NoMad Medical, LLC, DAB CR5236 (2019)

DECISION

The Centers for Medicare & Medicaid Services (CMS), through an administrative contractor, National Supplier Clearinghouse (NSC), revoked the billing privileges of NoMad Medical, LLC (NoMad or Petitioner).  NoMad was enrolled in the Medicare program as a supplier of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS).  NSC revoked NoMad based on a failure to meet two DMEPOS supplier standards and because NoMad was not operational.  NoMad requested a hearing before an administrative law judge (ALJ) to dispute the revocation.  As I explain below, I affirm the revocation of Medicare billing privileges.  However, because I conclude that NoMad was operational, I modify the effective date of revocation from July 25, 2016, to November 24, 2016.

I.  Background

NoMad was enrolled in Medicare as a DMEPOS supplier.  In an October 25, 2016 initial determination, NSC revoked NoMad’s Medicare billing privileges, effective July 25, 2016.  CMS Exhibit (Ex.) 2 at 1.  The initial determination explained that Petitioner was not in compliance with the following supplier standards:

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42 C.F.R. § 424.57(c)(1) . . . [Petitioner] failed to obtain and provide a current copy of the Home Medical Equipment License issued by the Tennessee Department of Health, Board for Licensing Health Care Facilities; therefore [it was] in violation of this standard.

42 C.F.R. § 424.57(c)(7) . . . A representative of the NSC made two attempts to conduct a visit of [Petitioner’s] facility on July 20, 2016, and July 25, 2016; however the visits were unsuccessful because [the] facility was closed on both attempts during [Petitioner’s] reported business hours.  In addition, [Petitioner] failed to have a visible sign identifying [the] hours of operation.  Because we could not complete an inspection of [the] facility, we could not verify [Petitioner’s] compliance with the supplier standards.  Based upon a review of the facts, we have determined that [Petitioner] is not operational to furnish Medicare covered items and services.  Thus, [Petitioner is] considered to be in violation of 42 CFR §§ 424.535(a)(5), all supplier standards defined in 42 CFR [§] 424.57(c) and pursuant to [section] 424.535(g), the revocation is effective the date CMS determined that [Petitioner was] no longer operational.

CMS Ex. 2 at 1­‑2.  The initial determination specified that, under 42 C.F.R. § 424.535(c), Petitioner was barred from reenrollment in the Medicare program for a period of two years, effective 30 days from the date of the letter.  CMS Ex. 2 at 1.

NoMad requested reconsideration by letter dated October 31, 2016, and then provided additional evidence on November 23, 2016, after speaking with the NSC hearing officer.  P. Ex. 3.  On November 28, 2016, the NSC hearing officer issued an unfavorable reconsidered determination upholding all of the bases for revocation stated in the initial determination.  CMS Ex. 5.

On January 16, 2017, NoMad requested a hearing before an ALJ.  Judge Carolyn Cozad Hughes issued an Acknowledgment and Pre-hearing Order (Order) on January 30, 2017.  In response to Judge Hughes’s Order, CMS filed a motion for summary judgment and pre‑hearing brief (CMS Br.) as well as five exhibits.  Petitioner filed a pre‑hearing brief (P. Br.) that opposed summary judgment and four exhibits.

This case was subsequently transferred to me on November 20, 2018.

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II.  Evidentiary Ruling

Neither side objected to the other party’s exhibits.  In the absence of objection, I admit CMS Exs. 1‑5 and P. Exs. 1‑4 into the record.  Order ¶ 7; Civil Remedies Division Procedures (CRDP) § 14(e).

III.  Decision on the Record

I deny CMS’s motion for summary judgment because there are material facts in dispute in this case.

The Order directed the parties to submit written testimony for each proposed witness.  Order ¶ 8.  Neither party submitted written direct testimony.  However, CMS included the inspector’s report, which the inspector declared true under the penalty of perjury.  CMS Ex. 1.  Although Petitioner generally requested that I hold a hearing, it did not comply with the Order and affirmatively request cross‑examination of the inspector who authored the inspection report.  Order ¶¶ 9‑10.  Similarly, Petitioner included a letter from a business owner whose company is located next to NoMad.  P. Ex. 4 at 17.  The letter was neither signed under penalty of perjury nor submitted as a formal affidavit or declaration.  Nonetheless, CMS did not request cross‑examination of the business owner.  Because neither side requested cross‑examination of the authors of these documents, I decide this case based on the written record.  Order ¶¶ 10‑11; CRDP § 19(b), (d).

IV.  Issue

Whether CMS had a legitimate basis to revoke Petitioner’s Medicare billing privileges.

V.  Jurisdiction

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

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

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

The Secretary of Health and Human Services (Secretary) has the authority to create regulations that establish enrollment standards for providers and suppliers, and to create supplier requirements for DMEPOS suppliers.  42 U.S.C. §§ 1395m(j)(1)(B)(ii), 1395cc(j).  The Secretary promulgated a regulation that requires providers and suppliers to be operational.  42 C.F.R. § 424.535(a)(5).  To be “operational,” a provider or supplier

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must be “open to the public for the purpose of providing health care related services . . . .”  42 C.F.R. § 424.502.

The Secretary also promulgated regulations establishing DMEPOS supplier standards, which a DMEPOS supplier must meet and maintain.  42 C.F.R. § 424.57(c).  The supplier standards state that a DMEPOS supplier must comply with state licensure and regulatory requirements.  42 C.F.R. § 424.57(c)(1)(ii).  In addition, a DMEPOS supplier must be “open to the public a minimum of 30 hours per week,” post its hours of operation, and be “accessible and staffed during posted hours of operation.”  42 C.F.R. §§ 424.57(c)(7)(i), (c)(30)(i).

CMS or its contractors may conduct inspections of a supplier’s premises at any time to determine if a supplier is in compliance with Medicare enrollment requirements or the supplier standards.  See 42 C.F.R. §§ 424.57(c)(8), 424.510(d)(8), 424.515(c), 424.517(a).  A supplier is subject to revocation of its Medicare billing privileges if it violates the DMEPOS supplier standards or the regulatory requirements applicable to all suppliers.  42 C.F.R. §§ 424.57(e), 424.535.

1. Whether Petitioner had a proper state license to operate is no longer at issue and is not a basis for revocation.

The reconsidered determination upheld all of the bases for revocation from the initial determination, including that Petitioner did not have a proper state license.  CMS Ex. 5 at 2; 42 C.F.R. § 424.57(c)(1).  In its brief, CMS indicated that it did not intend to defend this basis for revocation.  CMS Br. at 3.  Thus, whether NoMad had or needed a state license is no longer at issue and is not a basis for revocation.

2.  On Wednesday, July 20, 2016, at approximately 1:33 p.m. and Monday, July 25, 2016, at approximately 10:20 a.m., a site inspector from NSC was unable to gain entry into NoMad’s facility at 5909 Shelby Oaks Drive, Suite 150, Memphis, Tennessee, because the door was locked and no one answered when the inspector knocked.

There is no dispute that NoMad has operated out of a facility located at 5909 Shelby Oaks Drive, Suite 150, Memphis, Tennessee.  CMS Ex. 1 at 1; CMS Ex. 4 at 1; P. Ex. 2 at 1; P. Ex. 3 at 1.

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On Wednesday, July 20, 2016,1 at approximately 1:33 p.m., a site inspector from NSC attempted a site visit at NoMad’s facility at 5909 Shelby Oaks Drive, Suite 150.  CMS Ex.  1 at 1-2, 6‑7.  The door was locked and the site inspector knocked, but there was no response.  CMS Ex. 1 at 6.  The site inspector noted that the hours of operation were not posted.  CMS Ex. 1 at 2, 7.  The site inspector included pictures of NoMad’s front door and outside of the building, which verify the dates of the inspection attempts.  CMS Ex. 1 at 7.

The site inspector returned on Monday, July 25, 2016, at approximately 10:20 a.m. to conduct a second site visit.  As before, the door was locked and there was no response to knocking.  The site inspector indicated that he spoke with another business, Memphis Payroll Company, located a few doors down from NoMad, but they did not know anything about Petitioner.  CMS Ex. 1 at 1-2, 5-8.

3.  CMS had a legitimate basis to revoke Petitioner’s Medicare enrollment and billing privileges because Petitioner’s facility was not accessible and staffed during its hours of operation in violation of 42 C.F.R. § 424.57(c)(7).

CMS had a legitimate basis to revoke Petitioner’s Medicare enrollment and billing privileges.  The DMEPOS supplier requirement to be staffed and accessible during normal hours of operation is a rule that has few exceptions.  See Norpro Orthotics & Prosthetics, Inc., DAB No. 2577 at 5 (2014) (indicating that the regulatory history of 42 C.F.R. § 424.57(c)(7) makes exceptions for disasters, emergencies, and state and federal holidays); see also Benson Ejindu, DAB No. 2572 at 6 (2014).  A DMEPOS supplier is not “accessible” if the supplier’s location is closed because the staff is out for lunch, on a break, making patient visits, or out of the office for any reason.  See Ita Udeobong, DAB No. 2324 at 6‑7 (2010).  A supplier may not close, even temporarily, during its posted hours of operation.  Complete Home Care, Inc., DAB No. 2525 at 5 (2013).  Even if the staff of a DMEPOS supplier is present at its office, but the door is locked and the staff do not hear the knock of an inspector, then the office is not accessible under 42 C.F.R. § 424.57(c)(7).  Ejindu, DAB No. 2572 at 6‑7.

CMS stated in its reconsidered determination that NoMad indicated that its hours of operation were 7:30 a.m. to 3:00 p.m., Monday through Thursday.  CMS Ex. 5 at 4.  NoMad neither disputed this nor disputed that it failed to post those hours as required by the regulations.  Petitioner is obligated to be accessible and staffed during its hours of

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operation.  42 C.F.R. § 424.57(c)(7).  However, during the hours of operation on Wednesday, July 20, 2016, and Monday, July 25, 2016, Petitioner’s office door was locked and no employee responded to the site inspector’s knocking.  CMS Ex. 1.  Therefore, Petitioner violated 42 C.F.R. § 424.57(c)(7).

Petitioner asserts that it was open and accessible during the hours of operation.  Although Petitioner admits that the door was locked, it argues that the door was “locked for safety purposes.”  P. Br. at 6.  Petitioner contends that “the mere fact that the door was locked did not mean it was inaccessible.”  Id.  Moreover, Petitioner challenges some of the claims made in the site inspector’s report which “shows that it is not reliable grounds for the revocation of [its] Medicare billing privileges.”  P. Br. at 8.  Specifically, Petitioner provided a written attestation, signed by four separate business owners located near NoMad, wherein each owner stated they knew of NoMad and of its daily hours of operation and business location.  Id. at 8‑9; P. Ex. 2.  Finally, Petitioner submitted a letter from the business owner of Memphis Payroll which indicates that “at no time has anyone visited or entered the office of Memphis Payroll to make an inquiry regarding NoMad.”  P. Ex. 4 at 17; P. Br. at 9.

Petitioner’s arguments are unavailing.  As noted above, the supplier standards require that Petitioner be accessible during its hours of operation.  42 C.F.R. § 424.57(c)(7).  Certainly Ejindu suggests that merely locking a door, whether for safety or any other reason, may not on its own be a basis for revocation.  However, if a door is locked, Petitioner needs to provide customers who encounter a locked door during regularly scheduled hours with a reliable and effective means to overcome the barrier and obtain prompt entry.  Ejindu, DAB No. 2572 at 8.  Here, the record does not show that Petitioner provided information to customers about how to contact someone inside the office.  Nor does it suggest that Petitioner had a doorbell or other alternative for overcoming the locked door.  Once the site inspector knocked on the door and was unable to gain entry, CMS had a legitimate basis to revoke Petitioner for not being open and accessible during business hours.

With respect to Petitioner’s assertion that the site inspector’s report is not reliable based on the letter from Memphis Payroll’s owner, I resolve this contradiction in favor of the site inspector.  The inspection report was signed under penalty of perjury and indicated that the inspector would testify at a hearing, if needed.  CMS Ex. 1 at 5.  The letter that Petitioner relies on was not sworn under penalty of perjury.  P. Ex. 4 at 17.  Petitioner had the chance to submit written testimony but chose not to avail itself of that opportunity.  Order ¶ 8; CRDP § 16(a).  Thus, I conclude that the statements in the site inspector’s report are reliable and trustworthy.

I conclude that Petitioner violated 42 C.F.R. § 424.57(c)(7) because its office was not accessible on July 20 and 25, 2016.

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4.  CMS did not have a legitimate basis to revoke Petitioner’s Medicare billing privileges based on a finding that Petitioner was not operational under 42 C.F.R. § 424.535(a)(5).

Suppliers must be operational or they are subject to revocation.  42 C.F.R. § 424.535(a)(5).  A supplier is operational if 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 (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.  Although the requirement to be operational has significant similarities to the DMEPOS supplier standard that requires a DMEPOS supplier’s facility to be staffed and accessible to the public during posted hours of operation, it is important to note that the requirement to be “operational” is not a DMEPOS supplier standard.  Instead, it applies to all suppliers.  Therefore, a DMEPOS supplier could be “operational,” but still not meet all of the strict requirements of the DMEPOS supplier standards.

In the present case, Petitioner has presented sufficient evidence that it was operational.  The site inspector confirmed that Petitioner’s address exists and that signs show that Petitioner occupies the address Petitioner provided to Medicare.  CMS Ex. 1 at 7‑8.  Petitioner submitted evidence such as purchase orders that could only be created and accessed through accounting software inside the location, email and phone records from the dates of the site visits, proof of accreditation, and attestations from neighboring businesses that confirm Petitioner is operational.  P. Ex. 4 at 7, 16, 20‑36.  This evidence is uncontroverted and I accept it as true.  Petitioner’s evidence supports its contention that it was operational and able to provide health care related services.

I conclude that while Petitioner was not always accessible during its hours of operation, it was still open and staffed to provide health care related services sufficiently to avoid a violation of 42 C.F.R. § 424.535(a)(5).

5. Petitioner’s Medicare enrollment and billing privileges must be revoked, but the effective date of revocation is changed to November 24, 2016.

CMS imposed a retroactive revocation effective date in this case due to its finding that Petitioner was not operational.  CMS Ex. 2 at 1; 42 C.F.R. § 424.535(g).  However, due

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to my conclusion that CMS did not have a basis to revoke Petitioner for being non‑operational, I must modify the effective date of revocation.

Because Petitioner violated 42 C.F.R. § 424.57(c)(7), CMS was required to revoke Petitioner 30 days after the date that CMS sent the revocation notice to Petitioner.  42 C.F.R. § 424.57(e)(1).  CMS sent Petitioner the initial determination to revoke on October 25, 2016.  CMS Ex. 2 at 1.  Therefore, the effective date of Petitioner’s revocation is November 24, 2016.  Petitioner may seek reimbursement for items and services provided to Medicare beneficiaries through November 23, 2016.

VII.  Order

1) I affirm CMS’s revocation of NoMad’s Medicare enrollment and billing privileges based on 42 C.F.R. § 424.57(c)(7).

2) I reverse the finding that 42 C.F.R. § 424.535(a)(5) serves as a basis for NoMad’s revocation. 

3) I modify the effective date of revocation from July 25, 2016, to November 24, 2016.  42 C.F.R. § 424.57(e)(1).

• 1. CMS acknowledges in its brief that CMS Ex. 1 contains a typographical error on page six indicating that the first site visit took place on July 21, 2016. CMS Br. at 2 n.1. However, the first page of the site visit report, the accompanying site visit dated photographs, and the initial and reconsidered determinations all indicate the first site visit was on July 20, 2016. CMS Ex. 1 at 1, 7; CMS Ex. 2 at 2; CMS Ex. 5 at 4.