Pennsylvania Physicians, P.C., DAB CR5297 (2019)

DECISION

Petitioner, Pennsylvania Physicians, P.C., is a Pennsylvania medical practice, and physician, John P. Leichner, M.D., is its sole owner and practitioner. Petitioner participated in the Medicare program until June 14, 2016, when CMS revoked its billing privileges, retroactive to September 16, 2009. CMS took this action pursuant to 42 C.F.R. § 424.535(a)(3), because, on September 16, 2009, Dr. Leichner was convicted of felony tax fraud.

Petitioner appeals.

I find that CMS is authorized to revoke Petitioner's Medicare billing privileges because, within ten years preceding the revocation, its owner was convicted of a felony that CMS reasonably determined is detrimental to the best interests of the Medicare program and its beneficiaries. I therefore affirm CMS's determination.

Background

By letter dated June 14, 2016, the Medicare contractor, Novitas Solutions, advised Petitioner that its Medicare privileges were revoked, effective September 16, 2009. As

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the letter explains, the contractor acted pursuant to 42 C.F.R. § 424.535(a)(3) because John Leichner, sole owner of Pennsylvania Physicians, P.C., was convicted of a felony – conspiracy to defraud the United States. The contractor imposed a three-year enrollment bar, pursuant to 42 C.F.R. § 424.535(c)(1). CMS Ex. 5.

Petitioner requested reconsideration. In a reconsidered determination, dated July 26, 2016, a contractor hearing specialist upheld the revocation, citing Petitioner's felony conviction. CMS Ex. 1. Petitioner timely appealed and that appeal is now before me.

CMS moves for summary judgment, and Petitioner asks for a decision on the record. Because neither party proposes any witnesses, an in-person hearing would serve no purpose. See Acknowledgment and Pre-hearing Order at 5 (¶¶ 7, 9, 10). The matter may therefore be decided based on the written record, without considering whether the standards for summary judgment are satisfied.

CMS submits its brief (CMS Br.) and 19 exhibits (CMS Exs. 1-19). Petitioner submits its brief (P. Br.) and four exhibits (P. Exs. 1-4). In the absence of any objections, I admit into evidence CMS Exs. 1-19 and P. Exs. 1-4.

Discussion

CMS may revoke Petitioner's Medicare enrollment because, within the preceding ten years, its sole owner was convicted of tax fraud, a felony that CMS reasonably finds detrimental to the best interests of the Medicare program and its beneficiaries.1

Statute and regulations. CMS may revoke a provider's or supplier's Medicare billing privileges if, within the preceding ten years, it or any owner or managing employee was convicted 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); see also Social Security Act (Act) §§ 1842(h)(8) and 1866(b)(2)(D). Offenses for which billing privileges may be terminated include – but are not limited to – financial crimes such as extortion, embezzlement, income tax evasion, insurance fraud, and similar crimes. 42 C.F.R. § 424.535(a)(3)(ii)(B).

If, as here, the revocation is based on a felony conviction, the effective date of the revocation must be the date of the conviction. 42 C.F.R. § 424.535(g); Norman Johnson M.D., DAB No. 2779 at 20 (2017) (holding that ALJs are not permitted to depart from the regulation's plain text).

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Petitioner's felony offense. The record offers few details regarding the circumstances underlying Dr. Leichner's felony conviction. On September 16, 2009, he was convicted under 18 U.S.C. § 371, conspiracy to defraud the United States. CMS Ex. 17 at 9. He was sentenced to six months in jail, followed by three years of supervised release and ordered to pay $349,391 in restitution to the Internal Revenue Service. CMS Ex. 17 at 10-11, 13. Petitioner has conceded that Dr. Leichner's crime involved a personal income tax matter. CMS Ex. 8 at 16; CMS Ex. 17 at 1, 63; P. Br. at 4.

On its face, this case seems straight-forward. Petitioner's owner was convicted of felony tax fraud, a crime that is, by regulation detrimental to the best interests of the Medicare program and its beneficiaries. 42 C.F.R. § 424.535(a)(3)(ii)(B). CMS may therefore revoke its Medicare enrollment and billing privileges, and that revocation must be effective the date of the conviction. 42 C.F.R. § 424.535(g); see Norman Johnson, DAB No. 2779 at 20 (confining ALJ review to the question of whether CMS has established grounds for revocation and limiting the ALJ's authority to change its effective date).

The 2009 revocation of Dr. Leichner's billing privileges. Petitioner, however, argues that CMS may not now revoke its billing privileges because it already did so in 2009.

But in 2009, the contractor revoked Dr. Leichner's billing privileges because the state licensing board suspended his medical license. A physician whose medical license has been suspended or revoked cannot participate in the Medicare program. Act § 1861(r); 42 C.F.R. § 410.20(b). The Medicare contractor reviews, monthly, the status of medical licenses. During one such review, Highmark Medicare Services (Novitas's predecessor) learned that the Pennsylvania licensing board had suspended Dr. Leichner's medical license, effective October 27, 2009, because he was convicted of a crime "involv[ing] moral turpitude." CMS Ex. 19 at 2.

In a notice letter dated December 11, 2009, the Medicare contractor advised Dr. Leichner that his Medicare billing privileges were revoked for two reasons: 1) his medical license was suspended, so he was not authorized to render Medicare-covered services and was not in compliance with Medicare enrollment requirements, citing section 1861(r) of the Act as well as 42 C.F.R. §§ 410.20(b) and 424.535(a)(1); and 2) he did not report the adverse legal action within 30 days of the reportable event, violating 42 C.F.R. § 424.516(d)(1)(ii).2 The contractor imposed a one-year re-enrollment bar. CMS Ex. 18.

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Petitioner asserts that Dr. Leichner's license was suspended for the same reason that CMS now revokes his practice's billing privileges. From this, Petitioner argues that CMS has effectively twice revoked its/Dr. Leichner's Medicare enrollment for the same underlying offense. In Petitioner's view, this second revocation is not authorized by statute or regulation and violates Dr. Leichner's rights against double jeopardy.

In fact, the revocations were not for the same underlying offense. The Medicare program pays for physician services. Act § 1832(a). The Act defines "physician" as a doctor of medicine or osteopathy "legally authorized to practice medicine and surgery by the State in which he performs such function or action." Act § 1861(r) (emphasis added); see 42 C.F.R. § 410.20(b). With a suspended license – no matter what the underlying reason – Dr. Leichner simply could not participate in the Medicare program because he did not meet the statutory definition and could not practice medicine. Thus, the revocation was effective the date Dr. Leichner's license was suspended, not the date of his conviction, about which, at that point, the contractor knew little.

Because he could not legally practice medicine and did not meet the statutory definition of a physician who could be eligible to enroll in the Medicare program, CMS was compelled to revoke Dr. Leichner's billing privileges.

Moreover, even if revoking Dr. Leichner's billing privileges because he had no medical license were the same as revoking Petitioner's billing privileges because its owner was convicted of a financial crime (which it is not), Petitioner's argument would fail because, in 2009, CMS revoked Dr. Leichner's billing privileges for a second, independent reason: he failed to disclose an adverse legal action within 30 days of the event. Petitioner repeatedly equates the suspension of his medical license with his felony conviction but is silent as to the effect of the revocation for failing to report an adverse legal action. This second basis for the 2009 revocation is even further removed from his felony conviction than the license suspension.

Petitioner's 2010 enrollment. Following Dr. Leichner's release from jail, reinstatement of his medical license, and completion of the one-year re-enrollment bar, his medical practice (Petitioner) applied for enrollment in the Medicare program. Petitioner disclosed Dr. Leichner's 2009 conviction for income tax "improprieties," his six-month incarceration, and restitution. CMS Ex. 14 at 9.3 Nevertheless, for reasons CMS has not

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even attempted to explain, the contractor approved its enrollment, effective September 21, 2010. CMS Ex. 9.4

On April 6, 2016, Petitioner submitted a revalidation application. CMS Ex. 8. In that application, it again disclosed Dr. Leichner's conviction for income tax "improprieties," his incarceration, and restitution. CMS Ex. 8 at 16. Shortly thereafter, the contractor sent out the June 14 notice that it revoked Petitioner's billing privileges. CMS Ex. 5.

Petitioner characterizes the 2016 revocation as an unlawful reopening of its 2010 enrollment application. Citing 42 C.F.R. § 498.3(b)(17), Petitioner maintains that the contractor's 2010 determination granting Petitioner's enrollment application is an "initial determination." CMS may reopen an initial determination "within 12 months after the date of notice of the initial determination." 42 C.F.R. § 498.30. Because far more than twelve months have passed, Petitioner maintains that CMS has no authority to reopen.

Petitioner misreads section 498.3(b)(17). Under that section, CMS's determination to "deny or revoke" a supplier's Medicare enrollment under sections 424.530 or 424.535 is an initial determination. 42 C.F.R. § 498.3(b)(17) (emphasis added). CMS's determination to grant enrollment is not listed as an initial determination, subject to appeal rights and the one-year limit on reopening.

Thus, CMS justifiably determined that Petitioner's owner was convicted of a felony detrimental to the best interests of the Medicare program and its beneficiaries and may revoke its enrollment in the Medicare program. The duration of the re-enrollment bar is not subject to review. Dennis McGinty, PT, DAB No. 2838 at 14 (2017).

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Conclusion

CMS may revoke Petitioner's Medicare enrollment because its owner was convicted of felony that, by regulation, CMS determined is detrimental to the best interests of the Medicare program and its beneficiaries. I therefore affirm CMS's determination.

• 1.I make this one finding of fact/conclusion of law to support my decision.
• 2.The letter does not specify whether the "adverse legal action" was the loss of his medical license or his felony conviction. Dr. Leichner reported neither. Inasmuch as the letter does not mention the felony conviction and it appears that, at this point, the contractor knew virtually nothing about it, I assume that the revocation was based on Dr. Leichner's failing to report his license suspension.
• 3.Felony fraud involving hundreds of thousands of dollars in tax money goes well beyond an "impropriety." Petitioner's efforts to trivialize a serious crime suggest that Dr. Leichner either considered his offense minor or wanted the contractor to consider the offense minor.
• 4.Like several of my colleagues, I find deeply troubling the contractors' propensity for enrolling suppliers who, on their applications, disclose serious felony convictions, only to revoke those enrollments years later. See, e.g., Ian J. Griffith, PT, DAB CR4817 at 14 n.9 (2017); Donna Maneice, M.D., DAB CR4804 at 15 (2017). It's hard to argue with Petitioner's assertion that this practice means that no provider or supplier with a potentially disqualifying conviction can rely on the contractor's approval of enrollment. Years later, enrollment can be revoked, leaving the provider/supplier, who relied on the contractor's approval of enrollment, with potentially enormous overpayments for services that were, in fact, provided. Ordinarily, a known tax cheat would not engender much sympathy, but even the most case-hardened judge might consider a supplier, such as Petitioner, ill-used. Although neither an administrative law judge nor the Departmental Appeals Board is authorized to alter the practice, there are higher levels of review, and CMS may not be happy with the result.