Chris A. Ethridge, MD, DAB CR6042 (2022)

DECISION

The Centers for Medicare & Medicaid Services (CMS), acting through its administrative contractor, CGS Administrators, LLC (CGS), denied the July 2021 application of Petitioner, Chris A. Ethridge, MD, to enroll in the Medicare program based on Petitioner's felony conviction for unlawful taking over $500 in connection with his theft of approximately 23 vials of controlled substances from a children's hospital.  CMS upheld the determination on reconsideration.  I affirm the denial of Petitioner's enrollment application.

I.  Background and Procedural History

Petitioner is a family medicine physician who is licensed in Kentucky.  CMS Ex. 1 at 6, 8.  On March 20, 2017, the Louisville Metro Police Department took Petitioner into custody, at which time it charged him with a Class D felony, "Prohibited acts relating to controlled substances," in violation of section 218A-140 of the Kentucky Revised Statutes.  CMS Ex. 2 at 3.  A "post-arrest complaint" narrative includes the following discussion:

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The above listed subject was an Anesthesiologist Resident through University of Louisville Hospital.  During his time of Residency he completed some of his time at Norton Childrens Hospital.  During his time at this location the above subject unlawfully removed controlled substances from the Pyxis Machine, Remifentanil [and] Fentanyl.  Approx[imately] 23 vials were unlawfully removed.  Subject admitted to his involvement.

CMS Ex. 2 at 3.

On December 12, 2017, the Commonwealth of Kentucky filed a one count information charging that, on or about November 1, 2016, Petitioner "committed the offense of Theft By Unlawful Taking by taking or exercising control of property of a value of $500 but less than $10,000 belonging to another with intent to deprive the owner thereof."  CMS Ex. 2 at 2.  That same day, Petitioner, with the assistance of counsel, filed a motion to enter a guilty plea to the offense charged by information.  CMS Ex. 2 at 11-12.  In conjunction with his guilty plea, Petitioner executed a plea agreement in which he admitted that "[o]n or between 11/1/16 and 3/20/17 [he] unlawfully removed Remifentanil and Fentanyl from Norton Childrens hospital" and that the "[d]rugs had a value of over $500.00."  CMS Ex. 2 at 5.  In January 2018, the Jefferson County Circuit Court granted a motion for pre-trial diversion of a Class D felony.  CMS Ex. 2 at 6.

On June 26, 2018, Petitioner executed an "Agreed Order" with the Commonwealth of Kentucky Board of Medical Licensure that "permanently banned [him] from prescribing or dispensing controlled substances . . . ."1   CMS Ex. 2 at 22.  Petitioner stipulated that he "has engaged in conduct which violates the provisions of KRS 311.595(4), (6), and (9), as illustrated by KRS 311.597(1)(a) and (c)."2   CMS Ex. 2 at 21-22.  One factual stipulation reported Petitioner's statement that he had "use[d] alternative medications in cases without prior approval."  CMS Ex. 2 at 20.  Another factual stipulation addressed that on March 10, 2017, Norton's Children's Hospital "became aware that [Petitioner] had remove two (2) vials of remifentanil from a patient" and that 23 vials of remifentanil

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and fentanyl that Petitioner had "checked out" of a Pyxis3 system "could not be accounted for."  CMS Ex. 2 at 19.  Other stipulations discussed that a University of Louisville Department of Anesthesiology official referred Petitioner to the Kentucky Physicians Health Foundation "regarding a concern for substance use disorder" and that Petitioner entered residential treatment on March 21, 2017.  CMS Ex. 2 at 19-20.

On January 19, 2021, the state court "dismissed as diverted" the charges.4  CMS Ex. 4 at 30.  Thereafter, on March 31, 2021, the Court issued an order granting expungement of the charges.  CMS Ex. 4 at 32-33; P. Ex. 1.

In July 2021, Petitioner applied to enroll in the Medicare program.  CMS Ex. 1.  CGS issued an initial determination on August 16, 2021, in which it denied Petitioner's enrollment application pursuant to 42 C.F.R. § 424.530(a)(3), based on his felony conviction in the preceding 10 years.  CMS Ex. 3 at 1.

Petitioner submitted a request for reconsideration dated August 26, 2021.  CMS Ex. 4.  Petitioner argued that the charges had been expunged, his medical license was unrestricted, and he had been issued a Drug Enforcement Administration registration number.  CMS Ex. 4 at 1.

On October 14, 2021, CMS's Provider Enrollment & Oversight Group issued a reconsidered determination in which it upheld the denial of Petitioner's enrollment application pursuant to 42 C.F.R. § 424.530(a)(3).  CMS Ex. 5 at 1.  CMS explained:

Under 42 C.F.R. § 424.530(a)(3), CMS is authorized to deny a supplier's enrollment when the supplier was, in the preceding 10 years, convicted (as that term is defined in § 1001.2) of a Federal or State felony offense that CMS determines is detrimental to the best interests of the Medicare program and its beneficiaries.  Pursuant to § 1001.2, convicted means that a judgment of conviction has been entered . . . regardless of whether . . . [t]he judgment of

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conviction or other record relating to the criminal conduct has been expunged or otherwise removed.  Under § 1001.2, convicted is also defined as a Federal, State, or local court that has accepted a plea of guilty or nolo contendere by an individual or entity.

CMS Ex. 5 at 3.  CMS further explained:

CMS must also make a determination as to whether [Petitioner's] felony conviction is detrimental to the best interests of the Medicare program and its beneficiaries.  Through rulemaking, CMS has determined that certain felony offenses are per se detrimental to the best interests of the Medicare program and its beneficiaries.  Under § 424.530(a)(3)(i)(D), per se detrimental offenses include, but are not limited in scope or severity, to any felony that would result in mandatory exclusion under § 1128(a) of the [Social Security] Act.  Under section 1128(a)(4) of the Act, the Secretary must exclude individuals for a felony conviction relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. . . . CMS finds [Petitioner's] felony conviction of Theft by Unlawful Taking over $500 (Class D felony) of the controlled substances remifentanil and fentanyl from the Norton Children's Hospital to be severe in nature and akin to the enumerated controlled substance crimes described above.  As a result, CMS finds that [Petitioner's] felony conviction is per se detrimental to the best interest of the Medicare program and its beneficiaries.

CMS Ex. 5 at 3-4.

Petitioner, through counsel, filed a request for hearing on December 3, 2021.  CMS filed a combined brief and motion for summary judgment (CMS Br.), along with five proposed exhibits (CMS Exs. 1-5).  Petitioner submitted a pre-hearing brief in opposition to the motion for summary judgment (P. Br.) and five proposed exhibits (P. Exs. 1-5).  In the absence of any objections, I admit CMS Exs. 1-5 and P. Exs. 1-5 into the evidentiary record.

Neither party has submitted the sworn and 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.  Because an in-person hearing is unnecessary, I need not rule on CMS's motion for summary judgment.  I issue this decision on the merits.

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II.  Issue

Whether CMS has a legitimate basis to deny Petitioner's Medicare enrollment application pursuant to 42 C.F.R. § 424.530(a)(3), based on his felony conviction for theft by unlawful taking of property over $500 in value in connection with his unauthorized removal of remifentanil and fentanyl from a hospital Pyxis system.

III.  Jurisdiction

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

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

As a physician, Petitioner is a supplier of health care services for purposes of the Medicare program.  42 U.S.C. § 1395x(d); 42 C.F.R. §§ 400.202 (supplier), 410.20(b)(1).  In order to participate in the Medicare program as a supplier, an individual must meet certain criteria to enroll and receive billing privileges.  42 C.F.R. §§ 424.505, 424.510.  CMS may deny a supplier's enrollment for any reason stated in, inter alia, 42 C.F.R. § 424.530(a).

A supplier's enrollment application for Medicare billing privileges can be denied based on the existence of a felony conviction, as is set forth in 42 C.F.R. § 424.530(a)(3):

(3)  Felonies.  The provider, supplier, or any owner or managing employee of the provider or supplier was, within the preceding 10 years, convicted (as that term is defined in 42 [C.F.R. §] 1001.2) of a Federal or State felony offense that CMS determines is detrimental to the best interests of the Medicare program and its beneficiaries.

(i)  Offenses include, but are not limited in scope or severity to –

*  *  *

(D)  Any felonies that would result in mandatory exclusion under section 1128(a) of the Act.

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42 C.F.R. § 424.530(a)(3)(i)(D); 42 U.S.C. § 1395u(h)(8) (authorizing the Secretary to deny enrollment when a prospective supplier has been convicted of a felony offense that the Secretary has determined is detrimental to the best interests of the Medicare program or its beneficiaries).  As relevant here, section 1128(a)(4) of the Act, 42 U.S.C. § 1320a-7(a)(4), mandates exclusion when an individual has a felony conviction, as defined by 42 U.S.C. § 1320a-7(i), "relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance."6

The definition of conviction utilized by CMS is found at 42 C.F.R. § 1001.2 (convicted), and the language of section 1001.2 mirrors the statutory language found in the Act.  Compare 42 C.F.R. § 1001.2 with 42 U.S.C. § 1320a-7(i); see 42 C.F.R. § 424.530(a)(3).  As relevant here, a prospective supplier has been convicted when a state court has accepted a plea of guilty or the supplier "has entered into participation in a first offender, deferred adjudication or arrangement where judgment of conviction has been withheld."  42 C.F.R. § 1001.2(c), (d); 42 U.S.C. § 1320a-7(i)(3),(4).

Suppliers of health care services who have been denied enrollment have a statutory right to a hearing to dispute the denial.  42 U.S.C. § 1395cc(j)(8).  CMS may exercise its discretion to deny enrollment when it determines that a felony offense committed by a supplier is detrimental to the best interests of the program and its beneficiaries.  See Fady Fayad, M.D., DAB No. 2266 at 16 (2009), aff'd sub nom. Fayad v. Sebelius, 803 F. Supp. 2d 699, 704 (E.D. Mich. 2011).  A supplier who has been denied enrollment has a right to an ALJ hearing and Departmental Appeals Board (DAB) review.  42 C.F.R. §§ 498.3(b)(17)(i), 498.5(l)(2)-(3).

1. On March 20, 2017, the Louisville Metro Police Department cited Petitioner for committing prohibited acts related to controlled substances after it received a report from Norton Children's Hospital that he had removed approximately 23 vials of remifentanil and fentanyl without authorization.
2. In conjunction with a plea agreement executed on December 12, 2017, the Commonwealth of Kentucky filed a one count information charging that Petitioner committed the offense of "Theft by Unlawful Taking by taking or exercising control of property of a value of [over] $500 but less than $10,000 belonging to another with intent to deprive the owner thereof."

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3. Pursuant to the plea agreement, Petitioner admitted that he had unlawfully removed remifentanil and fentanyl from Norton Children's Hospital between November 1, 2016, and March 20, 2017.
4. On January 23, 2018, a state court judge accepted Petitioner's guilty plea and granted a motion for pre-trial diversion of a Class D felony.  At that time, the judge ordered that if Petitioner failed to complete pre-trial diversion, the court "shall impose a sentence equal to the penalty recommended by the prosecutor," which was a five-year term of incarceration.
5. Theft by unlawful taking of property in excess of $500 is a Class D felony that is punishable by more than one year of incarceration.
6. Because a state court accepted Petitioner's guilty plea and Petitioner entered a pre-trial diversion program, he has a conviction as defined by 42 C.F.R. § 1001.2 for purposes of Medicare enrollment.
7. Petitioner's felony offense related to the unlawful dispensing of controlled substances is within the 10 years preceding his submission of a Medicare enrollment application.
8. Pursuant to 1128(a)(4) of the Act, a felony offense related to the unlawful dispensing of a controlled substance mandates exclusion.
9. CMS has determined that felony offenses that would result in mandatory exclusion under section 1128(a) of the Act are per se detrimental to the Medicare program and its beneficiaries.
10. CMS and its administrative contractor had a legitimate basis to deny Petitioner's enrollment application pursuant to 42 C.F.R. § 424.530(a)(3)(i)(D) because his felony offense within the 10 years preceding his submission of an enrollment application is per se detrimental to the best interests of the Medicare program and its beneficiaries.

Petitioner was initially charged with unauthorized procurement of controlled substances.  CMS Ex. 2 at 1; P. Ex. 1 at 1.  In conjunction with a plea agreement in which the prosecution supported his referral to a pre-trial diversion program, he pleaded guilty to theft by unlawful taking of property valued in excess of $500, a Class D felony that carried a maximum sentence of incarceration of five years.  CMS Ex. 2 at 5-6.  Petitioner acknowledged that the factual basis underlying his guilty plea was his unauthorized removal of approximately 23 vials of remifentanil and fentanyl from a hospital Pyxis

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system.  CMS Ex. 2 at 5.  Petitioner also acknowledged that his theft of controlled substances was related to his own substance abuse.  See CMS Ex. 2 at 20; P. Br. at 1-3.  The crux of Petitioner's crime is that instead of dispensing remifentanil and fentanyl he obtained from a hospital Pyxis system to the patients for whom the medications were intended, he illegally dispensed those controlled substances to himself.

Because Petitioner entered a guilty plea to the felony charge that he committed theft by unlawful taking of property in excess of $500, and the facts underlying the offense demonstrate that he removed controlled substances from a hospital Pyxis system and dispensed them to himself, Petitioner's felony offense undoubtedly relates to the "unlawful manufacture, distribution, prescription or dispensing of a controlled substance."  42 U.S.C. § 1320a-7(a)(4).  Petitioner unpersuasively claims that his theft does not relate to the unlawful distribution, prescription, or dispensing of a controlled substance.

Other than citing a single irrelevant ALJ decision,7 Petitioner offers no support for his claim that Congress did not intend to exclude individuals who did not distribute, prescribe, or dispense controlled substances to others.  P. Br.8  Significantly, the record contains evidence that Petitioner's criminal conduct resulted in controlled substances not being dispensed to others as intended, but rather, dispensed to Petitioner himself.  See CMS Ex. 2 at 20-21 (factual stipulation in the "Agreed Order" that Petitioner "use[d] alternative medications in cases without prior approval" and legal stipulation that Petitioner violated KRS § 311.595(9) pertaining to "dishonorable, unethical, or unprofessional conduct of a character likely to deceive, defraud, or harm the public or any member thereof").

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In an analogous enrollment case invoking the section 1128(a)(4) exclusion authority, the DAB upheld the revocation of a physician's Medicare enrollment where the physician's prescriptions "were ostensibly written for members of [the physician's] family," but had been issued "so that he could obtain the controlled substances for his own use."  Blair Allen Nelson, M.D., DAB No. 3024 at 3 (2020).  The DAB determined that the ALJ "correctly concluded [that the physician's] conviction was not merely ‘similar' or ‘akin' to an offense listed in section 1128(a)(4), it is a conviction ‘falling' explicitly within the reach of section 1128(a)(4) and described at 42 C.F.R. § 424.535(a)(3)(ii)(D)."  Blair Allen Nelson, DAB No. 3024 at 7.  The DAB further explained the physician's felony conviction for a scheme that allowed him to procure controlled substances for his own use "would result in a mandatory exclusion under section 1128(a)(4), [and] CMS determined it to be per se detrimental to the best interests of the Medicare program and its beneficiaries.  CMS, therefore, had a lawful basis to revoke [his] Medicare billing privileges . . . ."  Blair Allen Nelson, DAB No. 3024 at 8.  In that case, the physician unlawfully prescribed controlled substances for his own use, whereas in the instant case, Petitioner stole controlled substances from a Pyxis system and dispensed the medications to himself, rather than to patients for whom the medications were intended.  Thus, while the crime in the Blair Allen Nelson case did not involve any patients or anyone other than the physician who received controlled substances, the DAB nonetheless determined that the mandatory exclusion authority under section 1128(a)(4) applied.

Petitioner argues that "it is clear that Congress did not intend to exclude providers whose actions or board orders pertained to treatment and monitoring for a substance abuse problem."9   P. Br.  Broadly speaking, I agree.  By its plain language, Congress intended to exclude suppliers who have been convicted of felony offenses related to the manufacture, distribution, prescribing, and dispensing of controlled substances.  42 U.S.C. § 1320a-7(a)(4).  The specific circumstances here do not simply relate to substance abuse and treatment, but also involve the means by which Petitioner obtained controlled substances for his personal use.  Petitioner has a felony conviction, for purposes of Medicare enrollment, because he stole controlled substances that were intended for patients, and not because he merely possessed controlled substances due to substance abuse.

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Petitioner also argues that he has "complied with all treatment directives, monitoring of his sobriety, successfully completed his Family Medicine residency and met all expectations of the Kentucky Board of Medical Licensure" and also "has the support of each entity that has worked closely with him and the support of his prospective employer."  P. Br.  Petitioner's efforts and determination to overcome a substance abuse problem are laudable.  The state court system furthered worthy rehabilitative goals when it allowed Petitioner to enter a diversion program and ultimately expunged the charges.  See CMS Exs. 2 at 7; 4 at 32-33; P. Ex. 1.  Likewise, Kentucky's medical licensing board ultimately removed any restrictions on Petitioner's license, and Petitioner's residency program allowed him to change his specialty and continue his residency.  See P. Exs. 2-5.  With some degree of leniency being afforded to him, the support of others, and his own remarkable effort, Petitioner has been able to complete his residency and regain an unrestricted medical license.

My role in this matter is limited, and I am not empowered to reverse CMS's denial of Petitioner's enrollment application in the interests of leniency or to reward Petitioner's rehabilitation.  I may not reverse CMS's denial of Petitioner's enrollment application so long as CMS had that authority to deny his enrollment application.  Letantia Bussell, M.D., DAB No. 2196 at 13 (2008).  Addressing the limited role of an ALJ, the DAB has explained, "Where CMS is legally authorized to deny an enrollment application, an ALJ cannot substitute his or her discretion for that of CMS (or CMS's contractor) in determining whether, under the circumstances, denial is appropriate."  White, DAB No. 2912 at 14.  Thus, the scope of my review is whether CMS had a legitimate basis to deny Petitioners' enrollment application, not whether I would make the same determination in the first instance.

The purpose of an enrollment denial is to protect the Medicare program and its beneficiaries, rather than to promote and reward the rehabilitation of criminal offenders.  See, e.g., Henry L. Gupton, DAB No. 2058 at 7 (2007) (explaining that the goals of criminal law "generally involve punishment and rehabilitation by the offender, possibly deterrence of future misconduct . . . , and various public policy goals"), aff'd, Gupton v. Leavitt, 575 F. Supp. 2d 874 (E.D. Tenn. 2008).  Congress has authorized CMS to deny the enrollment of a supplier with a felony conviction that is detrimental to the best interests of the Medicare program and its beneficiaries.  42 U.S.C. § 1395u(h)(8).  In furtherance of that authority, CMS has determined that felony convictions that would result in a mandatory exclusion under section 1128(a) of the Act are per se detrimental to program and its beneficiaries.  42 C.F.R. § 424.530(a)(3)(i)(D).  For purposes of Medicare enrollment, Petitioner has a felony criminal conviction related to the dispensing of controlled substances, and such a conviction would result in a mandatory exclusion under section 1128(a)(4).  Petitioner has thus been convicted of a criminal offense that is

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per se detrimental to the best interests of the Medicare program and its beneficiaries within the 10 years preceding his enrollment application.  CMS was therefore authorized to deny Petitioner's enrollment application.  42 C.F.R. § 424.530(a)(3)(i)(D).

V.  Conclusion

I affirm the denial of Petitioner's enrollment application.

1. On June 14, 2021, following the court's issuance of an expungement order, the medical licensing board terminated the Agreed Order.  P. Ex. 2 at 1.
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2. Section 311.595(9) of the Kentucky Revised Statutes applies to an individual who has "[e]ngaged in dishonorable, unethical, or unprofessional conduct of a character likely to deceive, defraud, or harm the public or any member thereof."
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3. In simple terms, a Pyxis system is a proprietary piece of equipment used by a hospital to manage its supply inventory and facilitate patient billing and recordkeeping.  A Pyxis medication system dispenses medications, maintains access logs, and records the dosages of medication removed for administration to specific patients.  See, e.g., https://www.bd.com/en-us/products-and-solutions/products/product-brands/pyxis (last visited March 3, 2022).
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4. It appears that the Court dismissed and expunged both the original charge and the charge to which Petitioner entered his guilty plea.
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5. My findings of fact and conclusions of law are in bold and italics.
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6. While there are slight differences in the wording of section 1128 of the Act and its codification at 42 U.S.C. § 1320a-7, the two authorities are substantively identical.  I refer to them interchangeably.
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7. Petitioner cited Stephen White, M.D., DAB CR5069 (2018) in support of his claim that Congress intended to exclude only individuals who illegally provided controlled substances to others.  Preliminarily, I point out that the decisions of other ALJs are not binding precedent.  Further, the ALJ's limited discussion of congressional intent focused on the question of whether "mere possession" of a controlled substance, without any evidence of illegal manufacture, distribution, prescription, or dispensing, would mandate exclusion.  White, DAB CR5069 at 9.  Unlike the circumstances presented in White, the evidence here shows that Petitioner did not merely possess controlled substances, but rather used his position as a resident with access to a hospital Pyxis system to dispense medications to himself.  In upholding the ALJ's decision, the DAB stated, "CMS's finding of a nexus between the Medicare program and . . . felony drug possession is not unreasonable."  Stephen White, M.D., DAB No. 2912 at 15 (2018).
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8. Because Petitioner did not paginate his brief, I do not provide pinpoint citations to his brief.
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9. Along those lines, Petitioner argues "[t]here is no evidence that [he] illegally used protected health information, submitted fraudulent billings, issued unlawful prescriptions or otherwise caused harm to patients."  P. Br.  While the absence of such evidence is not dispositive of whether the section 1128(a)(4) exclusion authority applies, I nonetheless disagree that there is "no evidence" that Petitioner caused harm to any patients.  CMS Ex. 2 at 20-21 (stipulations in the Agreed Order that Petitioner "use[d] alternative medications in cases without prior approval" and that he violated KRS § 311.595(9), which pertains to "dishonorable, unethical, or unprofessional conduct of a character likely to deceive, defraud, or harm the public or any member thereof").
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