Benjamino Louis Granato d/b/a/ Alpha Diabetic Supply, DAB CR5597 (2020)

DECISION

Palmetto GBA (Palmetto), an administrative contractor acting on behalf of the Centers for Medicare & Medicaid Services (CMS), revoked the Medicare enrollment and billing privileges of Petitioner, Benjamino Louis Granato d/b/a Alpha Diabetic Supply, because Palmetto determined Petitioner was not operational to furnish Medicare-covered items or services.  Specifically, a site visit contractor was unable to gain entry to Petitioner’s practice location during Petitioner’s posted business hours on two separate days.  For the reasons stated herein, I affirm the revocation of Petitioner’s Medicare enrollment and billing privileges.

I.  Background and Procedural History

Petitioner was enrolled in the Medicare program as a supplier of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS).  CMS Exhibit (Ex.) 1 at 5.  Petitioner reported to the National Supplier Clearinghouse1 (NSC) that its office was located at “6415 Bandera,” San Antonio, Texas.  CMS Ex. 1 at 3.

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At approximately 12:18 pm on July 16, 2019, and approximately 12:31 pm2 on July 17, 2019, a site visit contractor attempted to conduct a site visit at Petitioner’s office at 6415 Bandera Rd. in San Antonio, Texas.  CMS Ex. 2 at 1-9 (site visit contractor’s report).  The site visit contractor’s report includes date and time-stamped photographs of the exterior of Petitioner’s location, showing posted business hours of 12:00 pm - 6:30 pm (Tuesday through Friday) and 12:00 pm - 4:00 pm (Saturdays).  CMS Ex. 2 at 9.  The site visit contractor included the following comments in his report:

On 7-16-19, the site was visited by the IDS Investigator, with negative results.  The Investigator arrived at the site at 12:00pm to conduct the inspection.  The site was closed with no sign of activity.  The Investigator remained at the site until 12:18 (see photo) at which time the site remained closed.  On 7-17-19, the IDS Investigator returned to the site at 12:00 pm to conduct an inspection, with negative results.  The investigator remained at the site until 12:31 pm (see photo) at which time the site remained closed with no sign of activity.  A check was done with a neighboring business and an employee stated the site is open intermittently and sometimes he sees activity.

CMS Ex. 2 at 8.

In an October 22, 2019 initial determination, Palmetto revoked Petitioner’s Medicare enrollment and billing privileges effective July 17, 2019, based on noncompliance with 42 C.F.R. § 424.535(a)(5) and the supplier standards set forth at 42 C.F.R. § 424.57(c) because Petitioner was closed when a site visit contractor made two separate visits during posted business hours.  CMS Ex. 3 at 1.  Palmetto informed Petitioner that it would be barred from re-enrolling in the Medicare program for a period of two years.  CMS Ex. 3 at 1-2.

In a letter dated November 6, 2019, Petitioner requested reconsideration of the initial determination revoking its enrollment and billing privileges.  CMS Ex. 4 at 1.  Petitioner explained the following:

Management was out of town on Business[.]

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An employee had been scheduled to open and close on July 16, 2019 and July 17, 2019[.] As our findings the employee did not report nor informed management they will not [be] able to report to work on [the] dates mention above.
The issue has been corrected by [Petitioner] terminating the employee [a]s of November 5, 2019.

CMS Ex. 4 at 1.

Palmetto issued a reconsidered determination on November 19, 2019, at which time it upheld the revocation of Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(5).  CMS Ex. 5.  Palmetto explained the following:

The NSC attempted to conduct a site visit of [Petitioner’s] facility at 6415 Bandera Rd., San Antonio, TX 78238 on July 16, 2019 at 12:18 p.m. and July 17, 2019 at 12:31 p.m.; however, both visits were unsuccessful as the business was closed with no sign of activity.  As an inspection of [Petitioner’s] facility could not be conducted, the NSC was not able to verify compliance with the supplier standards and therefore determined that the facility was not operational to furnish Medicare covered items and services.

As the NSC was not able to verify compliance with the Medicare supplier standards, [Petitioner] was mailed a letter advising their billing privileges will be revoked effective July 17, 2019, which is the date your practice location was determined to be non-operational.

* *  *  *

The NSC concludes that there is no error made in the determination that resulted in a revocation.  [Petitioner] has not provided a verifiable explanation for their noncompliance with 42 [C.F.R.] § 424.535(a)(5).  [Petitioner] failed to show compliance with the supplier standards as the site inspection could not be conducted at their reported location on file with the NSC and admitted that the location was not open as the employee failed to report to work on July 16 and 17, 2019.  Therefore, the NSC cannot grant [Petitioner] access to the Medicare Trust Fund by way of a Medicare number.

CMS Ex. 5 at 2-3. 

Petitioner filed a request for an administrative law judge (ALJ) hearing that was received on January 14, 2020.  On January 24, 2020, the Civil Remedies Division acknowledged

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receipt of Petitioner’s request for hearing and issued my Standing Pre-Hearing Order (Pre-Hearing Order) directing the parties to file pre-hearing exchanges in accordance with specific requirements and deadlines.  CMS filed a motion for summary judgment and pre-hearing brief (CMS Br.), along with six proposed exhibits (CMS Exs. 1-6).  Petitioner filed a pre-hearing brief (P. Br.).3   In the absence of any objections, I admit CMS Exs. 1-6 into the evidentiary record.

Neither party has submitted the written direct testimony of any witnesses.  Therefore, a hearing is unnecessary for the purpose of cross-examination of any witnesses.  Pre‑Hearing Order §§ 12-14.  I consider the record to be closed and the matter ready for a decision on the merits.4

II.  Issue

Whether CMS has a legal basis to revoke Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(5) because Petitioner was not operational at the practice location on file with CMS.

III.  Jurisdiction

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

IV.  Findings of Fact, Conclusions of Law, and Analysis5

Pursuant to section 1834(j)(1)(A) of the Social Security Act, to receive Medicare payments for items furnished to a Medicare beneficiary, a supplier of medical equipment and supplies must have a supplier number issued by the Secretary of Health and Human Services (Secretary).  42 U.S.C. § 1395m(j)(1)(A); 42 C.F.R. § 424.505.  To obtain and

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retain its supplier number, a DMEPOS supplier must meet the standards set forth in 42 C.F.R. § 424.57(c), and CMS may revoke its billing privileges if it fails to do so.  42 C.F.R. § 424.57(c)(1), (e).  To receive direct-billing privileges, a DMEPOS supplier must meet and maintain each of the supplier enrollment standards, including the requirement to maintain a physical location that is accessible and staffed during posted hours.  42 C.F.R. § 424.57(c)(7)(i)(C).  The supplier must also permit CMS or its agents to conduct on-site inspections to ascertain its compliance with governing regulations and ensure its location is accessible to various entities such as the public, CMS, and the NSC.  42 C.F.R. § 424.57(c)(7), (8).

CMS may revoke a currently enrolled DMEPOS supplier’s Medicare enrollment and billing privileges if CMS determines, upon on-site review, that the DMEPOS supplier is no longer operational to furnish Medicare covered items or services, or the supplier fails to satisfy any of the Medicare enrollment requirements, or has failed to furnish Medicare covered items or services as required by the statute or regulations.  42 C.F.R. § 424.535(a)(5)(i), (ii).  After a DMEPOS supplier’s Medicare enrollment and billing privileges are revoked, it is barred from reenrolling in the Medicare program for a period of one to three years.  42 C.F.R. § 424.535(c).6

1.  Petitioner’s location at 6415 Bandera Rd. in San Antonio, Texas, was not open, accessible, and staffed when a site visit contractor attempted to conduct site inspections on July 16 and 17, 2019.

On July 16, 2019, at approximately 12:18 pm, the site visit contractor visited Petitioner’s 6415 Bandera Rd. location and observed that “[t]he site was closed with no sign of activity.”  CMS Ex. 2 at 2, 8.  Likewise, on July 17, 2019, at approximately 12:31 pm, the same site visit contractor revisited Petitioner’s 6415 Bandera Rd. location and observed that the “site remained closed with no sign of activity.”  CMS Ex. 2 at 8.  Photographs obtained by the site visit contractor yielded the following information regarding Petitioner’s posted business hours:

Alpha Diabetic Supply

Business Hours
Tues – Fri     12 noon – 6:30pm
Sat                12 noon – 4:00pm
CLOSED SUNDAY & MONDAY

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CMS Ex. 2 at 9.  Petitioner has not disputed that it was not staffed and open for business on both July 16 and 17, 2019.  CMS Ex. 4 at 1 (request for reconsideration acknowledging that management was “out of town” and that “the employee did not report nor informed management they will not be able to report to work”); CMS Ex. 6 at 1 (request for hearing stating that Petitioner had implemented a new procedure requiring, inter alia, its employee to call management “24 hrs prior to there [sic] schedule time if not able to report to work”); P. Br. (stating it has “implemented a policy and procedure so the deficiency would not occur again”).

Based on the undisputed evidence of record, the site visit contractor attempted to conduct two separate site inspections of Petitioner’s location at 6415 Bandera Rd. on July 16, 2019, at approximately 12:18 pm, and Jul 17, 2019, at approximately 12:31 pm, but the site visit contractor was unable to complete the inspection because the office was closed during posted business hours and Petitioner did not have any staff present at that location.

2.  Palmetto, acting on behalf of CMS, had a legitimate basis to revoke Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(5)7 because Petitioner has not shown that its qualified physical practice location was operational on July 16 and 17, 2019.

CMS may revoke a supplier’s enrollment and billing privileges if, upon an on-site review, CMS determines that the supplier is no longer operational to provide Medicare-covered items or services, or the supplier fails to meet enrollment requirements.  42 C.F.R. § 424.535(a)(5)(i), (ii).  The term “operational” means:

the provider or supplier has a qualified physical practice location, is open to the public for the purpose of providing health care related services, is prepared to submit valid Medicare claims, and is properly staffed, equipped, and stocked (as applicable, based on the type of facility or organization, provider or supplier specialty, or the services or items being rendered), to furnish these items or services.

42 C.F.R. § 424.502 (definition of Operational).  In order “[t]o be ‘operational’ in accordance with the definition in section 424.502, a supplier, among other things, must have a ‘qualified physical practice location’ that is ‘open to the public for the purpose of providing health care related services.’”  Viora Home Health, Inc., DAB No. 2690 at 7

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(2016).  A supplier’s “qualified physical practice location” is the supplier’s address that is on file with CMS at the time of a site visit.  Care Pro Home Health, Inc., DAB No. 2723 at 5-6 (2016) (footnote omitted).

Petitioner does not dispute that the site visit contractor unsuccessfully attempted to conduct site visits on both days at the location on file with CMS.  Both attempted site visits occurred during the Petitioner’s posted business hours.  CMS Ex. 2 at 2, 8 (site visit contractor’s written observations); 9 (date and time-stamped photographs taken on July 16 and 17, 2019, showing that the site visit contractor attempted to conduct both site visits during the posted business hours).  These facts are sufficient for me to conclude that Petitioner was not open to the public, and therefore, not operational, on July 16 and 17, 2019.  In making this conclusion, I am mindful “that the proper inquiry is to assess the [supplier’s] operational status at the time of the onsite review because the intent of the applicable regulations ‘is that a [supplier] must maintain, and be able to demonstrate, continued compliance with the requirements for receiving Medicare billing privileges.’”  Viora, DAB No. 2690 at 7 n.7 (emphasis in original), quoting A to Z DME, LLC, DAB No. 2303 at 7 (2010).  Petitioner’s failure to be open to the public on July 16 and 17, 2019, prevented the site visit contractor from determining whether Petitioner continued to be compliant with enrollment requirements.

The undisputed evidence establishes that Petitioner’s 6415 Bandera Rd. location was not operational because it was not accessible and staffed during posted business hours; therefore, CMS properly revoked Petitioner’s Medicare billing privileges.  42 C.F.R. § 424.535(a)(5)(i); see Care Pro, DAB No. 2723 at 6 (holding that CMS lawfully revoked a provider’s Medicare enrollment based on its non-operational status at a single location); see also Viora, DAB No. 2690 at 13 (holding that CMS properly revoked a provider’s Medicare enrollment when a practice location of record was not operational upon onsite review).

Petitioner argues in its brief that it “has corrected the deficiency as of November 4, 2019,” and “has also implemented a policy and procedure so the deficiency would not happen again.”  Petitioner explains in its brief that its new policy and procedure requires that an employee “[m]ust open the office by [the] hours which are posted on [the] front door,” inform management 24 hours in advance if he or she cannot report to work, and call management from the company phone when he or she arrives at work.8   The fact that Petitioner did not previously have a requirement that its employee open the office during its posted business hours is nothing short of absurd; Petitioner’s new policy and procedure is essentially nothing more than a requirement that its employee actually be at

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work during posted business hours and notify Petitioner in advance if he or she cannot report to work.9

Petitioner alleged in its request for reconsideration that it did not know that its employee was not at the office for two consecutive days on July 16 and 17, 2019, and that it first learned of this when Palmetto issued the notice revoking its Medicare enrollment and billing privileges in October 2019.  CMS Ex. 4 at 1.  If Petitioner was unaware of a two‑day closure of its office, one can only wonder whether Petitioner’s office was closed at other times without Petitioner’s purported knowledge; after all, it is hard to believe that the site visit contractor attempted to conduct an inspection on the only two days that Petitioner failed to be open during its posted business hours.

The factual question before me is whether Petitioner was staffed and open for business on July 16 and 17, 2019; Petitioner concedes it was not open to the public on those dates.  See CMS Ex. 4 at 1.  The law requires a supplier such as Petitioner to be “operational” such that it has a “‘qualified physical practice location, is open to the public for the purpose of providing health care related services, is prepared to submit valid Medicare claims, and is properly staffed, equipped, and stocked . . . to furnish these items or services.’”  Medinn Corp., DAB No. 2928 at 14 (2019), quoting 42 C.F.R. § 424.502 (emphasis omitted).  Because Petitioner was not open to the public and staffed at the time of the two site visits, it was not operational as required by 42 C.F.R. § 424.535(a)(5)(i).  Palmetto had a legitimate basis to revoke Petitioner’s enrollment and billing privileges because it was “not operational” on July 16 and 17, 2019.  See CMS Ex. 5 at 2.

To the extent that Petitioner may be requesting equitable relief, I am unable to grant equitable relief.  P. Br. (“And now with the Covid-19 had made it even more difficult for the above Medicare and TriCare [sic] beneficiaries to receive assistants [sic].”); see US Ultrasound, DAB No. 2302 at 8 (2010) (stating that an ALJ may not grant equitable relief in an instance where statutory or regulatory requirements are not met).  I am not authorized to grant Petitioner relief from applicable regulatory requirements.  1866ICPayday.com, L.L.C., DAB No. 2289 at 14 (2009) (“An ALJ is bound by applicable laws and regulations and may not invalidate either a law or regulation on any ground . . . .”).

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3.  The effective date of Petitioner’s revocation is set by regulation.

The regulation at 42 C.F.R. § 424.535(g) states that when a revocation is based on a provider not being operational, the revocation of the supplier’s billing privileges is effective as of the date the practice location is determined by CMS or its contractor not to be operational.  Pursuant to section 424.535(g), Petitioner’s revocation is effective July 17, 2019, the date of the second failed site visit.

4.  The two-year length of the re-enrollment bar is not reviewable.

The DAB has explained that “CMS’s determination regarding the duration of the re-enrollment bar is not reviewable.”  Vijendra Dave, M.D., DAB No. 2672 at 11 (2016).  The DAB noted that “the only CMS actions subject to appeal under Part 498 are the types of initial determinations specified in section 498.3(b).”  Id.  The DAB further explained that “[t]he determinations specified in section 498.3(b) do not, under any reasonable interpretation of the regulation’s text, include CMS decisions regarding the severity of the basis for revocation or the duration of a revoked supplier’s re-enrollment bar.”  Id.  The DAB discussed that a review of the rulemaking history showed that CMS did not intend to “permit administrative appeals of the length of a re-enrollment bar.”  Id.  I have no authority to review this issue, and I do not disturb the two-year re-enrollment bar.  See 42 C.F.R. § 424.535(c).

V.  Conclusion

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

1. “The National Supplier Clearinghouse is the single organizational entity responsible for issuing and revoking Medicare supplier billing privileges for suppliers of [DMEPOS].”  National Supplier Clearinghouse MAC, Palmetto GBA, https://www.palmettogba.com/palmetto/providers.nsf/DocsCatHome/Providers~National%20Supplier%20Clearinghouse?Open (last visited April 20, 2020).  The NSC is an administrative contractor for CMS.
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2. Although the site visit contractor reported precise times for his visits (i.e., 12:18 pm, 12:30 pm), the narrative portion of the same report indicates an earlier arrival at 12:00 pm on both occasions.  CMS Ex. 2 at 2, 8.  Therefore, I qualify all times listed herein as being approximate.
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3. Petitioner, through the Departmental Appeals Board (DAB) Electronic Filing System, uploaded three separate documents that it identified as “P. Ex. 1,” “P. Ex. 2,” and “P. Ex. 3.”  However, these documents are not proposed evidentiary exhibits.  P. Ex. 1 is Petitioner’s response to a show cause order, and P. Exs. 2 and 3 are Petitioner’s written allegations that it has remedied the circumstances that led to the revocation.  Because P. Exs. 2 and 3 consist of arguments rather than evidence, I construe the documents together to be Petitioner’s brief.
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4. As an in-person hearing to cross-examine witnesses is not necessary, it is unnecessary to further address CMS’s motion for summary judgment.
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5. Findings of fact and conclusions of law are in italics and bold font.
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6. I apply the preceding version of the regulation that was in effect at the time of the revocation.  See 84 Fed. Reg. 47,794, 47,794, 47,854-56 (Sept. 10, 2019) (amending 42 C.F.R. § 424.535(c)).
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7. Although CMS argues that revocation is warranted pursuant to 42 C.F.R. § 424.535(a)(1) (CMS Br. at 6-8), I limit the discussion herein to section 424.535(a)(5) because Palmetto, in the “DECISION” portion of the reconsidered determination, relied solely on 42 C.F.R. § 424.535(a)(5).  CMS Ex. 5 at 3.
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8. I note that the new policy and procedure Petitioner outlined in its brief is different than the new policy and procedure it outlined in its request for hearing.
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9. With respect to the requirement that an employee notify management at least 24 hours in advance if he or she is unable to report to work, such a requirement is premised on a flawed belief that employees will never have to deal with an unexpected illness or other emergency.
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