Basem Abdulla Attum, M.D., DAB CR6029 (2022)

DECISION

This decision affirms the determination by the Centers for Medicare & Medicaid Services (CMS) to place Basem Abdulla Attum, M.D. (hereinafter “Dr. Attum” or “Petitioner”) on its Preclusion list and to deny Dr. Attum’s Medicare enrollment application. 

I.  Background and Procedural History

On August 24, 2021, Dr. Attum, through counsel, timely requested a hearing before an Administrative Law Judge (ALJ) to contest the denial of his Medicare enrollment application and placement on the CMS Preclusion List.  Request for Hearing (RFH).  

On August 24, 2021, at my direction, the Civil Remedies Division (CRD) issued an acknowledgement letter and my standing prehearing order (Standing Order), which set forth a schedule for briefing and submitting supporting evidence and other procedural requirements. 

On September 28, 2021, CMS filed a Motion for Summary Judgment and supporting memorandum and brief (CMS Br.), along with five exhibits (CMS Exs. 1-5).

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On November 2, 2021, Petitioner filed an Opposition to CMS’s motion for summary judgment and supporting memorandum, and also filed a court document marked as “Exhibit A.”  The document is titled “Agreed Order,” and was entered by the Jefferson Circuit Court, Kentucky (Kentucky state court) in Petitioner’s criminal case on October 25, 2021.  Petitioner argues that good cause exists to admit this new evidence pursuant to 42 C.F.R. § 498.56(e) since it was not in existence at the reconsideration stage.  42 C.F.R. § 498.56(e).  

On November 10, 2021, CMS filed a reply (CMS Reply) objecting to Petitioner’s Exhibit A.  CMS argued that the exhibit is irrelevant, and that Petitioner did not show good cause for failing to submit the document at the reconsideration stage.  CMS Reply at 3-4. 

CMS’s objection to Exhibit A is overruled.  The document is relevant as it relates to Petitioner’s conviction in the Kentucky state court.  The document was entered by the state court on October 25, 2021, making it impossible for Petitioner to include it with his June 2021 request for reconsideration.  I find that Petitioner has shown that good cause exists for its submission, and Petitioner’s Exhibit A is admitted into evidence.  42 C.F.R. § 498.56(e).

Neither party identified witnesses, nor did they submit the written direct testimony of any witnesses.  Therefore, a hearing is not necessary, and this case will be decided based on the written record.  Standing Order ¶¶ 10, 12; Civil Remedies Division Procedures ¶ 19(d).  Because the matter will be resolved based on the written record, CMS’s motion for summary judgment is moot. 

Petitioner did not object to CMS’s exhibits.  In the absence of objection, CMS Exs. 1-5 are admitted into evidence.  Standing Order ¶ 9.

II.  Jurisdiction

This tribunal has the authority to hear and decide this matter.  42 U.S.C. § 1395cc(j)(8); 42 C.F.R. §§ 424.545(a), 498.1(g), 498.3(b)(17), (20), 498.5(l)(2), (n)(2); see also 42 C.F.R. §§ 405.803(a), 422.222(a)(2)(i), 432.120(c)(6)(v)(A). 

III.  Issues

The issues in this case are:

Whether CMS had a legitimate basis to deny Petitioner’s application for Medicare enrollment and billing privileges under 42 C.F.R. § 424.530(a)(3); and

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Whether CMS had a legitimate basis to place Petitioner on its preclusion list, as defined at 42 C.F.R. §§ 422.2 and 423.100.

IV.  Findings of Fact

The following Findings of Fact are taken from the record and are undisputed.

1. Attum is a physician with a specialty in orthopedic surgery who is licensed to practice medicine in Tennessee and California. CMS Ex. 3 at 1-2. 
2. On August 17, 2015, Dr. Attum entered into a plea agreement with the Division Thirteen Court in Jefferson County, Kentucky, whereby he pled guilty to: one count of Fraudulent Insurance Acts over $500, in violation of KY. REV. STAT. § 304.47-020(1)(b); one count of Theft of Identity, in violation of KY. REV. STAT. § 514.160; and three counts of Obtaining or Attempting to Obtain a Controlled Substance by Fraud or Deceit, in violation of KY. REV. STAT. § 218A.140(l).  CMS Ex. 5 at 1-5.
3. As part of the plea agreement, the parties agreed to the following facts related to Petitioner’s crimes:

On or between 12/1/2012 through 4/30/2012 [sic], in Jefferson County, Kentucky, Dr. Basem Attum, working with various co-defendants wrote fraudulent prescriptions for others and traded fraudulent prescriptions for Ambien on at least 3 separate occasions.  Dr. Attum also committed theft of identify by stealing multiple doctors’ DEA numbers to write fraudulent prescriptions.  Finally, Dr. Attum committed insurance fraud.

CMS Ex. 5 at 4.

4. Petitioner filed a motion to participate in the Pretrial Diversion program. On August 17, 2015, the Kentucky state court granted the motion, entering an Order Granting Pretrial Diversion of a Class D Felony.  CMS Ex. 5 at 6-8. 
5. Under the terms and conditions of the pretrial diversion, if Petitioner successfully completed the program, the criminal charge to which he pled guilty “[would] be designated as Dismissed-Diverted.” In the event Petitioner failed to successfully complete the program, the court would impose a five-year sentence.  CMS Ex. 5 at 7-8.

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6. On March 18, 2021, Petitioner electronically filed an application to enroll in the Medicare program as a physician with a specialty in orthopedic surgery. CMS Ex. 3.  
7. The enrollment application requested that the applicant disclose any final adverse actions and any exclusions, revocations, or suspensions of a license to provide healthcare. CMS Ex. 3 at 2. 
8. Petitioner disclosed that he had felony convictions within the last 10 years. Specifically, Petitioner listed his August 17, 2015 guilty plea in Kentucky state court to the offenses of Possession of Controlled Substance, Insurance Fraud, and Identity Theft.  Petitioner also noted that, on July 17, 2020, the Kentucky Board of Medical Licensure terminated an Agreed Order of indefinite restriction.  CMS Ex. 3 at 2-3. 
9. On April 5, 2021, Noridian, a CMS Medicare contractor, notified Petitioner that his Medicare enrollment application was denied pursuant to 42 C.F.R. § 424.530(a)(3). CMS determined that Petitioner’s August 17, 2015 state felony conviction was detrimental to the best interests of the Medicare program and its beneficiaries.  CMS Ex. 2 at 1.  Noridian also informed Petitioner that he would be placed on the CMS Preclusion List pursuant to 42 C.F.R. §§ 422.2, 422.222, 423.100, and 423.120(c)(6).  CMS Ex. 2 at 1. 
10. On June 8, 2021, Petitioner, through counsel, submitted a request for reconsideration of the enrollment denial and placement on the CMS Preclusion List. CMS Ex. 1. 
11. On August 11, 2021, a CMS hearing officer issued an unfavorable reconsidered determination which upheld the denial of Petitioner’s enrollment application and also, his placement on the preclusion list. CMS Ex. 4.
12. The CMS hearing officer noted that in his request for reconsideration, Petitioner admitted that he was convicted of felony offenses on August 17, 2015, which was within the preceding 10 years. The CMS hearing officer examined Petitioner’s offenses and found that they were detrimental to the best interests of the Medicare program and its beneficiaries.  He explained as follows:  

CMS finds [Petitioner’s] felony conviction for Fraudulent Insurance Acts over $500.00 to be an enumerated financial crime described [in 42 C.F.R. § 424.530(a)(3)(i)(B)].  In addition, under § 424.530(a)(3)(i)(D), per se detrimental offenses include, but are not limited in scope or severity, to

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any felony that would result in mandatory exclusion under § 1128(a) of the Act.  Under section 1128(a)(4) of the Act, the Secretary [of Health and Human Services] 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 Obtaining or Attempting to Obtain a Controlled Substance by Fraud or Deceit to be severe in nature and akin to the enumerated controlled substance crimes described above.  As a result, CMS find that [Petitioner’s] felony convictions are per se detrimental to the best interest of the Medicare program and its beneficiaries.

In addition, CMS finds [Petitioner’s] felony convictions of Fraudulent Insurance Acts over $500.00, Theft of Identity, Obtaining or Attempting to Obtain a Controlled Substance by Fraud or Deceit to be detrimental to the best interests of the Medicare program and its beneficiaries based on the specific facts underlying the convictions.  On or between April 30, 2012 through December 1, 2012, [Petitioner], working with various co-defendants, wrote fraudulent prescriptions for others and traded fraudulent prescriptions for Ambien on at least three separate occasions.  [Petitioner] also committed theft of identity by stealing multiple doctors’ DEA numbers to write fraudulent prescriptions, and committed insurance fraud [cite omitted].  [Petitioner’s] actions demonstrate that he is a potential risk to beneficiaries if he is enrolled in the Medicare program. . . . Overall, [Petitioner’s] actions demonstrate his lack of good judgement, integrity, and trustworthiness. 

CMS Ex. 4 at 3-4. 

13. The CMS hearing officer also upheld Petitioner’s placement on CMS’s Preclusion List. The CMS hearing officer found that Petitioner was convicted of a felony within the preceding 10 years and determined that the conviction was detrimental to the best interests of the Medicare program, based on his consideration of the factors listed in 42 C.F.R. §§ 422.2 and 423.100.  CMS Ex. 4 at 4-6.
14. On October 25, 2021, the Kentucky state court entered an Agreed Order in Petitioner’s criminal case.  The Agreed Order noted that the matter was “dismissed on August 9, 2017 and subsequently expunged,” and stated that

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“[Petitioner’s] entry of a guilty plea on or about August 17, 2015 is retroactively set aside/withdrawn and [Petitioner] shall not be deemed to have entered a guilty plea at any time in connection with this case.” Ex. A.  

V.  Legal Authorities

The Social Security Act (Act) establishes the enrollment process for providers and suppliers participating in Medicare or Medicare related programs.  42 U.S.C. § 1302(a), 1395cc(j).  Under the Act, “suppliers” are physicians or other practitioners, a facility or other entity (other than a provider of services) that furnishes items or services under the Medicare provisions of the Act.  42 U.S.C. § 1395x(d).  Providers include hospitals, skilled nursing facilities, and home health agencies.  42 U.S.C. § 1395x(u).  Any physician who participates in the Medicare program is considered a “supplier.”  42 U.S.C. § 1395x(d); 42 C.F.R. § 400.202 (definition of “supplier”).  In this case, Petitioner is considered a “supplier.”

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 42 C.F.R. § 424.530. 

CMS may deny a supplier’s application for Medicare enrollment and billing privileges if the supplier has been convicted of a felony offense, as described 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-

(A)  Felony crimes against persons, such as murder, rape, assault, and other similar crimes for which the individual was convicted, including guilty pleas and adjudicated pretrial diversions.

(B) Financial crimes, such as extortion, embezzlement, income tax evasion, insurance fraud and other similar crimes for which the individual was convicted,

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including guilty pleas and adjudicated pretrial diversions.

(C) Any felony that placed the Medicare program or its beneficiaries at immediate risk, such as a malpractice suit that results in a conviction of criminal neglect or misconduct.

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

Section 1128(a) of the Act, as relevant here, requires the Secretary to exclude “from participation in any Federal health care program” any individual or entity who was convicted of one of several offenses as enumerated in section 1128(a).  As relevant here, section 1128(a)(4) provides-

(4)  Felony Conviction Relating to Controlled Substance.—
Any individual or entity that has been convicted for an offense which occurred after the date of the enactment of the Health Insurance Portability and Accountability Act of 1996, under Federal or State law, of a criminal offense consisting of a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.

Act § 1128(a)(4).

Additionally, CMS has established a preclusion list comprised of individuals and entities for whom Medicare Advantage plans cannot provide reimbursement for items and services they provide, and for prescribers to whom Medicare Part D plans cannot provide reimbursement for any prescriptions the individuals write.  42 C.F.R. §§ 422.222, 423.120(c)(6).  As relevant here, CMS may place an individual, entity, or prescriber on the Preclusion List under the following circumstances:

(3)  The [individual, entity, or prescriber], regardless of whether they are or were enrolled in Medicare, has been convicted of a felony under Federal or State law within the previous 10 years that CMS deems detrimental to the best interests of the Medicare program.  Factors that CMS considers in making such a determination . . . are –

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(i)       The severity of the offense;
(ii)      When the offense occurred; and
(iii)     Any other information that CMS
          deems relevant to its determination.

42 C.F.R. §§ 422.2; 423.100 (definitions of Preclusion list). 

If CMS places an individual on the preclusion list based on a felony conviction, the individual will remain on the preclusion list for a 10-year period, beginning on the date of the conviction, unless CMS determines that a shorter length of time is warranted.  In making a determination as to whether a shorter term of preclusion is appropriate, CMS considers: 

(i)       The severity of the offense;
(ii)      When the offense occurred; and
(iii)     Any other information that CMS
          deems relevant to its determination.

42 C.F.R. §§ 422.222(a)(5)(iii), 423.120(c)(6)(vii)(C).

VI.  Analysis and Conclusions of Law1

1. CMS had a legal basis to deny Petitioner’s Medicare enrollment application under 42 C.F.R. § 424.530(a)(3) because within the 10 years preceding his application, Petitioner was convicted of felony offenses which CMS has determined to be detrimental to the best interests of the Medicare program and its beneficiaries.

1. Petitioner was convicted of felony offenses within 10 years preceding his application for enrollment.

In his request for hearing, Petitioner did not dispute that he was convicted, and indeed, acknowledged his “2015 conviction.”  RFH at 2.  Petitioner also disclosed in his Medicare enrollment application that he was convicted of felony offenses in August 2015.  CMS Ex. 3 at 3. 

However, in his opposition brief, Petitioner, relying on the state court’s October 25, 2021 order (Order), argued that he was never convicted of a felony.  P. Br. at 1; P. Ex. A.  Petitioner points out that the court’s Order states that his guilty plea was “retroactively set

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aside/withdrawn”. P. Br. at 1; P. Ex. A.  As a result, Petitioner argues that he was never convicted of a felony under Kentucky law.

However, Petitioner’s argument is without merit.  On August 17, 2015, the state court entered an order granting Petitioner’s motion to participate in Pretrial Diversion.  CMS Ex. 5 at 6-8.  The Order states, “[i]f [Petitioner] successfully completes Pretrial Diversion, the charge will be designated as Dismissed-Diverted.”  CMS Ex. 5 at 8.  The Order also states, “[i]f the Court finds [Petitioner] fails to successfully complete Pretrial Diversion, the Court shall impose a sentence equal to the penalty recommended by the prosecutor.”  CMS Ex. 5 at 8.  The State recommended five years as the appropriate sentence to be imposed if Petitioner did not successfully complete the program.  CMS Ex. 5 at 7.  Although the state court’s order did not specifically reference the relevant provisions of the Kentucky statutory scheme, I note that Kentucky’s pretrial diversion program is set forth at KY. REV. STAT. § 533.250 et seq.

As relevant here, under KY. REV. STAT. § 533.250(1)(a), a person charged with a Class D felony offense is eligible for pretrial diversion if he or she “has not, within ten (10) years immediately preceding the commission of [the] offense, been convicted of a felony under the laws of this state, another state, or of the United States, or has not been on probation or parole or who has not been released from the service of any felony sentence within ten (10) years immediately preceding the commission of the offense.”  The statute states that “[a]ny person shall be required to enter an Alford plea or a plea of guilty as a condition of pretrial diversion.”  KY. REV. STAT. § 533.250(1)(f).  Further, another element of participation in pretrial diversion provides that if the person fails to complete the terms of the agreement within the time specified, the Division of Probation and Parole may inform the attorney for the Commonwealth, who “may apply to the court for a hearing to determine whether or not the pretrial diversion agreement should be voided and the court should proceed on the defendant’s plea of guilty in accordance with the law”.  KY. REV. STAT. § 533.256(1).  Finally, the statute states that “[i]f the defendant successfully completes the provisions of the pretrial diversion agreement, the charges against the defendant shall be listed as ‘dismissed-diverted’ and shall not constitute a criminal conviction.”  KY. REV. STAT. § 533.258.

Though Petitioner argues that he does not have a conviction under Kentucky law, it is settled law that the federal definition of “conviction” controls in this proceeding.  As the Departmental Appeals Board (Board) has explained, “federal law governs a determination of whether that supplier has been convicted of a qualifying offense for enrollment purposes.”  John A. Hartman, D.O., DAB No. 2911 at 13 (2018).

The issue is whether Petitioner was “convicted” within the meaning of 42 C.F.R. § 1001.2, which is incorporated in 42 C.F.R. § 424.530(a)(3).  The regulatory definition provides:

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Convicted means that—

(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.

42 C.F.R. § 1001.2; see 42 C.F.R. § 424.530(a)(3).

Petitioner’s participation in the Kentucky pretrial diversion program is akin to participation in a deferred adjudication scheme or other arrangement where judgment of conviction was withheld.  The Board has further explained that it is “well established . . . that the term ‘conviction’ under the Act extends to diverted, deferred and expunged convictions regardless of whether state law treats such actions as a conviction.”  Henry L. Gupton, DAB No. 2058 at 8 (2007), aff’d sub nom. Gupton v. Leavitt, 575 F. Supp. 2d 874 (E.D. Tenn. 2008).

Under the Kentucky statutory scheme, a guilty plea is required as a condition of pretrial diversion.  On August 17, 2015, the state court accepted Petitioner’s guilty plea to five felony counts as a condition of granting his motion for pretrial diversion.  On October 25, 2021, the state court issued an order setting aside/withdrawing Petitioner’s guilty plea.  P. Ex. 1.  However, regardless of the state court’s disposition of Petitioner’s criminal case, the record shows that Petitioner was convicted within the meaning of 42 C.F.R. § 424.530(a)(3) and 42 C.F.R. § 1001.2, by virtue of the state court’s acceptance of his guilty plea and granting his participation in the pretrial diversion program.

Petitioner electronically filed a Medicare enrollment application on March 18, 2021. Petitioner’s 2015 conviction of felony offenses thus occurred within the 10 years preceding the date Petitioner filed his Medicare application.

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2. Petitioner’s felony conviction for insurance fraud is per se detrimental to the best interests of the Medicare program and its beneficiaries.

The felony offenses enumerated in 42 C.F.R. § 424.530(a)(3)(i) are treated by CMS to be detrimental per se to the Medicare program.  See Letantia Bussell, M.D., DAB No. 2196 at 9 (2008).  The listed offenses include the financial crimes of extortion, embezzlement, income tax evasion, and insurance fraud.  Petitioner was convicted of Fraudulent Insurance Acts, which by title alone, indicates that Petitioner’s conviction entailed insurance fraud, which CMS has determined to be per se detrimental to the best interests of the Medicare program and its beneficiaries.

3. Petitioner’s felony conviction for obtaining or attempting to obtain a controlled substance by fraud or deceit is per se detrimental to the best interests of the Medicare program and its beneficiaries because the conviction is for an offense that would result in mandatory exclusion under section 1128(a) of the Act.

Another category of crimes specifically listed as per se detrimental to the Medicare program and its beneficiaries is comprised of “[a]ny felonies that would result in mandatory exclusion under section 1128(a) of the Act.”  42 C.F.R. § 424.530(a)(3)(i)(D).

Section 1128(a)(4) of the Act mandates that the Secretary exclude an individual from participation in any federal health care program if the individual has been convicted, after August 21, 1996, of a felony “relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.”  Act § 1128(a)(4).

Here, Petitioner was convicted of a felony offense in 2015.  According to the state court documents relating to Petitioner’s criminal case, Petitioner and others, “[o]n or between 12/1/2012 through 4/30/2012 [sic], in Jefferson County, Kentucky, . . . wrote fraudulent prescriptions for others and traded fraudulent prescriptions for Ambien on at least 3 separate occasions.  [Petitioner] also committed theft of identity by stealing multiple doctors’ DEA numbers to write fraudulent prescriptions.”  CMS Ex. 5 at 4.  Based on the foregoing facts, it is evident that Petitioner’s criminal acts related to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.  I find that Petitioner’s conviction for Obtaining or Attempting to Obtain a Controlled Substance by Fraud or Deceit would subject him to mandatory exclusion under section 1128(a)(4) of the Act, and, accordingly, this offense is per se detrimental to the best interests of the Medicare program and its beneficiaries.  42 C.F.R. § 424.530(a)(3)(i)(D).

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4. Although the offense of identity theft is not one of the crimes enumerated in 42 C.F.R. § 424.530(a)(3)(i), CMS exercised its discretion to determine that Petitioner’s felony conviction for identity theft was detrimental to the best interests of the Medicare program and its beneficiaries.

The third felony offense for which Petitioner was convicted, theft of identity, is not one of the crimes enumerated in 42 C.F.R. § 424.530(a)(3)(i).  However, if a particular offense is not among the felonies specifically listed in 42 C.F.R. § 424.530(a)(3)(i), CMS may conduct a case-specific analysis as to whether the felony conviction at issue is detrimental to the best interests of the Medicare program and its beneficiaries.  Brenda Lee Jackson, DAB No. 2903 at 8 (2018).  In this situation, the ALJ must then decide whether CMS’s determination regarding detriment to the Medicare program is reasonable.  See Fady Fayad, M.D., DAB No. 2266 at 8, 16-17 (2009), aff’d, Fayad v. Sebelius, 803 F. Supp. 2d 699, 704 (E.D. Mich. 2011).

In the reconsidered determination, CMS did not separately address Petitioner’s offense of identity theft.  Rather, the CMS hearing officer stated:

In addition, CMS finds [Petitioner’s] felony convictions of Fraudulent Insurance Acts over $500.00, Theft of Identity, Obtaining or Attempting to Obtain a Controlled Substance by Fraud or Deceit to be detrimental to the best interests of the Medicare program and its beneficiaries based on the specific facts underlying the convictions.  On or between April 30, 2012 through December 1, 2012, [Petitioner], working with various co-defendants, wrote fraudulent prescriptions for others and traded fraudulent prescriptions for Ambien on at least three separate occasions.  [Petitioner] also committed theft of identity by stealing multiple doctors’ DEA numbers to write fraudulent prescriptions, and committed insurance fraud [cite omitted].  [Petitioner’s] actions demonstrate that he is a potential risk to beneficiaries if he is enrolled in the Medicare program . . . . Overall, [Petitioner’s] actions demonstrate his lack of good judgment, integrity, and trustworthiness.

CMS Ex. 4 at 4.  It is evident that CMS conducted a case-specific inquiry and exercised its discretion to determine that all of the felony offenses for which Petitioner was convicted, including the offense of identity theft, were detrimental to the Medicare program and its beneficiaries.  The CMS hearing officer considered the specific facts of Petitioner’s underlying convictions, noting that Petitioner’s criminal acts entailed insurance fraud and committing identify theft to write fraudulent prescriptions.  CMS Ex.

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4 at 3-4.  The hearing officer concluded that Petitioner posed a risk to the Medicare program.  I find that, with respect to Petitioner’s offense of identity theft, CMS exercised its discretion under 42 C.F.R. § 424.530(a)(3) to reasonably determine that this offense was detrimental to the best interests of the Medicare program and its beneficiaries. 

Accordingly, the record establishes that Petitioner was convicted of felony offenses that are detrimental to the best interests of the Medicare program and its beneficiaries.  42 C.F.R. § 424.530(a)(3).  The evidence has proven that CMS had a legal basis to deny Petitioner’s Medicare enrollment application under 42 C.F.R. § 424.530(a)(3).

Petitioner argues that 42 C.F.R. § 424.530(a)(3) gives CMS discretion to determine whether to deny a supplier enrollment in the Medicare program if the supplier was convicted of a federal or state offense within the last 10 years.  RFH; P. Br. at 2.  Petitioner argues further that CMS should have considered his rehabilitative efforts to overcome his addiction.  RFH; P. Br. at 2.

I commend the effort taken by Dr. Attum to overcome his addiction.  Letters submitted by Dr. Attum’s colleagues show that he is held in high regard by his peers.  CMS Ex. 1.  However, my review is limited to determining whether CMS has a legal basis for denying Petitioner’s enrollment application under 42 C.F.R. § 424.530(a)(3).  Dr. Robert Kanowitz, DAB No. 2942 at 4 (2019); Hartman, DAB No. 2911 at 17; Bussell, DAB No. 2196 at 13.   As the Board held in Brian K. Ellefsen, DO, DAB No. 2626 (2015), “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.”  Ellefsen, DAB No. 2626 at 7.  Because the record establishes that CMS had a legal basis for denying Petitioner’s enrollment application under 42 C.F.R. § 424.530(a)(3), I find that CMS was legally authorized to exercise discretion in concluding that Petitioner’s felony conviction was detrimental to the best interests of the Medicare program and its beneficiaries.

Additionally, the hearing officer acknowledged and commended Dr. Attum’s rehabilitative efforts and the fact that he was accepted into other medical programs, but nevertheless, found that those factors “[held] no relevance to CMS’ determination.”  CMS Ex. 4 at 4.  To the extent that Petitioner’s arguments amount to a request for equitable relief, they must be denied, for I have no authority to grant such relief.  See, e.g., US Ultrasound, DAB No. 2302 at 8 (2010) (“Neither the ALJ nor the [Departmental Appeals Board] is authorized to provide equitable relief by reimbursing or enrolling a supplier who does not meet statutory or regulatory requirements.”).  As explained by the Board, “[t]he authority to balance equitable considerations with risks to the program and beneficiaries rests with CMS, while [the DAB’s] role is to evaluate if CMS’s action is legally authorized.”  Hartman, DAB No. 2911 at 21.

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2. CMS had a legal basis to add Petitioner to the CMS Preclusion List, effective August 11, 2021, the date of the reconsidered determination.

Petitioner also argues that CMS should not have placed him on the preclusion list.  As explained below, I conclude that CMS had a legal basis to add Petitioner to its preclusion list.

In the reconsidered determination, the CMS hearing officer explained that Petitioner’s felony conviction satisfied the regulatory requirements for placement on the preclusion list.  CMS Ex. 4 at 4-6; 42 C.F.R. §§ 422.2 and 423.100.  The hearing officer found that Petitioner was convicted of a felony within the preceding 10 years and determined that the conviction was detrimental to the best interests of the Medicare program.  As part of his analysis, the hearing officer considered the three factors listed in 42 C.F.R. §§ 422.2 and 423.100:  the severity of the offense; when the offense occurred; and any other information that CMS deems relevant to its determination.  CMS Ex. 4 at 5-6.

CMS found that Petitioner’s felony offenses were “severe.”  CMS Ex. 4 at 5.  The CMS hearing officer described Petitioner’s scheme, which entailed writing fraudulent prescriptions, trading fraudulent prescriptions for Ambien, committing identity theft to write fraudulent prescriptions, and insurance fraud.  The CMS hearing officer explained:

[Petitioner’s] actions represent a risk to patient safety and demonstrate his lack of good judgement, integrity, and trustworthiness.  Under the Medicare program, payment is made for claims submitted in a manner that relies on the trustworthiness and integrity of our Medicare partners.  CMS find that [Petitioner’s] actions are very severe and demonstrate his propensity for dishonest behavior . . . . [Petitioner’s] participation in the Medicare program would significantly affect the integrity of the program as Trust Funds would be at risk.  As a result, CMS finds that [Petitioner’s] felony convictions, which led to the denial of his Medicare enrollment application, is severe.

Petitioner’s offenses occurred over several months in 2012.  While the hearing officer acknowledged that the offenses took place “several years ago,” he explained that “CMS finds that the severity of the offense and the fact that it implicates [Petitioner’s] lack of sound judgment and trustworthiness are indications that his placement on the CMS Preclusion List is appropriate.”  CMS Ex. 4 at 5.

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CMS also found it relevant that Petitioner was convicted of felony offenses which are deemed to be per se detrimental to the Medicare program and its beneficiaries.  The CMS hearing officer noted that Petitioner’s conviction for Fraudulent Insurance Acts over $500 was an enumerated financial crime under 42 C.F.R. § 424.530(a)(3)(i)(B), and that his conviction for Obtaining or Attempting to Obtain a Controlled Substance by Fraud or Deceit fell into the category of felonies under 42 C.F.R. § 424.530(a)(3)(i)(D) inasmuch as it was a felony which would subject Petitioner to mandatory exclusion under section 1128(a)(4) of the Act.  The CMS hearing officer viewed the controlled substances offense as “severe in nature” and commented that there was “an inherent detriment to the enumerated felony offenses committed by [Petitioner.]”  CMS Ex. 4 at 5.

Further, CMS found Petitioner’s felony conviction for Identity Theft to be “relevant and particularly egregious” and stated that his actions “represent[] a serious violation of trust and illustrate[] [Petitioner’s] disregard for others and disregard for program integrity.”  CMS Ex. 4 at 5-6.  The CMS hearing officer concluded:

CMS has great cause to believe that [Petitioner’s] lack of good judgement and propensity to cause others to detrimentally rely on his fraudulent representations may substantially harm the Medicare program.  Therefore, CMS finds that [Petitioner’s] felony offenses are detrimental to the best interests of the Medicare program.  As a result, CMS upholds [Petitioner’s] inclusion on the CMS Preclusion List.

CMS acknowledges [Petitioner’s] rehabilitative efforts since his August 17, 2015 felony conviction.  However, it does not negate that [Petitioner] was convicted of a felony within the previous 10 years, which CMS has determined is detrimental to the best interest of the Medicare program.  Therefore, CMS upholds [Petitioner’s] placement on the CMS Preclusion List, effective the date of this decision. 

CMS Ex. 4 at 6.

In his request for hearing, Petitioner argues that CMS improperly considered the three factors listed in 42 C.F.R. §§ 422.2 and 423.100 in adding him to the preclusion list.  Petitioner claims that, in assessing the severity of the offense, CMS determined that he was a “risk” to Medicare but failed to address his rehabilitation and the amount of time that had passed since his crimes.  Petitioner also argues that CMS did not consider any mitigating effect resulting from the passage of time.  With respect to other information deemed relevant by CMS, Petitioner contends that his rehabilitative efforts warranted that CMS exercise its discretion in his favor.  RFH at 2.

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Contrary to Petitioner’s assertion, CMS carefully considered the relevant regulatory factors in 42 C.F.R. §§ 422.2 and 423.100.  It is true that the CMS hearing officer’s discussion is similar to his discussion of the denial of Petitioner’s enrollment application.  However, this fact has no bearing and does not in any way mean that CMS’s evaluation was somehow deficient.  In light of the fact that CMS placed Petitioner on its preclusion list based on his felony conviction, it is entirely reasonable that CMS would reiterate points previously stated in support of the denial of Petitioner’s enrollment.

Based on his analysis, the CMS hearing officer determined that Petitioner’s felony offenses were severe and that Petitioner’s criminal acts represented a risk to patient safety and showed that he posed a threat to the Medicare Trust Funds if he was enrolled in the program.  In addition to Petitioner being convicted of offenses specifically enumerated under 42 C.F.R. § 424.530(a)(3)(i), the hearing officer also considered Petitioner’s conviction for identity theft to be “particularly egregious,” demonstrating a “serious violation of trust . . . and disregard for program integrity.”  The hearing officer also acknowledged Petitioner’s rehabilitation and that the offenses occurred in 2012; nevertheless, he explicitly found that Petitioner’s rehabilitative efforts “[do] not negate that [Petitioner] was convicted of a felony within the previous 10 years, which CMS has determined is detrimental to the best interest of the Medicare program.”  CMS Ex. 4 at 6.

I do not find any error in CMS’s analysis.  The record establishes that, within the 10 years preceding his Medicare enrollment application, Petitioner was convicted of felony offenses which CMS determined to be detrimental to the best interests of the Medicare program and its beneficiaries under 42 C.F.R § 424.530(a)(3).  The CMS hearing officer considered the regulatory factors in 42 C.F.R. §§ 422.2 and 423.100 and justifiably determined that Petitioner’s placement on the preclusion list should be upheld effective August 11, 2021, the date of the reconsidered determination.  42 C.F.R. §§ 422.222(a)(3)(i)(B), 423.120(c)(6)(v)(C)(l)(ii).  Although CMS did not indicate how long Petitioner would remain on the preclusion list, the regulations provide that Petitioner will be on the list for a 10-year period, beginning on the date of his felony conviction, unless CMS determines that a shorter length of time is warranted.  42 C.F.R. §§ 422.222(a)(5)(iii), 423.120(c)(6)(vii)(C).  Neither party offered any arguments or evidence to show that CMS determined the duration to be less than 10 years; accordingly, Petitioner will be on the preclusion list until August 17, 2025, 10 years from the date of his felony conviction.

Although Petitioner argues that CMS should have exercised its discretion and not placed him on the preclusion list due to the age of his conviction, the language set forth in 42 C.F.R. §§ 422.2 and 423.100 states that one who has a felony conviction “within the previous 10 years that CMS deems detrimental to the best interests of the Medicare

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program” is subject to placement on the preclusion list.2   Here, Petitioner was convicted in 2015, which is within the 10 years preceding the March 18, 2021 filing of his Medicare enrollment application.  CMS alone is authorized to weigh equitable concerns against the risks to the Medicare program.  If CMS’s action is legally authorized, as I find here, then I must uphold it.  Hartman, DAB No. 2911 at 21; Wendell Foo, M.D., DAB No. 2904 at 25 (2018) (The Board “has repeatedly confirmed that neither it nor the ALJs have authority to overturn a legally valid agency action on equitable grounds or otherwise grant equitable relief.”).

VII.  Conclusion

CMS has established a legal basis to deny Petitioner’s Medicare enrollment application and to include Petitioner on its preclusion list.  Therefore, I affirm the denial of Petitioner’s Medicare enrollment application under 42 C.F.R. § 424.530(a)(3) and the inclusion of Petitioner on the CMS Preclusion List, effective August 11, 2021, the date of the reconsidered determination.

1. My findings of fact and conclusions of law are set forth in bold and italicized headings below.
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2. Under 42 C.F.R. § 422.222(a)(6), CMS has the discretion not to include an individual or entity on the preclusion list if it determines that “exceptional circumstances exist regarding beneficiary access to [Medicare Advantage] items, services, or drugs.”  In making the determination, “CMS takes into account:  (i) The degree to which beneficiary access to MA items, services, or drugs would be impaired; and (ii) Any other evidence that CMS deems relevant to its determination.”  42 C.F.R. § 422.222(a)(6).  In this case, Petitioner has not argued that CMS should have exercised its discretion under 42 C.F.R. § 422.222(a)(6) nor has he argued that any of the circumstances described in 42 C.F.R. § 422.222(a)(6) exist.  Therefore, it is not necessary for me to examine this regulation in the context of this case.
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