Lilia Gorovits, M.D., P.C., DAB No. 2985 (2020)

FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE DECISION

Petitioner Lilia Gorovits, M.D., P.C. appeals the April 20, 2018 Administrative Law Judge decision, Lilia Gorovits, MD PC, DAB CR5076 (ALJ Decision).  The ALJ granted summary judgment in favor of the Centers for Medicare & Medicaid Services (CMS), sustaining CMS’s decision to revoke Petitioner’s Medicare billing privileges effective March 11, 2016.  The ALJ determined that CMS lawfully revoked Petitioner’s Medicare enrollment based on Dr. Gorovits’s (Petitioner’s owner’s) guilty plea to felony obstruction of criminal investigations into health care offenses.  The ALJ concluded that he was not authorized to review the July 6, 2017 beginning date or three-year duration of the re-enrollment bar imposed on Petitioner.

For the reasons explained below, we affirm the ALJ Decision.

Legal Background

The Social Security Act (Act) authorizes CMS to regulate the enrollment of health care practitioners in Medicare.  Act § 1866(j)(1)(A).1 Regulations implementing the statute are codified in 42 C.F.R. Part 424, subpart P (sections 424.500-.570).2 The regulations provide that a physician, physician organization (such as Petitioner), or other “supplier” of health care services must be enrolled in Medicare in order to bill the program for covered services furnished to Medicare beneficiaries.  42 C.F.R. §§ 400.202, 424.500.  CMS may revoke a supplier’s Medicare billing privileges for any of the “reasons” in 42 C.F.R. § 424.535(a).  Those reasons include:

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• The supplier or any owner of the supplier is excluded from federal health care programs under section 1128 of the Act.  42 C.F.R. § 424.535(a)(2)(i).
• The supplier or any owner of the supplier was, within the preceding 10 years, convicted (as that term is defined in 42 C.F.R. § 1001.2) of a felony 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).  The term “convicted” is defined in 42 C.F.R. § 1001.2 to include a federal court’s acceptance of an individual’s guilty plea.
• The supplier did not timely report its owner’s felony conviction or exclusion to CMS.  42 C.F.R. §§ 424.535(a)(9), 424.516(d)(1)(ii), 424.502. 

If CMS or its contractor 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 an individual’s exclusion from federal health care programs under section 1128 of the Act, the revocation is effective with the date of exclusion.  Id. § 424.535(g).  When a revocation is based on a felony conviction, the revocation is effective with the date of the conviction.  Id.

“The re-enrollment bar begins 30 days after CMS or its contractor mails notice of the revocation.”  42 C.F.R. § 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 its Medicare billing privileges in accordance with the procedures in 42 C.F.R. Part 498.  42 C.F.R. § 424.545(a).  A supplier must first request “reconsideration” of the initial determination.  Id. §§ 424.545(a), 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).3 Id. §§ 498.80, 498.82.

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Case Background

The following facts are undisputed and drawn from the exhibits cited by the ALJ “to illustrate facts that are not in dispute.” ALJ Decision at 1.4

1. Petitioner’s owner pleaded guilty to a federal felony.  

On March 11, 2016, a federal court accepted the guilty plea of Lilia Gorovits, M.D., Petitioner’s sole owner, to charges of felony obstruction of criminal investigations of health care offenses in violation of 18 U.S.C. § 1518.  ALJ Decision at 2; CMS Ex. 3 (criminal information and guilty plea agreement) at 1-15; CMS Ex. 4 (Medicare enrollment documentation for Petitioner) at 1, 5, 15.  Dr. Gorovits pleaded guilty to the charge that she --

willfully prevented, obstructed, misled, and delayed and willfully attempted to prevent, obstruct, mislead and delay, the communication of information and records relating to a federal health care offense to federal criminal investigators in that she falsely denied being offered money and falsely denied receiving any money from [a hospice] to refer Medicare and Medicaid beneficiary patients to [the hospice] for hospice service[s]. 

CMS Ex. 3, at 4, 10.  The plea agreement stated that Dr. Gorovits’s violation arose “from her efforts to mislead federal investigators who were examining the practice of [a hospice] paying kickbacks to medical professionals, including herself, for referrals of Medicare and Medicaid eligible patients for hospice care services.”  Id. at 10.

2. The HHS Inspector General excluded Petitioner’s owner from federal health care programs.

By letter dated September 30, 2016, the Inspector General of the United States Department of Health and Human Services (I.G.) notified Dr. Gorovits that she was being excluded from participating in Medicare and all other federal health care programs, based

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on her conviction, as defined in section 1128(i) of the Act.  CMS Ex. 2, at 1.  The letter stated that the exclusion was effective 20 days from the date of the letter (October 20, 2016) and for a minimum period of two years.  Id.

3. Petitioner did not report its owner’s guilty plea or exclusion.

Petitioner did not report its owner’s conviction or her exclusion to CMS.  ALJ Decision at 2; Petitioner’s Pre-Hearing Brief, Motion to Stay and Consolidate, and Response to CMS’s Motion for Summary Judgment (P. Brief) at 3.

4. Novitas Solutions (Novitas) initially determined to revoke Petitioner’s Medicare billing privileges on January 26, 2017.

By initial determination dated January 26, 2017, Novitas, a CMS Medicare administrative contractor, notified Petitioner that its Medicare billing privileges were revoked effective October 20, 2016, for the following reasons:  (1) 42 C.F.R. § 424.535(a)(2), the I.G.’s exclusion of Petitioner’s owner from participation in federal health care programs as of October 20, 2016, pursuant to section 1128(b)(2) of the Act; and (2) 42 C.F.R. § 424.535(a)(9), Petitioner did not report the exclusion, an adverse legal action, to CMS within 30 days of the reportable event.  CMS Ex. 1, at 14.  The notice stated that, pursuant to 42 C.F.R. § 424.535(c), Novitas was “establishing a re-enrollment bar for a period of three (3) years that shall begin 30 days after the postmark date of this letter.”  Id. at 15.  Petitioner, through counsel, submitted a reconsideration request dated March 20, 2017.  CMS Ex. 1, at 19.

5. Novitas issued a revised initial determination on June 6, 2017.

By letter dated June 6, 2017 (while Petitioner’s request for reconsideration of the January 26, 2017 initial determination was pending), Novitas reopened and revised its January 26, 2017 initial determination.  CMS Ex. 1, at 23-24.  Novitas added Dr. Gorovits’s felony conviction as a third basis for the revocation, pursuant to 42 C.F.R. § 424.535(a)(3).  Id.  Novitas also revised the effective date of revocation to March 11, 2016, the date that the federal court accepted Dr. Gorovits’s guilty plea.  Id.  Novitas stated that, pursuant to section 424.535(c), it was establishing a re-enrollment bar for a period of three years beginning 30 days after the postmark date of the June 6, 2017 revised initial determination.  Id.

6. CMS issued a reconsideration determination on June 16, 2017.

In response to Petitioner’s timely request for reconsideration of the January 26, 2017 initial determination, by letter dated June 16, 2017, CMS determined on reconsideration to uphold the revocation of Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. §§ 424.535(a)(2), and (9), based on the undisputed facts that the

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I.G. excluded Dr. Gorovits from federal health care programs effective October 20, 2016, and Petitioner failed to report the exclusion to CMS within 30 days.  CMS Ex. 1, at 17-21.  CMS also affirmed the October 20, 2016 effective date of revocation and declined to reduce the three-year enrollment bar.  Id. at 20.

7. CMS issued its revised reconsideration determination on October 26, 2017.

Petitioner timely sought reconsideration of the June 6, 2017 revised initial determination.  CMS Ex. 5.

By letter dated October 26, 2017, CMS reopened and revised its June 16, 2017 reconsideration decision.  CMS Ex. 1, at 1-11.  CMS concluded that Novitas correctly revoked Petitioner’s billing privileges for the three separate reasons identified in the revised initial determination, 42 C.F.R. § 424.535(a)(2), (3), and (9).  Id. at 7-9.  Applying section 424.535(g) to the date the court accepted Dr. Gorovits’s guilty plea, CMS determined that the effective date of Petitioner’s revocation was March 11, 2016.  Id. at 9.  CMS found no merit to Petitioner’s argument “that the revocation and the imposition of a three year enrollment bar “violate[d] Dr. Gorovits’ substantive and procedural due process rights.”  Id. at 9.

ALJ Proceedings and ALJ Decision

Petitioner timely requested an ALJ hearing.  CMS moved for summary judgment.  Petitioner opposed CMS’s summary judgment motion.  In addition, Petitioner moved for a stay of the revocation proceedings pending Novitas’s reconsideration of Medicare overpayment determinations for services furnished by Petitioner from the March 11, 2016 effective date of its revocation through on or about September 30, 2016, when the I.G. notified Dr. Gorovits of her exclusion from federal health care programs.  P. Brief at 5-7.  Petitioner asked the ALJ to consolidate its revocation and overpayment appeals once all were ripe for ALJ review.  Id.

The ALJ denied Petitioner’s motion to stay the proceedings.  The ALJ concluded that he had no jurisdiction over the issue of Medicare overpayment and, to the extent that an overpayment determination confers hearing rights, Petitioner must exercise those rights in a different forum.

The ALJ granted summary judgment in favor of CMS on the revocation of Petitioner’s Medicare billing privileges effective March 11, 2016.  The ALJ concluded that he was not authorized to address Petitioner’s challenges to the beginning date or the duration of the three-year Medicare re-enrollment bar.  The ALJ also rejected Petitioner’s contention that Novitas was not authorized to reopen and revise its January 26, 2017 initial determination to revoke Petitioner’s Medicare participation effective October 20, 2016.

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The ALJ further determined that the revocation of Petitioner’s Medicare billing privileges was justified under section 424.535(a)(3) because:  (1) Petitioner’s owner’s conviction was “for a financial crime and/or for a felony that placed Medicare beneficiaries at immediate risk, as identified by 42 C.F.R. § 424.535(a)(3)(ii)”; and (2) even if “not for an offense specifically enumerated by” the regulation, the conviction was for an offense that CMS, in its authorized discretion, determined to be detrimental to Medicare and its beneficiaries.  ALJ Decision at 5-6.  The nature of the crime, the ALJ also explained, was unaffected by Petitioner’s owner’s subsequent cooperation with the government’s underlying criminal investigation, and he had no authority to grant Petitioner equitable relief.  Lastly, the ALJ held that he had no authority to consider Petitioner’s argument that CMS violated Petitioner’s constitutional due process rights.

Standard of Review

“The standard of review on a disputed issue of law is whether the ALJ 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), available at https://www.hhs.gov/about/agencies/dab/different-appeals-at-dab/appeals-to-board/guidelines/enrollment/index.html.

Whether summary judgment is appropriate is a legal issue that we address de novo.  Patrick Brueggeman, D.P.M., DAB No. 2725, at 6 (2016) (citing Lebanon Nursing & Rehab. Ctr., DAB No. 1918, at 4 (2004)); Guidelines.  Summary judgment is appropriate if there is no genuine dispute of fact material to the result and the moving party is entitled to judgment as a matter of law.  See 1866ICPayday.com, L.L.C., DAB No. 2289, at 2 (2009) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-25 (1986)).

Analysis

On appeal to the Board, Petitioner contests the ALJ Decision on multiple grounds.  Petitioner argues that the ALJ erred in affirming the March 11, 2016 effective date of revocation of its Medicare billing privileges.  According to Petitioner, the effective date of revocation should be October 20, 2016.  To support this contention, Petitioner asserts that the ALJ erred in determining that Novitas had the authority to reopen its January 26, 2017 initial determination, which established the October 20, 2016 effective date, and that there was no basis for revoking Petitioner’s billing privileges under 42 C.F.R. § 424.535(a)(3).  Petitioner also argues that the ALJ erred in concluding that the beginning date and length of the reenrollment bar are not appealable.  Petitioner further contends that the revocation and reenrollment bar imposed on Petitioner are arbitrary, capricious and otherwise legally impermissible, and that the ALJ erred in concluding that he could not address Petitioner’s constitutional due process arguments.

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For the reasons discussed below, we conclude that Petitioner’s contentions do not establish a basis for reversing or modifying the revocation of its Medicare billing privileges.  We explain that the ALJ correctly determined the scope of his review under the governing regulations and that summary judgment upholding CMS’s determination to revoke Petitioner’s Medicare billing privileges effective March 11, 2016, is appropriate.

1. The ALJ did not err in denying Petitioner’s request to stay the revocation proceedings and consolidate the case with Petitioner’s overpayment appeals.

As noted, Petitioner asked the ALJ to stay the proceedings in its revocation appeal pending reconsideration of Novitas’s determinations that Petitioner received Medicare overpayments for services furnished between March 11, 2016 (the date Dr. Gorovits’s guilty plea was accepted by the court) and on or about September 30, 2016 (when the I.G. informed Dr. Gorovits of her exclusion).  P. Brief at 5-7, 20.  Petitioner asked the ALJ to consolidate all of the proceedings when the overpayment appeals were “similarly ripe for adjudication.”  Id. at 20.  Petitioner said that the cases “are but two sides of the same coin” because the overpayment appeals derive from the determination of the effective date of revocation.  Id. at 7.  Therefore, Petitioner argued, consolidation of the appeals would serve the interests of efficiency and consistency.

The ALJ did not err in denying Petitioner’s request for a stay and consolidation based on his conclusion that he had “no jurisdiction over the issue of overpayment.”  ALJ Decision at 3 (citing 42 C.F.R. §§ 498.3(b), 498.5(l)(2)).  The regulations cited by the ALJ specify what types of CMS determinations are subject to review under 42 C.F.R. Part 498 by an ALJ in the Civil Remedies Division of the Departmental Appeals Board (DAB), and subsequently to the Board.  The appealable determinations include a reconsidered determination or a revised reconsidered determination related to the denial or revocation of a supplier’s Medicare enrollment pursuant to 42 C.F.R. §§ 424.530 or 424.535.  42 C.F.R. §§ 498.3(b)(17), 498.5(l)(2).

The appealable determinations in 42 C.F.R. Part 498 do not include decisions to deny claims for services and associated overpayments for such services.  Ronald J. Grason, M.D., DAB No. 2592, at 8 (2014) (initial determinations listed in 42 C.F.R. § 498.3(b) “that the Board and its ALJs are authorized to review do not include CMS denials of individual Medicare payment claims”), aff’d, Grason v. Burwell, No. 14-2267 (D. Ill. Feb. 23, 2016), aff’d, 659 F. App’x 899 (7th Cir. 2016).  “Medicare coverage and payment determinations may be appealed under a separate multistep administrative appeal process which includes review by administrative law judges in the Office of Medicare Hearing and Appeals and then, if appropriate, by the Departmental Appeals Board’s Medicare Appeals Council.”  Vijendra Dave, M.D., DAB No. 2672, at 12 (2016) (citing 42 C.F.R. Part 405, subpart I (setting out an administrative appeal process relating to initial determinations regarding claims for benefits under Medicare Parts A and B, including determinations that an overpayment of benefits was made)).

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Accordingly, the ALJ correctly concluded that he did not have authority to review Petitioner’s overpayment appeals and properly denied Petitioner’s request for a stay of proceedings in its revocation appeal.  Petitioner must use the separate appeal process in 42 C.F.R. Part 405, subpart I, to seek relief from any Medicare claim overpayment determination.

2. The ALJ correctly concluded that Novitas was authorized to reopen and revise its initial determination to revoke Petitioner’s billing privileges.

Petitioner contends that the ALJ incorrectly determined that Novitas was authorized to reopen and revise its January 26, 2017 initial determination, which revoked Petitioner’s billing privileges effective October 20, 2016.  Request for Review (RR) at 8-9; CMS Ex. 1, at 14-16.  Consequently, Petitioner says, “the effective date of Petitioner’s billing privilege[s] revocation should be October 20, 2016.”  RR at 7.  To support this argument, Petitioner relies on 42 C.F.R. § 498.30, “Limitation on reopening,” which provides in part that “CMS or the OIG, as appropriate, may on its own initiative, reopen any . . . initial or reconsidered determination, within 12 months after the date of notice of the initial determination.”  Petitioner says that the “very language of the regulation states that the power [to reopen and revise] rests with CMS or [the] OIG,” and, had “CMS wished the regulation to apply to contractors, it would have said so.”  Id. at 9.  Therefore, Petitioner says, Novitas’s June 6, 2017 revised initial determination, which added Petitioner’s owner’s felony conviction as a third basis for revocation and changed the effective date of Petitioner’s revocation to March 11, 2016, “cannot stand.”  Id.

The ALJ correctly concluded that Novitas was authorized to reopen and revise its January 26, 2017 initial determination.  Petitioner reads 42 C.F.R. § 498.30 in isolation, ignoring that “Novitas, a CMS contractor, issued and revised [Petitioner’s] initial determination based on CMS’s directive,” and the statutory framework under which CMS delegates such Medicare program functions to private contractors.  CMS Ex. 1, at 6 (Oct. 26, 2017 Revised Reconsideration Decision);Act §§ 1816, 1842, 1874A.  As reflected in CMS regulations and program manuals, many of the day-to-day functions of the program, including the enrollment of providers and suppliers, are carried out by Medicare administrative contractors like Novitas.  See, e.g., 42 C.F.R. § 421.5(b) & supbarts B-E; CMS Pub. 100-08, Medicare Program Integrity Manual, Chapter 15 – Medicare Enrollment.       

Furthermore, the Board has explained, section 1842 of the Act provides that the administration of Medicare Part B (under which physicians receive payment for covered services) “shall be conducted through contracts with [M]edicare administrative contractors under section 1874A.”  Fady Fayad, M.D., DAB No. 2266, at 18-19 (2009) (quoting statute), aff’d, Fayad v. Sebelius, 803 F. Supp. 2d 699, 704-705 (E.D. Mich. 2011).  Section 1874A(a), in turn, provides for CMS (under the Secretary’s delegation) to enter into contracts with Medicare administrative contractors to perform any of the

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functions described in section 1874A(a)(4).  Those functions include actions performed “under the Medicare Integrity Program under section 1893, as are necessary to carry out the purposes of this title.”  Act § 1874A(a)(4)(H).  The authority to revoke Medicare billing privileges is “necessary to carry out the purposes” of the Medicare program “because revocation supports access to high quality medical care by removing unscrupulous practitioners who pose a risk to program integrity and the well-being of Medicare beneficiaries.”  Fayad, DAB No. 2266, at 19.

Petitioner argues that the Board’s reasoning in Fayad is inapposite in this case because Fayad “concerned the threshold matter of initial determinations, not reopening of same.”  RR at 9 n.5.  Petitioner also says that “it would be a particularly odd scenario” if, during CMS’s review of a contractor’s initial decision, the contractor “could essentially nullify CMS’s review” through reopening and revision.  Id.  “While Novitas may act as an agent of CMS in certain respects,” Petitioner claims, it “should not be permitted to nullify CMS’s own review of” the underlying determination.  Id.

The Board’s legal analysis in Fayad is equally applicable in the case of a Medicare contractor’s authority to reopen and revise an initial decision to revoke a supplier’s billing privileges.  Just as the authority to revoke a supplier’s billing privileges in the first instance is a function necessary to carry out the purposes of the Medicare program, so too is the authority to reopen and revise an initial determination in order to ensure the decision properly takes into account the circumstances of the case and relevant enrollment requirements.  As the Board has explained in the context of other types of appeals, an administrative decision-maker has inherent authority to reopen and reconsider a decision, even in the absence of express authorization in its procedures, because such authority ensures fair process and sound decisions.  E.g. Charles Brian Griffin, Ruling on Request for Reconsideration, DAB Ruling No. 2017-3, at 2-3 (May 10, 2017) (42 C.F.R. Part 1005 does not expressly authorize the Board to reopen and reconsider a decision to exclude an individual from federal health care programs, but the Board has inherent authority to do so).

In addition, we reject Petitioner’s suggestion that a Medicare contractor with authority to reopen and revise an initial revocation determination could effectively nullify CMS’s review authority.  Medicare contractors act as CMS’s agents in managing the enrollment of providers and suppliers, as Novitas did in this case.  Indeed, Novitas acted at CMS’s direction in reopening.  CMS Ex. 1, at 6.  Moreover, under Part 498, CMS retains the authority to review on reconsideration a contractor’s revised initial determination to revoke a supplier’s billing privileges, as it did in this case.  Therefore, we agree with the ALJ that the fact that 42 C.F.R. § 498.30 “does not explicitly mention a contractor does not limit CMS’s ability to delegate the authority to reopen and revise a determination” and “[t]hat delegated authority is implicit in the regulation.”  ALJ Decision at 5.

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3. CMS lawfully revoked Petitioner’s Medicare billing privileges under 42 C.F.R. § 424.535(a)(3) 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).  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).  Where CMS cites multiple grounds for revocation, the revocation “need only be upheld on one regulatory ground in order to be sustained.”  AR Testing Corp., DAD No. 2679, at 4 n.7 (2016).

A revocation of a Medicare supplier’s billing privileges based on section 424.535(a)(3) is authorized if two conditions are met:  (1) the “supplier, or any owner or managing employee of the . . . supplier was, within the preceding 10 years, convicted (as thatterm is defined in 42 CFR 1001.2) of a Federal or State felony offense”; and (2) 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).  Section 1001.2 defines the term “convicted” to include a federal court’s acceptance of an individual’s guilty plea.

The categories of offenses set out in 42 C.F.R. § 424.535(a)(3)(ii) are those that CMS has determined by rulemaking to be detrimental to Medicare and Medicare beneficiaries as a matter of law.   See Michael Scott Edwards, OD, and M. Scott Edwards, OD, PA, DAB No. 2975, at 8-10 & n.12 (2019), appeal docketed, No. 2:19-cv-00048 (E.D.N.C. Dec. 30, 2019) (and cases cited therein); Donohue at 4-5 & 5 n.3.  Those categories are:  (A) Felony crimes against persons; (B) Financial crimes; (C) Any felony that placed the Medicare program or its beneficiaries at immediate risk, such as a malpractice suit that results in a conviction of criminal neglect or misconduct; and (D) Any felonies that would result in mandatory exclusion under section 1128(a) of the Act.

In addition, section 424.535(a)(3)(i) authorizes CMS to determine on an adjudicative basis whether a felony that does not fall within any of the categories specified in subsection 424.535(a)(3)(ii) is detrimental to the program and its beneficiaries.  See Edwards at 9-10 & n.12 (and cases cited therein).  As CMS explained when it revised the regulation effective February 2015, due to “the very serious nature of any felony conviction, our authority in [section] 424.535(a)(3)(i) should not be restricted to the [specified] categories of felonies.”  79 Fed. Reg. 72,500, 72,509-72,510 (Dec. 5, 2014) (preamble).  Furthermore, CMS said that it would evaluate the severity of the underlying offense when determining whether revocation is warranted, and would “carefully

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review[]” each case “on its own merits.”  Id. at 72,510.CMS added, the “determination of whether a particular conviction will or will not result in the revocation . . . of Medicare enrollment will depend upon the specific facts of each individual situation.”  Id.

CMS’s authority to determine whether a felony conviction is detrimental to Medicare and Medicare beneficiaries is derived in part from section 1842(h)(8) of the Act, which expressly gives the Secretary the authority to “terminate or refuse to renew” a physician or supplier agreement to participate in Medicare “in the event that such physician or supplier 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”; section 424.535(a)(3) delegates this authority to CMS.  See Letantia Bussell, M.D., DAB No. 2196, at 12 (2008).   Furthermore, the authority supports the “chief aim” of the “regulations governing Medicare enrollment[:]  to prevent ‘unqualified, fraudulent, or excluded providers and suppliers from providing items or services to Medicare beneficiaries or billing the Medicare program or its beneficiaries.’”  Fayad, DAB No. 2266, at 19 (quoting 71 Fed. Reg. at 20,754, 20,773-74 (Apr. 21, 2006) and noting that the degree to which Medicare beneficiaries enjoy access to high quality health care depends partly on Medicare’s fiscal integrity and the integrity and professional qualifications of health care practitioners and entities enrolled in the program).  The enrollment process is based on the understanding that “there is a relationship between fulfilling the requirements stipulated in the Medicare program statutes and related laws, the integrity of the provider and supplier, the quality of care furnished to Medicare beneficiaries, and the confidence of the public in the Medicare program.”  71 Fed. Reg. at 20,758.

In this case, Petitioner does not dispute that its owner was convicted of a felony offense within the qualifying 10-year period, but argues that the conviction was not for “a felony that CMS determined or could have determined was detrimental to the best interests of the Medicare program and its beneficiaries either as enumerated in the regulation or more broadly.”5 RR at 11 (internal brackets and quotation marks removed).  According to Petitioner, the ALJ misread the record by concluding that, “because Dr. Gorovits was convicted of obstructing a healthcare fraud investigation, then she was equally guilty of the allegations of fraud (and perfecting allegedly kickback-tainted referrals) that

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underlied [sic] the overarching investigation.”  Id. at 10.  Petitioner asserts, “A conviction for obstruction of justice is distinct from a conviction of actually engaging in Medicare fraud,” and there “is no evidence that Dr. Gorovits’ conviction actually worked to the detriment of Medicare or the program’s beneficiaries.”  Id. at 10, 12 (emphasis by Petitioner).  Furthermore, Petitioner says that “while CMS has some discretion as to which crimes place Medicare beneficiaries at substantial enough risk to impose revocation,” Dr. Gorovits’s conviction “was not of the type set forth within the ambit of the regulation.”  Id. at 11.

We reject Petitioner’s contention that CMS did not determine (and could not have determined), based on the undisputed facts, that Petitioner’s owner’s felony conviction was detrimental to the best interests of the Medicare program and its beneficiaries. The Board and federal courts recognize that CMS appropriately considers the specific circumstances of the underlying criminal violation when exercising its discretion to determine whether a felony conviction falls within the scope of section 424.535(a)(3).  E.g., Edwards at 10-11; Fayad, 803 F. Supp. 2d at 704.  For example, in the case of a supplier who pleaded guilty to conspiracy to defraud the United States and admitted to deliberately falsifying forms “to evade federal immigration laws,” a federal court concluded:  “Given Plaintiff’s dishonesty and demonstrated untrustworthiness in his dealings with the federal government, the Secretary reasonably concluded that Plaintiff’s continued participation in the Medicare program was contrary to the best interests of that program.”  Fayad, 803 F. Supp. 2d at 704.

Here, the record shows that CMS took into account the nature and circumstances of Petitioner’s owner’s felony offense in determining that the conviction was detrimental to Medicare and Medicare beneficiaries and, therefore, a legal basis for revocation under section 424.535(a)(3).  As CMS explained in the October 26, 2017 revised reconsideration determination, Dr. Gorovits did not simply plead guilty to a general obstruction of justice charge.  CMS Ex. 1, at 8.  Rather, Dr. Gorovits pleaded guilty to the felony of “Obstruction of Criminal Investigation[s] of Health Care Offenses, in violation of 18 U.S. Code § 1518.”  Id. (emphasis added).  “A violation of 18 U.S. Code § 1518,” CMS continued, “involves willfully preventing, obstructing, misleading, delaying or attempting to prevent, obstruct, mislead, or delay the communication of information or records relating to a violation of a Federal health care offense to a criminal investigator.”  Id.  In light of the Medicare program’s heavy reliance on the veracity of participating physicians and their compliance with federal laws and regulations, CMS explained, Dr. Gorovits’s demonstrated deceit and actual obstruction of a federal health care fraud investigation were detrimental to the best interests of the Medicare program and Medicare beneficiaries because they undermined both the trust that the program and its beneficiaries place in participating physicians and the financial integrity of the program.  Id.

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Moreover, Dr. Gorovits’s admitted conduct underlying her conviction lends further support to CMS’s determination.  As described in the plea agreement, Dr. Gorovits admitted that her obstruction of criminal investigations of health care offenses arose “from her efforts to mislead federal criminal investigators who were examining the practice of” a hospice “paying kickbacks to medical professionals, including herself, for referrals of Medicare and Medicaid eligible patients for hospice care services.”  CMS Ex. 3, at 10 (emphasis added).  Thus, while Dr. Gorovits was not convicted for receiving kickbacks or perfecting kickback-tainted referrals for Medicare beneficiaries, she admitted that she did in fact refer Medicare and Medicaid eligible patients to the hospice under investigation and that she received kickbacks for those referrals.  In accepting the kickbacks, Dr. Gorovits flouted her responsibility to comply with federal laws governing payments for physician referrals.  Consequently, regardless of whether Dr. Gorovits was convicted of receiving illegal kickbacks for patient referrals, her admitted conduct buttresses the conclusion that she was not a trustworthy practitioner and that the conviction was detrimental to Medicare and Medicare beneficiaries. 

Petitioner argues that several “documents support Dr. Gorovits’ contention that her felony conviction was not detrimental to the best interests of the Medicare program or its beneficiaries and cannot serve as a basis for a revocation retroactive to March 11, 2016.”  RR at 14.  Specifically, Petitioner says, the lack of any statement in the plea agreement that would have put Dr. Gorovits on notice that her conviction could lead to the revocation of her Medicare enrollment shows that the United States Attorney’s Office “did not believe that the felony was materially detrimental” to Medicare.  Id. at 13.  Indeed, Petitioner asserts, “Dr. Gorovits’ guilty plea ultimately resulted in her providing substantial cooperation to the government in its underlying investigation into Home Care Hospice, Inc.”  Id. at 14.  “Relatedly,” Petitioner says, Novitas was aware of Dr. Gorovits’s conviction at the time of the January 2017 initial determination, but did not then rely on the conviction as a basis for revocation.  Id. at 13-14.  Therefore, it must not have “believed that the conviction fell within the scope of 42 C.F.R. § 424.535(a)(3).”  Id. at 14.  Likewise, Petitioner asserts, it “is apparent that CMS did not consider the conviction to support a revocation” because its June 16, 2017 determination did not rely on section 424.535(a)(3) as a basis for revocation.  Id.

The absence of a reference in the plea agreement with the United States Attorney’s Office to the potential revocation of Dr. Gorovits’s Medicare enrollment based on her guilty plea cannot reasonably be understood to mean that CMS believed her offense was not detrimental to the Medicare program and its beneficiaries.  The responsibility and discretion to determine whether a felony conviction is detrimental to Medicare and Medicare beneficiaries lies with CMS, the federal agency responsible for administering the Medicare program, not a United States Attorney’s Office.  Furthermore, Novitas’s authorized decision (at CMS’s direction) to reopen the initial determination and add section 424.535(a)(3) as a third ground for the revocation, and CMS’s revised reconsideration determination affirming that action, plainly show that the contractor and

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CMS further considered and ultimately determined that the conviction fell within the ambit of 42 C.F.R. § 424.535(a)(3).

Moreover, the Board has held, the “Medicare statute and regulations do not require CMS to take action within a specified time frame after discovering information about a Medicare enrollee’s conviction.”  Horace Bledsoe, M.D. & Bledsoe Family Med., DAB No. 2753, at 9 (2016), appeal dismissed, Bledsoe v. Price, No. 3:17-cv-00442 (D.S.C. May 4, 2017).  Thus, “CMS may revoke at any time based on a conviction if the regulatory elements in section 424.535(a)(3) are satisfied,” and the “only legally mandated time limit is the requirement in section 424.535(a)(3) that the conviction occur within 10 years preceding enrollment or revalidation of enrollment.”  Id. (italics omitted). In addition, the statute and regulations place no limitation on CMS’s authority to issue a revocation based on prior action or inaction by the Medicare program with respect to the supplier’s enrollment status.  Consequently, the Board has concluded that section 424.535(a) authorized CMS to exercise its revocation authority under section 424.535(a)(3) “regardless of any prior decision by itself or its contractor not to exercise it.”  Cent. Kan. Cancer Inst., DAB No. 2749, at 10 (2016), appeal dismissed, Cent. Kan. Cancer Inst., P.A. v. Dep’t of Health & Human Servs., No. 2:17-cv-02012 (D. Kan. June 2, 2017).

Accordingly, we conclude that there is no material dispute of fact and that CMS lawfully revoked Petitioner’s enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(3) based on Petitioner’s owner’s conviction of a felony offense that CMS determined was detrimental to the best interests of the Medicare program and its beneficiaries.  Therefore, we must uphold the revocation.  See, e.g., Stanley Beekman, D.P.M., DAB No. 2650, at 10 (2015); Bussell at 13.

4. The ALJ correctly sustained the March 11, 2016 effective date of revocation, the date of Petitioner’s owner’s felony conviction.

The regulation governing the effective date of revocation, 42 C.F.R. § 424.535(g), provides that when a revocation is based on a felony conviction, the revocation is effective with the date of the felony conviction.  Furthermore, the Board has repeatedly held that ALJs and the Board “are bound by the Secretary’s regulations which expressly provide that when a revocation is based on a felony conviction, the revocation takes effect on the date of the conviction” in accordance with 42 C.F.R. § 424.535(g).  Cent. Kan. Cancer Inst., DAB No. 2749, at 10.  For the reasons discussed above, we conclude that CMS had a legal basis to revoke Petitioner’s Medicare billing privileges based on its owner’s felony conviction, pursuant to section 424.535(a)(3).  In addition, Petitioner does not dispute that on March 11, 2016, a federal court accepted Petitioner’s owner’s guilty plea to felony obstruction of criminal investigations of health care offenses.  Applying section 424.535(g) in this case, we therefore affirm the March 11, 2016 effective date of the revocation of Petitioner’s billing privileges.

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5. The ALJ correctly determined that he did not have authority to review the length or beginning date of the re-enrollment bar.

Petitioner argues that the ALJ erred in concluding that he did not have authority to review the length or start date of the re-enrollment bar imposed on Petitioner.  RR at 5-7 (referencing ALJ Decision at 3-4 (citing 42 C.F.R. §§ 498.3(b)(17), 424.545(a), 424.535(c)(1); Mohammad Nawaz, M.D. & Mohammad Zaim, M.D., PA, DAB No. 2687, at 15 (2016), aff’d, Mohammad Nawaz, M.D. & Mohammad Zaim, M.D., P.A. v. Price, No. 4:16cv386, 2017 WL 2798230 (E.D. Tex. June 28, 2017), aff’d sub nom Shah v. Azar, 920 F.3d 987 (5th Cir. 2019); Brueggeman at 15).  Petitioner asserts “that the reenrollment bar should have begun to run on the effective date of . . .  retroactive revocation (here, either March 11, 2016 or October 20, 2016).”  RR at 6.  Petitioner argues that the regulatory provision that “[t]he re-enrollment bar begins 30 days after CMS or its contractor mails notice of the revocation and lasts a minimum of 1 year, but not greater than 3 years, depending on the severity of the basis for revocation,” “should apply to standard revocations and not retroactive revocations.”  Id. (emphasis by Petitioner).

The ALJ did not err in concluding that he was not authorized to review the start date or duration of Petitioner’s re-enrollment bar under the governing regulations.  Section 424.545(a) provides that a “supplier whose Medicare enrollment has been revoked,” such as Petitioner, “may appeal CMS’ decision in accordance with part 498” of title 42 of the Code of Federal Regulations (Appeals Procedures for Determinations that Affect Participation in the Medicare Program).  Section 498, in turn, provides for suppliers to appeal particular types of CMS actions that adversely affect their participation in the Medicare program.  See 42 C.F.R. §§ 498.1, 498.3, 498.5.  Specifically, suppliers have the right to appeal “initial determinations” by CMS “with respect to the matters specified in paragraph (b)” of section 498.3.  Id. § 498.3(a)(1).

The “matters” listed in section 498.3(b) include “[w]hether to . . . revoke a . . . provider’s or supplier’s Medicare enrollment in accordance with . . . [42 C.F.R.] § 424.535.”  Id. § 498.3(b)(17).   “Hence,” the Board has held, “a determination to revoke a supplier’s enrollment under section 424.535(a) may be appealed by a supplier in accordance with Part 498’s procedures.”  Dave at 10.  Section 498.3(b)’s list of appealable initial determinations does not include CMS’s decision on the duration of a post-revocation re-enrollment bar.  Id.; see also Nawaz, DAB No. 2687, at 15-16.  “An appealable determination to revoke a supplier’s enrollment, and a decision about how long the revoked supplier must wait before being allowed to apply for reentry to the program,” the Board has explained, “are factually distinct matters governed by different legal requirements.”  Dave at 10(comparing section 424.535(a) (reasons for revocation) and section 424.535(c)(1)).  “Given section 498.3(b)’s precise and exclusive enumeration of appealable determinations,” the Board concluded it “cannot find a CMS action to be

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appealable under Part 498 unless section 498.3(b) describes the subject matter of that action.”  Id.; see also 73 Fed. Reg. 36,448, 36,454 (June 27, 2008) (CMS stating “. . . while we believe that providers and suppliers can appeal the revocation determination, we do not believe that providers and suppliers can appeal the duration of the re-enrollment bar for Medicare billing privilege[s].”).6

The date a re-enrollment bar begins is established by operation of section 424.535(c)(1), which states that “[t]he re-enrollment bar begins 30 days after CMS or its contractor mails notice of the revocation . . . .”  No distinction is made in the regulation for the starting date of the re-enrollment bar for revocations that are effective based on the date of a prior felony conviction.  Moreover, the introductory language of section 424.535(c) makes clear that a revoked supplier is “barred from participating in the Medicare program from the date of the revocation until the end of the re-enrollment bar.”  (Emphasis added.)  In Petitioner’s case, Novitas mailed the notice of revocation – the revised initial determination, which included section 424.535(a)(3) as a legal basis for the action – on June 6, 2017.  CMS Ex. 1, at 23.  The June 6, 2017 notice made clear that it “replace[d] and supersede[d] the prior revocation correspondence dated January 26, 2017,” thus voiding the initial determination.  Id.  Consequently, the three-year re-enrollment bar imposed on Petitioner began 30 days after the postmark date of the June 6, 2017 notice of revocation, on July 6, 2017, and neither we nor the ALJ have authority to alter that date.  See Mark A. Kabat, D.O., DAB No. 2875, at 16 (2018), appeal dismissed, Kabat v. Dep’t of Health & Human Servs., No. 1:18-cv-01969 (D. Colo. Nov. 29, 2018).

Where, as here, CMS had a valid basis to revoke a supplier’s Medicare billing privileges, the ALJ and the Board must sustain the revocation and may not disturb the length of the re-enrollment bar set by CMS or the date that the re-enrollment bar began.

6. We reject Petitioner’s argument that CMS’s action was arbitrary, capricious or otherwise legally impermissible.

Petitioner maintains that the imposition of the revocation and re-enrollment bar was “so arbitrary, capricious, or otherwise legally impermissible, that CMS overstepped its legal authority in its revocation decisions.”  RR at 15 (emphasis omitted).  Dr. Gorovits provided substantial support to the government in connection with the plea agreement, Petitioner asserts, and the federal court imposed a sentence of home confinement in lieu of imprisonment based on her cooperation.  Similarly, Petitioner says, the Pennsylvania State Board of Medicine recognized Dr. Gorovits’s cooperation and limited involvement

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in the matter underlying the criminal investigation and imposed only a term of probation on her medical license.  In contrast with these government entities that exercised “leniency and compassion in fashioning an appropriate sanction,” Petitioner argues, CMS imposed “the harshest possible sanction.”  Id. at 18.  Moreover, Petitioner asserts, “it appears that CMS has attempted to punish Dr. Gorovits for” exercising her appeal rights because CMS changed the “revocation date from October 20, 2016 to March 11, 2016 only after” Petitioner requested reconsideration of Novitas’s initial determination.   Id. at 19 (emphasis omitted).

Petitioner’s apparent reliance on the Administrative Procedure Act’s (APA’s) “arbitrary and capricious” standard is misplaced in these proceedings.  The APA standard provides for courts to “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 the law” after a hearing on the record.  5 U.S.C. § 706(2)(A).  The arbitrary and capricious standard of review, the Supreme Court has held, provides that courts only 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)).  This is not the standard of review that applies to administrative appeals of CMS Medicare enrollment revocations, which are governed by the regulatory process established under 42 C.F.R. Part 498.

As explained above, the scope of ALJ and Board review of a CMS decision to revoke a supplier’s Medicare enrollment is limited to determining whether CMS had a sufficient legal basis for the revocation determination.  Though CMS has discretion to consider mitigating circumstances in deciding whether, or how, to exercise its revocation authority, neither an ALJ nor the Board may substitute its discretion for that of CMS.  Douglas Bradley, M.D., DAB No. 2663, at 13 (2015) (“[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.”  (internal quotation marks and citation omitted)).

Furthermore, we find no evidence in the record that CMS or Novitas acted to punish Petitioner or Petitioner’s owner for seeking reconsideration of the initial determination by adding the third ground and resultant earlier effective date for the revocation.  The record shows that in reopening and revising the initial and reconsidered determinations, CMS and Novitas further evaluated Petitioner’s Medicare participation and timely added section 424.535(a)(3) as a basis to impose the remedy of revocation, taking into account the nature and circumstances underlying Petitioner’s owner’s conviction and the interests of Medicare program integrity.  The purpose of the remedial measure, the Board has stated, “is not to punish the program participant for past misconduct but to protect the program and its beneficiaries from fraud, abuse, and other harm that might arise in the

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future.”  Robert F. Tzeng, M.D., DAB No. 2169, at 14 (2008).  Thus, while CMS and Novitas revised the revocation of Petitioner’s Medicare billing privileges after Petitioner requested reconsideration of the initial determination, we conclude that in doing so they did not act to punish Petitioner’s owner but to protect the Medicare program and its beneficiaries from a supplier that they determined posed a continued risk to the program.  Id.

Accordingly, we reject Petitioner’s arguments that CMS’s action was arbitrary, capricious or otherwise legally impermissible.

7. The ALJ did not err in concluding that he had no authority to consider Petitioner’s arguments alleging constitutional due process violations.

Petitioner contends that the ALJ erroneously concluded that he could not address its challenge to CMS’s decision on constitutional due process grounds.  “[A]dministrative entities, like all other governmental entities are beholden to constitutional limits,” Petitioner says, and “there is no legal reason why the ALJ” could not address the revocation determination “viewed through a constitutional prism.”  RR at 19.  As it argued before the ALJ, Petitioner maintains that the revocation of its billing privileges effective “March 11, 2016 violates Dr. Gorovits’ substantive and procedural due process rights”7 because: (1) she “had no notice that she should stop seeing Medicare patients after her conviction”; (2) section 424.535(a)(3)(i) is “unconstitutionally vague, on its face and as applied”; (3) the varying and conflicting decisions issued by Novitas and CMS amount to deprivation of due process; and (4) Novitas’s decision to lengthen the revocation and reenrollment periods after Dr. Gorovits appealed the initial revocation decision violated her due process rights.  

We find no error in the ALJ’s conclusion that he had no authority to consider Petitioner’s constitutional due process arguments.  The ALJ stated that, because he had found the revocation “consistent with applicable law and regulations,” Petitioner’s due process challenges “reduce[] to an assertion that the regulatory framework that governs this case or its application by the contractor to the facts are unconstitutional.” ALJ Decision at 7. The ALJ explained that he is “delegated authority to act on behalf of the Secretary to hear

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and decide” revocation decisions and that nothing in his delegated authority authorized him “to decide that the Secretary’s policies as expressed in regulations are unconstitutional.” Id. at 7-8.

We agree. The Board has repeatedly held that ALJs and the Board are bound by the Medicare enrollment regulations and “lack the authority to overturn, on constitutional grounds, a revocation that was imposed in accordance with the applicable law and regulations.”  Donahue at 8-9.  Where “the regulatory prerequisites for revocation (both procedural and substantive) are satisfied, as they were here, we must apply the regulations and sustain the revocation.”  Id. (citing Zahid Imran, M.D., DAB No. 2680, at 9 (2016) (stating that the Board may not “[f]ind invalid or refuse to follow Federal statutes and regulations on constitutional grounds” (internal quotation marks omitted)); see also Bledsoe, DAB No. 2753, at 10-11 (declining to rule on equitable estoppel claim, as well as abuse-of-discretion and constitutional claims, in upholding revocation under section 424.535(a)(3)).  Accordingly, we conclude that we have no basis for reversing or modifying the revocation of Petitioner’s Medicare billing privileges on constitutional due process grounds.

Conclusion

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