La Fuente Ocular Prosthetics, LLC, DAB CR5473 (2019)

DECISION

Petitioner, La Fuente Ocular Prosthetics, LLC, is an Oklahoma supplier of durable medical equipment, orthotics, and supplies.  It participated in the Medicare program until November 20, 2016, when the Centers for Medicare & Medicaid Services (CMS) revoked its billing privileges.  CMS took this action pursuant to 42 C.F.R. §§ 424.57(c)(2), 424.535(a)(1), and 424.535(a)(2), because the Office of Inspector General (IG) for the Department of Health and Human Services excluded one if its owners from participating in federal health care programs and because the supplier did not report the exclusion to the Medicare contractor. 

Petitioner appeals. 

I find that CMS is authorized to revoke Petitioner’s Medicare billing privileges for two independent reasons:  1) one of its owners was excluded from program participation; and 2) Petitioner did not report that exclusion to the Medicare contractor.  I therefore affirm CMS’s determination.

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Background

By letter dated January 6, 2017, the Medicare contractor, National Supplier Clearinghouse, advised Petitioner that its Medicare privileges were revoked, effective November 20, 2016.  As the letter explains, the contractor acted pursuant to 42 C.F.R. § 424.535(a)(2) because Brandon La Fuente, an owner of La Fuente Ocular Prosthetics LLC, had been excluded from participating in Medicare, Medicaid, and all other federal healthcare programs.  The contractor also acted pursuant to 42 C.F.R. §§ 424.535(a)(1) and 424.57(c) because Petitioner did not timely report the exclusion.  CMS Ex. 1 at 9-12.

The contractor imposed a three-year enrollment bar, pursuant to 42 C.F.R. § 424.535(c)(1).  CMS Ex. 1 at 9. 

Petitioner requested reconsideration.  In a reconsidered determination, dated April 6, 2017, a CMS hearing officer upheld the revocation.  CMS Ex. 1 at 1-5.  Petitioner timely appealed and that appeal is now before me.

CMS moves for summary judgment.  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 motion and brief (CMS Br.) with two exhibits (CMS Exs. 1-2).  Petitioner submits its brief and seven exhibits (P. Exs. 1-7).  In the absence of any objections, I admit into evidence CMS Exs. 1-2 and P. Exs. 1-7.

Discussion

CMS may revoke Petitioner’s Medicare billing privileges because one of its owners was excluded from participating in federal healthcare programs and because Petitioner did not timely report the exclusion to the Medicare contractor.1

On its face, this case seems straight-forward.  CMS may revoke a supplier’s Medicare billing privileges if any of its owners is excluded from Medicare, Medicaid, and any other federal healthcare program in accordance with section 1128 of the Social Security Act.  42 C.F.R. § 424.535(a)(2)(i); see also Social Security Act (Act) § 1866(b)(2)(C).  If, as here, the revocation is based on a federal exclusion, the effective date of the revocation must be the date of the exclusion.  42 C.F.R. § 424.535(g); Norman Johnson, M.D., DAB

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No. 2779 at 20 (2017) (holding that ALJs are not permitted to depart from the regulation’s plain text). 

Effective November 20, 2016, the IG excluded one of Petitioner’s owners, Brandon R. La Fuente, from participating in all federal health care programs because he had been convicted of a program-related offense.  CMS Ex. 1 at 68; see CMS Ex. 1 at 6 (claiming to have severed all ties with Brandon La Fuente as of January 2017); CMS Ex. 1 at 33 (showing that Brandon R. La Fuente was an owner and managing member of the company as of January 1, 2017); CMS Ex. 1 at 42 (transferring Brandon R. La Fuente’s 80% interest in the company to Henry La Fuente, effective January 6, 2017). 

Thus, because Petitioner’s owner and managing member was excluded from participating in Medicare, Medicaid, and other federal healthcare programs, CMS properly revoked its Medicare enrollment pursuant to section 424.535(a)(2)(i).  The effective date of its revocation must be the date of the owner’s exclusion, November 20, 2016.  42 C.F.R. § 424.535(g).

CMS may also revoke a supplier’s billing privileges if it is not in compliance with enrollment requirements.  42 C.F.R. § 424.535(a)(1).  Among those requirements, a supplier must respond to questions on its application for billing privileges with “complete and accurate information” and must, within 30 days, report to CMS any changes in the information it has supplied.  42 C.F.R. § 424.57(c)(2).  Here, Petitioner did not, within 30 days, report its owner’s exclusion.  In fact, in a January 2017 enrollment application, Petitioner withheld that information.  The application asked it to report “each final adverse legal action,” including “any suspension or exclusion from participation in . . . a federal or state health care program.”  In response, Petitioner reported that, on July 31, 2015, Brandon La Fuente completed “probation requirements.”  CMS Ex. 1 at 29, 33.  Because Petitioner did not mention the owner’s exclusion, CMS properly revoked its Medicare enrollment under 42 C.F.R. §§ 424.57(c)(2) and 424.535(a)(1).

Petitioner concedes that its owner was excluded from program participation and that it failed to report the exclusion within 30 days, but argues that CMS should not revoke its billing privileges because Brandon La Fuente was not, in fact, convicted; he pled nolo contendere to state charges of Medicare/Medicaid fraud and was given a deferred sentence.  The statute governing exclusions is explicit:  for exclusion purposes, a “conviction” includes a plea of nolo contendere as well as a deferred adjudication or other arrangement where a judgment of conviction has been withheld.  Act § 1128(i) (3).  In any event, Brandon La Fuente’s exclusion is a final determination, by which we are all bound.  Petitioner may not use these proceedings to revisit a legally-binding and administratively-final determination.  See Karthik Ramaswamy, M.D., DAB No. 2563 at 9 (2014) (en banc), aff’d, Ramaswamy v. Burwell, 83 F. Supp. 3d 846 (E.D. Mo. 2015).

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Petitioner also points out that it ended its business relationship with Brandon La Fuente, which it did – but not until after he had been excluded from program participation.  That it timely reported the severed ties is simply irrelevant to the question of whether it reported the exclusion. 

Finally, Petitioner argues that CMS is not required to revoke its billing privileges and should have exercised its discretion not to do so.  My authority here is limited; I may decide whether CMS was legally authorized to revoke.  If so, I must affirm the action.  I may not substitute my own judgments as to how CMS should have exercised its discretion.  Breton L. Morgan, M.D., Inc. and Breton L. Morgan, M.D., DAB No. 2933 at 3 (2019).

Conclusion

CMS may revoke Petitioner’s Medicare enrollment because one of its owners was excluded from program participation and because it did not report that exclusion to the Medicare contractor.  I therefore affirm CMS’s determination.

• 1.I make this one finding of fact/conclusion of law to support my decision.