Cystic Fibrosis Pharmacy, Inc., DAB CR5150 (2018)

DECISION

The Medicare enrollment and billing privileges of Petitioner, Cystic Fibrosis Pharmacy, Inc., are revoked pursuant to 42 C.F.R. § 424.57(e)(1) based on noncompliance with 42 C.F.R. § 424.57(c)(22),1 effective August 23, 2017.

I.  Procedural History and Background

Petitioner was enrolled in the Medicare program as a pharmacy and supplier of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS).  CMS Ex. 1 at 14.  On May 1, 2017, the Supplier Audit and Compliance Unit (SACU) of the National Supplier Clearinghouse (NSC) operated by Palmetto GBA, a Medicare Administrative Contractor (MAC) for the Centers for Medicare & Medicaid Services (CMS), notified Petitioner that Petitioner appeared to be violating 42 C.F.R. § 424.57(c)(10) and (c)(22) (Supplier Standards 10 and 22).  The SACU allowed Petitioner 21 calendar days to provide information to show it was in compliance with the Supplier Standards.  CMS Exhibit (Ex.) 1 at 5-6.

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On July 24, 2017, NSC notified Petitioner that Petitioner’s Medicare billing number and billing privileges were revoked effective August 23, 2017.  NSC cited 42 C.F.R. §§ 405.800, 424.57(e), 424.535(a)(1), and 424.535(g) as the legal authority for the revocation, based on violations of 42 C.F.R. § 424.57(c)(10) (Supplier Standard 10), (c)(21) (Supplier Standard 21), and (c)(22) (Supplier Standard 22).  NSC advised Petitioner that it was subject to a one-year bar to re-enrollment beginning 30 days from the postmark on NSC’s notice letter pursuant to 42 C.F.R. § 424.535(c).  CMS Ex. 1 at 7‑8.

On August 22, 2017, Petitioner submitted a request for reconsideration.  CMS Ex. 1 at 10-11.  On September 26, 2017, a Medicare Hearing Officer upheld revocation of Petitioner’s Medicare enrollment and billing privileges effective August 23, 2017, based on violation of 42 C.F.R. § 424.57(c)(22) (Supplier Standard 22).  CMS Ex. 1 at 3.

On November 24, 2017, Petitioner filed a request for hearing before an administrative law judge (ALJ).  On December 4, 2017, this case was assigned to me for hearing and decision, and an Acknowledgment and Prehearing Order (Prehearing Order) was issued at my direction.

On January 9, 2018, CMS filed a combined prehearing brief and motion for summary judgment with CMS Exs. 1 and 2.  Petitioner did not object to CMS’s exhibits and they are admitted as evidence.  On February 2, 2018, Petitioner filed a combined prehearing brief and opposition to CMS’s motion for summary judgment (P. Br.) with seven exhibits.  Petitioner’s Exs. 1 through 7.  CMS filed a reply brief (CMS Reply) on February 21, 2018.

CMS objects to my consideration of P. Exs. 1 through 7 on the grounds that Petitioner has not shown good cause for presenting the new evidence for the first time before me, citing 42 C.F.R. § 498.56(e).  CMS Reply at 1.  In provider and supplier appeals, 42 C.F.R. § 498.56(e) requires that I determine whether good cause exists to admit new documentary evidence not submitted at the time of reconsideration.  If I conclude good cause exists I “must include” the evidence.  42 C.F.R. § 498.56(e)(2)(i).  P. Exs. 1 through 7 are documentary evidence not produced by Petitioner at reconsideration and offered for the first time before me.  Petitioner offers no explanation for why P. Exs. 1 through 7 were not submitted to the hearing officer who conducted reconsideration.  Accordingly, P. Exs. 1 through 7 are not admitted as evidence.  I further note that P. Ex. 7, an inspection report by the Florida Department of Health Investigative Services for an inspection conducted on November 13, 2017, is not relevant to the issue of whether Petitioner was accredited at the time of revocation of its Medicare enrollment and billing privileges effective August 23, 2017.  For purposes of summary judgment, I treat the information contained in P. Exs. 1 through 7 as true, drawing all favorable inferences for Petitioner.

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II.  Discussion

A.  Applicable Law

Section 1831 of the Social Security Act (the Act) (42 U.S.C. § 1395j) establishes the supplementary medical insurance benefits program for the aged and disabled known as Medicare Part B.  Payment under the program for services rendered to Medicare-eligible beneficiaries may only be made to eligible providers of services and suppliers.2 Act §§ 1835(a) (42 U.S.C. § 1395n(a)), 1842(h)(1) (42 U.S.C. § 1395u(h)(1)).  Petitioner is a DMEPOS supplier.

The Act requires the Secretary of Health and Human Services (Secretary) to issue regulations that establish a process for the enrollment in Medicare of providers and suppliers, including the right to a hearing and judicial review of certain enrollment determinations, such as revocation of enrollment and billing privileges.  Act § 1866(j) (42 U.S.C. § 1395cc(j)).  Pursuant to 42 C.F.R. § 424.505, a supplier such as Petitioner must be enrolled in the Medicare program and be issued a billing number to have billing privileges and to be eligible to receive payment for services rendered to a Medicare-eligible beneficiary.

Pursuant to 42 C.F.R. §§ 424.57 and 424.505, a DMEPOS supplier such as Petitioner must be enrolled in the Medicare program to be reimbursed for durable medical equipment, prosthetics, orthotics, or supplies to be sold or rented to Medicare beneficiaries.  The regulations establish detailed requirements that suppliers must meet and maintain to enroll in Medicare and to receive and maintain Medicare billing privileges.  42 C.F.R. pt. 424, subpt. P.  DMEPOS suppliers have additional requirements imposed by 42 C.F.R. § 424.57(b) and (c).  To receive direct-billing privileges, a DMEPOS supplier must meet and maintain the Medicare application certification standards set forth in 42 C.F.R. § 424.57(c).  A DMEPOS supplier must operate and furnish Medicare-covered items in compliance with all applicable federal and state licensure and regulatory requirement.  42 C.F.R. § 424.57(c)(1).  Among other

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requirements, a DMEPOS supplier must be accredited by a CMS-approved accreditation organization and the accreditation must indicate the products and services for which the supplier is accredited.  42 C.F.R. § 424.57(c)(22).

The Secretary has delegated the authority to revoke enrollment and billing privileges to CMS.  42 C.F.R. §§ 424.57(e)(1), 424.535.  CMS or its Medicare contractor may revoke an enrolled supplier’s Medicare enrollment and billing privileges and supplier agreement for any of the reasons listed in 42 C.F.R. § 424.535.  Noncompliance with DMEPOS specific enrollment requirements established by 42 C.F.R. § 424.57(b) and (c) for DMEPOS suppliers is also a basis for revocation of Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.57(e)(1).  When Medicare enrollment and billing privileges are revoked pursuant to 42 C.F.R. § 424.57(e)(1), revocation is effective 30 days after the DMEPOS supplier is sent notice of the revocation.  If a supplier’s Medicare enrollment and billing privileges are revoked, the supplier is barred from re-enrolling in the Medicare program for one to three years.  42 C.F.R. § 424.535(c).

A supplier whose enrollment and billing privileges are revoked may request reconsideration and review as provided by 42 C.F.R. pt. 498.  42. C.F.R. § 424.545(a).  A supplier submits a written request for reconsideration to CMS or its contractor.  42 C.F.R. § 498.22(a).  CMS or its contractor must give notice of its reconsidered determination to the supplier, giving the reasons for its determination, specifying the conditions or requirements the supplier failed to meet, and advising the supplier of its right to an ALJ hearing.  42 C.F.R. § 498.25.  If the decision on reconsideration is unfavorable to the supplier, the supplier has the right to request a hearing by an ALJ and further review by the Departmental Appeals Board (the Board).  Act § 1866(j)(8) (42 U.S.C. § 1395cc(j)(8)); 42 C.F.R. §§ 424.545, 498.3(b)(17), 498.5.  A hearing on the record, also known as an oral hearing, is required under the Act.  Crestview Parke Care Ctr. v. Thompson, 373 F.3d 743, 748-51 (6th Cir. 2004).  The supplier bears the burden to demonstrate that it meets enrollment requirement with documents and records.  42 C.F.R. § 424.545(c).

B.  Issues

Whether summary judgment is appropriate; and

Whether there was a basis for the revocation of Petitioner’s billing privileges and enrollment in Medicare.

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

My conclusions of law are set forth in bold text followed by my findings of fact and analysis.

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1. Summary judgment is appropriate.

CMS filed a motion for summary judgment and Petitioner opposes the motion.  A supplier whose enrollment has been revoked has a right to a hearing and judicial review pursuant to section 1866(h)(1) and (j) of the Act (42 U.S.C. § 1395cc(h)(1) and (j)) and 42 C.F.R. §§ 498.3(b)(17); 498.5(l).  A hearing on the record, also known as an oral hearing, is required under the Act.  Act §§ 205(b), 1866(h)(1) and (j)(8) (42 U.S.C. §§ 405(b), 1395cc(h)(1) and (j)(8)); Crestview, 373 F.3d at 748-51.  A party may waive appearance at an oral hearing, but must do so affirmatively in writing.  42 C.F.R. § 498.66.  Petitioner has not waived the right to oral hearing or otherwise consented to a decision based only upon the documentary evidence or pleadings.  Accordingly, disposition on the written record alone is not permissible, unless summary judgment is appropriate, as I conclude it is in this case.

Summary judgment is not automatic upon request, but is limited to certain specific conditions.  The Secretary’s regulation at 42 C.F.R. pt. 498 that establishes the procedures to be followed in adjudicating Petitioner’s case do not establish a summary judgment procedure or recognize such a procedure.  However, the Board has long accepted that summary judgment is an acceptable procedural device in cases adjudicated pursuant to 42 C.F.R. pt. 498.  See, e.g., Ill. Knights Templar Home, DAB No. 2274 at 3‑4 (2009); Garden City Med. Clinic, DAB No. 1763 (2001); Everett Rehab. & Med. Ctr., DAB No. 1628 at 3 (1997).  The Board also has recognized that the Federal Rules of Civil Procedure do not apply in administrative adjudications such as this, but the Board has accepted that Fed. R. Civ. P. 56 and related cases provide useful guidance for determining whether summary judgment is appropriate.  Furthermore, a summary judgment procedure was adopted as a matter of judicial economy within my authority to regulate the course of proceedings and made available to the parties in the litigation of this case by my Prehearing Order, para. II.D. and G.  The parties were given notice by the Prehearing Order that summary judgment is an available procedural device and that the law as it has developed related to Fed. R. Civ. P. 56 will be applied.

Summary judgment is appropriate when there is no genuine dispute as to any issue of material fact for adjudication and/or the moving party is entitled to judgment as a matter of law.  In determining whether there are genuine issues of material fact for trial, the reviewer must view the evidence in the light most favorable to the non-moving party, drawing all reasonable inferences in that party’s favor.  The party requesting summary judgment bears the burden of showing that there are no genuine issues of material fact for trial and/or that it is entitled to judgment as a matter of law.  Generally, the non-movant may not defeat an adequately supported summary judgment motion by relying upon the denials in its pleadings or briefs but must furnish evidence of a dispute concerning a material fact, i.e., a fact that would affect the outcome of the case is proven.  Mission Hosp. Reg’l Med. Ctr., DAB No 2459 at 5 (2012) (and cases cited therein); Experts Are Us, Inc., DAB No. 2452 at 5 (2012) (and cases cited therein); Senior Rehab. & Skilled

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Nursing Ctr., DAB No. 2300 at 3 (2010) (and cases cited therein); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

The standard for deciding a case on summary judgment and an ALJ’s decision-making in deciding a summary judgment motion differ from that used in resolving a case after a hearing.  On summary judgment, the ALJ does not make credibility determinations, weigh the evidence, or decide which inferences to draw from the evidence, as would be done when finding facts after a hearing on the record.  Rather, on summary judgment, the ALJ construes the evidence in a light most favorable to the non-movant and avoids deciding which version of the facts is more likely true.  Holy Cross Vill. at Notre Dame, Inc., DAB No. 2291 at 5 (2009).  The Board also has recognized that on summary judgment it is appropriate for the ALJ to consider whether a rational trier of fact could find that the party’s evidence would be sufficient to meet that party’s evidentiary burden.  Dumas Nursing & Rehab., L.P., DAB No. 2347 at 5 (2010).  The Secretary has not provided in 42 C.F.R. pt. 498 for the allocation of the burden of persuasion or the quantum of evidence required to satisfy the burden.  However, the Board has provided some persuasive analysis regarding the allocation of the burden of persuasion in cases subject to 42 C.F.R. pt. 498.  Batavia Nursing & Convalescent Ctr., DAB No. 1904 (2004), aff’d, Batavia Nursing & Convalescent Ctr. v. Thompson, 129 F. App’x 181 (6th Cir. 2005).

There is no genuine dispute as to any material fact in this case.  Petitioner does not dispute that it was “not actively accredited” when its Medicare enrollment and billing privileges were revoked.  P. Br. at 1.  I accept as true for purposes of summary judgment that Petitioner was actively seeking accreditation when its Medicare enrollment and billing privileges were revoked and that Petitioner’s plight may have been due to some malfeasance or neglect on the part of an employee.  However, those facts are not material to the issue of whether CMS had a basis to revoke pursuant to 42 C.F.R. § 424.57(e)(1) based on violation of 42 C.F.R. § 424.57(c)(22).  I conclude that there is no genuine dispute as to any issue of fact material to the basis for revocation and Petitioner’s arguments must be resolved against it as a matter of law.  Accordingly, summary judgment is appropriate.

2. Petitioner was not in compliance with 42 C.F.R. § 424.57(c)(22) (Supplier Standard 22) because Petitioner had a lapse in accreditation.

3. There is a basis for revocation of Petitioner’s enrollment and billing privileges pursuant to 42 C.F.R. § 424.57(e)(1) based on Petitioner’s violation of 42 C.F.R. § 424.57(c)(22) (Supplier Standard 22).

4. The effective date of revocation of Petitioner’s Medicare enrollment and billing privileges is August 23, 2017, 30 days from the date of the

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July 24, 2017 notice of the initial determination to revoke.  42 C.F.R. § 424.57(e)(1).

a.  Facts

The material facts are undisputed.  Petitioner admitted in its request for reconsideration that its accreditation expired on April 23, 2016.  CMS Ex. 1 at 10; P. Br. at 3.  I accept as true for purposes of summary judgment Petitioner’s assertion in its request for reconsideration that it applied for reaccreditation prior to expiration, Petitioner was surveyed by the accrediting organization, a plan of correction was filed, and the process for reaccreditation continued as of the date of the request for reconsideration.  CMS Ex. 1 at 10; P. Br. at 1.  I also accept as true for purposes of summary judgment that Petitioner was reaccredited on October 12, 2017.  P. Br. at 1.

b. Analysis

It is well established that even a single violation of a supplier standard is an adequate basis for revocation of billing privileges and enrollment. 1866ICPayday.com, DAB No. 2289 at 13 (2009).  Furthermore, 42 C.F.R. § 424.57(e) requires that CMS revoke a supplier’s billing privileges if it is determined that the supplier does not meet the standards established by 42 C.F.R. § 424.57(b) and (c).  Supplier Standard 22 (42 C.F.R. § 424.57(c)(22)) requires that Petitioner, a DMEPOS supplier, be accredited by a CMS‑approved accreditation organization in order to maintain enrollment and receive and retain a supplier billing number.  A provider or supplier is required to be able to demonstrate that it meets enrollment requirements and to produce the documents necessary to show it is in compliance with enrollment requirements.  42 C.F.R. § 424.545(c).

The undisputed facts establish that Petitioner violated 42 C.F.R. § 424.57(c)(22) (Supplier Standard 22) because Petitioner was not accredited beginning about April 23, 2016 and continuing to October 12, 2017.  Although Petitioner was in the process of being reaccredited, that fact is not material as the requirement is to be accredited.  Petitioner concedes that it was not accredited at the time of revocation.  P. Br. at 1.  Accordingly, revocation for violation of 42 C.F.R. § 424.57(c)(22) is required by 42 C.F.R. § 424.57(e)(1), which provides that  “CMS revokes a supplier’s billing privileges if it is found not to meet the standards in paragraphs (b) and (c) of this section.”

Petitioner’s arguments to excuse its violation of Supplier Standard 22 and avoid revocation are without merit.

Petitioner asserts that the lapse in accreditation was a result of an employee’s inattention and misrepresentations.  The employee responsible for Petitioner’s accreditation failed to

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notify Petitioner of letters from the accrediting organization listing necessary steps to complete the accreditation process.  Petitioner asserts that were it not for the employee, Petitioner would not have had a lapse in accreditation.  P. Br. at 3-4.  Petitioner cannot avoid responsibility for failure to comply with DMEPOS requirements by blaming its agent or employee.  Petitioner cites no statute, regulation, or CMS policy that permits an enrolled supplier or provider to avoid enforcement of participation requirements based on the failure of an employee or an agent.  The defense is most often addressed and rejected in the area of the submission of false claims.  A provider or supplier is ultimately responsible, both as a matter of law and under the terms of their participation agreements, for ensuring that claims for Medicare reimbursement are accurate and for any errors in those claims.  Louis J. Gaefke, D.P.M., DAB No. 2554 at 5-6 (2013).  Petitioner cannot avoid responsibility for its claims by the simple expedient of shifting responsibility to an employee or agent.

In conclusion,we believe that providers and suppliers are responsible for the claims they submit or the claims submitted on their behalf.  We believe it is essential that providers and suppliers take the necessary steps to ensure they are billing appropriately for services furnished to Medicare beneficiaries.

73 Fed. Reg. 36,448, 36,455 (June 27, 2008) (emphasis added).  I conclude on the same rationale that Petitioner cannot avoid responsibility for failure to comply with accreditation requirements by blaming its employee, even though I accept as true for summary judgment that it was the employee’s malfeasance or neglect that caused Petitioner not to be accredited.

I conclude that CMS had a basis for revocation of Petitioner Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.57(e)(1).  I have no authority to review the exercise of discretion by CMS or its contractor to revoke where there is a basis for revocation.  Abdul Razzaque Ahmed, M.D., DAB No. 2261 at 19 (2009), aff’d, Ahmed v. Sebelius, 710 F. Supp. 2d 167 (D. Mass. 2010).  The scope of my authority is limited to determining whether there is a legal basis for revocation of Petitioner’s Medicare enrollment and billing privileges.  Id.

Petitioner’s arguments may be construed to be for equitable relief.  But, I have no authority to grant equitable relief.  US Ultrasound, DAB No. 2302 at 8 (2010) (neither the ALJ nor the Board is authorized to provide equitable relief).  Furthermore, I am bound to follow the Act and regulations, and I have no authority to declare statutes or regulations invalid or ultra vires.  1866ICPayday.com, L.L.C., DAB No. 2289 at 14 (2009) (“ALJ is bound by applicable laws and regulations and may not invalidate either a law or regulation on any ground.”).

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Pursuant to 42 C.F.R. § 424.57(e)(1), revocation for noncompliance with the supplier standards established by 42 C.F.R. § 424.57(b) and (c), is effective 30 days after the supplier is sent notice of the revocation.  Therefore, the correct effective date for revocation of Petitioner’s Medicare enrollment and billing privileges is 30 days after the notice of the revocation was issued.  See Neb Group of Arizona, DAB No. 2573 at 7-8 (2014).  Accordingly, I conclude that the effective date of revocation of Petitioner’s Medicare enrollment and billing privileges was August 23, 2017, which is 30 days after the July 24, 2017 notice of revocation was issued.

III.  Conclusion

For the foregoing reasons, I conclude that Petitioner’s Medicare enrollment and billing privileges are revoked pursuant to 42 C.F.R. § 424.57(e)(1), effective August 23, 2017.

• 1. References are to the 2016 revision of the Code of Federal Regulation (C.F.R.), the revision in effect at the time of the initial determination in this case, unless otherwise stated.
• 2. A “supplier” furnishes services under Medicare and includes physicians and other practitioners and facilities that are not included within the definition of the phrase “provider of services.” Act § 1861(d) (42 U.S.C. § 1395x(d)). A “provider of services,” commonly shortened to “provider,” includes hospitals, critical access hospitals, skilled nursing facilities, comprehensive outpatient rehabilitation facilities, home health agencies, hospice programs, and a fund as described in sections 1814(g) (42 U.S.C. § 1395f(g)) and 1835(e) (42 U.S.C. § 1395n(e)) of the Act. Act § 1861(u) (42 U.S.C. § 1395(x)(u)). The distinction between providers and suppliers is important because they are treated differently under the Act for some purposes.