Thomas Heggen, M.D, DAB CR5929 (2021)

DECISION

The Centers for Medicare & Medicaid Services (CMS), through its Medicare administrative contractor, revoked the Medicare enrollment and billing privileges of Thomas Heggen, M.D. (Dr. Heggen or Petitioner) pursuant to 42 C.F.R. § 424.535(a)(3) and (a)(4) because, within the preceding 10 years, Dr. Heggen was convicted of a felony that CMS determined was detrimental to the interests of the Medicare program and its beneficiaries, and because Dr. Heggen failed to disclose the conviction on his enrollment application.

Petitioner appeals.  CMS moves for summary judgment, which Petitioner opposes.  In an Acknowledgment and Pre-Hearing Order that issued on August 19, 2019, the presiding Administrative Law Judge (ALJ)1 set deadlines for the parties to submit pre-hearing briefs in this matter.  The Order also set deadlines for the parties to submit exhibits and witness testimony, as well as the parties’ written request and intention to cross-examine opposing party witnesses.  Additionally, the Order set deadlines for the parties to submit written objections to the opposing party’s proffered exhibits.  Pre-Hearing Order at 4-6.  The parties did not submit sworn witness testimony or objections to opposing party

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exhibits.  There being no objections, I receive CMS Exhibits (CMS Exs.) 1-8 and Petitioner’s Exhibits (Pet. Exs.) 1-2. 

As the evidence reflects, there is no genuine issue of a material fact.  Nevertheless, inasmuch as there is no basis for conducting an in-person hearing2 , I decide this case based on the written record rather than on summary judgment.  For the reasons explained below, I find that CMS had a legal basis to revoke Dr. Heggen’s Medicare enrollment and billing privileges.  Accordingly, I affirm the revocation.

I.  Background

Dr. Heggen, an Illinois physician, was arrested on July 15, 2011, and subsequently charged with Identity Theft, Obtaining a Controlled Substance, and Unlawful Possession of a Controlled Substance.  CMS Ex. 3 at 8, 11.  On January 13, 2012, Dr. Heggen entered into a plea arrangement in the Circuit Court of Will County, Illinois, where he pled guilty to one count of Unlawful Possession of a Controlled Substance, a class 4 felony.  CMS Ex. 3 at 1.  The Court sentenced him to two years’ probation, 50 hours of community service, and applicable fines and fees.  The judgment was stayed pending his successful completion of probation.  CMS Ex. 3 at 1; CMS Ex. 6 at 3.  Petitioner entered into a Consent Order with the Illinois Department of Financial and Professional Regulation (IDFPR) that went into effect on March 21, 2012.  CMS Ex. 4 at 34-42.  IDFPR imposed a 90-day suspension of his medical license, fine, and probation.  The basis for the disciplinary action was noted to be “due to violation of Medical Practice Act related to issuance of controlled substance prescriptions for personal use.”  CMS Ex. 7 at 3. 

Petitioner submitted a Medicare Enrollment Application (CMS-855I) signed on March 30, 2015.  Section 3 of the application provides that all applicable final adverse actions must be reported, regardless of whether any records were expunged or any appeals are pending.  The requested information for adverse legal actions includes convictions, exclusions, revocations, and suspensions.  CMS Ex. 4 at 13.  On page 13 of the application, Petitioner acknowledged his 90-day medical license suspension from March 2012 until June 2012.  CMS Ex. 4 at 14.  He included that the license was reinstated on June 19, 2012, with a minimum five-year probation until 2017.  Section 6 of the application requests identifying information about all individuals having managing control.  The application section requests whether any individual listed has a final adverse action, and if so, to identify the court, agency, or administrative body that imposed the action, as well as the resolution.  Petitioner lists himself in Section 6 and simply states

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“see page 13 and attachment.”  CMS Ex. 4 at 21.  While Petitioner attaches a copy of the Consent Order which provided for his 90-day license suspension, Petitioner did not include in any section of his application any reference to the Illinois Circuit Court or his guilty plea for the unlawful possession of a controlled substance. 

Acting on behalf of CMS and in a letter dated February 22, 2019, the Medicare contractor, National Government Services (NGS), revoked Petitioner’s Medicare enrollment and billing privileges, effective January 13, 2012.  NGS also imposed a three-year re-enrollment bar.  CMS Ex. 1 at 2.  Citing 42 C.F.R. § 424.535(a)(3) and (a)(4), NGS based the revocation and bar on Petitioner’s January 13, 2012 felony conviction and his failure to disclose the conviction on his March 30, 2015 CMS-855I application.
Specifically, NGS stated: 

42 C.F.R. § 424.535(a)(3)-Felonies

The Centers for Medicare & Medicaid Services (CMS) has been made aware of your January 13, 2012 felony conviction, as defined in 42 C.F.R. § 1001.2 for Unlawful Possession of a Controlled Substance in violation of Illinois Statute § 720 570/402(c) in the Circuit Court of Will County, Illinois.

Under 42 C.F.R. § 1001.2(d) a conviction is defined as “an individual or entity has entered into participation in a first offender, deferred adjudication, or other program or arrangement where judgment of conviction has been withheld.”

42 C.F.R. § 424.535(a)(4)-False or Misleading Information

On your Centers for Medicare & Medicaid Services (CMS) 855 revalidation enrollment application, signed on March 30, 2015, you answered “yes” in section three of the application, indicating that you did have an adverse legal history, and disclosing your medical license suspension.  However, you failed to disclose your January 13, 2012 felony conviction for Unlawful Possession of a Controlled Substance.  A felony conviction is listed as an adverse legal action that requires reporting on the 855I application.

CMS Ex. 1 at 1.  On March 31, 2019, Petitioner requested reconsideration of the revocation.  CMS Ex. 2.  On June 4, 2019, CMS issued an unfavorable reconsidered determination.  CMS Ex. 8.

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II.  Issues

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

III.  Jurisdiction

I have jurisdiction to hear and decide this case.  See 42 C.F.R. §§ 498.3(b)(17), 498.5(1)(2); see also 42 U.S.C. § 1395cc(j)(8).

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

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

1.  CMS had a legal basis to revoke Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R.§ 424.535(a)(3) because, within the 10 years prior to revocation, Petitioner was convicted of a felony offense that CMS determined to be detrimental to the best interests of the Medicare program and its beneficiaries.

The Social Security Act authorizes the Secretary of Health and Human Services (Secretary) to create regulations governing the enrollment of suppliers in the Medicare program, and to discontinue the enrollment of a physician or other supplier who “has been convicted of a felony under Federal or State law for an offense which the Secretary determines is detrimental to the best interests of the [Medicare] program or program beneficiaries.”  42 U.S.C. §§ 1395u(h)(8), 1395cc(j).

There is no dispute that on January 13, 2012, Petitioner entered into a plea agreement in the Circuit Court of Will County, Illinois, whereby he pled guilty to one count of Unlawful Possession of a Controlled Substance, a class 4 felony.  CMS Ex. 3 at 1.  Taking into consideration that Petitioner was a first-time offender, the court’s Order provided for a probationary period of two years and 50 hours of community service, in addition to various fines and assessments. 

Under the Secretary’s regulations, CMS may revoke a supplier’s Medicare billing privileges if the supplier is (1) convicted of a federal or state felony offense; (2) within the preceding 10 years; and (3) the felony offense is one that CMS determines to be detrimental to the best interests of the program and its beneficiaries.  42 C.F.R. § 424.535(a)(3).  Sections 424.535(a)(3)(ii)(A) through (D) list specific felonies that are detrimental to the best interests of the Medicare program and its beneficiaries.  It should be noted, however, that section (a)(3)(ii) also notes that the applicable felonies “include, but are not limited in scope or severity” to those specifically named. 

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Petitioner submits that possession of a controlled substance is not listed as one of the offenses that require mandatory exclusion and thus the regulations do not establish that a conviction for possession of a controlled substance is grounds for exclusion from participating in the Medicare program.  Pet. Brief (Br.) at 4.  Furthermore, Petitioner asserts that the wording of the statute does not provide CMS the authority to determine that other felonies, even if they are determined to be detrimental to the beneficiaries or the Medicare program, are grounds for exclusion.  Id.

Petitioner appears to confuse the relevant authorities for revocation and exclusion, mistaking the exclusion statute (42 U.S.C. § 1320a-7) as the revocation authority in this case.  The authority for CMS’ revocation in this case is at 42 C.F.R. § 424.535, which refers to the exclusion statute to identify certain offenses that are per se detrimental to the Medicare program and its beneficiaries.  As the Board explained in Eva Orticio Villamor-Goubeaux, “the categories in the regulation mean that CMS has determined, by rulemaking, that certain types of felony offenses are presumptively, or per se, detrimental to the best interests of the Medicare program and its beneficiaries.”  Eva Orticio Villamor-Goubeaux, DAB No. 2997 at 8 (2020) (citation omitted).  Nevertheless, the Board also noted that 42 C.F.R. § 424.535(a)(3)(i) “authorizes CMS to determine on a case-by-case, adjudicative basis whether a felony, even one that does not fall within any named category of felony offenses, is detrimental to the Medicare program and its beneficiaries.”  Id. (citing Lilia Gorovits, M.D., P.C., DAB No. 2985 at 10 (2020), appeal docketed, Gorovits v. Azar, No. 2:20-cv-01850 (E.D. Pa. Apr. 9, 2020); Michael Scott Edwards, OD, DAB No. 2975 at 9-10 and 10 n.12 (2019), appeal dismissed per settlement, No. 2:19-cv-00048 (E.D.N.C. Feb. 26, 2020); Fady Fayad, M.D., DAB No. 2266 at 8 (2009), aff’d, Fayad v. Sebelius, 803 F. Supp. 2d 699 (E.D. Mich. 2011)).  Furthermore, I also note that in the Fayad decision, the Board explained that in the context of section 424.535(a)(3), “[t]he words ‘include’ or ‘including’ are not terms of limitation or exhaustion” and “[w]hen followed by a list of items, those words are reasonably read as signifying that the list contains merely illustrative examples of a general proposition or category that precedes the word and is not intended to preclude unmentioned items from being considered supportive or part of the general proposition or category.”  Fayad, DAB No. 2266 at 8.

Thus, even assuming possession of a controlled substance is not specifically listed in the section 424.535(a)(3) list of felonies, I find that CMS is not precluded from finding that the felony is a basis for revocation. 

Petitioner also argues that while the application form requests the disclosure of a “final adverse action,” there was no such action in this instance because the judgment was stayed.  Pet. Br. at 6.  Further, Petitioner asserts that because there is no specific reference to a plea agreement in section 424.535(a)(3)(ii)(C), “there must be a conviction to authorize a revocation based on a felony that does not come within the crimes listed in

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42 C.F.R. Section 424.535(a)(3)(ii)(A) and 42 C.F.R. Section 424.535 (a)(3)(ii)(B).”  Id. at 8. 

The term “convicted” is defined in 42 C.F.R. § 1001.2 as: 

(a) A judgment of conviction has been entered against an individual or entity by a Federal, State or local court, regardless of whether:  (1) There is a post-trial motion or an appeal pending, or (2) The judgment of conviction or other record relating to the criminal conduct has been expunged or otherwise removed;
(b) A Federal, State, or local court has made a finding of guilt against an individual or entity;
(c) A Federal, State or local court has accepted a plea of guilty or nolo contendere by an individual or entity; or
(d) An individual or entity has entered into participation in a first offender, deferred adjudication or other program or arrangement where judgment of conviction has been withheld. 

Petitioner submits in his Request for Hearing (Req. for hrg.) at 33 , that he was never convicted under Illinois law because he entered into a first offender diversion program.  Citing the Board’s decision in Kimberly Shipper, P.A., DAB No. 2804 at 7 (2017), aff’d, Kimberly Shipper, P.A. v. Price, Case No. 6:17-CV-00253-ADA, 2019 WL 2098120 (W.D. Tex. Mar. 1, 2019), CMS submits that “federal law, not state law, controls what constitutes a ‘conviction’ for the purpose of Federal laws designed to protect the Medicare program and its beneficiaries.”  CMS Br. at 7.  

Clearly, Petitioner’s guilty plea constitutes a “conviction” under the wording of 42 C.F.R. § 1001.2(c).  Despite the fact that the judgment was stayed, it also meets the criteria of section 1001.2(d) in that it was a “first offender, deferred adjudication or other program or arrangement where judgment of conviction has been withheld.” 

Petitioner additionally argues that there is no basis to conclude that possession of a controlled substance is detrimental to the best interests of the Medicare program and its beneficiaries.  Specifically, Petitioner contends that there is no factual basis to support the determination that a conviction for possession of a controlled substance calls into question the integrity of a person.  Pet. Br. at 8-9. 

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Conversely, CMS asserts that the reconsidered determination noted that “as a physician, Dr. Heggen has access to controlled substances, and he failed to exercise proper judgment and control in managing controlled substances, which could threaten the safety of patients.”  CMS Ex. 8 at 4; CMS Br. at 8.  Despite Petitioner’s assertions, it has been long settled that CMS has the discretion to revoke a supplier’s billing privileges and that CMS’ discretionary decision is not reviewable.  Letantia Bussell, M.D., DAB No. 2196 at 13 (2008).  I cannot substitute my own determination as to whether a given felony is detrimental to the Medicare program and its beneficiaries for that of CMS.  See Brian K. Ellefsen, DO, DAB No. 2626 at 7 (2015).  In fact, the Board has continued to hold that the scope of its review of a CMS decision to revoke a supplier’s enrollment is limited to determining whether CMS had a legal basis for revocation, and the Board cannot substitute its discretion for that of CMS.  Villamor-Goubeaux, DAB No. 2997 at 13; Douglas Bradley, M.D., DAB No. 2663 at 13 (2015).

In its June 4, 2019 reconsidered determination, CMS discussed its basis for finding that possession of a controlled substance is detrimental to the best interests of the Medicare program and its beneficiaries.  CMS explained that Petitioner’s felony conviction of unlawful possession of a controlled substance is extremely concerning as he is a physician.  CMS noted that in his role as a physician, he treats Medicare beneficiaries, and therefore, has access to controlled substances.  CMS determined that his actions, which led to the conviction, indicate that he did not exercise proper judgment and control in managing controlled substances.  CMS stated that it considers this crime, by a health care supplier, to be extremely detrimental to its beneficiaries and pointed out that his actions threaten the safety of the patients, which is of utmost priority to CMS.  CMS Ex. 8 at 3. 

Thus, the scope of my review of CMS’ decision to revoke a supplier’s enrollment is limited to determining whether CMS had a legal basis for revocation, and I cannot substitute my discretion for that of CMS.  Bradley, DAB No. 2663 at 13.  Based on the record as a whole and accepting CMS’ rationale set forth in the reconsidered determination discussed above, CMS acted within the scope of its authority to determine that Petitioner was convicted of a felony detrimental to the best interests of the Medicare program and its beneficiaries.  Furthermore, I find that CMS has established a lawful basis for revocation pursuant to 42 C.F.R. § 424.535(a)(3).  

Yet, even if CMS mistakenly revoked Petitioner’s enrollment and billing privileges based on finding that his conviction of a felony offense was detrimental to the best interests of the Medicare program and its beneficiaries, there was a basis to revoke his enrollment and billing privileges pursuant to 42 C.F.R § 424.535(a)(4) as discussed below. 

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2.  CMS had a legal basis to revoke Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(4) because Petitioner did not disclose his felony conviction on his enrollment application, and thereby provided false or misleading information in the application.

Petitioner maintains that there was no intent to deceive.  Req. for hrg. at 2.  Petitioner submits that because he entered into a “first offender diversion program” his conviction was deferred and that such a resolution would lead a layperson to believe that he had not been convicted.  Id. at 3-4.  Petitioner maintains that the Code of Federal Regulations is voluminous and it is difficult even for an attorney to comprehend all the regulations.  He argues that an attorney practicing criminal law would not be familiar with regulations governing the Medicare program and that was the reason why his criminal attorney did not advise him to report the result of the criminal case as being a conviction.  Id. at 4.  He argues that “[t]o expect an attorney practicing criminal law to be familiar with the rules and regulations of the Medicare program is like expecting a psychiatrist to perform brain surgery.”  Id.  Petitioner’s reasoning that there is no violation of 42 C.F.R. § 424.535(a)(3) because neither he nor his attorney were familiar with the Medicare regulations is unfounded. 

Assuming that Petitioner may not have intended to mislead when he omitted the conviction on his Medicare enrollment application, I find that his subjective belief was not reasonable.  The instructions for completing section 3 of the Medicare enrollment application specifically provide:  “All applicable final adverse actions must be reported, regardless of whether any records were expunged or any appeals are pending.”  CMS Ex. 4 at 13.  Further, the Board has held that section 424.510(d)(3) of the regulations “requires a supplier to be ‘aware of, and abide[] by, all applicable statutes, regulations, and program instructions.” Realhab, Inc., DAB No. 2542 at 17 (2013).  Thus, Petitioner’s argument that he was mistaken about the definition for “conviction” or that he was unfamiliar with the regulations is irrelevant.  The Board has repeatedly found that the regulations do not require proof that the applicant subjectively intended to provide false information, only proof that the applicant, in fact, provided misleading or false information that the applicant certified as true.  Sandra E. Johnson, CRNA, DAB No. 2708 at 14-15 (2016); Mark Koch, D.O., DAB No. 2610 at 4-5 (2014).

Although Petitioner asserts his mistaken understanding of the regulations, he also argues that he “indirectly” reported his conviction in his Medicare application.  He submits that he reported the suspension of his Illinois license to practice medicine in the Medicare application, and he attached a copy of the associated Consent Order with the IDFPR.  Petitioner contends that the Consent Order referred to the first offender program in the criminal case and thus, by reporting the suspension of his Illinois license to practice medicine, he provided sufficient information “so that CMS would have been aware of the underlying criminal case.”  Req. for hrg. at 5.  Page six of the Consent Order includes the following reference to the criminal case: 

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Respondent shall comply with all terms and conditions of his 410 Probation in the criminal case 11-CF-1351.  A violation of said Probation shall constitute a violation of this Probation.

CMS Ex. 4 at 39.  The Consent Order thus does not identify Petitioner’s conviction for possession of a controlled substance or any other information about the nature of the criminal case.  The mere reference to a criminal case number (with no court name or court dates) is not enough to provide constructive notice or to make CMS aware of the requisite facts surrounding Petitioner’s conviction.  While Petitioner asserts that the Consent Order included sufficient information to make CMS “aware” of the felony conviction, Petitioner also submits that “the problem was not a failure to report the underlying incident, but failing to provide all of the details on a specific part of the application, although the same information was on a different part of the application.”  Req. for hrg. at 5.  The record, however, does not support Petitioner’s argument.  Section 3 of the Medicare application requires the applicant to not only report adverse legal actions within the last 10 years, but to also provide the dates of the action, the identity of the Federal or State agency or the court/administrative body that imposed the action, and the resolution, if any.  CMS Ex. 4 at 13-14.  Petitioner included only information relating to his 90-day suspension of his medical license.  In section 6 of the application, the applicant is required to give the same information for those individuals having managerial control.  While Petitioner includes himself as having managing control, he merely inserts “See page 13 and attachment.”  Petitioner therefore did not disclose the requisite information anywhere on his application. 

Petitioner’s arguments that he “indirectly” included his felony conviction in the application is not persuasive.  In fact, the Board dealt with a similar argument in its recent decision in William Garner, M.D., DAB No. 3026 (2020).  In Garner, the petitioner failed to disclose in his application the revocation of his California medical license and listed only the stayed revocation of his Texas medical license.  The petitioner contended that he indirectly disclosed the revocation of his California medical license by twice giving CMS a copy of the Texas Medical Board order, which mentions the California revocation.  The Board rejected this argument and, citing 42 C.F.R. § 424.510(a), noted that a supplier’s disclosure of a final adverse legal action indirectly on a separate document at a different time, in lieu of listing it on the application, undermines the supplier’s obligation to provide complete and accurate information on the applicable enrollment application.  Garner, DAB No. 3026 at 10 (citing 42 C.F.R. § 424.510(a)).  Furthermore, the Board noted that such indirect disclosure frustrates CMS’ ability to validate the information on the enrollment application.  Id. (citing 42 C.F.R. § 424.510(d)).  The Board also cited its earlier ruling in Breton L. Morgan, M.D., Inc., DAB No. 2933 (2019), in which it held that a supplier’s enrollment application must provide direct disclosures of all final adverse actions, and “not disclosure of some actions or indirect references, that, if followed, might result in CMS’s becoming aware of final

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adverse actions not mentioned.”  Garner, DAB No. 3026 at 10 (citing Morgan, DAB No. 2933 at 12).4

In summary, Petitioner was obligated to ensure that the information on his enrollment application was complete and accurate.  Despite Petitioner’s assertions, the record reflects that he did not do so, and the information contained in the application was false and misleading. 

V.  Conclusion

For the reasons explained above, I affirm CMS’ revocation of Petitioner’s Medicare enrollment and billing privileges.

• 1.  The case was initially assigned to a different ALJ and then transferred to the undersigned. 
• 2.  The Departmental Appeals Board (DAB or Board) has long held that convening a hearing is unnecessary where no witness testimony is offered or all witness testimony is completed in writing and no cross-examination is sought.  George Yaplee Med. Ctr., DAB No. 3003 at 5 (2020) (citing Marcus Singel, D.P.M., DAB No. 2609 at 6 (2014)).
• 3.   Petitioner’s request for hearing was not paginated properly and so the citations refer to the PDF page numbers in the document uploaded in the DAB E-File system.
• 4.  In Garner, the Board acknowledged that its Morgan decision was vacated and reversed by the reviewing district court, but the Board also explained why it disagreed with the district court’s reasoning and why, in any case, it was not bound by the holding of a district court that was from a federal judicial district (S.D. W. Va.) different from the one from which the Garner appeal arose.  Garner, DAB No. 3026 at 10 n.10, 11-14.