Blair Allen Nelson, M.D., DAB No. 3024 (2020)

FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE DECISION

Blair Allen Nelson, M.D. (Petitioner) appeals the November 6, 2019 Administrative Law Judge decision, Blair Allen Nelson, M.D., DAB CR5462 (ALJ Decision), granting summary judgment in favor of the Centers for Medicare & Medicaid Services (CMS).  The ALJ upheld CMS’s decision to revoke Petitioner’s Medicare billing privileges under 42 C.F.R. § 424.535(a)(3) based on Petitioner’s felony conviction for obtaining a controlled substance by fraud.  The ALJ concluded CMS had a legal basis for the revocation because the felony offense relates to the unlawful prescription of a controlled substance and, as such, is detrimental to the best interests of the Medicare program and its beneficiaries as a matter of law.  For the reasons explained below, we affirm the ALJ Decision.

Legal Background

CMS is authorized under the Social Security Act (Act) to administer the enrollment of health care practitioners in Medicare through regulations promulgated by the Secretary of Health and Human Services (Secretary).  Act § 1866(j)(1)(A).1  The requirements for establishing and maintaining Medicare billing privileges are set forth in 42 C.F.R. Part 424, subpart P (sections 424.500-.570).  To participate in Medicare, physicians and other “suppliers” of health care services must be enrolled in the Medicare program.  42 C.F.R. §§ 424.500, 400.202 (defining “Supplier”), 424.502 (defining “Enroll/Enrollment”).  Enrollment confers on a supplier “billing privileges,” i.e., the right to claim and receive Medicare payment for health care services provided to program beneficiaries.  Id. §§ 424.500, 424.505.

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The Act gives the Secretary discretion to refuse to enter into a Medicare participation agreement or to terminate or refuse to renew an agreement with a physician or supplier who “has been convicted of a felony under Federal or State law for an offense which the Secretary determines is detrimental to the best interests of the program or program beneficiaries.”  Act § 1842(h)(8).  The Secretary delegated the authority to terminate a supplier’s Medicare billing privileges to CMS through 42 C.F.R. § 424.535.  CMS may revoke a currently enrolled supplier’s Medicare billing privileges for any of the reasons set forth in § 424.535(a), including the following:

(3)  Felonies. (i)  The . . . supplier . . . was, within the preceding 10 years, convicted (as that term is defined in 42 CFR 1001.2) of a Federal or State felony offense that CMS determines is detrimental to the best interests of the Medicare program and its beneficiaries.

(ii)  Offenses include, but are not limited in scope or severity to –
. . .
(D)  Any felonies that would result in mandatory exclusion under section 1128(a) of the Act.

42 C.F.R. § 424.535(a)(3)(i), (ii)(D).2

Section 1128(a) of the Act requires the Secretary to exclude individuals convicted of certain criminal offenses from participation in all federal health care programs.  Act §§ 1128(a)(1) – (4).  Relevant here, section 1128(a)(4) requires the exclusion of any individual who “has been convicted . . . under Federal or State law, of a criminal offense consisting of a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.”  Act § 1128(a)(4) (emphasis added); see also 42 C.F.R. § 1001.101(d).  The term “convicted” is defined to include, among other things, when a court accepts an individual’s guilty plea or enters a judgment of conviction.  See 42 C.F.R. § 1001.2 (defining “Convicted”).

If CMS revokes a supplier’s billing privileges, the supplier’s Medicare participation agreement is terminated, and the supplier is “barred from participating in the Medicare program from the date of the revocation until the end of the re-enrollment bar.”  42 C.F.R. § 424.535(b), (c).  When a revocation is based on a felony conviction, the revocation is effective with the date of the conviction.  Id. § 424.535(g).  “The re-

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enrollment bar begins 30 days after CMS or its contractor mails notice of the revocation.”  Id. § 424.535(c)(1).  The re-enrollment bar lasts a minimum of one year, but not more than three years, depending on the severity of the basis for revocation.  Id.  

A supplier may appeal a decision to revoke billing privileges in accordance with the regulations in 42 C.F.R. Part 498.  Id. § 424.545(a).  A supplier must first request “reconsideration” of the initial determination.  Id. §§ 498.3(b)(17), 498.5(l), 498.22(a).  If dissatisfied with the “reconsidered determination,” the supplier may request a hearing before an ALJ.  Id. § 498.40.  A party dissatisfied with an ALJ’s decision may request review by the Departmental Appeals Board (Board).  Id. §§ 498.80, 498.82.

Case Background

The following facts are undisputed and drawn from the record evidence on which the ALJ made his decision. 

Petitioner is a physician who had been licensed to practice medicine in Minnesota.  CMS Ex. 5, at 1.  On July 2, 2015, Petitioner was charged with one felony count of obtaining a controlled substance by fraud in violation of 21 U.S.C. §§ 843(a)(3) and 843(d)(1).  CMS Ex. 4.  The criminal information filed in the United States District Court for the District of Minnesota alleged that from May 2013 through September 2014, Petitioner fraudulently issued prescriptions for controlled substances, including oxycodone, hydrocodone, and amphetamines.  Id. at 1.  These prescriptions were ostensibly written for members of Petitioner’s family; but, in fact, he had issued the prescriptions so that he could obtain the controlled substances for his own use.  Id.

On July 29, 2015, Petitioner pled guilty to the felony charge of obtaining a controlled substance by fraud.  ALJ Decision at 2; CMS Ex. 5.  In pleading guilty, Petitioner admitted “he knowingly and intentionally acquired and obtained possession of controlled substances, namely, oxycodone, hydrocodone, and amphetamines, by misrepresentation, fraud, deception, and subterfuge.”  CMS Ex. 5, at 3; ALJ Decision at 2.  Petitioner admitted that he issued the fraudulent prescriptions in the names of various family members so that he could obtain and use the controlled substances himself.  CMS Ex. 5, at 1-2.  Petitioner further admitted that he continued this practice from May 2013 until September 2014, even after his medical license was suspended in October 2013.  Id. at 1-2.  On November 10, 2015, the district court entered a judgment of conviction against Petitioner consistent with his guilty plea.  ALJ Decision at 2; CMS Ex. 6, at 1-2. 

In a letter dated April 16, 2019, National Government Services (NGS), a Medicare contractor, notified Petitioner that it had revoked his Medicare billing privileges under 42 C.F.R. § 424.535(a)(3).  CMS Ex. 8, at 1.  The notification letter explained that Petitioner’s billing privileges were being revoked effective July 30, 2015, due to his felony conviction (as defined in 42 C.F.R. § 1001.2) for obtaining a controlled substance

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by fraud.  Id.3  NGS imposed a three-year re-enrollment bar beginning 30 days after the postmark of the letter.  Id. at 2.  

Petitioner submitted a request for reconsideration.  CMS Ex. 9; P. Ex. 3.  On July 31, 2019, CMS issued a reconsidered determination noting that “certain felony offenses are per se detrimental to the best interests of [the] Medicare program and its beneficiaries.”  CMS Ex. 1, at 4 (citing 42 C.F.R. § 424.535(a)(3)(ii)(D) and Act § 1128(a)(4)).  CMS found Petitioner “was convicted of the felony offense of prescription drug fraud,” which is “similar to the felony relating to the unlawful prescription of a controlled substance.”  Id.  CMS concluded that Petitioner’s felony conviction “falls within its authority to revoke” Petitioner’s billing privileges “because it is akin to a felony conviction related to [a] controlled substance, which is deemed per se detrimental to the best interests of the Medicare program and its beneficiaries.”  Id.4

ALJ Proceedings and Decision

Petitioner filed a request for hearing before an ALJ, acknowledging that he was convicted in July 2015 of a felony for obtaining a controlled substance by fraud.  Request for Hearing at 1 (“I would like to acknowledge that I do not contest the findings of CMS.”).5  Petitioner, however, challenged the three-year re-enrollment bar as “arbitrary and unfair.”  Id. at 1, 3.  Petitioner proposed a “compromise,” whereby CMS would count the two years between his 2015 felony conviction and his 2017 Medicare enrollment as “time already served” and place him on “probation” for two years.  Id. at 1.  Petitioner argued that it is “confusing and unjust” that his prior Medicare enrollment applications were approved after he “clearly disclosed the prescription fraud,” but he has now been barred from re-enrollment for three years.  Id. at 3.

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CMS moved for summary judgment, arguing that “it is undisputed CMS had a basis to revoke [Petitioner’s] billing privileges” under section 424.535(a)(3), and the ALJ “lacks the authority to remove or reduce the re‑enrollment bar.”  SJ Br. at 1.  Petitioner filed an opposition, arguing that “(a) CMS did not have a legitimate basis to revoke [his] billing privileges; (b) the revocation and corresponding re-enrollment bar were arbitrary and capricious; and (c) by taking the actions it did, CMS deprived [him] of his constitutionally protected right to due process.”  Petitioner’s Opposition to CMS’s Motion for Summary Judgment and Prehearing Brief (Pet. Prehearing Br.) at 1.

The ALJ granted summary judgment for CMS, sustaining the decision to revoke Petitioner’s billing privileges because the undisputed facts establish that CMS had a basis for the revocation under 42 C.F.R. § 424.535(a)(3)(ii)(D).  ALJ Decision at 2-3.6  The ALJ found Petitioner’s felony conviction explicitly falls within the reach of section 1128(a)(4) of the Act and, therefore, is detrimental to the best interests of the Medicare program and its beneficiaries as a matter of law.  Id. at 3-4.

The ALJ rejected Petitioner’s argument that because CMS characterized his felony conviction as “similar” and “akin” to a felony enumerated in section 1128(a)(4), his conviction is not per se detrimental to Medicare and its beneficiaries.  ALJ Decision at 3 (“Petitioner’s conviction is not of a felony that is ‘similar’ to a section 1128(a)(4) felony; it is a conviction of a section 1128(a)(4) felony. . . .  Petitioner was convicted of a crime – unlawfully prescribing controlled substances – that falls squarely within the reach of section 1128(a)(4) of the Act.”).

The ALJ determined he had no authority to resolve Petitioner’s “challenges to the Act or regulations on constitutional grounds.”  Id. at 3, 4.  The ALJ further found that CMS’s revocation decision was not arbitrary or capricious because the Act and implementing regulations specifically authorized it.  Id. at 4.  And, the ALJ concluded he had no authority to consider Petitioner’s challenge to the duration of the re-enrollment bar because it “is not an initial determination … that creates a right to a hearing.”  Id. at 3, 4 (citing Vijendra Dave, M.D., DAB No. 2672, at 9 (2016)).

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Standard of Review

Whether summary judgment is appropriate is a legal issue that we review de novo.  1866ICPayday.com, DAB No. 2289, at 2 (2009) (citing Lebanon Nursing & Rehab. Ctr., DAB No. 1918 (2004)).  Summary judgment is appropriate if there is no genuine dispute of material fact and the moving party is entitled to judgment as a matter of law.  Id. (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-25 (1986)).  In reviewing whether there is a genuine dispute of material fact for purposes of summary judgment, the Board views the proffered evidence in the light most favorable to the non-moving party.  See Patrick Brueggeman, D.P.M., DAB No. 2725, at 6 (2016).

The Board’s standard of review on a disputed issue of law is whether the ALJ’s decision is erroneous.  Guidelines – Appellate Review of Decisions of Administrative Law Judges Affecting a Provider’s or Supplier’s Enrollment in the Medicare Program (Guidelines), accessible at https://www.hhs.gov/about/agencies/dab/different-appeals-at-dab/appeals-to-board/guidelines/enrollment/index.html. 

Analysis

Petitioner concedes he was convicted of a felony charge of obtaining a controlled substance by fraud.  Petitioner’s Appeal of ALJ Decision Granting Summary Judgment in Favor of Respondent CMS (P. Br.) at 1, 10.  He acknowledges that a supplier’s Medicare billing privileges may be revoked under 42 C.F.R. § 424.535(a)(3) based on a felony conviction that CMS determines is detrimental to the best interests of the Medicare program and its beneficiaries.  Id. at 10-11.  And, he acknowledges that certain felonies –those specifically enumerated in section 1128(a) of the Act – are per se detrimental to the best interests of the Medicare program and its beneficiaries.  Id. at 11. 

Petitioner argues, however, that:  (i) “CMS did not have a legitimate per se basis to revoke [his] billing privileges”; (ii) “CMS deprived [him] of his constitutionally protected right to due process”; and (iii) “the revocation and corresponding re‑enrollment bar were arbitrary and capricious.”  P. Br. at 2.  For the reasons explained below, we reject each of Petitioner’s contentions and affirm the ALJ’s decision because there is no genuine issue of material fact and CMS is entitled to judgment as a matter of law.

1.       CMS lawfully revoked Petitioner’s Medicare billing privileges under 42 C.F.R.
§ 424.535(a)(3)(ii)(D) based on undisputed material facts.

On review of a determination to revoke a Medicare supplier’s billing privileges, an ALJ and the Board “decide only whether CMS has established a lawful basis for the revocation.”  Cornelius M. Donohue, DPM, DAB No. 2888, at 4 (2018).  Revocation of a physician’s billing privileges under 42 C.F.R. § 424.535(a)(3) is authorized if two conditions are met:  (i) the supplier “was, within the preceding 10 years, convicted (as

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that term is defined in 42 CFR 1001.2) of a Federal or State felony offense”; and (ii) the conviction was for an “offense that CMS determines is detrimental to the best interests of the Medicare program and its beneficiaries.”  42 C.F.R. § 424.535(a)(3)(i); Pa. Physicians, P.C., DAB No. 2980, at 5 (2019).  If the regulatory elements for revocation are satisfied, “then the revocation must be sustained.”  Douglas Bradley, M.D., DAB No. 2663, at 13 (2015) (internal quotations and citation omitted), appeal dismissed, No. 2:15-cv-08835 (D.N.J. June 2, 2017).   

Although CMS “may have discretion to consider unique or mitigating circumstances in deciding whether, or how, to exercise its revocation authority,” Care Pro Home Health, Inc., DAB No. 2723, at 9 n.8 (2016), ALJs and the Board may not “substitute [their] discretion for that of CMS in determining whether revocation is appropriate under all the circumstances.”  Abdul Razzaque Ahmed, M.D., DAB No. 2261, at 19 (2009), aff’d, Ahmed v. Sebelius, 710 F. Supp. 2d 167 (D. Mass. 2010).  See also Saeed A. Bajwa, M.D., DAB No. 2799, at 15 (2017) (“[W]hile the regulation affords CMS discretion to revoke or not to revoke in a particular case, neither an ALJ nor the Board may review how CMS exercises that discretion or substitute its own discretion.”), appeal dismissed, No. 3:17-cv-00792 (N.D.N.Y. Dec. 28, 2017). 

Petitioner does not dispute that within the preceding ten years he was convicted of a federal felony offense of obtaining a controlled substance by fraud.  P. Br. at 5-6.  Rather, referring to language in CMS’s reconsidered determination, he argues that offenses CMS determined to be “similar” or “akin” to the offenses found in section 1128(a) are not per se detrimental and, therefore, CMS had no basis to revoke his billing privileges.  P. Br. at 11-12.  Petitioner’s argument is without merit because, as the ALJ correctly concluded, Petitioner’s conviction was not merely “similar” or “akin” to an offense listed in section 1128(a)(4), it is a conviction “falling explicitly within the reach of section 1128(a)(4) and described at 42 C.F.R. § 424.535(a)(3)(ii)(D).”  ALJ Decision at 3.

The categories of offenses set forth under section 424.535(a)(3)(ii) are those that CMS has determined, by rulemaking, to be detrimental to the Medicare program and its beneficiaries as a matter of law.  See Lilia Gorovits, M.D., P.C., DAB No. 2985, at 10 (2020) (collecting cases), appeal docketed, No. 2:20-cv-01850 (E.D. Pa. Apr. 9, 2020); see also Eva Orticio Villamor-Goubeaux, DAB No. 2997, at 8 (2020) (collecting cases); Letantia Bussell, M.D., DAB No. 2196, at 9-10 (2008) (holding CMS has determined that the offenses listed in section 424.535(a)(3) are “detrimental per se to the program and its beneficiaries”); 71 Fed. Reg. 20,754, 20,768 (Apr. 21, 2006).7

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Those categories of per se detrimental offenses include, among other offenses, “[a]ny felonies that would result in mandatory exclusion under section 1128(a) of the Act.”  42 C.F.R. § 424.535(a)(3)(ii)(D); see also Dinesh Patel, M.D., DAB No. 2551, at 11 (2013) (explaining that convictions that would result in a mandatory exclusion under section 1128(a) of the Act are deemed per se detrimental to the best interests of the Medicare program and its beneficiaries).  Relevant here, section 1128(a)(4) provides for the mandatory exclusion of any individual convicted of a felony relating to the unlawful prescription of a controlled substance.  Act § 1128(a)(4). 

We find no error in the ALJ’s conclusion that Petitioner’s felony conviction is not merely “similar” or “akin” to a felony under section 1128(a)(4), “it is a conviction of a section 1128(a)(4) felony.”  ALJ Decision at 3.  There is no dispute Petitioner’s conviction was based on his admission that he fraudulently issued prescriptions in the names of various family members so that he could obtain and use the controlled substances himself.  P. Br. at 6; CMS Ex. 5.  Such an offense is, without question, related to the “unlawful . . . prescription . . . of a controlled substance.”  Act § 1128(a)(4).  Because Petitioner’s felony conviction would result in a mandatory exclusion under section 1128(a)(4), CMS determined it to be per se detrimental to the best interests of the Medicare program and its beneficiaries.  CMS, therefore, had a lawful basis to revoke Petitioner’s Medicare billing privileges under 42 C.F.R. § 424.535(a)(3)(ii)(D) based on undisputed facts.

Still further, Petitioner’s argument ignores CMS’s Motion for Summary Judgment and Prehearing Brief, where CMS argued that Petitioner’s felony conviction was per se detrimental to the best interests of the Medicare program and its beneficiaries because “the felony of obtaining a controlled substance by fraud is a felony relating to the prescription or dispensing of a controlled substance.”  SJ Br. at 10-11.  Regardless of the wording used by CMS in its reconsidered determination, CMS clarified its position in its motion for summary judgment.  So long as the non-federal party has adequate notice and a reasonable opportunity to respond, a federal agency is permitted to clarify its reasons for making a determination during the ALJ proceeding.  See Dennis McGinty, PT, DAB No. 2838, at 13 (2017), aff’d, No. 3:18-cv-359, 2019 WL 3034596 (N.D. Tex. July 11, 2019).  Here, Petitioner had sufficient and timely opportunity to respond to CMS’s decision, and the reasons for its decision, before the ALJ.

We also reject Petitioner’s further contention that there remains a genuine issue of material fact as to the case-specific findings made by CMS on the issue of whether Petitioner’s offense was detrimental to the best interests of the Medicare program and its beneficiaries.  P. Br. at 12-13.  Because the felony offense falls into one of the categories that CMS has determined to be detrimental per se, the adjudicator need not address whether CMS made a sufficient case‑specific determination of detriment to support revocation.  SeeVillamor-Goubeaux at 9; Donohue at 6 (finding that a case-specific determination is not required if “the supplier’s offense falls within one of the categories of crimes that CMS has, by rulemaking (in section 424.535(a)(3)), determined to be

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detrimental to Medicare”).8  Therefore, we need not review any case-specific findings because CMS established that Petitioner’s felony conviction is detrimental to the best interests of the Medicare program and its beneficiaries as a matter of law.

2.       The ALJ properly concluded he had no authority to consider Petitioner’s constitutional due process arguments.

Petitioner contends the ALJ erred by refusing to set aside CMS’s determination to revoke his Medicare billing privileges on constitutional due process grounds.  P. Br. at 14-15.  Petitioner contends he has “an established property right in possessing and utilizing his Medicare provider number,” and “[t]he arbitrary and capricious nature of CMS’s revocation” deprived him of substantive due process rights under the Fifth Amendment.  Id.  Petitioner contends the deprivation of his constitutional rights will result in a “significant forfeiture” and cause him to “suffer massive economic losses.”  Id. at 15 (underlining removed).

We find no error in the ALJ’s conclusion that he had no authority to consider Petitioner’s constitutional due process arguments because the ALJ’s “delegated authority does not extend to resolving challenges to the Act or regulations on constitutional grounds.”  ALJ Decision at 3, 4.  The Board has repeatedly held that ALJs and the Board cannot overturn a legally valid revocation on constitutional grounds.  See, e.g., Gorovits at 18-19 (declining to consider substantive and procedural due process arguments as grounds for reversing or modifying revocation); Michael Scott Edwards, OD, and M. Scott Edwards, OD, PA, DAB No. 2975, at 17 (2019) (“The Board and the ALJ must follow the applicable enrollment law and regulations and have no authority to refuse to apply those authorities based on constitutional challenges.”), appeal dismissed, No. 2:29-cv-00048 (E.D.N.C. Feb. 26, 2020); Donohue at 8 (“[W]e lack the authority to overturn, on constitutional grounds, a revocation that was imposed in accordance with the applicable law and regulations.”); Horace Bledsoe, M.D. & Bledsoe Family Med., DAB No. 2753, at 11 (2016) (“[T]he Board . . . may not reverse a revocation authorized by the regulations based on arguments of constitutional invalidity.  Nor may the Board do so based on alleged harsh economic consequences to the entity whose enrollment and billing privileges are revoked.”), appeal dismissed, No. 3:17-cv-00442 (D.S.C. May 4, 2017); see also John A. Hartman, D.O., DAB No. 2911, at 24-25 (2018) (declining to consider Fifth Amendment substantive and procedural due process arguments in action challenging denial of re-enrollment).

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As explained above, CMS established that it had a permissible legal basis to revoke Petitioner’s billing privileges under the applicable regulations.  Neither the ALJ nor the Board may overturn the revocation on constitutional grounds.9

3.       We reject Petitioner’s argument that the ALJ should have set aside CMS’s revocation decision and re-enrollment bar as arbitrary, capricious, or an abuse of discretion.

Petitioner contends the ALJ erred by refusing to set aside his revocation and three-year re-enrollment bar because those decisions were arbitrary, capricious, and an abuse of discretion.  P. Br. at 16-17.  Reiterating the same arguments made before the ALJ, Petitioner asserts that “CMS’s actions are not remotely in conformity with its stated mission” to expand access to high quality care and improve health care for all Americans because it has deprived his rural community “of access to the services of a highly credentialed and exceptionally skilled physician.”  Id.  Petitioner further points out that CMS approved his enrollment applications in 2017 and 2018, “with full knowledge” of his conviction, and, by revoking his billing privileges back to the date of his conviction and imposing a three-year re-enrollment bar, CMS imposed, “for all practical purposes, a seven year ban.”  Id. at 17.  According to Petitioner, this “draconian sanction” was not based on a consideration of “‘all relevant factors’” and has no “‘rational connection between the facts found and the choice made.’”  Id. (quoting United States Lines, Inc., v. Federal Maritime Comm’n, 584 F.2d 519, 526 (D.C. Cir. 1978)).  

Rejecting these arguments, the ALJ found the revocation of Petitioner’s billing privileges was not arbitrary or an abuse of discretion because it was specifically authorized by governing law and regulations.  ALJ Decision at 4.10  The ALJ further found he has “no authority to consider Petitioner’s challenge” to the duration of the re-enrollment bar.  Id.  We agree there is no basis to set aside CMS’s revocation decision or to modify the duration of the re-enrollment bar based on Petitioner’s contention that those decisions were arbitrary, capricious, or an abuse of discretion.

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Petitioner’s reliance on the “arbitrary and capricious” standard from the Administrative Procedure Act (APA) is misplaced in these proceedings because the APA standard of review does not apply to administrative appeals of Medicare enrollment revocations.  Gorovits at 17.  Rather, review of a revocation determination is governed by the regulatory process established under 42 C.F.R. Part 498.  Id.  “The APA establishes the arbitrary and capricious standard for federal court review of final agency actions.”  Arriva Medical, LLC, DAB No. 2934, at 15 (2019) (italics added), appeal docketed, No. 9:19-cv-80685 (S.D. Fla. May 24, 2019).  The APA provides that a reviewing court shall “hold unlawful and set aside agency action, findings, and conclusions found to be . . . arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”  5 U.S.C. § 706(2)(A).  Under the APA, a reviewing court applying the arbitrary and capricious standard will look at whether an agency has considered the relevant evidence and articulated a “satisfactory explanation for its action.”  F.C.C. v. Fox Television Stations, Inc., 556 U.S. 502, 513 (2009) (quoting Motor Vehicle Mfrs. Assn. of United States, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)).    

As explained above, the Board’s review of a revocation decision is limited to determining only whether CMS had a legal basis for its decision.  See supra at 6-7.  While CMS has discretion to consider mitigating circumstances and other factors in exercising its revocation authority, neither the ALJ nor the Board may substitute their discretion for that of CMS.  See id.  Thus, contrary to Petitioner’s assertions, the ALJ and the Board have no authority to review CMS’s exercise of its discretion to revoke Petitioner’s billing privileges and, therefore, “no authority to determine whether that exercise [of discretion] was arbitrary and capricious based on the mitigating circumstances alleged by Petitioner.”  Bajwa, DAB No. 2799, at 16; see also Gorovits at 17; Bradley at 13. 

Petitioner’s contention that his revocation should be set aside because it will impose a hardship on his rural community by depriving the populace of an experienced and exemplary physician has no merit.  There is no regulatory or statutory authority authorizing “the Board or ALJs to weigh a petitioner’s alleged good deed against his criminal conduct in determining whether there is a valid legal basis for CMS to revoke[.]”  Patel at 10-11 (rejecting contention that ALJ erred “by not considering whether [petitioner’s] alleged exemplary medical service to an underserved Medicare population outweighs his criminal conduct”); see also Daniel Wiltz, M.D. and Family Healthcare Clinic, APMC, DAB No. 2864, at 12 (2018) (“If, as here, CMS has a basis for revocation, the Board must uphold the determination to revoke without regard to, e.g., . . . the potential impact of revocation on the supplier’s patients, that CMS might reasonably have weighed to determine whether to proceed with revocation.”).11

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Similarly, neither the ALJ nor the Board are authorized to set aside CMS’s revocation decision based on the financial impact it may have on Petitioner.  See Donohue at 10 (“[W]e must sustain a revocation that is lawful under the applicable regulations regardless of other factors, such as the financial impact of the revocation on the supplier, that CMS might reasonably have weighed in exercising its discretion about whether or not to revoke.” (citations and internal quotations omitted)).

Still further, we reject Petitioner’s contention that CMS’s prior approval of his Medicare enrollment applications with knowledge of his felony conviction precludes CMS from later exercising its discretion to revoke his billing privileges.  As the Board previously held, CMS’s approval of a supplier’s Medicare enrollment application, which discloses a felony conviction, does not preclude CMS from subsequently revoking the supplier’s billing privileges based on that same conviction.  See Edwards, DAB No. 2975, at 13 (“[R]evalidating an enrolled supplier’s billing privileges and revoking existing billing privileges are two different determinations under different regulations within 42 C.F.R. Part 424, subpart P, and, with obviously very different consequences.”).  “[T]he Medicare statute and regulations do not require CMS [to issue a revocation] within a specified time frame after discovering information about a Medicare enrollee’s conviction. CMS may revoke at any time . . . if the regulatory elements in section 424.535(a)(3) are satisfied.”  Bledsoe, DAB No. 2753, at 9.  The only time limit mandated by the applicable regulation is that the conviction occur “within the preceding 10 years.”  42 C.F.R. § 424.535(a)(3); see also Donohue at 9.  Here, there is no dispute that Petitioner’s conviction occurred within ten years of CMS’s determination to revoke Petitioner’s Medicare billing privileges.

Additionally, the Medicare statute and regulations do not limit CMS’s authority to revoke billing privileges based on any prior action or inaction by CMS with respect to the supplier’s enrollment status.  Bledsoe at 9.  To the extent Petitioner contends his revocation should be set aside on equitable grounds, such as laches or estoppel, such an argument cannot be sustained.  Donna Maneice, M.D., DAB No. 2826, at 7-8 (2017) (“[N]either the ALJ nor the Board has authority to reverse an authorized revocation for reasons of equity.”).  CMS is authorized to revoke a supplier’s Medicare billing privileges under section 424.535(a)(3) “based solely on a qualifying felony conviction, without regard to equitable or other factors.”  Id.

Finally, a revoked supplier is, by regulation, “barred from participating in the Medicare program from the effective date of the revocation until the end of the reenrollment bar.”  42 C.F.R. § 424.535(c)(1).  Both the effective date of revocation and the start date of a re-enrollment bar are determined by regulation.  See id. §§ 424.535(g) (revocation based on a felony is effective with the date of conviction), 424.535(c)(1) (re-enrollment bar begins

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30 days after CMS or its contractor mails notice of revocation).12  Petitioner did not challenge in this appeal the date of his conviction (which resulted in an effective date of revocation of July 30, 2015, as determined by CMS) or the start date of his re-enrollment bar.  Nevertheless, Petitioner appears to argue that the duration of his re-enrollment bar is arbitrary and capricious because CMS did not consider “all relevant factors.”  P. Br. at 17.  However, the duration of a re‑enrollment bar is not an initial determination subject to review by the ALJ or the Board.  See, e.g., Gorovits at 15-16; Dave, DAB No. 2672, at 9 (declining to consider argument that three-year re-enrollment bar is “excessive and contrary to regulation” because it is not subject to review).  Therefore, we find no error in the ALJ’s conclusion that he lacked authority to review the duration of the re-enrollment bar as determined by CMS.  ALJ Decision at 3, 4. 

Conclusion

For the reasons discussed above, we affirm the ALJ Decision.

• 1. The current version of the Act can be found at http://www.socialsecurity.gov/OP_Home/ssact/ssact-toc.htm.  Each section of the Act on that website contains a reference to the corresponding United States Code chapter and section.  Cross-reference tables for the Act and the United States Code can be found at http://uscode.house.gov/table3/1935_531.htm and https://www.ssa.gov/OP_Home/comp2/G-APP-H.html.
• 2. CMS issued revised Part 424 regulations effective November 4, 2019.  84 Fed. Reg. 47,794 (Sept. 10, 2019).  We apply the regulations in effect on the date of the challenged revocation determination.  John P. McDonough III, Ph.D., DAB No. 2728, at 2 n.1 (2016).  CMS issued the reconsidered determination challenged here on July 31, 2019.  CMS Ex. 1.
• 3. NGS also revoked Petitioner’s billing privileges under 42 C.F.R. § 424.535(a)(9) for failing to timely report his felony conviction and license suspension; however, CMS abandoned this basis for revocation before the ALJ.  See CMS Ex. 8, at 1; CMS Motion for Summary Judgment and Prehearing Brief (SJ Br.) at 1 n.1 (“CMS is no longer relying on this basis to support the revocation.”); CMS Response at 3 n.2.
• 4. CMS also made a case-specific determination based on the underlying facts, finding that Petitioner’s offense was “detrimental to the best interests of the Medicare program and its beneficiaries . . . because of its nexus to healthcare.”  CMS Ex. 1, at 4.  CMS determined Petitioner’s unlawful actions call into question “his honesty and trustworthiness,” “his propensity for good judgment[,] and his ability to follow Federal laws, rules, and program instructions.”  Id. at 4-5.  CMS concluded that “Medicare beneficiaries, and thereby, the Trust Funds may be at risk if [Petitioner] is allowed to continue his participation in the Medicare program.”  Id. at 5.  CMS explained that Petitioner’s “efforts to recover from addiction do not alter [its] authority to revoke [his] billing privileges under [42 C.F.R.] § 424.535(a)(3).”  Id.
• 5. Petitioner did not challenge the effective date of his revocation (July 30, 2015) in the proceedings before the ALJ or in this appeal.
• 6. The ALJ concluded it was unnecessary to rule on the admissibility of the parties’ exhibits.  ALJ Decision at 1.  The Board has previously noted that, “while an ALJ is required to review all proposed exhibits submitted in support of or in opposition to a motion for summary judgment in order to determine whether there is a material dispute of fact precluding summary judgment, the ALJ is not required to admit those exhibits into the record in order to conduct this review and make this determination.”  Univ. of Tex. MD Anderson Cancer Ctr., DAB No. 2927, at 18 (2019), appeal docketed, No. 19-60226 (5th Cir. Apr. 9, 2019).  “Such exhibits,” however, “are properly treated as an offer of proof that may be evaluated if necessary to determine whether a genuine issue of material fact exists in considering a motion for summary judgment.”  Id. (internal quotation marks and citations omitted).  Petitioner has not shown that any proffered exhibits not discussed by the ALJ demonstrated a genuine dispute of material fact.  Moreover, we review the issue of summary judgment de novo and have fully considered every exhibit submitted by the parties.
• 7. In the preamble to the final rule, the drafters explicitly stated that “[a]ny felonies referred to in section 1128 of the Act” are “[f]elonies that we determine to be detrimental to the best interests of the Medicare program or its beneficiaries.”  71 Fed. Reg. 20,754, 20,768 (Apr. 21, 2006).
• 8. Although CMS made a case-specific determination that Petitioner’s conviction was detrimental based on the underlying facts, see supra n.4, the ALJ did not sustain CMS’s revocation decision based on those case-specific findings.
• 9. Because we conclude the Board is not authorized to address Petitioner’s due process arguments, we do not resolve whether Petitioner had a constitutionally protected property interest in his continued participation in Medicare.  We note, however, that five federal circuit courts of appeal have determined that a health care practitioner’s participation in the Medicare program is not a constitutionally protected property interest.  See, e.g., Shah v. Azar, 920 F.3d 987, 997-998 (5th Cir. 2019); Parrino v. Price, 869 F.3d 392, 397-98 (6th Cir. 2017); Erickson v. U.S. ex rel. Dep’t of Health & Human Servs., 67 F.3d 858, 862 (9th Cir. 1995); Koerpel v. Heckler, 797 F.2d 858, 863–65 (10th Cir. 1986); Cervoni v. Sec’y of Health, Ed. & Welfare, 581 F.2d 1010, 1018–19 (1st Cir. 1978).
• 10. Although the ALJ appears to have reached the issue, we do not review the revocation decision for abuse of discretion.  “[I]f CMS establishes that the regulatory elements necessary for revocation are satisfied, as they are here, then the revocation must be sustained, and neither the administrative law judge nor the Board may substitute its discretion for that of CMS in determining whether revocation is appropriate under all the circumstances.”  Bradley, DAB No. 2663, at 13 (internal quotations and citation omitted)).
• 11. To the extent Petitioner’s assertions about his exemplary service and the hardship his revocation will have on his rural community may be construed as a request for equitable relief, the Board has long held that ALJs and the Board have no authority to restore a supplier’s billing privileges on equitable grounds.  See, e.g., Wiltz, DAB No. 2864, at 13 (citing Brueggeman, DAB No. 2725, at 15).
• 12. The regulations in effect at the time of revocation further provided that a re-enrollment bar lasts a minimum of one year, but not more than three years.  42 C.F.R. § 424.535(c)(1).