet. CMS Ex. 1, at 2. During the
January 14, 2014 survey, the survey team observed the closet, which was in the corridor
adjacent to Petitioner’s new rehabilitation unit, and saw that the closet was in use but that
it lacked a door. CMS Exs. 1, at 1-3; 9, at 2 2-4. RG testified he photographed the
storage closet. CMS Ex. 9, at 2 4 4; see CMS Ex. 3. He observed a lot of equipment
including a rolling scale, walkers, and other types of rehabilitation equipment. /d., at 3
7; CMS. Ex. 3. He opined that if a fire occurred it could easily spread and the large
quantity of equipment would create a combustible and hazardous situation. CMS Ex. 9,
at 347. I find RG’s opinion credible considering his training as a fire protection
specialist and LSC surveyor for CMS and the State of Florida, his education in fire
science, his experience as a surveyor, and his 15 years of experience as a volunteer
firefighter and emergency technician. CMS Ex. 9, at 1 4/1.

Petitioner does not dispute that, on January 14, 2014, there was no door on the storage
closet. Petitioner further does not dispute the statement in the January 14, 2014 statement
of deficiencies that its failure “to provide a closet corridor door that would fully close and
positively latch when tested by applying minimal force at the latch edge of the door...
will allow the passage of smoke and fire into the closet and the possibility of reaching
into the ceiling area in the event of a fire.” CMS Ex. 1, at 2; P. Hearing Request; P. Br.;
P. Closing Br. Petitioner also acknowledges, on the survey statement of deficiencies, that
the door was not installed until January 30, 2014. CMS Ex. 1, at 1.

However, Petitioner argues that its “rehab area” and “supply closet” were undergoing
construction, which the state agency’s “Plans and Construction” section’ had purportedly
approved. Thus, Petitioner argues it should not have been held to the “same type of
compliance” as areas not under construction. P. Closing Br. at 2-3. Yet Petitioner has not
come forward with any relevant evidence to contest that the closet was actually in use
storing equipment or otherwise provide any evidence or authority showing why it should
be excepted from the LSC requirements during the cited period of noncompliance. Iam
also not aware of any steps Petitioner took to protect the health and safety of its residents,
whom I have no reason to find were not still living at the facility during the construction
period.

Petitioner also argues that its noncompliance under LSC Tag K 018 from the December 6,
2013 survey was “cleared” by Surveyor RG before a deficiency at LSC Tag K 018 was

> CMS states, and RG testified, that the state agency’s Plans and Construction division is
a separate division from the Health Quality Assurance division in which state surveyors,
such as RG, are employed. CMS Br. at 3; CMS Ex. 9, at 2. Petitioner does not dispute
this.
again cited during the January 14, 2014 complaint survey. P. Closing Br. at 1-2; P. Ex. A.
During the December 6, 2013 survey, Petitioner was cited under LSC Tag K 018 for
blocking its two beauty salon doors with linen carts, which posed a fire hazard.’ P.
Hearing Request; CMS Ex. 10, at 2; CMS Ex. 11, at 1. Petitioner did not request a hearing
to contest its noncompliance under LSC Tag K 018 as cited at the December 6, 2013
survey. Accordingly, CMS’s finding of noncompliance with regard to that K Tag is final.

Nonetheless, Petitioner argues also that the duration of the CMP should only run through
January 14, 2014, relying on the testimony of its Maintenance Director, MR, who testified
that:

On January 14, 2014 AHCA surveyor [RG] came to [Petitioner] for
the resurvey of the annual survey completed in December, 2013.
[RG] stated he cleared us from the annual surveys citations and
would then discuss the complaint received on a closet attached to the
rehab building under construction. He stated that the complaint was
no part of the survey. The closet was at that time still part of the
construction of the new rehab building and had not yet been
completed.

P. Ex. A.

Petitioner bears the burden of showing that it returned to substantial compliance earlier
than the date cited. Owensboro Place & Rehab. Ctr., DAB No. 2397, at 12 (2011). Here,
as of January 14, 2014, CMS found that deficiencies under Tag K 018 still existed under
different facts relating to the noncompliant closet, and Petitioner was again found out of
substantial compliance with that participation requirement due to the new violation of K
Tag 018.

From Maintenance Director MR’s testimony, it appears that Surveyor RG was reasonably
explaining that Tag K 018 involved two separate situations with the newest noncompliance
relating to the storage closet. Surveyor RG credibly testified that there was no closet
constructed during the December 2013 annual survey. CMS Ex. 9, at 2 § 3. However,
during the January 14, 2014 survey RG observed that the closet was installed and the
rehabilitation area was finished. /d. He also photographed the closet and surrounding
area, and he observed no door but a lot of stored equipment including a rolling scale,
walkers, and other types of rehabilitation equipment. Jd., at 2-3 J§ 3, 4, 7; CMS. Ex. 3.
The noncompliance relating to the closet was not resolved until Petitioner completed all
corrective actions as of January 30, 2014. See CMS Ex. 1, at 1-3. Petitioner has not

* Petitioner was also cited under LSC Tag K 021 for having fire doors that failed to close
properly. That deficiency was also determined to be corrected as of January 14, 2014.
CMS Ex. 10, at 2; CMS Ex. 11, at 1.
rebutted this persuasive showing by presenting any relevant evidence or otherwise
challenging the surveyor’s testimony.

B. Petitioner does not contest that it was not in substantial compliance
with Tag K 052, LSC Standard 101, because a fire alarm strobe light
was enclosed in a storage closet and thus could not function as
intended to alert staff and residents to an emergency.

Section 9.6 of the LSC references fire detection, alarm, and communication systems. The
systems “are primarily intended to provide the indication and warning of abnormal
conditions, the summoning of appropriate aid, and the control of occupancy facilities to
enhance protection of life.” LSC § 9.6.1.3. The LSC requires that a fire alarm system be
installed, tested, and maintained in accordance with NFPA 70 National Electrical Code
(NEC) and NFPA 72 National Fire Alarm Code. LSC § 9.6.1.4. Section 9.6.1.9 of the
LSC requires that a “complete fire alarm system shall be used for initiation, notification,
and control.” The notification function is defined as “the means by which the system
advises that human action is required in response to a particular condition.” LSC

§ 9.6.1.9. See CMS Ex. 1, at 3. Notification signals for occupants to evacuate shall be by
audible and visible signals in accordance with NFPA 72, National Fire Alarm Code, and
CABO/ANSI A1171.1, American National Standard for Accessible and Usable Buildings
and Facilities, or other means of notification acceptable to the authority having
jurisdiction shall be provided. LSC § 9.6.3.6.

During the January 14, 2014 survey, the survey team observed that construction of the
storage closet “on the existing wall side of the building [had] enclosed a fire alarm strobe
light.” The statement of deficiencies alleges that because Petitioner had enclosed the fire
alarm strobe light, it failed to “provide the visibility of the device into the corridor and
resident meeting area or resident lobby.” CMS Ex. 1, at 3-4. Surveyor RG testified “the
fire alarm strobe light was enclosed in the closet instead of where staff and residents
could see it.” Surveyor RG testified that Petitioner’s “failure to . . . reposition the fire
strobe light outside the closet poses a potential for more than minimal harm to the
residents” because it “is used to notify staff and residents of a fire and/or smoke to take
the proper steps to evacuate the facility or area. Since the fire strobe light was left in the
closet instead of relocated to an adjacent room or corridor, in the event of a fire and/or
smoke staff and residents would not be able to see it and would not be alerted to the
emergency.” CMS Ex. 9, at 2-3 4¥ 2, 5, 6.

Petitioner does not come forward with any argument or evidence to contest this citation
that the fire alarm strobe light was located in the closet where its staff and residents could
not see it. Petitioner also does not contest that it did not relocate the strobe light from the
inside of the closet to an outside wall where it could be seen until January 22, 2014.
Petitioner did not otherwise complete all corrective measures under Tag K 052 until
January 30, 2014. CMS Ex. 1, at 3.
C. Petitioner does not contest it was not in substantial compliance with
Tag K 056, LSC Standard 101, because Petitioner did not install a
sprinkler in its storage closet.

42 C.F.R. § 483.70(a)(8)(i) requires “an approved, supervised automatic sprinkler system
in accordance with the 1999 edition of NFPA 13 . . . throughout [a long-term care
facility’s] building by August 13, 2013.” If there is an automatic sprinkler system, it
must be installed and provide coverage throughout the building. LSC § 19.3.5.1; CMS
Ex. 1, at 4-5.

Surveyor RG testified that during the January 14, 2014 survey, there was no sprinkler in
Petitioner’s storage closet. The surveyor testified that he observed “a lot of equipment in
this storage closet, including a rolling scale, walkers and other types of rehabilitation
equipment. Since there was no sprinkler head in the closet, if a fire occurred it could
easily spread and the equipment would be combustible.” The surveyor testified that
Petitioner’s “failure to . . . install a sprinkler inside the closet . . . poses a potential for
more than minimal harm to the residents.” CMS Ex. 9, at 2-3 Jf 2, 5, 7. Petitioner does
not actively challenge this finding nor contend that it had a sprinkler in the closet. P.
Hearing Request; P. Br.; P. Closing Br. Petitioner did not install a sprinkler head in the
closet until January 22, 2014, and it did not otherwise complete its corrective measures
until January 30, 2014. See CMS Ex. 1, at 4-5.

D. Petitioner does not contest that it was not in substantial compliance
with Tag K 147, LSC Standard 101, because of Petitioner’s wiring of
medical equipment in a resident care area.

The LSC requires that all electrical wiring and equipment be maintained and installed in
accordance with NFPA 70 NEC. LSC § 9.1.2; CMS Ex. 8, at 10; CMS Ex. 9, at 3 49.
The NEC provides that, unless specifically permitted for uses not indicated here, “flexible
cords and cables shall not be used . . . [a]s a substitute for the fixed wiring of a structure.”
CMS Ex. 8, at 13 (referencing NFPA 70, NEC §§ 400-7, 400-8). The survey statement
of deficiencies documents that during the January 14, 2014 survey, the survey team saw
“flexible cords, (extension cords, power taps, power strips, surge protectors and
surge/UPS, uninterrupted power supply), battery back-up units, being used as a substitute
for the fixed wiring of the facility that is prohibited by NFPA 70.” The surveyors made
these observations in the newly constructed rehabilitation and therapy center, where they
saw power strips or surge protector strips attached to three pieces of medical equipment.
CMS Ex. I, at 6.

Surveyor RG testified that:
I observed that power strip devices were being used instead of fixed
wiring as required by the NFPA. Power strip devices, such as surge
protectors, were being used in a patient care area. Power strip
devices are not permitted in patient care areas, because they can
cease working if overloaded by too much equipment being plugged
into it. If necessary medical equipment, such as life support, is
plugged into a surge protector and service of a medical device is
interrupted, it can be life-threatening.

CMS Ex. 9, at 3 ¢ 10. Petitioner does not argue that it is acceptable to use power strip
devices instead of fixed wiring in resident care areas. P. Hearing Request; P. Br.; P.
Closing Br. Petitioner removed the power strips attached to the three pieces of medical
equipment in its therapy room on January 22, 2014. Petitioner also conducted an in-
service with its therapy and maintenance staffs regarding the “non-use of power strips.”
CMS Ex. 1, at 5. Petitioner also had its Administrator and MR inspect the facility to
ensure no power strips were utilized as of January 30, 2014. CMS Ex. 1, at 5-6.

E. A $100 per-day CMP is reasonable.

CMS must consider several factors when determining the amount of a CMP, which an
administrative law judge considers de novo when evaluating the reasonableness of a
CMP imposed by CMS: (1) the facility’s history of noncompliance; (2) the facility’s
financial condition, i.e., its ability to pay the CMP; (3) the severity and scope of the
noncompliance; (4) the relationship of the one deficiency to other deficiencies resulting
in noncompliance; and (5) the facility’s degree of culpability, which includes neglect,
indifference, or disregard for resident care, comfort, or safety. 42 C.F.R. §§ 488.438(f),
488.404(b), (c).

A CMP within the range of $50 to $3,000 per day is designated for deficiencies that do
not pose immediate jeopardy but either cause actual harm to residents, or cause no actual
harm but have the potential for causing more than minimal harm. 42 C.F.R.

§ 488.438(a)(1)(ii). In assessing the reasonableness of a CMP amount, an administrative
law judge looks at the per day amount, rather than the total accrual. Kenton Healthcare,
LLC, DAB No. 2186, at 28 (2008). The regulations leave the decision regarding the
choice of remedy to CMS, and the amount of the remedy to CMS and the administrative
law judge, requiring only that the regulatory factors at 42 C.F.R. §§ 488.438(f) and
488.404 be considered when determining an amount within the applicable range. 42
CER. §§ 488.408; 488.408(g)(2); 498.3(d)(11); see also 42 C.F.R. § 488.438(c)(2);
Alexandria Place, DAB No. 2245, at 27 (2009); Kenton Healthcare, LLC, DAB No.
2186, at 28-29.

CMS did not find immediate jeopardy to exist regarding the citations of deficiencies here.
However, that does not mean that the noncompliance here is not serious or that Petitioner

10

is not culpable. RG testified credibly that Petitioner’s failure to install a door to the
storage closet, to install a sprinkler inside the closet, to reposition the fire strobe light
from the closet, and to use power strip devices, all posed a risk of more than minimal
harm to Petitioner’s residents. Surveyor RG credibly testified, for example, that a strobe
light in a closet, and not in a corridor, means that residents, staff and visitors might not be
alerted to an emergency in the event of fire and smoke. Further, RG credibly explained
that with no sprinkler head in the closet, a fire could spread due to combustible
equipment being stored in the closet. In addition, RG credibly explained that a power
strip device may cease working if it is overloaded with too much equipment plugged into
it, which can be life threatening if necessary medical equipment is interrupted. CMS Ex.
9, at 1-4.

Petitioner did not dispute that it had a history of noncompliance under the LSC over
multiple prior consecutive survey cycles. P. Hearing Request; P. Br.; P. Closing Br.; see
CMS Br. at 7; CMS Ex. 10, at 2-3. I have no information with regard to whether or not
Petitioner’s financial condition impacts its ability to pay the CMP. However, it is
Petitioner’s burden to raise the issue of its ability to pay by submitting evidence of its
financial condition, and it has not done so here. Thus, considering all the factors
discussed, I find CMS has substantiated the very low $100 per day CMP, which is only
$50 more than the minimum, and I find it reasonable.

IV. Conclusion

Petitioner was not in substantial compliance with Medicare participation requirements for
the period cited (December 6, 2013 through January 29, 2014), and the $100 per day
CMP that CMS imposed for that period of noncompliance is reasonable.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Med-Caire, Inc.,
(Supplier No.: 0545010005; NPI: 1336420975),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-15-227
Decision No. CR3826
Date: May 1, 2015
DECISION

The Medicare enrollment and billing privileges of Petitioner, Med-Caire, Inc. are revoked
pursuant to 42 C.F.R. § 424.57(e) and 424.535(a)(1),' effective August 8, 2014, based on
noncompliance with 42 C.F.R. § 424.57(c)(1) (Supplier Standard 1).
I. Procedural History and Jurisdiction
Petitioner, Med-Caire, Inc., was a supplier of durable medical equipment, prosthetics,
orthotics, and supplies (DMEPOS) participating in Medicare. The National Supplier
Clearinghouse (NSC), operated by Palmetto GBA (Palmetto), notified Petitioner by letter
dated July 9, 2014, that Petitioner’s Medicare enrollment was revoked effective May 21,
2014. Centers for Medicare & Medicaid Services (CMS) exhibit (CMS Ex.) | at 7-10,
2-15. NSC cited 42 C.F.R. §§ 405.800, 424.57(e), 424.535(a)(1), 424.535(a)(5)(ii), and

424.535(g) as the legal authority for the revocation based on noncompliance with 42
C.F.R. §§ 424.57(c)(1) (Supplier Standard 1 — failure to comply with federal and state

' Citations are to the 2013 revision of the Code of Federal Regulations (C.F.R.), unless
otherwise indicated.
licensure and regulatory requirements), 424.57(c)(7) (Supplier Standard 7 — failure to
maintain a physical facility on an appropriate site), 424.57(c)(10) (Supplier Standard 10 —
failure to have a current liability insurance policy), and 424.57(c)(22) (Supplier Standard
22 — failure to be accredited by a CMS-approved accreditation organization). NSC
notified Petitioner that it was subject to a two-year bar to re-enrollment pursuant to 42
C.F.R. § 424.535(c). NSC also advised Petitioner that the effective date of revocation
was retroactive to May 21, 2014, the date on which CMS determined that Petitioner’s
practice location was no longer operational. CMS Ex. | at 7, 12.

On August 18, 2014, Petitioner requested reconsideration of the initial determination.
CMS Ex. | at 11. On September 25, 2014, a reconsideration hearing officer upheld the
revocation, concluding that Petitioner was non-compliant with Supplier Standards 1, 7,
10, and 22. CMS Ex. | at 1-6.”

Petitioner requested a hearing before an administrative law judge (ALJ) on October 28,
2014 (RFH). The case was assigned to me for hearing and decision on November 14,
2014, and an Acknowledgment and Prehearing Order (Prehearing Order) was issued at
my direction. No issue has been raised as to the timeliness of Petitioner’s request for
hearing, the parties do not challenge my authority to decide this case, and I conclude that
I have jurisdiction.

On December 15, 2014, CMS filed a motion for summary judgment (CMS Br.) with
CMS Exs. | through 3. On January 21, 2015, I ordered Petitioner to show good cause
why its request for hearing should not be dismissed for abandonment or as a sanction for
violation of my Prehearing Order because Petitioner had failed to file its exchange,
including a response to the CMS motion and Petitioner’s exhibits. Petitioner responded
to the order to show cause on January 28, 2015 (P. Response). Petitioner also submitted
two documents for my consideration, neither of which was properly marked as an exhibit.
CMS filed a reply to Petitioner’s response to the order to show cause (CMS OSC Reply).
On February 6, 2015, I ruled that Petitioner had not abandoned its request for hearing and
no sanction would be imposed. On February 19, 2015, CMS filed another reply to
Petitioner’s response, which addressed Petitioner’s contentions (CMS Reply). Petitioner
also filed a reply (P. Reply) to the CMS motion for summary judgment on February 19,
2015.

> The copy of the reconsideration determination CMS submitted as CMS Ex. | at 1-6 is
missing the second page, which contains the hearing officer’s discussion of Supplier
Standard number 1| under the section of the determination titled “RATIONALE.” A
complete copy of the reconsidered determination was filed by Petitioner with its request
for hearing. Departmental Appeals Board Electronic Filing System (DAB E-File) Item
# 1, “Originating Case Decision” (DAB E-File #1).
Petitioner did not object to my consideration of CMS Exs. | through 3 and they are
admitted as evidence. CMS objected to my consideration of the documents Petitioner
submitted on grounds that Petitioner failed to submit the documents at reconsideration
and also because the documents are not relevant to any issue that I may decide. CMS
OSC Reply at 1-2. One of the documents is a lease agreement dated August 22, 2013, for
2,000 square feet at 1793 N.W. Maynard Road, Cary, North Carolina, for the period
September 1, 2013 through September 30, 2016. CMS offered a copy of the same lease
agreement but the copy submitted by CMS (CMS Ex. | at 30-46) was unexecuted and did
not include the hand-written notes and interlineation contained on the copy Petitioner
submitted, which appears to be the executed document. Thus, contrary to the assertion of
CMS, Petitioner did submit the lease document at reconsideration, albeit a copy that was
incomplete. I conclude that it is appropriate to ensure that the complete document
offered by Petitioner is included in the record. I also conclude that the document is
relevant to the extent it shows that Petitioner may have established a new location for its
DMEPOS location as alleged by Petitioner. Accordingly, the lease agreement offered by
Petitioner is admitted and treated as if marked Petitioner’s exhibit (P. Ex.) 1. The other
document includes copies of Employer’s Quarterly Tax and Wage Reports for the State
of North Carolina, for the last quarter of 2013 and the first three quarters of 2014. The
fact that Petitioner paid payroll taxes to the State of North Carolina is not disputed by
CMS. However, the fact that Petitioner paid payroll taxes in North Carolina is not a fact
that helps me resolve any issue in dispute in this case. E.g., Fed. R. Evid. 401(b).
Accordingly, I conclude that the North Carolina tax records submitted by Petitioner are
not relevant and may not be admitted. However, the documents remain with the record
and are available for further review if necessary.

IL. Discussion
A. Applicable Law

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

> A “supplier” furnishes services and supplies under Medicare. The term supplier
applies to physicians or other practitioners and facilities that are not included within the
definition of the phrase “provider of services.” Act § 1861(d) (42 U.S.C. § 1395x(d)). A

“provider of services,” commonly shortened to “provider,” includes hospitals, critical
(Continued next page.)
1835(a) (42 U.S.C. § 1395n(a)); 1842(h)(1) (42 U.S.C. § 1395(u)(h)(1)). Petitioner is a
DMEPOS supplier.

The Act requires the Secretary to issue regulations that establish a process for the
enrollment of providers and suppliers, including the right to a hearing and judicial review
in the event of denial or non-renewal. Act § 1866(j) (42 U.S.C. § 1395ce(j)).

Pursuant to 42 C.F.R. §§ 424.57 and 424.505, a DMEPOS supplier such as Petitioner
must be enrolled in the Medicare program to be reimbursed for durable medical
equipment, prosthetics, orthotics, or supplies sold or rented to Medicare beneficiaries.
The regulations establish detailed requirements that suppliers must meet and maintain to
enroll in Medicare and to receive and maintain Medicare billing privileges. 42 C.F.R. pt.
424, subpt. P. DMEPOS suppliers have additional requirements imposed by 42 C.F.R.

§ 424.57(b) and (c). To receive direct-billing privileges, a DMEPOS supplier must meet
and maintain the Medicare application certification standards set forth in 42 C.F.R.

§ 424.57(c). Among other requirements, a DMEPOS supplier must maintain a physical
facility on an appropriate site. 42 C.F.R. § 424.57(c)(7). An appropriate site for the
physical facility must meet certain criteria, including that the practice location be a
location accessible to the public, Medicare beneficiaries, and CMS and its agents, and
that the practice location must be accessible and staffed during posted hours of operation.
42 C.F.R. § 424.57(c)(7)(i)(B), (C). A DMEPOS supplier must operate and furnish
Medicare-covered items in compliance with all applicable federal and state licensure and
regulatory requirements. 42 C.F.R. § 424.57(c)(1). A DMEPOS supplier is required to
submit completed application and enrollment forms for each separate physical location it
uses to furnish DMEPOS, with the exception of warehouses or repair facilities. 42
C.F.R. § 424.57(b)(1). A DMEPOS supplier must provide complete and accurate
information in response to questions on its application for Medicare billing privileges and
must report to CMS any changes in information supplied on the application within 30
days of the change. 42 C.F.R. §§ 424.57(c)(2); 424.516(c). Additionally, a DMEPOS
supplier must permit CMS or its agent to conduct on-site inspections to ascertain supplier
compliance with the Medicare enrollment standards. 42 C.F.R. § 424.57(c)(8). Finally, a
DMEPOS supplier must at all times be “operational,” which means it “has a qualified
physical practice location, is open to the public for the purpose of providing health care

(Continued from preceding page.)

access hospitals, skilled nursing facilities, comprehensive outpatient rehabilitation
facilities, home health agencies, hospice programs, and a fund as described in sections
1814(g) and 1835(e) of the Act. Act § 1861(u) (42 U.S.C. § 1395x(u)). The distinction
between providers and suppliers is important because they are treated differently under
the Act for some purposes.
related services, is prepared to submit valid Medicare claims, and is properly staffed,
equipped, and stocked . . . to furnish these items or services.” 42 C.F.R. § 424.502.

The Secretary has delegated authority to CMS or its Medicare contractor to revoke an
enrolled supplier’s Medicare enrollment and billing privileges and any supplier
agreement for any of the reasons listed in 42 C.F.R. § 424.535. Noncompliance with
enrollment requirements, such as those established by 42 C.F.R. § 424.57(b) and (c) for
DMEPOS suppliers, is also a basis for revocation of billing privileges and enrollment in
Medicare. 42 C.F.R. §§ 424.57(e); 424.535(a)(1). After a supplier’s Medicare
enrollment and billing privileges are revoked, the supplier is barred from reenrolling in
the Medicare program for one to three years. 42 C.F.R. § 424.535(c).

A supplier whose enrollment and billing privileges have been revoked may request
reconsideration and review as provided by 42 C.F.R. pt. 498. A supplier submits a
written request for reconsideration to CMS or its contractor. 42 C.F.R. § 498.22(a).
CMS or its contractor must give notice of its reconsidered determination to the supplier,
giving the reasons for its determination and specifying the conditions or requirements the
supplier failed to meet, and advising the supplier of its right to an ALJ hearing. 42 C.F.R.
§ 498.25. If the decision on reconsideration is unfavorable to the supplier, the supplier
has the right to request a hearing by an ALJ and further review by the Departmental
Appeals Board (the Board). Act § 1866(j)(8) (42 U.S.C. § 1395ce(j)(8)); 42 C.F.R.

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

B. Issue
Whether summary judgment is appropriate; and

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

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

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

1. Summary judgment is appropriate.
CMS has requested summary judgment. A provider or supplier denied enrollment in

Medicare or whose enrollment has been revoked has a right to a hearing and judicial
review pursuant to section 1866(h)(1) and (j) of the Act and 42 C.F.R. §§ 498.3(b)(1),
(5), (6), (8), (15), (17); 498.5. A hearing on the record, also known as an oral hearing, is
required under the Act. Act §§ 205(b), 1866 (h)(1) and (j)(8); Crestview, 373 F.3d at
748-51. A party may waive appearance at an oral hearing, but must do so affirmatively
in writing. 42 C.F.R. § 498.66. In this case, Petitioner has not waived the right to oral
hearing or otherwise consented to a decision based only upon the documentary evidence
or pleadings. Accordingly, disposition on the written record alone is not permissible,
unless the CMS motion for summary judgment has merit.

Summary judgment is not automatic upon request but is limited to certain specific
conditions. The Secretary’s regulations that establish the procedure to be followed in
adjudicating Petitioner’s case are at 42 C.F.R. pt. 498. 42 C.F.R. §§ 405.800, 405.803(a);
424.545(a), 498.3(b)(5), (6), (15), (17). The regulations do not establish a summary
judgment procedure or recognize such a procedure. However, the Board has long
accepted that summary judgment is an acceptable procedural device in cases adjudicated
pursuant to 42 C.F.R. pt. 498. See, e.g., Ill. Knights Templar Home, DAB No. 2274 at 3-
4 (2009); Garden City Med. Clinic, DAB No. 1763 (2001); Everett Rehab. & Med. Ctr.,
DAB No. 1628 at 3 (1997). The Board also has recognized that the Federal Rules of
Civil Procedure (Fed. R. Civ. Pro.) do not apply in administrative adjudications such as
this, but the Board has accepted that Fed. R. Civ. Pro. 56 and related cases provide useful
guidance for determining whether summary judgment is appropriate. Furthermore, a
summary judgment procedure was adopted as a matter of judicial economy within my
authority to regulate the course of proceedings and made available to the parties in the
litigation of this case by my Prehearing Order. The parties were given notice by the
Prehearing Order that summary judgment is an available procedural device and that the
law as it has developed related to Fed. R. Civ. Pro. 56 will be applied.

Summary judgment is appropriate when there is no genuine dispute as to any issue of
material fact for adjudication and/or the moving party is entitled to judgment as a matter
of law. The party requesting summary judgment bears the burden of showing that there
are no genuine issues of material fact for trial and/or that it is entitled to judgment as a
matter of 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. Generally, the non-movant may
not defeat an adequately supported summary judgment motion by relying upon the
denials in its pleadings or briefs but must furnish evidence of a dispute concerning a
material fact, i.e., a fact that would affect the outcome of the case if proven. Mission
Hosp. Reg’! Med. Ctr., DAB No. 2459 at 4 (2012) (and cases cited therein); Experts Are
Us, Inc., DAB No. 2452 at 4 (2012) (and cases cited therein); Senior Rehab. & Skilled
Nursing Ctr., DAB No. 2300 at 3 (2010) (and cases cited therein); see also Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

The standard for deciding a case on summary judgment and an ALJ’s decision-making in
deciding a summary judgment motion differs from that used in resolving a case after a
hearing. On summary judgment, the ALJ does not make credibility determinations,
weigh the evidence, or decide which inferences to draw from the evidence, as would be
done when finding facts after a hearing on the record. Rather, on summary judgment, the
ALJ construes the evidence in a light most favorable to the non-movant and avoids
deciding which version of the facts is more likely true. Holy Cross Vill. at Notre Dame,
Inc., DAB No. 2291 at 5 (2009). The Board also has recognized that on summary
judgment it is appropriate for the ALJ to consider whether a rational trier of fact could
find that the party’s evidence would be sufficient to meet that party’s evidentiary burden.
Dumas Nursing & Rehab., L.P., DAB No. 2347 at 5 (2010). The Secretary has not
provided in 42 C.F.R. pt. 498, for the allocation of the burden of persuasion or the
quantum of evidence required to satisfy the burden. However, the Board has provided
some persuasive analysis regarding the allocation of the burden of persuasion in cases
subject to 42 C.F.R. pt. 498. Batavia Nursing & Conv. Ctr., DAB No. 1904 (2004), aff'd,
Batavia Nursing & Conv. Ctr. v. Thompson, 129 Fed. App’x 181 (6th Cir. 2005).

In this case, I conclude that there is no genuine dispute as to any material fact pertinent to
revocation under 42 C.F.R. §§ 424.57(e) and 424.535(a)(1) based on Petitioner’s
noncompliance with 42 C.F.R. § 424.57(c)(1) (Supplier Standard 1) that requires a trial.
Petitioner has conceded its noncompliance with Supplier Standard 1, in that, Petitioner
admits that it moved to another location and failed to notify CMS of its new address.
Petitioner admits that it did not file the required Form CMS-855S to report its change of
address. RFH; P. Response; P. Reply. Accordingly, summary judgment based on the
violation of 42 C.F.R. § 424.57(c)(1) is appropriate.

Summary judgment is not appropriate for a revocation based on the alleged violations of
42 C.F.R. §§ 424.57(c)(7) (Supplier Standard 7); 424.57(c)(10) (Supplier Standard 10);
and 424.57(c)(22) (Supplier Standard 22). Petitioner’s submitted evidence in support of
its request for reconsideration (CMS Ex. | at 11, 16-46) and P. Ex. 1. Ifall favorable
inferences are drawn in favor of Petitioner, as required in ruling on summary judgment, I
conclude that there are genuine disputes of material fact related to revocation for
noncompliance with 42 C.F.R. §§ 424.57(c)(7) and (10) that would require a trial.
Drawing all favorable inferences for Petitioner, I conclude that there is a genuine dispute
as to whether Petitioner had a fully operational site, open and accessible to the public and
CMS, and that satisfied other requirements of 42 C.F.R. § 424.57(c)(7) on May 21, 2014,
at about 11:20 a.m. when the site visit occurred, albeit at a location other than that on file
with CMS. P. Ex. 1; CMS Ex. | at 16-27, 30-46. Petitioner’s evidence submitted on
reconsideration also shows a genuine dispute because the evidence supports an inference
that Petitioner had the insurance required by 42 C.F.R. § 424.57(c)(10) with no lapse in
coverage. CMS Ex. | at 28-29, 74.

The alleged noncompliance with 42 C.F.R. § 424.57(c)(22) (Supplier Standard 22) poses
a different problem. CMS records show that Petitioner was accredited by the Community
Health Accreditation Program for its location on 2617 Rowland Road, Suite 104,
Raleigh, North Carolina effective through June 2, 2016. CMS Ex. | at 57-58; CMS Exs.
2,3. NSC advised Petitioner in the initial determination dated July 9, 2014, that
according to CMS records, Petitioner was not accredited for “multiple products and
services” that Petitioner disclosed to NSC. CMS Ex. 1 at 9, 14. Petitioner presented no
evidence reflecting its accreditation status when it requested a reconsidered
determination. CMS Ex. 1 at 11. On reconsideration the hearing officer concluded that
revocation was appropriate for noncompliance with 42 C.F.R. § 424.57(c)(22). The
hearing officer mentioned that Petitioner was not accredited for multiple products. The
hearing officer failed to address whether or not Petitioner was properly accredited at its
new address, 1793 N.W. Maynard Road, Cary, North Carolina, even though Petitioner
clearly informed the hearing officer of the move to the new location. CMS Ex. 1 at 4-5,
30-46; P. Ex. 1. Pursuant to 42 C.F.R. § 424.57(c)(23), Petitioner was required to notify
its accreditation organization when Petitioner opened a new location and the accreditation
organization could accredit the new location for three months without conducting a new
site visit. There is no evidence that Petitioner gave its accreditation organization the
required notice, whether Petitioner was subject to the three-month interim accreditation,
or what products or services were accredited for the new location. Petitioner did not
mention the accreditation issue in its request for hearing. In its Reply, Petitioner’s Chief
Executive Officer asserts that Petitioner maintained all required accreditations. Petitioner
failed, however, to present any evidence of its accreditation for my consideration. Based
on the evidence and the absence of any mention in the NSC notices of the issue of
whether or not Petitioner was properly accredited to operate at its new location at 1793
N.W. Maynard Road, Cary, North Carolina, remand to CMS pursuant to 42 C.F.R.

§ 498.56(d) for consideration of that new issue would be appropriate. However, I
conclude that remand is unnecessary because there is a basis for revocation for
noncompliance with 42 C.F.R. § 424.57(c)(1).

The facts related to Petitioner’s noncompliance with Supplier Standard 1 are not
disputed. Accordingly, there is a basis for revocation of Petitioner’s Medicare enrollment
and billing privileges. It is well established that even a single violation of a single
supplier standard is an adequate basis for revocation of billing privileges and enrollment.
1866I1CPayday.com, DAB No. 2289 at 13 (2009).

2. Petitioner was not in compliance with 42 C.F.R. § 424.57(c)(1)
(Supplier Standard 1).

3. The effective date of revocation of Petitioner’s enrollment and
billing privileges is determined pursuant to 42 C.F.R. § 424.57(e), and
is August 8, 2014, which is 30 days after the date on which Petitioner
was sent the July 9, 2014 notice of initial determination to revoke.
a. Facts

The material facts that establish noncompliance with Supplier Standard | are not
disputed. On May 21, 2014, a NSC investigator attempted to inspect Petitioner’s facility
at Petitioner’s address on file with CMS — 2617 Rowland Road 104, Raleigh, North
Carolina 27615. CMS Ex. | at 47-53, 59. The investigator found that Petitioner was no
longer at that location. The investigator found that the location was occupied by another
business, and a representative for that business advised the investigator that the business
had been at that location since October 2013. CMS Ex. | at 52-53. Petitioner admits that
at the time of the attempted site visit, it was not at the 2617 Rowland Road address
because it had moved to another location. Petitioner admits that it failed to notify CMS
of its new address by filing a Form CMS-855S. RFH; P. Response; P. Reply.

b. Analysis

On reconsideration, the hearing officer upheld the revocation of Petitioner’s Medicare
enrollment and billing privileges based on noncompliance with 42 C.F.R. § 424.57(c)(1)
(Supplier Standard 1), among other regulatory requirements. The hearing officer found
that the site investigator was unable to conduct an inspection because Petitioner was not
at the location on file with CMS. DAB E-File #1 at 2. The hearing officer concluded
that Petitioner’s documentation did “not verify that the supplier submitted the required
CMS-855S change of information application to the NSC in the required time frame of
30 days from the change.” CMS Ex. | at 4; DAB E-File #1 at 4.

The regulation requires that a DMEPOS supplier operate and furnish Medicare-covered
items in compliance with all applicable federal and state licensure and regulatory
requirements. 42 C.F.R. § 424.57(c)(1). A DMEPOS supplier must submit completed
application and enrollment forms for each separate physical location it uses to furnish
DMEPOS, with the exception of warehouses or repair facilities. 42 C.F.R.

§ 424.57(b)(1). The supplier must provide complete and accurate information on its
application and must report any changes in information on the application within 30 days
of the change. 42 C.F.R. §§ 424.57(c)(2); 424.516(c). All suppliers are required to
provide CMS notice of the address of practice locations using an enrollment application.
42 C.F.R. § 424.510(d)(2)(iii). All suppliers are required to report any changes on the
applicable enrollment application. 42 C.F.R. §§ 424.510, 424.515(a)(1).

Accordingly, once it was enrolled in the Medicare program as a DMEPOS supplier,
Petitioner was required to notify NSC of any changes in its enrollment information within
30 days of the change. 42 C.F.R. §§ 424.57(c)(2), 424.516(c). Petitioner was required to
report such changes by filing Form CMS-855S. 42 C.F.R. § 424.510(a).
10

Petitioner admits that it moved its business from 2617 Rowland Road, Raleigh, North
Carolina, the address listed in CMS records at the time of the attempted site investigation.
RFH; P. Response; P. Reply; CMS Ex. | at 47-48, 52, 71. Petitioner concedes that it
failed to notify CMS that it had relocated its business to another address. In its request
for reconsideration dated August 18, 2004, Petitioner states “[w]e do recognize the
mistake of not changing our address with CMS, this is a task that was overlooked and not
followed through on.” CMS Ex. 1 at 11. In its October 28, 2014 request for hearing,
Petitioner states, “[w]e ask that we are granted mercy in the fact that we did not complete
our change of address information in a timely manner.” RFH. In its reply, Petitioner
specifically refers to its failure to submit the Form CMS-855S, stating “[t]he only
standard in question and admitted to was that [Petitioner] did not fill out a change of
address form with Medicare . . . . it was one update that was not made in our 8558, and
that is the change of address.” P. Reply.

Based on Petitioner’s admitted failure to notify NSC of its address change within 30
days, I conclude that Petitioner was not in compliance with all federal regulatory
requirements. Therefore, Petitioner was not in compliance with 42 C.F.R. § 424.57(c)(1)
(Supplier Standard 1). Accordingly, I conclude that there is a basis for the revocation of
Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R.

§§ 424.57(e) and 424.535(a)(1).

The July 9, 2014 initial determination stated that the effective date of revocation was
retroactive to May 21, 2014, the date CMS determined that Petitioner’s practice location
was no longer operational. CMS Ex. | at 7, 12. A retroactive effective date for
revocation is only authorized under 42 C.F.R. § 424.535(g) in limited circumstances, one
of which is a determination by CMS or its contractor that a location is not operational.
The hearing officer on reconsideration concluded that Petitioner was noncompliant with
Supplier Standards 1, 7, 10, and 22. The hearing officer did not make any factual
findings or conclude as an additional basis for revocation that Petitioner was no longer
operational within the meaning of 42 C.F.R. §§ 424.502 and 424.535(a)(5).

Revocation in this case is authorized under 42 C.F.R. §§ 424.57(e) and 424.535(a)(1).
Pursuant to 42 C.F.R. § 424.57(e), revocation for noncompliance with the supplier
standards established by 42 C.F.R. § 424.57(b) and (c), is effective 30 days after the
supplier is sent notice of the revocation. Therefore, the correct effective date for
revocation of Petitioner’s Medicare enrollment and billing privileges based on a violation
of 42 C.F.R. § 424.57(c)(1) (Supplier Standard 1) is 30 days after the notice of the
revocation was issued. Neb Group of Arizona, DAB No. 2573 at 7-8 (2014).
Accordingly, I conclude that the effective date of the revocation of Petitioner’s Medicare
enrollment and billing privileges was August 8, 2014, which is 30 days after the July 9,
2014 notice of the revocation was issued.
11

Petitioner states that it has been in business for over 33 years and has been a committed
provider to its patients’ needs. Petitioner states that its current customers were aware of
its move and that its sales orders reflected the change in address. Petitioner asks that I
give it favorable consideration and allow it to continue to serve its patients. P. Reply.
Even if I accept Petitioner’s assertions as true for purposes of summary judgment, these
facts have no impact on the outcome of this case as those facts are not material to the
issue of whether Petitioner violated Supplier Standard 1. Furthermore, to the extent that
Petitioner’s arguments may be construed as a request for equitable relief, I have no
authority to grant equitable relief. US Ultrasound, DAB No. 2302 at 8 (2010) (“[n]either
the ALJ nor the Board is authorized to provide equitable relief by reimbursing or
enrolling a supplier who does not meet statutory or regulatory requirements.”). I am also
required to follow the Act and regulations and have no authority to declare statutes or
regulations invalid. /866/CPayday.com, L.L.C., DAB No. 2289 at 14 (“[a]n ALJ is
bound by applicable laws and regulations and may not invalidate either a law or
regulation on any ground.”).

II. Conclusion

For the foregoing reasons, I conclude that Petitioner’s Medicare enrollment and billing
privileges were properly revoked effective August 8, 2014, due to noncompliance with 42
CFR. § 424.57(c)(1).

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

NMS Healthcare of Hagerstown, LLC
(CCN: 21-5256),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-15-1199
Decision No. CR3825

Date: April 30, 2015

DECISION DISMISSING REQUEST FOR HEARING

I dismiss the request for hearing filed by Petitioner, NMS Healthcare of Hagerstown,
LLC. I do so because the Centers for Medicare & Medicaid Services (CMS) did not
impose a remedy against Petitioner. Consequently, there is nothing left for me to hear
and decide.

1. Background

Petitioner is a skilled nursing facility that participates in the Medicare program. The
Maryland Office of Health Care Quality (state agency) completed a survey of Petitioner’s
facility on October 20, 2014 and determined that Petitioner was not in substantial
compliance with program requirements. Based on a revisit survey on December 17,
2014, CMS determined that Petitioner had not regained substantial compliance. By letter
dated January 5, 2015, CMS notified Petitioner that it planned to impose a denial of
payment for new admissions (DPNA) effective January 20, 2015. Petitioner filed its
hearing request on January 12, 2015, before the DPNA was to go into effect. By letter
dated January 20, 2015, CMS notified Petitioner that it has regained substantial
compliance with Medicare requirements effective January 9, 2015 and that, as a result,
the DPNA would not go into effect. To date, CMS has not imposed any enforcement
remedies as a result of Petitioner’s noncompliance from October 20, 2014 until January
8, 2015.

On March 29, 2015, CMS filed a Motion to Dismiss because Petitioner has refused to
withdraw its hearing request despite CMS notifying it that the DPNA would not be
imposed. CMS Ex. 2.

CMS asserts that it had not imposed any remedy against Petitioner. Petitioner does not
contest this assertion. Thus, the issue before me is whether a facility has a right to a
hearing when the enforcement remedy provided for in 42 C.F.R. § 488.406 does not go
into effect. This issue is hardly novel. All of the Administrative Law Judges (ALJs) of
the Civil Remedies Division have addressed it many times, and have without exception
come to the same resolution. I find that Petitioner is not entitled to a hearing, and, on the
basis of 42 C.F.R. § 498.70(b), I dismiss Petitioner’s hearing request.

42 C.F.R. Part 498 sets forth the hearing rights of a nursing facility. A provider
dissatisfied with CMS’s initial determination is entitled to further review, but
administrative actions that do not constitute initial determinations are not subject to
appeal. 42 C.F.R. § 498.3(d). The regulations specify which actions are initial
determinations and set forth examples of actions that are not. A finding of
noncompliance that results in the imposition of a remedy specified in 42 C.F.R.

§ 488.406 is an initial determination for which a facility may request a hearing.

42 C.F.R. § 498.3(b)(13). Unless the finding of noncompliance results in the actual
imposition of a specified remedy, however, the finding is not an initial determination.
42 C.F.R. § 498.3(d)(10)(ii). Where, as here, CMS does not impose a remedy, rescinds
all proposed remedies, or a remedy does not go into effect, a facility has no hearing right
because no determination subject to a hearing exists. It is the final imposition of an
enforcement remedy or sanction and not the citation of a deficiency that triggers a
facility’s right to a hearing pursuant to 42 C.F.R. Part 498. Columbus Park Nursing &
Rehab. Ctr., DAB No. 2316 (2010); Fountain Lake Health & Rehab., Inc., DAB No.
1985 (2005); Lakewood Plaza Nursing Ctr., DAB No. 1767 (2001); Lutheran Home-
Caledonia, DAB No. 1753 (2000); Schowalter Villa, DAB No. 1688 (1999); Arcadia
Acres, Inc., DAB No. 1607 (1997).

In Petitioner’s April 27, 2015 Response to CMS’s Motion to Dismiss, Petitioner argues
that: 1) the underlying alleged deficiencies were inappropriately cited, without merit and
should be stricken; 2) CMS cannot “sua sponte, vitiate the right to a hearing simply by
announcing that it has rescinded the penalty, but leave in place damaging allegations of
noncompliance;” 3) there are constitutional concerns if there is no right to review of
CMS’s actions. Petitioner’s Response at 1-2. I cannot reach Petitioner’s first argument
until I decide that it has a right to a hearing and I do not do so. As to Petitioner’s third
argument, I cannot address constitutional issues.
Petitioner cites as support of its second argument Grace Healthcare of Benton v. DHHS,
603 F. 3d 412 (8" Cir. 2009) and Golden Living Center-Grand Island Lakeview v.
Sebelius, 2011 WL 6303243 (D. Neb. 2011). However, Petitioner does not support its
argument to administrative proceedings before an ALJ by citation of any statute or
regulation that permits me to hear and decide cases when all remedies imposed by CMS
have been rescinded or never went into effect. Additionally, the Departmental Appeals
Board’s (Board’s) decision in NMS Healthcare of Hagerstown, DAB No. 2601 (2014)
makes it clear that the Board was unmoved by the decisions in Graceland or Golden
Living. In this case, no remedy was ever imposed; the hearing request was filed before
the DPNA was to go into effect and the facility regained substantial compliance prior to
the date of the hearing request and, therefore, no DPNA ever went into effect.

The regulations and prior Board decisions are clear — there is no right to a hearing where
deficiencies are identified, but where CMS has thereafter rescinded the initial
determination to impose a CMP, and no other enforcement remedy has been imposed.
My authority in cases involving CMS is limited to hearing and deciding those issues
which the Secretary of this Department has delegated authority for me to hear and decide.
That authority is specified at 42 C.F.R. §§ 498.3 and 498.5. The regulations authorize me
only to hear and decide cases involving specified initial determinations by CMS. I am
authorized to dismiss a hearing request when a petitioner does not have a right to a
hearing pursuant to 42 C.F.R. § 498.70(b) and, for that reason, I do so now in this matter.
Petitioner’s January 12, 2015 request for hearing is dismissed. The parties may request
that an order dismissing a case be vacated pursuant to 42 C.F.R. § 498.72.

/s/
Steven T. Kessel
Administrative Law Judge