Stacy A. Miller, RN/CRNP, DAB CR5391 (2019)

DECISION

The Centers for Medicare & Medicaid Services (CMS), through Novitas Solutions (Novitas), a CMS contractor, revoked the Medicare enrollment and billing privileges of Stacy A. Miller, RN, CRNP (Ms. Miller or Petitioner) based on Ms. Miller’s felony conviction for the offenses of acquiring possession of controlled substances by misrepresentation and possession of controlled substances with the intent to deliver those substances without authorization. Petitioner requested a hearing before an administrative law judge (ALJ) to dispute the revocation.

This case is unusual, although not unique, in that Novitas had previously enrolled Ms. Miller as a supplier in the Medicare program with the full knowledge of Ms. Miller’s convictions and completion of a five-year exclusion from participating in all federal health care programs, including Medicare. Ms. Miller proceeded to provide services for over two years to Medicare beneficiaries only for Novitas to later retroactively revoke her based on her criminal conviction from nine years earlier. Such a retroactive revocation means that CMS may seek a return of all payments made to Ms. Miller for the services she provided to Medicare beneficiaries after her enrollment.

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If one were to believe the CMS hearing officer who wrote the reconsidered determination upholding revocation, Ms. Miller represents a threat, solely based on conduct from nearly a decade earlier, to the Medicare program and its beneficiaries. If that is true, then Novitas’s failure to deny Ms. Miller’s enrollment application means that Novitas placed the Medicare program and its beneficiaries at risk.

If one were to believe Ms. Miller, her actions, while illegal, represented poor judgment rather than a corrupt heart. In such a case, Novitas was correct when it enrolled her in the Medicare program after she completed probation, had her license restored, and obtained reinstatement from the Inspector General for the Department of Health and Human Services (IG) at the end of the five-year exclusion. However, it also means that Novitas’s revocation is excessively punitive due to the potential that Petitioner would need to return Medicare payments for services she rendered while duly enrolled. Further, because of the lateness of the revocation, the imposition of a three-year re-enrollment bar means that Petitioner will be prohibited from providing care to Medicare beneficiaries for at least 12 years.

My role in this matter is merely to determine whether CMS had a legitimate basis to revoke Petitioner. Therefore, I must affirm the revocation because Petitioner’s conviction is one that would result in a mandatory exclusion under 42 U.S.C. § 1320a-7(a) and the conviction was within the preceding 10 years of the revocation. Given the circumstances in this case, however, CMS should re-evaluate the length of the re-enrollment bar imposed on Ms. Miller.

I. Background and Procedural History

Ms. Miller is a certified registered nurse practitioner in Pennsylvania who was enrolled as a supplier in the Medicare program. CMS Exhibit (Ex.) 4 at 9; CMS Ex. 5 at 1-2; Petitioner (P.) Ex. M at 1 ¶ 1, 4 ¶ 21. Ms. Miller obtained her diploma in registered nursing and her license to be a Registered Nurse in 1982.  P. Ex. M at 1 ¶ 3. From that time until 2008, Petitioner progressed in her nursing career, which included earning a Bachelor of Science in Nursing, a Master of Science in Nursing and Family Nurse Practitioner, and a license as a Certified Registered Nurse Practitioner (CRNP). P. Ex. M at 1-2 ¶¶ 4-9.

In 2007, Ms. Miller became concerned that she had the same illness her father had died from and obtained pain medication under the name of a physician with whom she worked. The medications she received were controlled substances. Because of the manner in which she obtained this medication, Ms. Miller was charged with and pleaded guilty in 2008 to violating Pennsylvania law regarding the acquisition and possession of controlled substances by misrepresentation, and possession of a controlled substance with intent to deliver the controlled substance. CMS Ex. 1; P. Ex. M at 2 ¶¶ 10-12. The conviction resulted in a two-year sentence of probation, suspension of Ms. Miller’s

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nursing licenses, and an IG exclusion from participating in federal health care programs. P. Ex. M at 3 ¶ 14.

Petitioner successfully completed her sentence of probation in 2010, received reinstatement of her nursing licenses on a probationary basis in 2011, received reinstatement of those licenses on an unrestricted basis in 2012, and received reinstatement by the IG to participate in federal health care programs in 2014. P. Exs. C‑E; P. Ex. M at 3 ¶¶ 16-17.

In 2014, Ms. Miller submitted a CMS-855I application to Novitas seeking enrollment in the Medicare program. CMS Ex. 4. On the application and in a supplemental statement, Ms. Miller disclosed her criminal conviction and her IG exclusion. CMS Ex. 4 at 5, 14‑16. Ms. Miller included with the CMS-855I copies of the documents showing the reinstatement of her nursing licenses and reinstatement by the IG. CMS Ex. 4 at 17-19, 34, 36-37; P. Ex. M at 4 ¶ 20. In January 2015, Novitas issued an initial determination enrolling Ms. Miller in the Medicare program effective September 14, 2014. CMS Ex. 5; P. Ex. M at 4 ¶ 21. Ms. Miller began treating Medicare beneficiaries. P. Ex. M at 4 ¶ 22.

In an August 14, 2017 initial determination, Novitas revoked Ms. Miller’s Medicare enrollment and billing privileges, retroactive to the date of Ms. Miller’s first enrollment (i.e., September 14, 2014). CMS Ex. 6. The basis for the revocation was:

42 CFR § 424.535(a)(3) – Felonies

[CMS] has been made aware of your July 7, 2008 felony conviction for Acquisition by Misrepresentation in violation of Title 35 of the Pennsylvania Statutes § 780-113(a)(12) and Possession with Intent to Deliver in violation of Title 35 of the Pennsylvania Statutes § 780-113(a)(3), in Pennsylvania’s Court of Common Pleas, Armstrong County.

CMS Ex. 6 at 1 (emphasis in original). The CMS administrative contractor barred Petitioner from re-enrolling in the Medicare program for three years from the postmark date on the envelope of the initial determination.  CMS Ex. 6 at 2.

Ms. Miller requested reconsideration of the revocation. CMS Ex. 7.

In a November 27, 2017 reconsidered determination, a CMS hearing officer upheld the revocation. CMS Ex. 8.  The CMS hearing officer stated that Ms. Miller’s criminal conviction was per se detrimental to the Medicare program and its beneficiaries under 42 C.F.R. § 424.535(a)(3)(ii)(D) because Ms. Miller’s conviction was for felonies that would result in a mandatory exclusion under 42 U.S.C. § 1320a-7(a)(4). CMS Ex. 8 at 4.

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The CMS hearing officer then postulated an alternative basis for revocation, which was that Ms. Miller’s “felony convictions for Acquisition by Misrepresentation as well as Possession with Intent to Deliver demonstrates a propensity for dishonesty, as [Petitioner] obtained controlled substances through a fraudulent manner, and calls into question [Petitioner’s] moral turpitude, since [Petitioner] intended to deliver the controlled substances to another person.” CMS Ex. 8 at 4.

Ms. Miller requested a hearing before an ALJ. This case was originally assigned to Judge Bill Thomas, who issued an Acknowledgment and Pre-Hearing Order (Order) establishing deadlines for the submission of prehearing exchanges. In accordance with the Order, CMS filed its prehearing exchange, which included a motion for summary judgment and prehearing brief (CMS Br.), and nine proposed exhibits (CMS Exs. 1-9). Petitioner filed a prehearing exchange, which included a brief (P. Br.) and 13 proposed exhibits (P. Exs. A-M). One of the exhibits was the written direct testimony for Ms. Miller (P. Ex. M). Petitioner also requested that two Novitas employees testify at a hearing. CMS filed a reply brief (CMS Reply) in which it objected to the testimony of the Novitas employees.

On November 20, 2018, I was assigned to hear and decide this case.

II. Decision on the Record

I admit all of the proposed exhibits into the record because neither party objected to any of them. Order ¶ 7; Civil Remedies Division Procedures (CRDP) § 14(e).

The Order advised the parties that they must submit written direct testimony for each proposed witness and that an in-person hearing would only be necessary if the opposing party requested an opportunity to cross-examine a witness. Order ¶¶ 8-10; CRDP §§ 16(b), 19(b); Vandalia Park, DAB No. 1940 (2004); Pac. Regency Arvin, DAB No. 1823 at 8 (2002) (holding that the use of written direct testimony for witnesses is permissible so long as the opposing party has the opportunity to cross-examine those witnesses). Petitioner submitted an affidavit as her written direct testimony. P. Ex. M. CMS stated that it only wished to cross-examine Petitioner if I decided a hearing was appropriate. CMS Reply at 6.

Petitioner also requested that two Novitas employees be made available to testify at a hearing. The first is the Novitas employee who signed the initial determination in 2015 enrolling Petitioner in the Medicare program.  Petitioner wants to question that employee as to the knowledge she had at the time of the initial determination of Petitioner’s previous conviction and exclusion. The second is the Novitas employee who signed the initial determination revoking Petitioner in 2017. Petitioner wants to question this employee as to the employee’s knowledge of Petitioner’s enrollment application and the

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information it disclosed about her conviction and exclusion, as well as Novitas’s subsequent approval of Petitioner’s enrollment application.

CMS objected to the testimony of the Novitas employees as irrelevant and noted that Petitioner had not requested subpoenas to compel their attendance at a hearing. CMS Reply at 4-6.

Even after CMS pointed out that Petitioner needed to request a subpoena for the Novitas employees, Petitioner did not file requests for subpoenas.  See 42 C.F.R. § 498.58.  Therefore, Petitioner did not correctly seek the testimony for adverse witnesses following CMS’s clear statement in its reply brief that subpoenas would be needed to obtain testimony from Novitas employees (i.e., they would not testify voluntarily).

However, even if Petitioner had requested subpoenas for these witnesses, I agree with CMS that the testimony of the Novitas employees is not relevant to my review of the revocation in this matter. Petitioner’s request is similar to a subpoena request that a supplier made in another revocation case in which he wanted to show that the supplier had previously disclosed his felony conviction, including on CMS-855 enrollment applications, and CMS had approved those applications, but then later revoked the supplier based on the disclosed conviction. The Departmental Appeals Board (DAB) upheld the ALJ’s rejection of the subpoena request on appeal stating:  “The ruling’s key finding is that the subpoena did not seek documents for the purpose of developing a case on the controlling legal issue – that being whether CMS had a basis to revoke under section 424.535. That finding comports with the requirement, in section 498.58(c)(3), that the party requesting a subpoena show that it is necessary to establish a ‘pertinent’ fact.” Horace Bledsoe, M.D. & Bledsoe Family Medicine, DAB No. 2753 at 4-6, 12 (2016).

An ALJ is to receive in evidence testimony that is relevant and material.  42 C.F.R. § 498.60(b)(1). The testimony that Petitioner seeks to elicit from the Novitas employees is not relevant to my limited review in this case.  Therefore, I sustain CMS’s objection to those witnesses testifying at a hearing.

Because CMS did not seek to cross-examine Petitioner unless I otherwise thought a hearing appropriate, and I have upheld CMS’s objection to the testimony of Novitas’s employees, I have no need to hold a hearing in this case and issue this decision based on the written record. Order ¶¶ 8-11; CRDP § 19(d).

III. Issue

Whether CMS had a legitimate basis to revoke Ms. Miller’s Medicare enrollment and billing privileges based on 42 C.F.R. § 424.535(a)(3).

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IV. Jurisdiction

I have jurisdiction to hear and decide this case. 42 U.S.C. § 1395cc(j)(8); 42 C.F.R. §§ 424.545(a), 498.1(g), 498.3(b)(17), 498.5(l)(2).

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

My findings of fact and conclusions of law are set forth in italics and bold font.

The Social Security Act authorizes the Secretary of Health and Human Services (Secretary) to create regulations governing the enrollment of suppliers in the Medicare program and to discontinue the enrollment of a physician or other 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 [Medicare] program or program beneficiaries.”  42 U.S.C. §§ 1395u(h)(8), 1395cc(j).

Under the Secretary’s regulations, CMS may revoke a supplier’s Medicare enrollment and billing privileges when a supplier has been convicted within the last ten years of a federal or state felony offense that CMS determines is detrimental to the best interests of the Medicare program or its beneficiaries. 42 C.F.R. § 424.535(a)(3)(i). Further, the regulations provide a non-exhaustive list of the types of felony offenses that CMS considers detrimental to the best interests of the program and its beneficiaries. 42 C.F.R. § 424.535(a)(3)(ii). That list of felonies includes all felonies the conviction of which would result in a mandatory exclusion from participation in federal health care programs under section 1128(a) of the Social Security Act (42 U.S.C. § 1320a-7(a)). 42 C.F.R. § 424.535(a)(3)(ii)(D). The Social Security Act mandates exclusion when an individual is convicted after 1996 of a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. 42 U.S.C. § 1320a-7(a)(4).

When a supplier is convicted of a felony specifically listed in the regulations, such felonies are considered per se detrimental to the best interests of the Medicare program and its beneficiaries. Letantia Bussell, M.D., DAB No. 2196 at 9 (2008).

1. On July 7, 2008, Petitioner pleaded guilty to two felony offenses under Pennsylvania state law related to acquiring controlled substances through misrepresentation and possession of a controlled substance with intent to distribute, and on August 26, 2008, the Court of Common Pleas of Armstrong County, Pennsylvania, sentenced Petitioner to two years of probation.

In November 2007, the District Attorney for Armstrong County, Pennsylvania, filed an Information charging Petitioner with violating section 780-113(a)(12) of title 35 of the Pennsylvania Statutes by fraudulently using a physician’s Drug Enforcement Administration registration number to order a total of 5,500 Hydrocodone tablets, 900

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Alprazolam tablets, and eight 16-ounce bottles of Hydrocodone syrup. CMS Ex. 1 at 8. The Information also charged Petitioner with violating section 780-113(a)(30) of title 35 of Pennsylvania Statutes by willfully and knowingly intending to deliver the Hydrocodone and Alprazolam to others when Petitioner was not registered or licensed to do so. CMS Ex. 1 at 3, 9.

On July 7, 2008, Petitioner pleaded guilty to these offenses. CMS Ex. 1 at 10.  On August 28, 2008, the Court of Common Pleas of Armstrong County, Pennsylvania sentenced Petitioner to two years of probation. CMS Ex. 1 at 11-12.

2. CMS had a legitimate basis under 42 C.F.R. § 424.535(a)(3) to revoke Petitioner’s Medicare enrollment and billing privileges because Petitioner was convicted of a felony within the last ten years related to the unlawful distribution or dispensing of controlled substances, making that felony per se detrimental to the best interests of the Medicare program and its beneficiaries.

CMS may revoke a supplier’s Medicare billing privileges if the supplier is:  (1) convicted of a federal or state felony offense within the last ten years; and (2) the felony offense is one that CMS has determined to be detrimental to the best interests of the Medicare program and its beneficiaries. 42 C.F.R. § 424.535(a)(3).

In the present case, the record establishes that, for revocation purposes, Petitioner was convicted of a felony on August 26, 2008, because Petitioner pleaded guilty to two felonies and, on August 26, 2008, a Pennsylvania court accepted that plea by sentencing Petitioner. CMS Ex. 1 at 10-12; see 42 C.F.R. §§ 424.535(a)(3)(i), 1001.2 (definition of Convicted). Novitas issued the initial determination revoking Petitioner based on the criminal conviction on August 14, 2017; therefore, the revocation occurred less than ten years after the conviction. CMS Ex. 6.

Further, the record supports the conclusion that Petitioner was convicted of an offense that is per se detrimental to the interests of the Medicare program and its beneficiaries. Specifically, Petitioner was convicted of a criminal offense for which mandatory exclusion would result because Petitioner’s criminal offense was a felony related to the unlawful distribution or dispensing of a controlled substance. 42 U.S.C. § 1320a-7(a)(4).  Petitioner unlawfully obtained controlled substances by misrepresentation, thus having them illegally dispensed to her.  Further, Petitioner was convicted of intending to illegally distribute those controlled substances.  Therefore, Petitioner was convicted of a felony for which a mandatory exclusion would be imposed. Indeed, Petitioner was excluded by the IG for her criminal offenses and an ALJ affirmed her exclusion under 42 U.S.C. § 1320a-7(a)(4).  Stacy Ann Miller, DAB CR2018 (2009).

Petitioner does not dispute that her felony convictions would result in a mandatory exclusion under 42 U.S.C. § 1320a-7(a)(4) or that the revocation took place less than ten

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years after the conviction. Rather, Petitioner argues that the initial determination to revoke did not specify that 42 C.F.R. § 424.535(a)(3)(ii)(D) (i.e., felonies that would result in a mandatory exclusion) was the basis for revocation. P. Br. at 8. It is true that the initial determination simply cited to § 424.535(a)(3), but the reconsidered determination expressly discussed § 424.535(a)(3)(ii)(D) and it is the reconsidered determination that is the subject of review in this proceeding. CMS Exs. 6, 8; Neb Group of Ariz., LLC, DAB No. 2573 at 7 (2014).

Petitioner also disputes the CMS hearing officer’s case-by-case analysis as to why Petitioner’s conviction is detrimental to the Medicare program and its beneficiaries. P. Br. at 8-9.  However, I find it unnecessary to consider the hearing officer’s alternative basis for concluding that Petitioner’s conviction can be considered detrimental for purposes of the regulation because there is no doubt that Petitioner’s felony offenses are per se detrimental under § 424.535(a)(3)(ii)(D). 

Petitioner further argues that CMS’s use of § 424.535(a)(3)(ii)(D) to revoke Petitioner is not reasonable because the IG long ago imposed an exclusion and CMS did not revoke Petitioner until years after Petitioner had been reinstated from the IG’s exclusion. However, CMS’s authority to revoke is distinct and separate from the IG’s authority to exclude and does not preclude CMS taking independent action so long as it is within the confines of its authority under the regulations. See Ahmed v. Sebelius, 710 F. Supp. 2d 167, 175-176 (D. Mass. 2010); Dr. Robert Kanowitz, DAB No. 2942 at 6 (2019).

Finally, Petitioner asserts that CMS was acting in an arbitrary and capacious manner and did not take into account that Petitioner had been enrolled in the Medicare program after disclosing her criminal convictions. P. Br. at 9-11.  However, CMS’s discretion to impose revocations is broad.  As the DAB has explained it:

The ALJ’s review of CMS’s revocation . . . is thus limited to whether CMS had established a legal basis for its actions. . . .  In other words, the right to review of CMS’s determination by an ALJ serves to determine whether CMS had the authority to revoke . . . Medicare billing privileges, not to substitute the ALJ’s discretion about whether to revoke. Once the ALJ found that both elements required for revocation were present . . . , the ALJ was obliged to uphold the revocation . . . .

Bussell, DAB No. 2196 at 13 (citations omitted) (emphasis in original). The DAB has previously upheld CMS’s decision to retroactively revoke a supplier who had informed CMS of her criminal convictions years earlier.  Donna Maneice, M.D., DAB No. 2826 at 7-8 (2017). Accordingly, I conclude that CMS had a legitimate basis to revoke Petitioner’s Medicare enrollment and billing privileges under 42 C.F.R. § 424.535(a)(3).

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VI. Conclusion

I affirm the revocation of Petitioner’s Medicare enrollment and billing privileges.