A & E Home Supply, Inc., DAB CR6084 (2022)

DECISION

The Centers for Medicare & Medicaid Services (CMS), through its Medicare administrative contractor, the National Supplier Clearinghouse (NSC),1 revoked Petitioner’s Medicare enrollment as a supplier of Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) pursuant to 42 C.F.R. § 424.535(a)(1) because Petitioner did not employ or contract with a licensed orthotic fitter as required under Florida law.  By failing to employ a licensed orthotic fitter Petitioner failed to comply with the supplier standard set forth at 42 C.F.R. § 424.57(c)(1).  Additionally, NSC barred Petitioner from re-enrolling in the Medicare program for two years pursuant to 42 C.F.R. § 424.535(c).  Because I conclude that NSC had a legal basis to revoke Petitioner’s Medicare enrollment and billing privileges, I affirm the revocation.

I.  Background and Procedural History

Petitioner supplies orthotics and mail order blood glucose monitors and supplies, which fall within the category of DMEPOS.  Petitioner’s Opposition to CMS’s Motion for Summary Judgment and Prehearing Brief (P. Br.) at 2.  Prior to March 16, 2020,

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Petitioner was enrolled in Medicare as a DMEPOS supplier.  See, e.g., CMS Ex. 2 at 1; 42 C.F.R. § 424.57(a) (definition of DMEPOS supplier).  Following receipt of a notice that Petitioner’s surety bond would expire on February 16, 2020, NSC reviewed Petitioner’s enrollment record on file.  CMS Ex. 1 at 3; see also CMS Ex. 5.  Upon review, NSC determined that because Petitioner had enrolled as a supplier of “Orthoses: Pre-Fabricated (Custom Fitted),” Florida law required Petitioner to employ or contract with a licensed orthotic fitter.  CMS Ex. 1 at 3‑4; CMS Ex. 2 at 1.  NSC determined that Petitioner was noncompliant with this requirement since Petitioner neither employed nor contracted with a licensed orthotic fitter at the time of review.  Id.

By letter dated March 16, 2020, NSC notified Petitioner that its Medicare supplier number was revoked retroactive to February 16, 2020, based on noncompliance with three supplier standards:  42 C.F.R. §§ 424.57(c)(1) (state licensure); 424.57(c)(10) (comprehensive liability insurance); and 424.57(c)(26) (surety bond).  CMS Ex. 2 at 1-2.  NSC also informed Petitioner that it was barred from reenrolling in Medicare for two years.  Id. at 1.  Petitioner submitted a corrective action plan, dated March 18, 2020.2   CMS Ex. 3.  By letter dated March 26, 2020, NSC rejected Petitioner’s corrective action plan, concluding that the plan did not fully resolve Petitioner’s noncompliance.  P. Ex. 4.  By letter dated April 29, 2020, Petitioner requested reconsideration.  CMS Ex. 4.  NSC issued an unfavorable reconsidered determination, dated May 28, 2020, upholding the revocation and reenrollment bar based upon noncompliance with the supplier standard at 42 C.F.R. § 424.57(c)(1).3   CMS Ex. 1.

Petitioner timely filed a hearing request and I was designated to hear and decide the case.  On June 2, 2020, my office acknowledged receipt of Petitioner’s hearing request and provided a copy of my Standing Prehearing Order (Prehearing Order).  On June 11, 2020, Petitioner filed a “Hearing Request Correction” (RFH) which provided “specific issues and conclusions of law with which the Petitioner disagree[d].”  The Prehearing Order required the parties to file a prehearing exchange consisting of a brief and any supporting documents, including any Motion to Dismiss or Motion for Summary Judgment.  Prehearing Order ¶ 4.  On July 7, 2020, CMS submitted its Motion for Summary

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Judgment and Brief in Support (CMS Br.), along with five proposed exhibits (CMS Exs. 1-5).  On July 17, 2020, Petitioner submitted its brief, along with five proposed exhibits (P. Exs. 1-5).

The parties did not list any witnesses or offer written direct testimony for any proposed witness.  As the Prehearing Order informed the parties, a hearing is only necessary if a party files admissible written direct testimony and the opposing party asks to cross-examine.  Prehearing Order ¶ 10.  Therefore, no hearing is required and I decide this case on the written record, without regard to whether the standard for summary judgment is met.  I deny CMS’s motion for summary judgment as moot.

II.  Evidentiary Rulings

Neither party objected to the exhibits proposed by the opposing party.  However, P. Ex. 5, a signed certification (CMS Form 855-S Section 15), dated May 28, 2020, is evidence submitted for the first time before me.  I am required to exclude new evidence unless Petitioner shows good cause for submitting it for the first time at the administrative law judge level.  42 C.F.R. § 498.56(e); Michael Turano, M.D., DAB No. 2922 at 17 (2019).  Petitioner argues good cause exists to admit this evidence because “it is a simple and clear resolution to the issue at hand.”  P. Br. at 11.  Petitioner additionally argues that good cause exists because, in essence, Petitioner did not realize that it needed to provide the signed certification until after it received the unfavorable reconsideration.  P. Br. at 5 (Section 15 “was omitted from the reconsideration request because it had not at any other point in time been deemed necessary by the contractor”).

Petitioner’s arguments do not establish good cause for Petitioner’s failure to submit this evidence at an earlier stage.  First, misunderstanding or ignorance of the requirements for submitting a Medicare enrollment application cannot establish good cause.  Medicare suppliers “are presumed to have constructive notice of the statutes and regulations that govern their participation as a matter of law.”  Pepper Hill Nursing & Rehab. Ctr., LLC, DAB No. 2395 at 8 (2011).  The regulations make clear that each time a supplier submits a Medicare enrollment application, “[t]he certification statement found on the enrollment application must be signed by an individual who has the authority to bind the . . . supplier, both legally and financially, to the [regulatory] requirements.”  42 C.F.R. § 424.510(a)(3) (emphasis added).  In addition, consistent with the regulatory provision, the instructions for completing Form 855-S clearly state that “either [Section] 14 or 15 MUST always be completed in addition to completing the information that is

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changing within the required section.”  Form 855-S Section 1.D (emphasis in original).4   Thus, at a minimum, Petitioner had constructive notice that it was required to submit a signed certification statement with any Medicare enrollment application it submitted.

Second, even if P. Ex. 5 were not new evidence subject to exclusion pursuant to 42 C.F.R. § 498.56(e), I would exclude it because it is not relevant to any issue that I may hear and decide.  P. Ex. 5 is irrelevant because it is probative, if at all, on the issue of whether Petitioner successfully corrected its Medicare enrollment record to reflect that it did not supply custom-fitted orthotics.  However, as I discuss in greater detail below, CMS’s refusal to reinstate a supplier based on a corrective action plan is not an appealable initial determination.  42 C.F.R. § 405.809(b)(2); see also Conchita Jackson, M.D., DAB No. 2495 at 6 (2013) (noting that administrative law judges have no authority to review CMS’s (or a contractor’s) decision to reject a proposed corrective action plan).

For the reasons just discussed, I exclude P. Ex. 5.  In the absence of any other objections, I admit CMS Exs. 1-5 and P. Exs. 1-4 into the record.

III.  Issue

The issue in this case is whether CMS had a legal basis to revoke Petitioner’s Medicare enrollment and billing privileges under 42 C.F.R. § 424.535(a)(1).

IV.  Jurisdiction

I have jurisdiction to hear and decide this case.  42 C.F.R. §§ 498.3(b)(17), 498.5(l)(2); see also Social Security Act (Act) § 1866(j)(8) (codified at 42 U.S.C. § 1395cc(j)(8)).

V.  Discussion

1. Statutory and Regulatory Background

To receive Medicare payments for items furnished to Medicare-eligible beneficiaries, a DMEPOS supplier must obtain a supplier number from the Secretary of Health and Human Services (Secretary).  Act § 1834(j)(1)(A) (42 U.S.C. § 1395m(j)(1)(A)).  The

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Act also requires, in relevant part, that DMEPOS suppliers “comply with all applicable State and Federal licensure and regulatory requirements” and any other requirements the Secretary may specify.  Act § 1834(j)(1)(B)(ii)(I) and (IV) (42 U.S.C. § 1395m(j)(1)(B)(ii)(I) and (IV)).

The Secretary has established 30 standards that suppliers must certify they will meet and continue to meet.  42 C.F.R. § 424.57(c)(1)-(30).  Failure to meet any of these standards will result in CMS revoking a supplier’s billing privileges.  42 C.F.R. § 424.57(e)(1); see also 1866ICPayday.com, L.L.C., DAB No. 2289 at 13 (2009) (“[F]ailure to comply with even one supplier standard is a sufficient basis for revoking a supplier’s billing privileges.”).

Both the Act and regulations require that, when applying to be enrolled as Medicare suppliers, entities must certify that they operate in compliance with state licensing requirements: 

If a State requires licensure to furnish certain items or services, a DMEPOS supplier –

(A) Must be licensed to provide the item or service; and
(B) May contract with a licensed individual or other entity to provide the licensed services unless expressly prohibited by State law.

42 C.F.R. § 424.57(c)(1)(ii); see also Act § 1834(j)(1)(B)(ii) (42 U.S.C. § 1395m(j)(1)(B)(ii)).

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

1. Based on its enrollment category, Petitioner was required to employ or contract with a licensed orthotic fitter.5
2. Petitioner did not employ or contract with a licensed orthotic fitter.
3. CMS had a legal basis to revoke Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(1) due to Petitioner’s noncompliance with the supplier standard at 42 C.F.R. § 424.57(c)(1).

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Before NSC revoked Petitioner’s Medicare enrollment in this case, Petitioner was enrolled as a supplier of “Orthoses: Pre-Fabricated (Custom Fitted).”  CMS Ex. 1 at 3; CMS Ex. 4 at 2; CMS Br. at 5-6.  As the parties agree, the State of Florida requires the services of a licensed orthotic fitter if custom orthotics are being provided.  RFH at 1‑2; P. Br. at 3‑4; CMS Br. at 6.

Petitioner’s sole argument against the revocation of its Medicare enrollment is that, despite being enrolled as a supplier of custom orthotics, it was not required to employ or contract with a licensed orthotic fitter because it did not, in fact, supply custom fitted products.  RFH at 1-2; P. Br. 2-4, 6-7.  However, Petitioner concedes that, at the time NSC reviewed Petitioner’s Medicare enrollment record, the record on file “indicated that [Petitioner] had [licensed] orthotic personnel” and that “pre-fabricated (custom fitted) products were part of the company’s services/products.”  RFH at 1.  Petitioner also concedes that 42 C.F.R. § 424.57(c)(1) “requires a supplier to maintain applicable state licensure and licensed professionals on staff in accordance with its supplier type and the products/services offered.”  Id.  Petitioner’s concessions, taken together, are sufficient to establish a basis for revocation.

CMS is entitled to rely on the information providers and suppliers submit in their enrollment applications, even if such information was submitted in error.  See Meadowmere Emergency Physicians, PLLC, DAB No. 2881 at 11 (2018) (under the statute and regulations, suppliers are responsible for uncorrected errors in their enrollment applications).  The Meadowmere decision elaborated that the enrollment regulations obligate providers and suppliers to ensure their enrollment applications are complete, accurate, and truthful and that an authorized official must sign a certification to that effect.  Id.  According to the decision, “These requirements ensure . . . that CMS may rely on the accuracy of the information in administering the Medicare program.”  Id.

In summary, Petitioner’s enrollment classification on file with NSC was one that required Petitioner to employ or contract with a licensed orthotic fitter, but Petitioner did not do so.  Because this is a violation of the supplier standard at 42 C.F.R. § 424.57(c)(1), NSC had a legal basis to revoke Petitioner’s enrollment and billing privileges.  It is immaterial that Petitioner may have listed an incorrect classification on its enrollment application.

Petitioner argues that its Medicare enrollment should not have been revoked because, during the reconsideration process, it submitted corrected enrollment forms that were intended to remove Petitioner from the custom orthotics category and to “reclassify” Petitioner as a supplier exempt from the licensing requirement.  P. Br. at 4.  In the following section of this decision, I explain why Petitioner’s effort to correct its enrollment record is not a basis to overturn the revocation of its Medicare enrollment.

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4. Petitioner’s attempts at corrective actions are not reviewable by an administrative law judge.

The main thrust of Petitioner’s appeal is that NSC erred by ignoring Petitioner’s efforts to correct its enrollment classification.  Petitioner argues that its original classification as a supplier of custom orthotics was incorrect because Petitioner offered only off-the-shelf products, which do not require a licensed orthotic fitter.  RFH at 1-2; P. Br. at 2‑4.  As part of its reconsideration request, Petitioner attempted to correct its enrollment classification by submitting excerpts from Form 855-S indicating its supplier type was a Medical Supply Company and that it supplied “Orthoses: Off-the-Shelf” rather than custom fitted.  CMS Ex. 4 at 6-7.  However, in the reconsidered determination, NSC did not accept the forms as proof of Petitioner’s compliance with 42 C.F.R. § 424.57(c)(1).  CMS Ex. 1 at 4.  NSC stated that it did not accept the forms because Petitioner failed to submit the required signed copy of Form 855-S Section 15 (Authorized Official Certification Statement and Signature) authorizing such changes to the supplier file.  Id.

I find that, in substance, Petitioner’s so-called reconsideration request was an additional corrective action plan.  Although Petitioner submitted the corrected enrollment forms as part of its reconsideration request and NSC issued what it described as a “reconsideration,” rejecting the forms, it is apparent that Petitioner’s evidence and argument did not contend that it was compliant with Medicare enrollment requirements at the time NSC revoked Petitioner’s enrollment.  Rather, as Petitioner stated in its reconsideration request, Petitioner was attempting to correct its enrollment record because “[t]he supplier type as well as the services to be furnished were listed incorrectly on [Petitioner’s] Medicare supplier file at the time the . . . compliance review was made.”  CMS Ex. 4 at 2.  Petitioner’s own characterization of the relief it was seeking establishes that Petitioner was asking for the opportunity to “correct” its enrollment file.  See P. Br. at 4 (Petitioner’s submission was intended to “remove [Petitioner] from the category of DME supplier that is required by the State of Florida to have an orthotic fitter license, and to reclassify [Petitioner] as a Medical Supply Company, a supplier type that is exempt from the State’s licensure requirement.”).

This is significant because “[t]he refusal of CMS or its contractor to reinstate a . . . supplier’s billing privileges based on a corrective action plan is not an initial determination under [42 C.F.R] part 498.”  42 C.F.R. § 405.809(b)(2).  Because rejection of a corrective action plan is not an initial determination, administrative law judges have no authority to review it.  See, e.g., Jackson, DAB No. 2495 at 6; DMS Imaging, Inc., DAB No. 2313 at 8 (2010).  The question before me in the present proceeding is whether a basis for revocation existed at the time of the revocation notice, not whether the basis was later eliminated.  See DMS Imaging, Inc. at 7-8.  Petitioner admits that based on its enrollment record on file at the time, it was required to employ or contract with a licensed orthotic fitter but failed to do so.  Accordingly, NSC had a basis to revoke Petitioner’s Medicare enrollment.  Petitioner’s later attempts at correction, no matter how they are

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labeled, cannot form a basis to reverse the revocation of Petitioner’s Medicare enrollment and billing privileges.

5. The duration of the reenrollment bar is not a reviewable initial determination.

Without any specific argument, Petitioner claims that “CMS did not establish a lawful basis for . . . barring [Petitioner] from re-enrolling in Medicare for two years.”  P. Br. at 11.  “There is, however, no right to appeal a decision by CMS concerning the duration of a post-revocation re-enrollment bar.”  Vijendra Dave, M.D., DAB No. 2672 at 10 (2016).  42 C.F.R. § 498.3(b) lists CMS determinations that may be appealed to an administrative law judge.  That regulation nowhere refers to determinations regarding the duration of reenrollment bars.  Id.; see also North Ridge Care Ctr., DAB No. 1857 at 8 (2002) (stating that “[b]y its very terms, Part 498 provides appeal rights only for these listed actions” (emphasis added)).  Thus, as is true of Petitioner’s actions aimed at correcting its enrollment record, I similarly have no authority to review NSC’s determination as to the length of the reenrollment bar.

VI.  Conclusion

For the reasons set forth above, I affirm CMS’s revocation of Petitioner’s Medicare enrollment and billing privileges.

1. Palmetto GBA performs the NSC function on behalf of CMS.  See CMS Exhibit (Ex.) 1.
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2. Petitioner’s corrective action plan addressed only Petitioner’s noncompliance with the requirement to maintain a surety bond.  CMS Ex. 3 at 1at 1, 7.  With its reconsideration request, Petitioner submitted additional evidence related to its alleged failure to maintain comprehensive liability insurance.  CMS Ex. 4 at 2, 4.  NSC accepted Petitioner’s evidence as proof that Petitioner complied with the requirements to maintain a surety bond and comprehensive liability insurance.  CMS Ex. 1 at 3-4.
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3. For the reasons explained in note 2, NSC did not rely on the supplier standards at 42 C.F.R. § 424.57(c)(10) and (26) as bases for revoking Petitioner’s Medicare enrollment at the reconsideration stage.  CMS Ex. 1 at 1-2.
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4. I cite to the May 2016 edition of Form 855-S, which was the version Petitioner completed.  An archived copy of this version is available at https://web.archive.org/web/20210327000153/https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/CMS-Forms-Items/CMS019480 (last visited May 23, 2020).  The current version of the form, dated November 2021, requires that Section 15 must always be included, rather than giving an option for Section 14 or 15.  Form CMS 855S (Section 1B), available at https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/Downloads/cms855s.pdf (last visited May 23, 2022).
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5. My findings of fact and conclusions of law appear as headings in bold italic type.
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