Sound Advice Hearing Doctors, LLC, DAB CR5671 (2020)

DECISION

The Centers for Medicare & Medicaid Services (CMS), through its Medicare administrative contractor, Wisconsin Physicians Service Insurance Corporation (WPS), revoked the Medicare enrollment and billing privileges of Sound Advice Hearing Doctors, LLC (Petitioner).  WPS also established a three-year reenrollment bar, beginning 30 days after the postmark date of the revocation letter.1   As explained below, CMS properly concluded that a delegated official of Petitioner was excluded from participation in Medicare, Medicaid, and any other federal health care program, based on license revocation or suspension under section 1128(b)(4) of the Social Security Act (Act) (42 U.S.C. § 1320a‑7(b)(4)).  CMS also correctly concluded that Petitioner's

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Medicare enrollment application included false or misleading information.  I therefore affirm CMS's revocation of Petitioner's Medicare enrollment and billing privileges.

I.  Background

Petitioner is an audiology clinic/group practice operating in multiple locations and based in Springfield, Missouri.  See CMS Ex. 1; see also CMS Ex. 5 at 9, 10, 16-23.  Petitioner first employed Teresa Faught as an office manager in one of its branch locations from 2012‑2015.  CMS Ex. 1at 1‑2.  Then, on March 15, 2018, Petitioner rehired Ms. Faught as an insurance credentialing specialist.  Id. at 1; see also Petitioner's Exhibit (P. Ex.) 2 at ¶ 3.

On or about May 14, 2018, Petitioner submitted a form CMS-855B Medicare Enrollment Application for Clinics/Group Practices and Certain Other Suppliers (CMS-855B), which WPS received on May 15, 2018.  CMS Ex. 5 at 89.  In a cover letter, Petitioner explained that it was responding to WPS's requests for additional information concerning changes to Petitioner's ownership.  Id. at 86‑87.  On the CMS-855B, Petitioner listed Teresa Faught as an "Insurance Specialist" and "Delegated Official" and checked "no" as the answer to whether Ms. Faught had "under any current or former name or business identity, ever had a final adverse legal action . . . imposed against" her.  Id. at 55-56.  Brian D. Vesely, Petitioner's CEO, signed both an authorization for Ms. Faught to act as a "Delegated Official" and a certification statement attesting that the contents of the CMS-855B were "true, correct, and complete."  Id. at 62, 64.  However, records from the Office of Inspector General (IG) of the U.S. Department of Health and Human Services (HHS) document that Ms. Faught, under the name Theresa Thorne, was excluded from participation in federal health care programs on August 20, 2006, based on section 1128(b)(4) of the Act (license revocation/suspension/surrender).  CMS Ex. 4 at 2.2

By letter dated August 3, 2018, WPS revoked Petitioner's Medicare billing privileges pursuant to 42 C.F.R. § 424.535(a)(2), (a)(4), and (a)(9).  CMS Ex. 2 at 1.  WPS asserted the following grounds for revocation:

42 C.F.R. § 424.535(a)(2) - Provider or Supplier Conduct -
On August 20, 2006[,] Teresa E. Faught (aka Theresa Elaine Graves Thorne) was excluded by the [IG], pursuant to section 1128(b)(4) of the Social Security Act.  Teresa E. Faught is listed as a managing employee and delegated official on [Petitioner's] Medicare 855B enrollment record, effective as of March 15, 2018.

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42 C.F.R. § 424.535(a)(4) - False or Misleading Information - . . . [Petitioner] answered "no" in section six of the [CMS‑855B] application, indicating that Teresa E. Faught (aka Theresa Elaine Graves Thorne) did not have any adverse legal history.  However, Teresa E. Faught was excluded by the [IG] . . . on August 20, 2006.  An exclusion is listed as an adverse legal action that requires reporting on the 855B application.  Teresa E. Faught is listed as a managing employee and delegated official on [Petitioner's] Medicare 855B enrollment record, effective as of March 15, 2018.

42 C.F.R. § 424.535(a)(9) - Failure to Report - On August 20, 2006, Teresa E. Faught (aka Theresa Elaine Graves Thorne) was excluded by the [IG], pursuant to Section 1128(b)(4) of the [Act].  Teresa E. Faught and is listed as a managing employee and delegated official on [Petitioner's] Medicare 855B enrollment record, effective as of March 15, 2018.  [Petitioner] did not notify [CMS] of this adverse legal action, as required under 42 C.F.R. § 424.516.

Id. at 1.  The revocation was effective March 15, 2018, the date Petitioner hired Ms. Faught.  Id.  In addition, WPS imposed a three-year reenrollment bar.  Id. at 2.

By letter dated August 27, 2018, Petitioner requested reconsideration.  CMS Ex. 1.  CMS's Provider Enrollment and Oversight Group3 issued a reconsidered determination, dated December 22, 2018.  CMS Ex. 6 at 1.  CMS upheld the revocation, based on 42 C.F.R. § 424.535(a)(2) and (a)(4).  Id. at 4-6.  CMS overturned the revocation under 42 C.F.R. § 424.535(a)(9), finding that Petitioner had no duty to report Ms. Faught's exclusion, which occurred prior to her association with Petitioner.  Id. at 6.

Petitioner timely requested a hearing before an administrative law judge, and the case was assigned to me for hearing and decision.  I issued an Acknowledgment and Pre‑Hearing Order dated February 15, 2019 (Order).  The Order directed each party to file a pre-hearing exchange consisting of a brief and any supporting documents and also set deadlines for those filings.  Order ¶ 4.  CMS filed a motion for summary judgment and a supporting memorandum and prehearing brief (CMS Br.) and six proposed exhibits (CMS Exs. 1‑6).  Petitioner filed a response brief (P. Br.) and two proposed exhibits (P. Exs. 1-2).  Neither party objected to the exhibits offered by the opposing party.

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Therefore, in the absence of objection, I admit CMS Exs. 1-6 and P. Exs. 1-2 into the record.

The Order advised the parties that they must submit written direct testimony for any proposed witness and that an in-person hearing would be necessary only if the opposing party requested the opportunity to cross-examine a witness.  Order ¶¶ 8-10; Civil Remedies Division Procedures (CRDP) §§ 16(b), 19(b); Pacific Regency Arvin, DAB No. 1823 at 8 (2002) (holding that the use of written direct testimony for witnesses is permissible so long as the opposing party has the opportunity to cross‑examine those witnesses).  Petitioner listed Brian D. Vesely as a witness and offered his written direct testimony by signed affidavit (P. Ex. 2).  However, CMS did not request to cross-examine Mr. Vesely.  Petitioner requested to cross‑examine any witnesses proposed by CMS, but CMS did not list any proposed witnesses.  Consequently, an in‑person hearing is not required, and I issue this decision based on the written record, without regard to whether the standards for summary judgment are met.  Order ¶¶ 8-11; CRDP § 19(d).

II.  Issue

The issue in this case is whether CMS had a legal basis to revoke Petitioner's Medicare enrollment and billing privileges.

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 Act § 1866(j)(8) (42 U.S.C. § 1395cc(j)(8)).

IV.  Discussion

A. Statutory and Regulatory Background

Petitioner is an audiology clinic/group practice and, accordingly, is classified as a "supplier" for purposes of the Medicare program.  CMS Ex. 5 at 9; see Act § 1861(d) (42 U.S.C. § 1395x(d)); 42 C.F.R. § 400.202 (definition of supplier).  In order to participate in the Medicare program as a supplier, an entity must meet certain criteria to enroll and receive billing privileges.  42 C.F.R. §§ 424.505, 424.510.  CMS may revoke the enrollment and billing privileges of a supplier for any reason stated in 42 C.F.R. § 424.535.

Pursuant to 42 C.F.R § 424.535(a)(2)(i), CMS may revoke a currently enrolled supplier's Medicare billing privileges if the "supplier, or any owner, managing employee, authorized or delegated official, medical director, supervising physician, or other health care personnel of the [supplier is excluded] from the Medicare, Medicaid, and any other Federal health care program . . . ."  Pursuant to 42 C.F.R § 424.535(a)(4), CMS may also

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revoke a supplier's Medicare enrollment and billing privileges if the supplier has certified as true information that is false or misleading on its application to enroll or maintain enrollment in Medicare.  Regulations define "final adverse action" as including "[s]uspension or revocation of a license to provide health care by any State licensing authority," as well as "exclusion or debarment from participation in a Federal or State health care program."  42 C.F.R. § 424.502 (definition of final adverse action).  When CMS revokes a supplier's Medicare enrollment and billing privileges, CMS establishes a reenrollment bar for a period ranging from one to three years.  42 C.F.R. § 424.535(c).4   Generally, a revocation becomes effective 30 days after CMS mails the initial determination revoking Medicare billing privileges, but if the revocation is based on a federal exclusion or license suspension or revocation, the revocation is effective the date of the exclusion or license suspension or revocation.  42 C.F.R. § 424.535(g).

B. Findings of Fact, Conclusions of Law and Analysis5

1. On August 20, 2006, the IG excluded Theresa Thorne (Teresa Faught) from participation in federal health care programs under section 1128(b)(4) of the Act (license revocation/suspension/surrender).

Exclusion search results from the IG exclusions database indicate that Theresa Thorne (Teresa Faught) was excluded from participation in federal health care programs on August 20, 2006, based on section 1128(b)(4) of the Act (license revocation/suspension/ surrender).  CMS Ex. 4.  Petitioner has not disputed that Ms. Faught was excluded from federal health care programs as of August 20, 2006.  There is no indication that the IG has reinstated Ms. Faught after this exclusion.  Based on the record before me, I find that Teresa Faught is excluded from participation in Medicare, Medicaid, and other federal health care programs as of the date of this decision.

2. When Petitioner filed its CMS-855B, Teresa Faught was a delegated official who was excluded from participation in Medicare, Medicaid, and any other Federal health care program; accordingly, CMS had a legal basis to revoke Petitioner's Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(2).

Petitioner submitted form CMS-855B to WPS on or about May 15, 2018.  CMS Ex. 5.  Petitioner completed Section 6 of the CMS-855B (Ownership Interest and/or Managing

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Control Information (Individuals)) to add Ms. Faught as a "Delegated Official" as of March 15, 2018, among other actions.  Id. at 55.  In completing this section, Petitioner checked the "no" box to indicate that Ms. Faught had no history of any final adverse legal actions.  Id. at 56.  Petitioner's CEO, Brian Vesely, signed the CMS-855B, attesting that he, as an authorized official, assigned Ms. Faught responsibility as a delegated official and that the contents of the CMS-855B were true, correct, and complete.  Id. at 62, 64.

The CMS-855B includes the following definitions:

• Final Adverse Legal Action includes "exclusion from participation in, or any sanction imposed by, a Federal or State health care program . . . ."  Id. at 13.
• Authorized Official "means an appointed official (for example, chief executive officer, chief financial officer, general partner, chairman of the board, or direct owner) to whom the organization has granted the legal authority to enroll it in the Medicare program, to make changes or updates to the organization's status in the Medicare program, and to commit the organization to fully abide by the statutes, regulations, and program instructions of the Medicare program."  Id. at 60.
• Delegated Official "means an individual who is delegated by an authorized official the authority to report changes and updates to the supplier's enrollment record.  A delegated official must be an individual with an 'ownership or control interest' in (as that term is defined in Section 1124(a)(3) of the Social Security Act), or be a W-2 managing employee of, the supplier."  Id.
• Managing Employee "means a general manager, business manager, administrator, director, or other individual who exercises operational or managerial control over, or who directly or indirectly conducts, the day-to-day operations of the supplier, either under contract or through some other arrangement, regardless of whether the individual is a W-2 employee of the supplier."  Id. at 42.

See also 42 C.F.R. § 424.502 (definitions of final adverse action, authorized official, delegated official, and managing employee).

Petitioner's CMS-855B of May 15, 2018, additionally identified Ms. Faught as the "contact person" for Petitioner's application.  CMS Ex. 5 at 58.  As such, Petitioner authorized WPS to contact her "[i]f questions arise during the processing of this application."  Id.  By letter dated May 22, 2018, addressed to Ms. Faught, as Petitioner's contact person, WPS requested additional information to complete processing the enrollment application.  CMS Ex. 3 at 3-4.  By letter dated June 5, 2018, Ms. Faught, on

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behalf of Petitioner, responded to WPS.6   Id. at 1-2.  In her response, Ms. Faught confirmed that she was a "Delegated/Managing Employee" as of March 18, 2018.  Id. at 1.

On August 3, 2018, WPS revoked Petitioner's Medicare enrollment and billing privileges, effective March 15, 2018, citing 42 C.F.R. § 424.535(a)(2), (a)(4), and (a)(9), because Ms. Faught, a delegated official, was excluded from Medicare and because the CMS-855B failed to disclose the exclusion.  CMS Ex. 2 at 1-2.  WPS also imposed a three-year reenrollment bar.  Id. at 2.CMS affirmed the revocation on reconsideration, relying on 42 C.F.R. § 424.535(a)(2) and (a)(4).  CMS Ex. 6.  I conclude that CMS had a basis to revoke Petitioner's billing privileges based on these regulations.

Exclusion Search Results from the IG exclusions database list Theresa Thorne (Teresa Faught) as excluded from participation in Medicare, Medicaid, and federal health care programs as of August 20, 2006, without an end date.  CMS Ex. 4 at 2.  There is nothing in the record to indicate that the IG has reinstated Ms. Faught or that her exclusion otherwise ended before Petitioner terminated her employment.  As the above discussion makes clear, Petitioner's CMS-855B identified Ms. Faught as a delegated official and W‑2 employee.  CMS Ex. 5 at 55-56, 64.  In subsequent correspondence to WPS, Ms. Faught identified herself as a "Delegated/Managing Employee."  CMS Ex. 3 at 1.  Mr. Vesely apparently signed off on the correspondence in which she did so.  P. Ex. 2 at ¶ 8.  I therefore conclude that, at the time Petitioner filed the CMS-855B with WPS, a delegated official of Petitioner was excluded from participation in Medicare, Medicaid, and other federal health care programs.  CMS thus had a basis for revoking Petitioner's Medicare enrollment and billing privileges, pursuant to 42 C.F.R. § 424.535(a)(2).

In its brief, Petitioner disputes that Teresa Faught was a "managing employee, delegated official, or other health care personnel" and asserts that revocation was improper under 42 C.F.R. § 424.535(a)(2) and (a)(4) because she did not fall within one of those employment categories.  P. Br. at 2, 9-10.  In support of its argument that Ms. Faught was not a delegated official, managing employee, or other health care personnel, Petitioner submits the affidavit of Brian Vesely, its CEO and an authorized official.  P. Ex. 2.  Mr. Vesely states that Ms. Faught was an Insurance Specialist in a "purely administrative, non‑managerial role."  Id. at ¶ 5. Although Mr. Vesely acknowledges that he signed CMS-855B forms identifying Ms. Faught as a delegated official, he asserts that he did so not knowing that a delegated official must be a managing employee with responsibility

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for Petitioner's operations.  Id. at ¶¶ 7, 8.  Petitioner's arguments and representations are unavailing.

Even if Mr. Vesely, as Petitioner's authorized official, was subjectively unaware of the requirement that a delegated official must be a managing employee,7 he nevertheless certified, by his signature, that the CMS-855B was true, correct and complete.  CMS Ex. 5 at 62.  As an appellate panel of the Departmental Appeals Board (DAB) has explained, CMS is entitled to rely on the information providers and suppliers submit in their enrollment applications, even if such information was submitted in error:

We also agree with the [administrative law judge] that even if [the supplier] mistakenly listed [an individual] as a managing employee on its . . . enrollment application, no provision of the statute or regulations absolves it of responsibility for [this] uncorrected error[.]

Meadowmere Emergency Physicians, PLLC, DAB No. 2881 at 11 (2018) (internal quotation marks omitted).  The panel 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. The panel stated:  "These requirements ensure . . . that CMS may rely on the accuracy of the information in administering the Medicare program."  Id.

As the appellate panel in Meadowmere emphasized, CMS and its contractors are justified in relying on the information suppliers submit throughout the enrollment process.  This conclusion is reinforced by the regulatory definition of "enroll/enrollment" as "the process that Medicare uses to establish eligibility" to submit Medicare claims and to order and certify Medicare items and services.  42 C.F.R. § 424.502 (emphasis added).  Accordingly, Petitioner's suggestion that CMS may not revoke billing privileges based on an application that was not completed or processed to approval is without merit.  See P. Br. at 11.  It is immaterial whether the contractor approved or rejected the application that includes inaccurate content because each application is a part of the enrollment process.

In sum, Petitioner submitted a CMS-855B certifying that Ms. Faught was a delegated official.  The IG exclusions database shows that Ms. Faught is excluded from

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participating in Medicare, Medicaid, and other federal health programs, and Petitioner does not deny that she is excluded.  Therefore, CMS had a basis to revoke Petitioner's Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(2).

3. CMS had a further basis to revoke Petitioner's Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(4).

Having concluded that CMS had a legal basis to revoke Petitioner's Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(2) based on Ms. Faught's exclusion from Medicare, it is not necessary to decide whether there is also a basis to revoke Petitioner's enrollment application under section 42 C.F.R. § 424.535(a)(4) for making false or misleading statements.  See, e.g., Daniel Wiltz & Family Healthcare Clinic, APMC, DAB No. 2864 at 12 (2018) (if one basis for sanction is established, CMS's action would be sustained "regardless of any additional bases").  However, while not required to do so, in this section, I explain why I conclude that there is a basis to revoke Petitioner's Medicare enrollment pursuant to 42 C.F.R. § 424.535(a)(4).

Petitioner does not dispute that, on its CMS-855B, it reported that Ms. Faught did not have a history of adverse legal actions.  Nor, as discussed above, does Petitioner dispute that, in fact, the IG excluded Ms. Faught from Medicare participation.  However, Petitioner argues that revocation is improper, because Petitioner "did not deliberately submit false or misleading information that was used to maintain enrollment in Medicare."  P. Br.at 11 (emphasis omitted).8   Moreover, Petitioner represents that Ms. Faught actively concealed the fact that she was excluded.  P. Ex. 2 at ¶¶ 4, 10.  However, even if Petitioner did not know of Ms. Faught's adverse legal history and did not intend to provide false or misleading information to Medicare, this is not a basis for reversing the revocation of Petitioner's billing privileges.

This is because Petitioner's intent is not relevant to the question of whether Petitioner "certified as true information that is false or misleading" on its CMS-855B:

[S]ection 424.535(a)(4) does not require proof that [the supplier] subjectively intended to provide false information, only proof that [the supplier] in fact provided misleading or false information that [it] certified as true.

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Mark Koch, D.O., DAB No. 2610 at 4 (2014) (emphasis in original).  As I have described above, Mr. Vesely, as Petitioner's authorized official, certified that the contents of the CMS-855B were true, correct, and complete, even though the application stated that Ms. Faught had no adverse legal actions, which was untrue.  That is all that is required to authorize revocation pursuant to 42 C.F.R. § 424.535(a)(4).

Nor does Petitioner's argument that its CMS-855B was not an "application to enroll or maintain enrollment in Medicare" within the meaning of 42 C.F.R. § 424.535(a)(4) aid Petitioner.  See P. Br. at 11-12.  The fact that Petitioner submitted the specific CMS-855B at issue in the present case to change information rather than to enroll initially or revalidate enrollment does not alter the fact that Petitioner's application to change its enrollment information was part of the Medicare enrollment process.  Indeed, the certification statement required on all applications makes clear that suppliers have a continuing obligation to update and correct their applications.9  It is apparent that a supplier who does not comply with this obligation will not "maintain enrollment in Medicare."  Therefore, for the same reasons explained in the previous section of this decision, I find that Petitioner's CMS‑855B was an enrollment application described in 42 C.F.R. § 424.535(a)(4).  Because Petitioner provided information on that application that was false or misleading, CMS had a basis to revoke Petitioner's Medicare enrollment and billing privileges.

4. I have no authority to grant relief on equitable grounds.

Finally, to the extent Petitioner argues that revocation of its Medicare billing privileges is unfair or excessive under the circumstances presented, this is not a basis to overturn the revocation.  Neither administrative law judges nor appellate panels of the DAB may consider equitable arguments, based upon concepts such as fairness or honest mistakes, when deciding a revocation case.  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); see also 1866ICPayday.com, L.L.C., DAB No. 2289 at 14 (2009) (administrative law judge "is bound by applicable laws and regulations and may not invalidate either a law or regulation on any ground . . . .").  Accordingly, Petitioner's arguments concerning intent and honest error in completing the CMS-855B provide no basis for overturning the revocation.

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V.  Conclusion

For the reasons explained above, I decide that CMS had a legal basis to revoke Petitioner's Medicare enrollment and billing privileges effective March 15, 2018.

1. The initial determination revoking Petitioner's enrollment is dated August 3, 2018.  CMS Exhibit (Ex.) 2 at 1.  The record does not contain a copy of the postmarked envelope in which the initial determination was mailed.  In the absence of evidence to the contrary, I infer that the postmark date is the same date as the initial determination itself, August 3, 2018, and that Petitioner's three-year reenrollment bar began September 2, 2018, and ends September 2, 2021.
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2. The IG exclusion record indicates that Ms. Faught was identified as excluded through a match with name and Social Security Number.  CMS Ex. 4 at 2.
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3. The Provider Enrollment and Oversight Group is a component of CMS itself, not an administrative contractor.
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4. The regulation was amended after Petitioner filed its hearing request to extend the reenrollment bar up to 10 years.  See 84 Fed. Reg. 47,794, 47,794, 47,854-56 (Sept. 10, 2019).
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5. My findings of fact and conclusions of law appear as headings in bold italic type.
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6. It appears that Ms. Faught's letter of June 5, 2018, enclosed supplemental submissions to Petitioner's CMS-855B.  CMS Ex. 3 at 1.  The record before me does not include copies of the supplemental submissions.  However, in his affidavit, Mr. Vesely acknowledges that he signed a "revised CMS-855B" in June 2018 that identified Ms. Faught as a delegated official and W-2 managing employee.  P. Ex. 2 at ¶ 8.
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7. Ignorance of the definition would not be a defense, in any event.  Persons "who deal with the government are expected to know the law . . . ."  John Hartman, D.O., DAB No. 2564 at 3 (2014) (citing Heckler v. Cmty. Health Servs. of Crawford County, Inc., 467 U.S. 51, 63 (1984)).  "As courts and the [DAB] have recognized, Medicare providers and suppliers, as participants in the program, have a duty to familiarize themselves with Medicare requirements."  Richard Weinberger, M.D., and Barbara Vizy, M.D., DAB No. 2823 at 21 (2017).
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8. These arguments are consistent with assertions in the request for reconsideration, in which Petitioner argued at length that there was no intent to deceive Medicare or to provide false information by listing Ms. Faught as a delegated official while she was excluded and that any such listing was an honest mistake.  CMS Ex. 1 at 2‑3.
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9. By signing the CMS-855B, an authorized official agrees to notify the Medicare contractor, "If I become aware that any information in this application is not true, correct, or complete."  See CMS Ex. 5 at 62.  As described above, Mr. Vesely signed the certification statement on Petitioner's behalf.  Id.
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