National Seating & Mobility Inc., DAB No. 2984 (2020)

FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE DECISION

National Seating & Mobility, Inc. (National, Petitioner) appeals the June 17, 2019 decision of an Administrative Law Judge (ALJ) affirming the denial of National’s enrollment of a new practice location in the Medicare program by the Centers for Medicare & Medicaid Services (CMS), acting through its administrative contractor, National Supplier Clearinghouse (NSC).  National Seating & Mobility, Inc., DAB CR5345 (2019) (ALJ Decision).  The ALJ agreed with NSC that National’s location was shared with other Medicare suppliers contrary to applicable enrollment requirements. 

For the reasons explained below, we affirm.

Relevant legal authorities

The regulations require in relevant part that, to meet the standards for participation in Medicare, a supplier of Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) –

(7)  Maintains a physical facility on an appropriate site.  An appropriate site must meet all of the following:
(i)  Must meet the following criteria:

*      *     *

(D)  Maintains a permanent visible sign in plain view and posts hours of operation.  If the supplier’s place of business is located within a building complex, the sign must be visible at the main entrance of the building or the hours can be posted at the entrance of the supplier.

*      *     *

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(29) (i)  Except as specified in paragraph (c)(29)(ii) of this section, is prohibited from sharing a practice location with any other Medicare supplier or provider. . . .

42 C.F.R. § 424.57(c)(7) and (29).1

Case background

On September 5, 2018, an NSC inspector visited the new practice location that National sought to add to its enrollment as a supplier of DMEPOS in the Medicare program.  CMS Ex. 3.  She reported as follows:

There is no signage with supplier name or hours posted anywhere inside or outside.  Was advised verbally by Tori Whitehead that they will be sharing an entrance with Ashbury Medical and are in process of getting signage up and showing the [Suite] C on the door for this supplier.  They will also share a showroom area and they have their own space in warehouse.

Id. at 1.  Based on the inspector’s report, NSC concluded that National had failed to meet two DMEPOS supplier standards required to enroll the location, i.e., the requirement to have appropriate signage under 42 C.F.R. § 424.57(c)(7) and the prohibition on sharing the location with another provider or supplier under 42 C.F.R. § 424.57(c)(29).  CMS Ex. 1, at 2-3.  After receiving the denial of enrollment, National submitted a corrective action plan (CAP).  CMS Ex. 6.

The inspector then returned for a second site visit on November 1, 2018.  CMS Ex. 4.  Her report recognized that some signage was now posted but found that National was still sharing the practice location.  Id. at 2-3.  The report noted:

The supplier shares an entrance with Asbury Pharmacy.  You must come in through the pharmacy then through the double doors then to the suppliers’ door.

The supplier is currently in the process of having the frame and doors replaced for an entrance directly into their space from the outside.  This work has not yet begun.

Id. at 7.  Photographs of the site were attached to the report.  Id. at 8-11.

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Based on this report, NSC rejected National’s CAP.  CMS Ex. 7.  NSC also treated National’s submission as a request for reconsideration of the denial of enrollment and denied reconsideration, stating that National –

shares a practice location with All Saints Home Medical LLC [dba Asbury Medical Supply] and Cudd Company LLC [dba Asbury Pharmacy] as it appears the businesses are not separated within the building space.  Also, [National] does not maintain a permanent visible sign in plain view showing the business name and hours of operation.  The facility was in the process of building out a separate entrance, however at the times and dates of the site visits, the entrance was still shared.  This does not reflect compliance at the time of the site visit.  The facility did not have permanent visible signage posted according to the site visit report after the site inspection on November 1, 2018.

Id. at 4.

National requested an ALJ hearing, asserting that, while it did share a building with two Medicare-enrolled suppliers, its “space was separate from the two other building occupants, that the appropriate signage showing the business name and hours of operation was displayed[,] and that a separate entryway was identified for access directly to [National’s] space.”  ALJ Decision at 3 (quoting Request for Hearing at 3).  Before the ALJ, CMS limited the basis for denial of enrollment to the supplier standard at 42 C.F.R. § 424.57(c)(29), i.e., sharing space.  Id.  The ALJ concluded that National failed to meet its burden of proving that it met the enrollment requirement and upheld the denial of enrollment.  Id. at 10.  National timely appealed the ALJ Decision to the Board.

ALJ Decision

The core of the ALJ’s analysis is captured in the following excerpt:

There is no dispute that Petitioner had external doors that led into Petitioner’s offices.  However, there is a dispute as to whether Petitioner was using those doors as its public entrance at the time of the September 2018 site visit, as opposed to having customers enter through the space used by All Saints.  Petitioner admits, and the evidence shows, that in September 2018, its side doors did not have signs on them indicating that they were Petitioner’s entrance; rather, Petitioner added the signs following the denial of enrollment.  P. Br. at 7.  The clear lack of signage on the exterior doors, coupled with the site inspector’s statement that Ms. Whitehead told her Petitioner “will be sharing an entrance with Ashbury [sic] Medical [Supply],” shows it is more likely than not that Petitioner was not using the exterior door as a public entrance at the time of the September

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5, 2018 survey.  CMS Ex. 3 at 1.  As mentioned above, the site inspector’s statement on this point, which was contemporaneous with the survey, is more credible than and not truly rebutted by Ms. Whitehead’s more recent testimony that she “do[es] not recall informing [the site inspector] that [Petitioner] shared an entrance with Asbury Medical.”  P. Ex. 5 at 2 ¶ 12.

Therefore, it is more likely than not that Petitioner was sharing an entrance to its practice location with All Saints because it had no signage on its external doors to indicate that members of the public could enter Petitioner’s practice location through those doors.  Further, Ms. Whitehead admitted as much to the site inspector.  Moreover, Petitioner’s portion of the shared building was not officially differentiated with the USPS until sometime after October 23, 2018—well after the survey—when Petitioner asked the USPS to add a new suite number for Petitioner’s portion of the building.  P. Ex. 5 at 1 ¶ 9; P. Ex. 11 at 1.  Based on these facts, I conclude that, as of September 2018, Petitioner was sharing a practice location with another Medicare supplier in violation of 42 C.F.R. § 424.57(c)(29).  Because Petitioner was not in compliance with 42 C.F.R. § 424.57(c)(29), a supplier standard and enrollment requirement, in September 2018, Petitioner’s enrollment application was subject to denial.  42 C.F.R. § 424.530(a)(1); Experts Are Us, Inc., DAB No. 2452 at 5.

ALJ Decision at 9-10.  Consequently, the ALJ affirmed CMS’s denial of enrollment based on National’s noncompliance with the enrollment requirement/supplier standard at 42 C.F.R. § 424.57(c)(29).  Id. at 10.

Analysis

1. Standard of review

As a preliminary matter, we address National’s apparent confusion about the applicable standard of review in this appeal.  The ALJ decided the case “on the written record,” after determining that an in-person hearing was not necessary because neither party requested to cross-examine any witness.  ALJ Decision at 3-4.  In its appeal brief, National asserts that there are “material questions of law and fact warranting full and complete consideration.”  Pet.’s Request for Review (RR) at 1.  National also states that it seeks reversal based on the ALJ’s alleged “failure to review the totality of circumstances.”  Id.

The existence of genuine disputes of material fact is relevant only in reviewing whether summary judgment was properly granted.  Resolving a case on the written record is not a grant of summary judgment to either party, but instead is a final determination of all material factual disputes based on the record before the judge after weighing all the evidence.

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In reviewing an ALJ’s decision on the record, the standards of review the Board applies are well-established.  See, e.g., Michael Scott Edwards, OD, et al., DAB No. 2975, at 7 (2019), appeal docketed, Edwards v. Azar, No. 2:19-cv-00048 (E.D.N.C. Dec. 30, 2019); Chaplin Liu, M.D., DAB No. 2976, at 6 (2019); Golden Living Ctr. – Frankfort v. Sec’y of Health & Human Servs., 656 F.3d 421, 426-27 (6th Cir. 2011) (upholding the Board’s standards).The standard of review on a disputed issue of law is whether the ALJ decision is erroneous.  See Guidelines – Appellate Review of Decisions of Administrative Law Judges Affecting a Provider’s or Supplier’s Enrollment in the Medicare Program, at https://www.hhs.gov/about/agencies/dab/different-appeals-at-dab/appeals-to-board/guidelines/enrollment/index.html.  The standard of review on a disputed factual issue is whether the ALJ decision is supported by substantial evidence in the record as a whole.  The standard of review on a disputed issue of law is whether the ALJ decision is erroneous.  Id.

Moreover, in considering factual findings made by an ALJ after full record review, the Board will defer to the ALJ’s determinations of the credibility to be accorded to witness testimony and the weight to be given to evidence, absent a compelling reason to do otherwise.  See, e.g., Putnam Ctr., DAB No. 2850, at 23 (2018) (Board “does not disturb an ALJ’s credibility determinations absent a compelling reason for doing so”), aff’d, Putnam Ctr. v. U.S. Dep’t of Health & Human Servs., 770 Fed. App’x 630 (4th Cir. 2019); Rosewood Care Ctr. of Swansea, DAB No. 2721, at 7 (2016) (Board “defers to an ALJ’s determinations of credibility and weighing of the evidence absent a compelling reason to do otherwise”), aff’d, Rosewood Care Ctr. of Swansea v. Price, 868 F.3d 605 (7th Cir. 2017).

2. The ALJ reviewed relevant circumstances to determine if National’s practice location was separate or shared.

National argues that the regulations do not specify that a DMEPOS supplier must have “its own suite-specific mailing address or an exclusive entrance in order to not be ‘sharing’” with another provider’s or supplier’s practice location.  RR at 6.  National argues that its position is consistent with the preamble discussion of a practice location as merely the “physical space where a DMEPOS supplier operates his or her business and meets with customers and potential customers.”  Id. (quoting 75 Fed. Reg. 52,629, 52,641 (Aug. 27, 2010)). 

The context of the preamble language National quotes is as follows:

DMEPOS suppliers list the practice location in Section 4 of the Medicare enrollment application (CMS-855S).  For the purposes of this standard, sharing a practice location refers to sharing of the physical location as described on the CMS-855S.  In general, the practice location is the

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physical space where a DMEPOS supplier operates his or her business and meets with customers and potential customers.

75 Fed. Reg. at 52,641; see also ALJ Decision at 8.  This language does not provide precise factors to use in evaluating what physical space is being used by the supplier and its potential or actual customers and how that space may be shared by another supplier.  Given the wide range of DMEPOS suppliers across the country and the potential diversity in the physical layouts and actual use of their locations, application of the regulation necessarily requires consideration of varying facts and circumstances.  The preamble language quoted above simply points regulators to considering the spaces used by a particular supplier to conduct its business activities and to encounter its actual and potential customers. 

National also argues that the ALJ should not have focused on whether National shared “a non-clinical area.”  RR at 6.  The preamble explains, however, that a DMEPOS supplier’s practice location includes spaces where the supplier “operates” the business as well as spaces where potential customers are met, which on its face extends at least to reception areas and offices.  National relies on Proactive Medical, LLC, DAB No. 2346 (2010), claiming that decision holds that sharing “waiting areas and receptionist areas” does not constitute sharing a practice location.  RR at 7.  Proactive does not establish any such broad principle.  The Board upheld the ALJ’s grant of summary judgment to Proactive on the ground that undisputed facts showed Proactive to be a mobile, rather than a fixed-base, independent diagnostic testing facility (IDTF).  DAB No. 2346, at 4-8.  National is a DMEPOS supplier, and the IDTF certification standards are different from the DMEPOS certification standards.  Mobile IDTFs were exempt from the prohibition on shared practice locations in the IDTF certification regulations then applicable.  Id. at 2, 4 (quoting 42 C.F.R. § 433.10(g)(15) (2010)).  The Board went on to opine in dicta that, even were Proactive not a mobile IDTF, its use of a shared waiting area with a physician practice from which it leased its suite would not violate the IDTF certification standards.  Id. at 8-10.  In adopting those IDTF standards, the Board noted, CMS specifically responded to commenters that it was “not prohibiting the sharing [of] common [] hallways, parking, or common areas,” but that an IDTF and a clinic could not enroll “using the same suite number within the same office building,” and further indicated that “sharing of nonclinical space, equipment and personnel be allowed between an IDTF and an adjacent facility.”  Id. at 9-10 (quoting 72 Fed. Reg. 66,222, 66,290-92 (Nov. 27, 2007)).  The preamble specifically discusses arrangements customary to IDTFs, which may co-locate with physician or radiology clinics, and what restrictions would avoid any potential for abuse in such situations.  See, e.g., 72 Fed. Reg. at 66,290-92.  Nothing in the IDTF certification standards or the Board’s decision in Proactive signifies that DMEPOS suppliers whose customers access their space through another supplier’s reception area are not sharing their practice location.  The potential for beneficiaries in such situations to be unclear about which business they are patronizing is evident.

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In considering what circumstances are relevant in assessing the totality of the evidence as to whether the practice location was “shared” in violation of the regulation, we find consideration of the context and purpose of the provision as part of the DMEPOS supplier standards helpful.  CMS explained, in adopting the standard, its position “that allowing a DMEPOS supplier to commingle its practice location with another DMEPOS supplier effectively limits the ability of CMS and the NSC to ensure that each DMEPOS supplier meets all of the supplier standards specified at § 424.57.”  75 Fed. Reg. at 52,631.  The requirement for clear, permanent marking of an appropriate site is also intended to ensure that it will be “accessible during posted business hours to beneficiaries” as well as to inspectors.  Id. at 52,630. 

National itself asserts that the proper approach is to review the individual facts and circumstances around whether the location was shared.  Moreover, National does not deny that the ALJ could properly consider a shared entrance and shared address “as factors in determining whether a provider was sharing its practice location with another provider.”  RR at 6.  Nevertheless, National says, here the ALJ “improperly took these factors as determinative and failed to consider the totality of the circumstances.”  Id.; see also id. at 9 (“While the nature of NSM’s entrance and its specific mailing address may be relevant to whether its space constitutes a ‘separate practice location,’ the ALJ erred by not considering the totality of the circumstances.”  (Italics in original)).  National stresses that the regulations do not include any specific references to postal addresses or entrances.  Id. at 8; Reply Br. at 2-4.

But the ALJ did exactly what National calls for, i.e., considered the totality of the relevant circumstances based on the record without treating any single factor as determinative.  The ALJ described in detail the conditions observed by the inspector in September, including the inspector’s finding no signage inside or outside the building identifying the presence of National or the existence of a Suite C.  ALJ Decision at 5-6.  The inspector testified that he entered by one of the front doors and asked for National at the reception counter of Asbury Medical.  Id. at 5.  National’s manager was summoned and, according to the inspector, told her that National’s office space “was located behind a door near the counter for Ashbury Medical” but that “they were thinking about revamping a set of doors at the side of the building to be the entrance” to National.  Id. (quoting CMS Ex. 2, at 2).  The inspector described these outside doors as “two metal grey doors leading to a side parking lot.”  Id. at 5-6 (quoting CMS Ex. 2, at 2-3).

National’s manager testified that, at some time not identified in her declaration, a National representative asked the United States Postal Service (USPS) to add a suite identification to National’s business address.  P. Ex. 5, at 1.  She asserted that she allowed the inspector to access National’s space through the internal doors “as a courtesy,” but stated she did “not recall” telling the inspector that National shared the entrance with Asbury Medical.  Id. at 2.  She claimed to have told the inspector that

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National’s suite was “accessible through the parking lot,” but admitted she “may have indicated that the gray double doors would be replaced at some point in the future.”  Id.

The ALJ clearly considered all of the testimony, reports and photographs in evidence, and explained why he gave more credence to the inspector’s testimony than to the manager’s.  ALJ Decision at 5-6.  Specifically, he explained that:  (1) the manager did not expressly deny telling the inspector that National shared its entrance, but instead “evasively stated that she ‘do[es] not recall informing [the site inspector] that [National] shared an entrance with Asbury Medical’”; (2) she gave no testimony concerning the “undated photographs showing signs” with National’s name on the doors; and (3) although she testified “she told the site inspector that [National]’s offices were accessible through the side doors in the building, she did not say that the public used those doors or how the public would know to use those doors.”  Id. at 6 (quoting P. Ex 5, ¶ 12, and citing P. Exs. 3-4, 8).  Thus, the ALJ credited the inspector’s testimony that National’s own manager did not consider the side parking lot doors to be a customer entrance, so customers would enter and be encountered in space belonging to and identified only as Asbury Medical.  The ALJ further concluded that the “side entrance appears from the pictures to be windowless metal doors used for receipt of inventory or for moving large items in and out of the building.”  ALJ Decision at 6.  He found no evidence that they were used by the public to access National’s offices.  Id.  He further found it essentially undisputed that, at the time of the initial site visit that led to the denial of enrollment, National had not registered a suite number with the USPS as part of its address (noting that the CAP and the manager’s testimony indicate this request was only made after the denial and would be completed “within ten days”).  Id. at 7. 

Furthermore, he found that National admitted that no signs were posted anywhere, at least as of the September site visit, identifying National, setting out its hours, or directing potential customers how to gain direct access.  Id. at 10.  While, as noted, CMS did not rely before the ALJ on the absence of signage as an independent basis for the denial, National’s failure to provide any direction to customers on how to identify and access its space apart from going through Asbury’s facilities is nevertheless a significant and relevant factor in assessing whether the practice location is shared.  Moreover, the absence of any physical designation of a separate suite within the building, beyond the lack of USPS recognition, was another factor that could create confusion for customers (as well as inspectors) about whether National was a distinct supplier with segregated physical facilities.

National has given us no compelling reason to disregard the ALJ’s evaluation of the relative weight accorded to the testimony and supporting evidence.  The ALJ nowhere stated that any single factor was determinative.  He relied on his own viewing of the photographic evidence to find that the parking lot access was designed for deliveries and that beneficiaries seeking access to National would most likely have to pass through another supplier’s suite.  The photographs show, and the parties do not dispute, that the

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front doors lead directly into the other supplier’s reception area.  See CMS Ex. 2, at ¶¶ 9, 10, 12, 13; CMS Ex. 3, at 2.  (While the parties and the ALJ refer to the arrangement as sharing an “entrance,” it is apparent from the photographs and descriptions in the record that visitors do not enter into a building lobby shared by multiple offices.)  He considered as relevant the fact that National sought to have its suite number recognized by the USPS only after the initial survey, but did not treat the lack of recognition before that as conclusive in itself of whether the location was shared within the meaning of the regulation.  ALJ Decision at 7, 10.  CMS submitted two articles from Medicare contractors which suggest that the specific physical address must be recognized by the USPS in order to be considered a qualified practice location.  CMS Exs. 17 and 18.  Contrary to National’s contentions (RR at 8-9), however, the ALJ did not cite to or rely on these contractor articles in making his assessment of whether National had shown that it did not share its practice location.  While the articles may illuminate the contractors’ understanding or application of standards, they are not binding or enforceable law.  See, e.g., Care Pro Home Health, Inc., DAB No. 2723, at 7 (2016), and cases cited therein.  The regulatory standard does not make any single factor decisive, and the ALJ correctly followed the regulation in this regard.

Looking at all the relevant circumstances in the record, as summarized in his decision, the ALJ concluded that National failed to show by a preponderance of the evidence that it was not sharing a practice location with the other suppliers in the same building, and that CMS therefore had authority to deny enrollment of National’s new practice location.  Id. at 9-10.  We agree.

National argues, however, that the ALJ erred in reaching this conclusion because he failed to take into account changes made as of the revisit in November 2018.  The ALJ considered this argument but followed Board precedent limiting the issue on appeal in an enrollment denial case such as this to whether the supplier was in compliance with the relevant standard(s) at the time the contractor issued the denial.  ALJ Decision at 8 (“ALJ review is limited to whether, at the time of the denial, the denial was legitimate, and subsequent changes made in relation to a CAP do not form a basis for reversing the denial”), and cases cited therein.  

The ALJ correctly construed Board cases as holding that the relevant time frame for assessing compliance is when the contractor made the initial determination being appealed.  For example, in Marcus Singel, D.P.M., the supplier admitted that its hours of operation had not been posted for several years (allegedly for security reasons) but argued that the hours were reposted right after the site inspection and supplied an (undated) photograph.  DAB No. 2609, at 4 (2014).  The Board rejected these claims of correction, holding that “corrections made after revocation are immaterial to whether the revocation was authorized in the first place.”  Id. at 7 (citing Orthopaedic Surgery Assoc., DAB No. 2594, at 6 (2014); Neb Group of Ariz. LLC, DAB No. 2573, at 6 (2014); and A to Z DME, LLC, DAB No. 2303, at 6-7 (2010)); see also 73 Fed. Reg. 36,448, 36,452

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(June 27, 2008) (“When a Medicare contractor makes an adverse enrollment determination (for example, enrollment denial or revocation of billing privileges), . . . appeal rights are limited to provider or supplier eligibility at the time the Medicare contractor made the adverse determination.”).  Thus, the relevant site visit was the first in September 2018.

For the ALJ or the Board to review whether the supplier later came into compliance would amount to reviewing the contractor’s rejection of the CAP, which the Board has held is barred by express regulation.  DMS Imaging, Inc., DAB No. 2313 (2010).2  It would be inappropriate to allow National to use a back-door method to circumvent this regulatory restriction by relying on changes made as part of the CAP process or the site visit in November 2018 to evaluate the corrections.3

Even were the ALJ or the Board to have considered the results of the November 2018 site visit, it would be unlikely to make any difference.  The physical layout was unchanged; the delivery doors from the side parking lot had not been converted to a public entrance.  CMS Ex. 2, at 3.  During that visit, the manager again promised the inspector that those doors would be “replaced with an entrance directly into [National’s] office space, but that the work had not yet begun.”  Id.  Notices with National’s name and hours had been added to both those doors and the interior connecting doors giving National’s hours of operation.  The inspector described these, however, as “made out of paper and attached with clear tape.”  Id.  Thus, they do not appear to amount to permanent signage.  Also at that time, the inspector saw a National employee using the interior door and was taken himself through that door into National’s office space.  Id.  Thus, there was still no evidence that potential customers accessed National other than through Asbury Medical’s space, even though the manager asserted that the connecting door was always locked and intended only for employees to get to shared warehouse space.  P. Ex. 5, at 1.  Given that the ALJ, as discussed above, already found the inspector’s testimony more credible and reliable than the manager’s, it would not appear that National’s reliance on the changes made by November 2018 could show by a preponderance of the evidence that it was not continuing to share a practice location, even had the changes been relevant to the ALJ’s review (which, as we have said, they were not).

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Conclusion

The Board affirms the ALJ Decision.