Diagnostic Imaging Network Medical Group, Inc., DAB CR5481 (2019)

DECISION

Petitioner, Diagnostic Imaging Network Medical Group, Inc., is an independent diagnostic testing facility located in Buena Park, California.  It participated in the Medicare program until the Centers for Medicare & Medicaid Services (CMS) revoked its billing privileges.  CMS took this action pursuant to 42 C.F.R. § 424.535(a)(2) because the Office of Inspector General (IG) for the Department of Health and Human Services excluded one of its health care technicians from participating in federal health care programs. 

Petitioner appeals. 

I find that CMS is authorized to revoke Petitioner’s Medicare billing privileges because one of its health care employees was excluded from program participation.  By regulation, the effective date of the revocation is the date of the employee’s exclusion.  However, I agree with the CMS hearing officer; the effective date should be the date the sanctioned employee began working for Petitioner, which was after the date of his exclusion.  I therefore affirm CMS’s reconsidered determination.

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Background

By letter dated October 17, 2016, the Medicare contractor, Noridian Healthcare Solutions, advised Petitioner that its Medicare privileges were revoked, effective June 26, 2008.  As the letter explains, the contractor acted pursuant to 42 C.F.R. § 424.535(a)(2) because one of the testing facility’s technicians, Eddy Shpolyansky, had been sanctioned by the IG on February 20, 2008.  The contractor imposed a three-year enrollment bar, pursuant to 42 C.F.R. § 424.535(c)(1).  CMS Ex. 1. 

Petitioner requested reconsideration.  In a reconsidered determination, dated March 7, 2017, a CMS hearing officer upheld the revocation, although she changed its effective date to January 11, 2012, the day Petitioner first employed Technician Shpolyansky.  CMS Ex. 4; but see footnote 3, below.  Petitioner timely appealed.

Hearing on the written record.  I find that this matter may be decided on the written record.  In my initial order, I instructed the parties to list proposed witnesses (if any) and to submit their written direct testimony.  Acknowledgment and Pre-hearing Order at 3, 5 (¶¶ 4, 8) (May 19, 2017).  I also directed each party to state, affirmatively, whether it intended to cross-examine any proposed witness.  Order at 5 (¶ 9).  An in-person hearing is necessary “only if a party files admissible, written direct testimony, and the opposing party asks to cross-examine.”  Order at 5 (¶ 10).  CMS lists no witnesses.  Petitioner lists one witness and provides her written declaration.  P. Ex. 7.  CMS has not asked to cross-examine her.  An in-person hearing would therefore serve no purpose, and I may decide the case based on the written record.

Exhibits.  CMS submits its motion and brief (CMS Br.) with eight exhibits (CMS Exs. 1-8).  Petitioner submits its brief and seven exhibits (P. Exs. 1-7).  CMS proactively objected to one of Petitioner’s exhibits, P. Ex. 6 (also submitted as CMS Ex. 8 and P. Ex. 7 at 3), which Petitioner submitted with its hearing request, marked as Exhibit E.  Petitioner identifies P. Ex. 6 as an excerpt from its employment logs, which purportedly show that Technician Shpolyansky left its employment on July 31, 2015.  CMS argues that the document should not be admitted because Petitioner did not submit it at the reconsideration level.  CMS Br. at 4-5.     

I may admit new documentary evidence if I find good cause for Petitioner’s failing to submit it at the reconsideration level.  42 C.F.R. § 498.56(e).  The October 17 notice letter explicitly warned Petitioner that it “must submit [any relevant] information with [its] request for reconsideration” if it wanted the hearing officer or, later, an administrative law judge, to consider it.  CMS Ex. 1 at 1.  In my prehearing order, I instructed Petitioner to identify specifically any new evidence and to explain in its brief why good cause exists for me to receive it.   Order at 4 (¶ 6) .

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I find that Petitioner has not established good cause for failing to submit the employment log excerpt at the reconsideration level.  Petitioner claims that, until it received the reconsidered determination, it had not understood that Technician Shpolyansky’s ongoing employment was relevant.  P. Br. at 3.  But the notice letter straightforwardly advised that Petitioner’s Medicare privileges were revoked because one of its technicians had been sanctioned by the Office of Inspector General.  CMS Ex. 1 at 1.  Although I am not convinced that this case turns on whether Technician Shpolyansky was still employed by Petitioner when CMS issued its revocation notice, I find it inconceivable that Petitioner did not understand that evidence regarding the status of the technician’s employment could be relevant.1  Therefore, pursuant to section 498.56(e), I decline to admit P. Ex. 6, P. Ex. 7 at 3, and CMS Ex. 8.  See Meadowmere Emergency Physicians, PLLC, DAB No. 2881 at 11 (2018) (affirming the ALJ’s decision to exclude evidence that, prior to the date of his conviction, a physician terminated his relationship with the supplier because that evidence was introduced, for the first time, at the ALJ hearing).

The regulation does not preclude me from admitting testimony, so the written declaration from Petitioner’s director of human resources (P. Ex. 7 at 1-2) is admissible. 

I therefore admit into evidence CMS Exs. 1-7, P. Exs. 1-5, and P. Ex. 7 at 1-2.

Discussion

CMS may revoke Petitioner’s Medicare billing privileges because one of its health care employees was excluded from participating in federal health care programs.2

CMS may revoke a supplier’s Medicare billing privileges if any of its “health care personnel” is excluded from Medicare, Medicaid, and any other federal healthcare program in accordance with section 1128 of the Social Security Act (Act).  42 C.F.R. § 424.535(a)(2)(i); see also Act § 1866(b)(2)(C).  If, as here, the revocation is based on a federal exclusion, the effective date of the revocation is the date of the exclusion.  42 C.F.R. § 424.535(g); Norman Johnson, M.D., DAB No. 2779 at 20 (2017) (holding that ALJs are not permitted to depart from the regulation’s plain text). 

Effective June 26, 2008, the IG excluded Eddy Shpolyansky from participating in all federal health care programs because he had been convicted of a program-related offense.  CMS Ex. 2.  Nevertheless, Petitioner hired the excluded Mr. Shpolyansky as a technician, (purportedly) effective January 11, 2012.  CMS Ex. 3 at 3.  Thus, because Petitioner hired

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an excluded individual into a health care position, CMS properly revoked its Medicare enrollment pursuant to section 424.535(a)(2)(i).  The effective date of its revocation would normally be the date of the employee’s exclusion (42 C.F.R. § 424.535(g)), but, as the CMS hearing officer correctly concluded, Petitioner should not be excluded before it actually ran afoul of program requirements.  Thus, the effective date – January 11, 2012 – is the date Petitioner hired into a health care position an excluded individual. 

Petitioner has changed its position since the reconsideration stage.  There, it all but conceded that it currently employed Technician Shpolyansky, never suggesting that his employment had ended.  In fact, it argued that it acted “in good faith by offering continued employment to Mr. Shpolyansky after it received approval” from the (then) Medicare contractor.  P. Ex. 2 at 1 (referring to the contractor’s October 2, 2012 letter). Petitioner claimed that it had interviewed the technician who “insists that he has never been the subject of exclusion or disbarment from any federal program in general, and Medicare more specifically.”  Id.  

Petitioner now concedes that Technician Shpolyansky was, in fact, excluded and that it hired an excluded individual for a health care position.  Petitioner could easily have verified whether its new employee had been excluded.  The IG maintains a list of excluded individuals and warns that “[a]nyone who hires an individual or entity on the [List of Excluded Individuals/Entities] may be subject to civil money penalties.”  The IG instructs health care entities to “routinely check the list to ensure that new hires and current employees are not on it.”  Exclusions Program, https://oig.hhs.gov/exclusions/ (last visited Nov. 21, 2019).  Petitioner apparently did not take this basic precaution, an omission that threatens program security.  Because Petitioner hired and employed, as a health care worker, an excluded individual, CMS is authorized to revoke its billing privileges under section 424.535(a)(2)(i).

Petitioner now argues, for the first time, that its billing privileges should not be revoked because Technician Shpolyansky no longer worked at the testing facility on October 17, 2016, when the notice letter was sent out.  Petitioner’s support for this new position is a short declaration from its human resources administrator declaring that, based on her review of employment records, Technician Shpolyansky began work at the testing facility on August 1, 2011, and ended his employment on July 31, 2015.  P. Ex. 7 at 2.3  I do not find this persuasive.  First, the timing of this disclosure is suspicious.  Throughout the reconsideration level, Petitioner never suggested that Mr. Shpolyansky no longer worked

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at the testing agency.  In fact, as noted above, its submissions suggested that his employment was continuing. 

Second, Petitioner advised the contractor that it hired Technician Shpolyansky and the contractor added him to its list of supplier technicians (as it removed others from that list).  The contractor reminded Petitioner that it was required to submit “changes or updates” to its enrollment information and was required to verify the accuracy of its enrollment information.  CMS Ex. 3 at 3.  Petitioner offers no evidence that it advised the contractor that Technician Shpolyansky should be removed from its enrollment records.  See Meadowmere, DAB No. 2881 at 9, 11 (holding that a supplier’s failure to report the departure of its director supports the finding that his association with the supplier continued).

In any event, I am not persuaded that the language of the regulation excuses a supplier from employing an excluded individual so long as the excluded individual leaves his job before the notice letter is released.  Petitioner relies on the regulation’s use of the present tense:  “other health care personnel of the . . . supplier is—excluded . . . .”  42 C.F.R. § 424.535(a)(2)(i).  But this means that the employment and the exclusion must coincide:  i.e., the individual must be working for the supplier at the same time he is subject to exclusion.  Use of the past tense – “was” – would mean that CMS could revoke if an individual had ever been excluded, even if he were reinstated before he went to work for the supplier.  This was plainly not the drafters’ intention.

The Departmental Appeals Board has considered the significance of the present tense in a similar phrase; section 424.535(a)(1) authorizes exclusion if the supplier “is determined to not be in compliance with . . . enrollment requirements . . . .”  The Board concluded that the contractor could revoke for noncompliance regardless of whether the noncompliance continues at the time of the revocation.  It noted that requiring the contractor to identify the problem, develop a case, and issue an initial determination before a period of noncompliance ends would, among other problems, “place an undue burden on the contractor,” and effectively render the regulation unworkable in instances of short-term periods of noncompliance.  Meindert Niemeyer, M.D., DAB No. 2865 at 9 (2018).

Moreover, if, in fact, Petitioner severed its relationship with the excluded employee, the regulations authorize CMS to reverse a revocation.  Under 42 C.F.R. § 424.535(e), CMS may reverse the revocation if the supplier submits proof that it has terminated its relationship within 30 days of the revocation notification.  The decision to do so is wholly within CMS’s discretion, and I have no authority to review it.  Sunsites Pearce Fire District, DAB No. 2926 at 15 (2019); Meadowmere, DAB No. 2881 at 15. 

Nor may I review the length of the re-enrollment bar imposed by CMS.  Vijendra Dave, M.D., DAB No. 2672 at 9-12 (2016).  I am authorized to review initial determinations “to

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deny or revoke a provider’s or supplier’s Medicare enrollment in accordance with . . . § 424.535.” 42 C.F.R. § 498.3(b)(17). As the Board observed in Vijendra Dave, the regulations confer no such right to appeal CMS’s decision concerning the duration of a post-revocation re-enrollment bar. Vijendra Dave, M.D., DAB No. 2672 at 10.

Conclusion

CMS may revoke Petitioner’s Medicare enrollment because the supplier hired and employed a health care technician who was excluded from program participation. The effective date of its exclusion is January 11, 2012, the day Petitioner first employed the excluded individual. I therefore affirm CMS’s determination.

• 1. In fact, as discussed below, at the reconsideration level, Petitioner addressed the issue by acknowledging that the technician was then an employee.
• 2. I make this one finding of fact/conclusion of law to support my decision.
• 3. The contractor apparently thought that Technician Shpolyansky began working at the testing facility on January 11, 2012. CMS Ex. 3 at 3; CMS Ex. 4. If, in fact, his employment began on August 1, 2011, then August 1 should be the effective date of Petitioner’s exclusion. See discussion below. However, I have afforded the witness declaration virtually no weight, and CMS has not asked for the earlier effective date.