Dr. Cesar I. Vargas Quinones, DAB CR6080 (2022)

DECISION

I sustain the Centers for Medicare & Medicaid Services’s (CMS’s) determination to deny Petitioner’s application for Medicare enrollment and to put him on the CMS Preclusion List.

I.  Background

Petitioner, a physician, filed a hearing request to challenge CMS’s determination to deny his application for Medicare enrollment and to put him on the CMS Preclusion List.1

CMS moved for summary judgment.  With its motion CMS filed eight proposed exhibits, identified as CMS Ex. 1-CMS Ex. 8.  CMS did not offer the testimony of a witness.  Petitioner opposed the motion and filed two proposed exhibits, identified as P. Ex. 1 and P. Ex. 2.  These exhibits include Petitioner’s written declaration.  P. Ex. 1.

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Petitioner’s testimony describes his incarceration as a prisoner of the United States from November 30, 2011, when he was arrested on federal charges, to his release from federal prison on December 28, 2017.  P. Ex. 1 at 2.  These facts are non-controversial, and cross-examination of Petitioner would not impeach them.  I receive CMS Ex. 1-CMS Ex. 8 and P. Ex. 1-P. Ex. 2 into evidence.  A hearing is unnecessary because neither party requested witness cross-examination.  I decide this case on the parties’ written exchanges.  I find it unnecessary that I apply the criteria for granting or denying summary judgment.

II.  Issues, Findings of Fact and Conclusions of Law

1. Issues

The issues are whether CMS is authorized to deny Petitioner’s application for Medicare enrollment and to put him on the CMS Preclusion List.

2. Findings of Fact and Conclusions of Law

On March 29, 2012, Petitioner pled guilty to, and was convicted of, a federal felony consisting of conspiracy to possess with intent to distribute controlled substances.  CMS Ex. 5 at 14-27.  Petitioner was convicted of hiring co-conspirators to work as physicians and assistants at a clinic that he owned.  He and his co-conspirators knowingly and intentionally issued sham prescriptions on a recurring basis to individuals for various controlled substances that included opioids.  Petitioner’s criminal scheme included having his co-conspirators issue sham prescriptions to himself so that he could resell and distribute controlled substances.  CMS Ex. 5 at 14-27.

Petitioner was sentenced to 48 months’ imprisonment and three years of probation.  CMS Ex. 5 at 28-32.  The sentence exceeded the sentence recommended in Petitioner’s plea agreement, in part because of Petitioner’s abuse of his status as a physician and also due to his attempts to conceal his criminal conduct.  Id. at 34.

On July 3, 2012, CMS notified Petitioner that it was revoking his Medicare enrollment effective March 29, 2012, the date of Petitioner’s conviction.  CMS Ex. 4 at 1-2.  CMS mailed the notice to the correspondence address that Petitioner provided in his Medicare enrollment application.  Id.; see CMS Ex. 8 at 3.  Petitioner did not appeal the determination to revoke his enrollment.

On May 11, 2021, Petitioner filed an application to reactivate his Medicare billing privileges.  CMS Ex. 3 at 1.  In this application Petitioner used the same return mailing address as was previously on file with CMS and to which CMS had mailed the 2012 notice of revocation of Petitioner’s Medicare enrollment.  Id. at 3.  A Medicare contractor treated this application as an application to enroll in Medicare, because Petitioner’s previous enrollment had been revoked.  CMS Ex. 7 at 4.

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On June 14, 2021, the contractor notified Petitioner that his enrollment application was denied and that he was being put on the CMS Preclusion List.  CMS Ex. 1 at 1.  The contractor told Petitioner that the basis for the determinations was that Petitioner was convicted of a felony consisting of criminal conduct detrimental to the interests of the Medicare program and its beneficiaries, citing 42 C.F.R. §§ 424.530(a)(3), 422.2, 422.222, 423.100, and 423.120(c)(6).

Petitioner requested reconsideration of the determinations.  CMS Ex. 2.  In his request he contended that his participation in Medicare had never been revoked and that he, in fact, remained an active Medicare participant.  CMS Ex. 2 at 7.2   Petitioner contended that he was merely seeking confirmation from the contractor and CMS that he remained enrolled as a Medicare supplier.  Id. at 7-9.  Petitioner also disputed the determination that he had been convicted of conduct justifying revocation, asserting that he had been a model citizen since his conviction.  Id. at 11.

CMS denied Petitioner’s request for reconsideration, upholding the denial of Petitioner’s application and his inclusion on the CMS Preclusion List through March 29, 2022.  CMS Ex. 7.  The denial explained that Petitioner’s enrollment had been revoked in 2012 and therefore, his application to reactivate his billing privileges was treated as an application for enrollment as a Medicare supplier.  Id. at 3-4.  CMS advised Petitioner that it determined that his felony conviction was per se detrimental to the Medicare program and its beneficiaries because it would result in mandatory exclusion from Medicare participation pursuant to section 1128(a) of the Social Security Act (Act).  Section 1128(a)(4) of the Act mandates exclusion from Medicare participation of any individual who is convicted of a criminal offense relating to the unlawful manufacture, distribution, prescription or dispensing of a controlled substance.  CMS Ex. 7 at 4; Act § 1128(a)(4).

CMS determined that the facts and circumstances of Petitioner’s conviction called into question his trustworthiness and veracity relating to his ability to abide by the government’s rules.  Id. at 4-5.  CMS found that Petitioner’s claims to have been a model citizen did not countervail the facts relating to his conviction.  Id. 

CMS considered applicable regulatory criteria in determining whether Petitioner should be on the CMS Preclusion List.  These criteria are stated at 42 C.F.R. §§ 422.2 and 423.100.  Pursuant to these criteria CMS evaluated the severity of Petitioner’s crimes, when they occurred, and additional relevant information.

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CMS found that Petitioner’s conviction established that he had committed extremely severe crimes because they related to the safety and well-being of those individuals seeking treatment from Petitioner.  CMS Ex. 7 at 6.  CMS found that Petitioner had been convicted of these crimes within the previous ten years.  Id. 

CMS found additionally that Petitioner had played a leading role in his criminal conspiracy and had directed other physicians to prescribe controlled substances for Petitioner’s personal use.  CMS Ex. 7 at 6-7.  CMS concluded that Petitioner’s criminal conduct proved that he had a dangerous disregard for the law as well as for the safety of others.  The criminal conduct engaged in by Petitioner was, CMS determined, precisely the type of conduct that that the CMS Preclusion List was intended to protect against.  Id. at 7.  CMS noted that this was especially the case considering the ongoing opioid crisis.  Id.  Finally, CMS found that Petitioner’s conduct negatively affected the integrity of Medicare because his actions reflected poorly on the medical profession and jeopardized public confidence in Medicare providers and suppliers.  Id. 

Petitioner requested a hearing to challenge the initial and reconsidered determinations. 

My authority to address issues in this case is limited to deciding whether CMS had a legal basis to deny Petitioner’s enrollment application and to put Petitioner on the CMS Preclusion List.  John A. Hartman, D.O., DAB No. 2911 at 9, 14 (2018).  I do not have the authority to address any challenge that Petitioner might now raise to the original revocation determination because that challenge is untimely.  Petitioner had 60 days from the date of the revocation notice within which to request reconsideration.  42 C.F.R. § 498.20(b).  His failure to do so renders that determination administratively final and puts beyond my reach any challenge to the determination.  There was no reconsidered determination from the initial determination to revoke, leaving me with nothing that I may hear and decide.  Haissam Elzaim, M.D., et al., DAB No. 2501 at 4-5 (2013). 

However, Petitioner argues that CMS failed to send him notice of that determination.  P. Ex. 1 at 1; Petitioner’s Pre-Hearing Brief and Opposition to Motion for Summary Judgment (Petitioner’s brief) at 7.  Consequently, according to Petitioner, the revocation of his Medicare participation is either invalid or alternatively, he may now challenge the merits of the revocation determination. 

The gravamen of Petitioner’s argument is that he was incarcerated by the federal government as of the mailing date of the revocation notice, that CMS knew that Petitioner would not receive the notice that the contractor sent to the address that Petitioner had on file with the contractor, and therefore, Petitioner was denied due process.  Petitioner’s brief at 8, 11.  According to Petitioner, it was impossible for him to challenge the determination to revoke his participation because he did not receive the notice of that determination.  Id. at 11.  Petitioner contends that CMS had “clear notice from the docket” of Petitioner’s criminal case that Petitioner would not receive the notice

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of revocation.  Id. at 12.  Petitioner asserts that the contractor knew or reasonably should have known that Petitioner would not see the revocation notice and that he would have no ability to respond to it timely.  Id.  Petitioner demands that the reconsideration determination in this case should therefore be “reversed.”  Id. at 13.

I find Petitioner’s argument to be without merit.  First, it assumes facts that are not in evidence.  Second, it conjures a duty that CMS does not have and ignores a duty that Petitioner definitely has and that he did not perform.

Petitioner’s argument hinges on his assertion that CMS or its contractor knew or should have known that Petitioner would not receive mail at his registered address and that CMS or the contractor therefore, either intentionally or recklessly, denied Petitioner due process by sending the revocation notice to that address.  Essentially, Petitioner asserts that CMS or the contractor should have sent notice to Petitioner at the prison where he was incarcerated on July 3, 2012.

However, Petitioner has offered no evidence to show that either CMS or the contractor was aware that Petitioner was not receiving mail at his registered address.

Petitioner assumes that some unnamed federal government entity would have or should have advised CMS or the contractor of Petitioner’s imprisonment, thus giving notice of that fact to CMS or the contractor.  Alternatively, Petitioner seems to assert that CMS or the contractor should have researched the question of Petitioner’s whereabouts before sending the revocation notice.  But Petitioner has offered no evidence to show that notice of his incarceration was sent to CMS or the contractor nor has he offered either evidence or argument to establish that CMS or the contractor had the wherewithal or the obligation to ferret out the fact of Petitioner’s incarceration before mailing the revocation notice.

In addressing this issue, Petitioner asserts, vaguely, that some additional evidence might come out at an in-person hearing that would permit me to infer that CMS or the contractor knew that Petitioner could not receive mail at his registered address due to his incarceration.  Petitioner’s brief at 15.  However, Petitioner was obligated to file all relevant evidence in his pre-hearing exchange.  He has offered no basis – other than speculation – for me to conduct additional proceedings.  Speculation is no ground for such proceedings.

Second, it was not CMS’s duty to research Petitioner’s address.  CMS and the contractor were entitled to rely on the mailing address that Petitioner supplied to them.  It was Petitioner’s duty to inform CMS and the contractor of any change in his mailing address.  When Petitioner enrolled as a Medicare supplier, he provided CMS and the contractor with an address at which he could be contacted.  When Petitioner changed his address, either voluntarily or involuntarily, he had the duty to notify the contractor and CMS of that change.

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Medicare regulations governing supplier enrollment explicitly require a supplier to notify the contractor and CMS of any change in enrollment application information within 90 days of its occurrence.  42 C.F.R. § 424.516(d), (e)(2).  Petitioner asserts that he was incarcerated beginning November 30, 2011, more than eight months before the contractor sent the revocation notice to Petitioner’s registered address.  Petitioner was obligated to inform CMS and the contractor of his change of address months before the contractor sent the notice.  He cannot now claim that he was unfairly denied notice given that he failed to discharge his duty to provide a change of address. 

I find that CMS had a lawful basis to deny Petitioner’s current enrollment application.  The evidence establishes:  (1) that Petitioner was convicted of a felony within ten years of Petitioner’s May 11, 2021 application; and (2) that the conviction was for an offense that CMS determined to be detrimental to the best interests of the Medicare program and its beneficiaries.  Evidence establishes that Petitioner was convicted of a federal felony on March 29, 2012.  That conviction was for criminal acts that are a per se basis for establishing a detriment to the Medicare program and its beneficiaries.  42 C.F.R. § 424.530(a)(3)(i)(D); Act § 1128(a)(4). 

Finally, I find that CMS had a lawful basis to put Petitioner on the CMS Preclusion List.  Regulations permit CMS to put an individual on the list if he or she has been convicted of a felony within the previous ten years and CMS determines that the crime is detrimental to the best interests of the Medicare program.  42 C.F.R. §§ 423.100, 422.2.  These regulatory provisions replicate those that govern revocation of Medicare participation. 

There is no dispute that Petitioner was convicted of a felony within the ten years prior to the determination to put him on the CMS Preclusion List. 

As to the issue of whether the conviction was for a crime that is detrimental to the best interests of the Medicare program, the regulations establish three criteria for evaluation of that issue.  These are: (1) the severity of the offense; (2) when it occurred; and (3) any other information that CMS may deem to be relevant.  42 C.F.R. §§ 423.100, 422.2. 

The evidence establishes that CMS carefully considered these criteria and relevant evidence in evaluating the issue of detriment.  I have no basis to conclude that CMS’s determination was wrong.  It is a discretionary determination well-grounded in the record.  Letantia Bussell, M.D., DAB No. 2196 at 13 (2008).  As I have discussed, CMS determined that Petitioner had played a leading role in the criminal conspiracy of which he was convicted, that he had a dangerous disregard for the law as well as for the safety of others, and that he engaged in criminal conduct that was precisely the type of conduct that the CMS Preclusion List was intended to protect against.  CMS Ex. 7 at 6-7.  These findings were more than amply supported by the evidence of Petitioner’s crimes.  CMS Ex. 5.  Petitioner offered no evidence that undercut or mitigated the evidence relied on by CMS.

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Petitioner argues that putting him on the CMS Preclusion List is an unlawful retroactive determination.  Petitioner’s brief at 20-24.  He asserts that CMS did not implement the list until June 15, 2018.  Therefore, according to Petitioner, putting him on that list is “retroactive” because he was convicted in 2012, about six years prior to the CMS Preclusion List’s implementation.

I find this argument to be without merit.  Petitioner’s conviction may have predated the implementation of the CMS Preclusion List, but the threat that Petitioner posed was ongoing.  CMS didn’t determine that Petitioner’s conviction made him a threat to the integrity of the Medicare program only in the past.  Rather, its determination was that Petitioner’s past conduct established him to be an ongoing threat – a threat that existed at the time that the CMS Preclusion List was implemented and from that date forward, until ten years had elapsed from Petitioner’s conviction.  There is nothing whatsoever that is retroactive about that determination.3   Putting Petitioner on the CMS Preclusion List was prospective, rather than retroactive in nature, with the authority for that determination stemming from a regulation that was in effect at the time that CMS made the determination.  Robert F. Tzeng, M.D., DAB No. 2169 at 13 (2008).

1. The CMS Preclusion List is a list of providers and suppliers who are prohibited from receiving payment from Parts C and D of the Medicare program.  42 C.F.R. §§ 422.2 and 423.100.  CMS acted to put Petitioner on the CMS Preclusion List based on the authority granted by 42 C.F.R. §§ 424.530(a)(3), 422.2, 422.222, 432.100, and 423.120(c)(6).
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2. Notwithstanding, Petitioner knew that he had been foreclosed from billing for Medicare reimbursement.  Petitioner’s application for reactivation of billing privileges was an attempt by him to reactivate a billing number that no longer functioned to allow him to claim reimbursement.  CMS Ex. 3 at 1.
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3. I note that Petitioner is no longer on the CMS Preclusion List, effective March 29, 2022.
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