Five Star Healthcare, LLC, DAB CR6109 (2022)

DECISION

The Centers for Medicare & Medicaid Services (CMS), through an administrative contractor, revoked the Medicare billing privileges of Five Star Healthcare, LLC (Five Star or Petitioner) pursuant to 42 C.F.R. § 424.535(a)(3) for its managing employee's felony conviction of an offense that CMS has determined to be detrimental to the best interests of the Medicare program and pursuant to 42 C.F.R. § 424.535(a)(2) for its managing employee's exclusion from participating in Medicare and Medicaid programs.  Based on the evidence of record, I affirm CMS's determination to revoke Five Star's Medicare enrollment and billing privileges, effective January 24, 2018.

I.  Factual Background and Procedural History

Petitioner is a home health agency that was enrolled in Medicare effective December 12, 1996.  CMS Ex. 3 at 3.  Maria Larkin was identified by Petitioner as being an officer, W- 2 managing employee and an individual with operational/managerial control effective April 1, 1999.  CMS Ex. 11 at 31-35.

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On January 24, 2018, the United States District Court for the District of Nevada convicted Ms. Larkin on one count of tax evasion with a term of one year and one month imprisonment.  CMS Ex. 5 at 1-2; CMS Ex. 13.

On February 16, 2018, Five Star sent a letter to Ms. Larkin informing her that she was "effectively removed from all managerial positions effective Jan. 1, 2018."  P. Ex. 1 at 10.

On April 27, 2018, three months after Ms. Larkin's conviction, Five Star's Medicare revalidation application was received by a CMS contractor, National Government Services (NGS), which was signed by Ms. Larkin, on April 25, 2018, as an "authorized official."  The revalidation application further identified her as a W-2 managing employee and an individual having operational/managerial control, but no longer an officer.  The application also noted that Ms. Larkin's title was changed from "administrator" to "operations coordinator."  The changes were noted as being effective on April 25, 2018.  CMS Ex. 9 at 12-17; CMS Ex. 12 at 35-39, 56.

On February 6, 2019,1 Petitioner terminated Ms. Larkin due to her exclusion from Medicare and Medicaid.  P. Ex. 1 at 15.

On March 15, 2019, NGS notified Petitioner that its Medicare billing privileges and provider agreement were being revoked effective January 24, 2018, pursuant to 42 C.F.R. § 424.535(a)(2) and (a)(3).  CMS Ex. 2 at 1.

On March 29, 2019, Petitioner requested reconsideration of the decision to revoke its Medicare privileges and provider agreement.  CMS Ex. 1 at 1-2.  On April 2, 2019, Petitioner supplemented its reconsideration request and included the February 16, 2018 and February 6, 2019 letters from it to Ms. Larkin.  P. Ex. 1.

On July 2, 2019, CMS issued its reconsideration decision in which it upheld its determination to revoke Petitioner's Medicare privileges and provider agreement.  In making the decision, CMS considered the supplemental information submitted by Petitioner, including the February 6, 2019 letter from it to Ms. Larkin.  CMS Ex. 14.

On July 18, 2019, Petitioner timely filed a request for a hearing with the Departmental Appeals Board, Civil Remedies Division regarding CMS's reconsidered decision upholding the revocation of Petitioner's Medicare billing privileges and provider agreement.  The case was originally assigned to another administrative law judge and docketed as Case No. C-19-969.  On July 25, 2019, an Acknowledgment and Pre-hearing Order (Pre-hearing Order) was issued by that administrative law judge.

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On August 28, 2019, CMS timely filed a Motion for Summary Judgement and 14 exhibits.  CMS proposed no witnesses.  On September 24, 2019, Petitioner timely filed a Pre-Hearing Brief in Opposition to CMS's Motion for Summary Judgement (P. Br.), four exhibits, and identified one proposed witness.  On October 8, 2019, CMS requested to cross-examine Petitioner's witness should its Motion for Summary Judgment be denied.

On May 3, 2022, the instant matter was transferred to me to hear and decide.

II.  Decision on the Record

CMS offered no witness testimony.  Although Petitioner has submitted testimony that is subject to cross-examination, (P. Ex. 3), and CMS has requested the opportunity to cross-examine that witness, I find that the information contained in the record is sufficient to issue a ruling and cross-examination of Petitioner's witness is unnecessary.  Therefore, a hearing in this case is unnecessary and I decide this case based on the written record.  CRDP §§ 16(b), 19(b), (d).  CMS's Motion for Summary Judgment is therefore moot.

As neither party objected to the opposing party's proposed exhibits, I admit CMS Exhibits 1-14 and Petitioner's Exhibits 1-4.2

III.  Issue

Whether CMS had a legitimate basis to revoke Petitioner's billing privileges and provider agreement under 42 C.F.R. §§ 424.535(a)(2) and (a)(3).

IV.  Jurisdiction

I have jurisdiction to decide this case.  42 C.F.R. §§ 498.3(b)(17), (b)(20), 498.5(l)(2), (n)(2).

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

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

1. Petitioner was enrolled as a provider in the Medicare program effective December 12, 1996.

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2. Ms. Larkin was Petitioner's W-2 managing employee and individual with operational/managerial control effective April 1, 1999.
3. Ms. Larkin was convicted of one felony count of tax evasion on January 24, 2018, in the United States District Court for the District of Nevada and was sentenced to 13 months of imprisonment. CMS has determined that such offense is one that is detrimental to the best interests of the Medicare program.
4. On April 25, 2018, Ms. Larkin signed Petitioner's revalidation application on Petitioner's behalf as an "authorized official."  By signing the revalidation application, Ms. Larkin certified "that the information contained [in the revalidation application] is true, correct, and complete . . . ."  The revalidation application also identified Ms. Larkin as a W-2 managing employee and an individual having operational/managerial control, but no longer an officer.
5. CMS had a legitimate basis to revoke Petitioner's billing privileges in the Medicare program and its provider agreement under 42 C.F.R. § 424.535(a)(3), because Ms. Larkin remained a W-2 managing employee with managerial/operational control after her felony conviction for tax evasion.

Any home health agency that participates in the Medicare program is considered a "provider."  42 U.S.C. § 1395x(u).  The regulation at 42 C.F.R. § 424.535(a)(3) authorizes CMS to revoke a currently enrolled provider's billing privileges and any corresponding provider agreement if a managing employee of the provider was convicted of tax evasion.  42 C.F.R. § 424.535(a)(3)(ii)(B).

In the present matter, there is no dispute that Ms. Larkin was convicted of felony tax evasion, a felony that CMS has determined to be detrimental to the best interests of the Medicare program.  There is no dispute that, three months after her conviction, Ms. Larkin signed Petitioner's revalidation application as an "authorized official" of Petitioner and that the application stated that she remained a W-2 managing employee and an individual with managerial/operational control.  P. Br. at 5-7.

However, Petitioner argues that Ms. Larkin was not authorized to sign the revalidation application on its behalf as she no longer had any management authority at that time.  P. Br. at 5-6.  In support, Petitioner submitted a February 16, 2018 letter to Ms. Larkin in which Petitioner retroactively removed Ms. Larkin's managerial authority effective January 1, 2018.  P. Ex. 1 at 10.  In support of its argument, Petitioner cites to Cleveland Back and Pain Management Center, Inc., DAB CR5257 (2019) for the proposition that

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filings made to CMS create a rebuttable presumption of correctness that can be overcome by a preponderance of the evidence.  P. Br. at 9-15.

As an initial matter, I am not bound by decisions by Administrative Law Judges as they have no precedential weight.  Alexander C. Gatzimos, MD, JD, LLC, DAB No. 2730 at 16 (2016); Zahid Imran, M.D., DAB No. 2680 at 12 (2016).  To the contrary, I am bound by prior decisions of the Board, and, in Meadowmere Emergency Physicians, PLLC, it held that CMS may rely upon a supplier's reenrollment application in administering the Medicare program, even if the information contained in the application is inaccurate.  DAB No. 2881 (2018).  Specifically, in Meadowmere, CMS revoked Meadowmere's Medicare enrollment and billing privileges under 42 C.F.R. § 424.535(a)(3) based on its managing employee and medical director's, Dr. Conner, conviction of conspiracy to commit healthcare fraud effective June 14, 2016.  In its request for reconsideration, Meadowmere averred that Dr. Conner had, in fact, not been associated with Meadowmere since September 26, 2015.  In upholding the ALJ's finding that CMS had a proper basis for revoking Meadowmere's enrollment and billing privileges, the Board held, in part:

We also agree with the ALJ that even if Meadowmere mistakenly listed Dr. Conner as a managing employee on its September 2015 enrollment application, no provision of the statute or regulations absolves it of responsibility for this uncorrected error.  As the regulations make clear, to maintain Medicare billing privileges, a supplier is obligated to ensure that its enrollment application contains complete, accurate, and truthful responses to all information requested within each section as applicable to the supplier type.  Moreover, when a supplier submits a Medicare enrollment application, a person who has authority to bind the supplier legally and financially must sign a certification statement attesting that the information submitted is accurate and that the supplier is aware of, and abides by, all applicable statutes, regulations, and program instructions.  These requirements ensure, among other things, that CMS may rely on the accuracy of the information in administering the Medicare program. . . .

Thus, regardless of whether Meadowmere listed Dr. Conner as a managing employee intentionally or by mistake, [CMS's administrative contractor] and CMS properly relied on the information that Meadowmere provided about Dr. Conner's employment status on its enrollment application in determining that a Meadowmere managing employee was

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convicted of a federal felony offense relating to health care fraud.

Meadowmere at 11-12 (internal citations and quotations omitted).

In the present case, Petitioner did not revoke Ms. Larkin's managerial authority until February 16, 20183 ; 23 days after Ms. Larkin's conviction.  Accordingly, based solely on the fact that Ms. Larkin retained managerial authority for 23 days after her conviction, I find that CMS properly exercised its authority to revoke Petitioner's billing privileges and provider agreement.

In addition, despite the February 16, 2018 letter and argument by Petitioner that Ms. Larkin did not have the authority to sign the revalidation application, Ms. Larkin went on to sign the revalidation application on April 25, 2018 on behalf of Petitioner as an "authorized official" – an application that stated that Ms. Larkin remained Petitioner's W-2 managing employee and an individual with managerial/operational control.  Accordingly, despite the February 16, 2018 letter from Petitioner, Ms. Larkin still exercised enough managerial control to sign the revalidation application as an "authorized official."  Therefore, I also find that CMS properly exercised its authority to revoke Petitioner's billing privileges and provider agreement based on the information contained in its revalidation application.

Petitioners also avers it hired an outside consultant firm to complete the revalidation process and that errors regarding Ms. Larkin's status were contained in that application submitted by the Petitioner. (P. Br. 6,7).  Petitioner's argument that the errors were included in the revalidation application due to the consultant firm errors do not relieve Petitioner of its responsibility to ensure the information in the application is true and correct.  42 C.F.R. §§ 424.502, 424.510(a)(1) and (d), 424.515.

Petitioner then argues that the retroactive revocation of billing privileges based on the felony conviction of owner or managing employee should be disregarded in the present matter as there was insufficient notice and comment of the changes that permitted retroactive revocation.  P. Br. at 15-22.  Petitioner does agree, though, that 42 C.F.R. § 424.535(g) was "lawfully promulgated."  P. Br. at 21.  However, review of 73 Fed. Reg. 69,7260, 69,864-66 (November 19, 2008), in which retroactive revocation based on

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a felony conviction was enacted, clearly demonstrates sufficient notice and that numerous comments, specifically with regard to 42 C.F.R. § 424.535(g), were received and responded to.  The regulation regarding retroactive revocation was enacted nearly a decade before Ms. Larkin's felony conviction.  I have no authority to declare statutes or regulations invalid. 18661CPayday.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….").

6. CMS had a legitimate basis to revoke Petitioner's billing privileges in the Medicare program and its provider agreement under 42 C.F.R. § 424.535(a)(2), because Ms. Larkin remained listed as a W-2 managing employee with managerial/operational control after her exclusion from federal health care programs.

As set forth above, it is undisputed that Ms. Larkin was listed as a W-2 managing employee with managerial/operational control on Petitioner's revalidation application at the time that she was excluded from federal health care programs as a result of her felony conviction for tax evasion.  Petitioner argues that CMS's decision to revoke its billing privileges and provider agreement based on Ms. Larkin's exclusion is improper because Ms. Larkin was terminated by Petitioner before her exclusion became effective.  However, as set forth more fully above, the Board has held that CMS is entitled to rely upon the information contained in a supplier's enrollment application and that it is the responsibility of the supplier to ensure the application contains correct information and to amend the information as appropriate.  Meadowmere at 11-12.

Moreover, 42 C.F.R. § 424.535(e) allows CMS to reverse a revocation under 42 C.F.R. § 424.535(a)(2) or (a)(3) based on the supplier's termination of its business relationship with the offending employee.  However, such a determination is solely based on CMS's discretion, which is not reviewable by an ALJ.  Main Street Pharmacy, LLC, DAB No. 2349 at 6 (2010).  Thus, Petitioner argument that the exception under § 42 C.F.R.424.535(a)(2) is not an issue reviewable by me.

CMS was therefore entitled to rely upon the information contained in Petitioner's revalidation application.  Accordingly, as Ms. Larkin was listed as a managing employee with managerial/operational control at the time of her exclusion, CMS had a proper legal basis for revoking Petitioner's provider agreement and billing privileges under 42 C.F.R. § 424.535(a)(2).

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VI.  Conclusion

I affirm CMS's revocation of Petitioner's Medicare billing privileges and provider agreement based on 42 C.F.R. § 424.535(a)(2) and (a)(3) and that the effective date of the revocation is January 24, 2018.

1. The date of the letter is mistakenly noted as February 6, 2018.  P Ex. 1 at 15.  Petitioner acknowledges that the letter should have been dated February 6, 2019.  P. Br. at 8.
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2. Petitioner's Ex. 4, an email from Ms. Larkin to Five Star, does not appear to have been submitted prior to the present action, which would require a showing of good cause by Petitioner to admit the exhibit.  42 C.F.R. § 498.56(e)  However, absent an objection from CMS, I admit Petitioner's Ex. 4.
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3. The letter purports to retroactively remove Ms. Larkin's managerial duties beginning January 1, 2018.  However, I am not convinced that managerial authority held at one point in time can be retroactively removed at a future date.  Such an action would allow all providers that have had their billing privileges revoked under 42 C.F.R. § 424.535(a)(3) to simply write a letter to an employee retroactively removing their managerial authority to a date prior to conviction.  Either one has managerial duties at a specific point in time or one does not.
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