Tiffany Harris, DAB CR5288 (2019)

DECISION

Palmetto GBA (“Palmetto”), a Medicare administrative contractor acting on behalf of the Centers for Medicare & Medicaid Services (CMS), revoked the Medicare enrollment and billing privileges of Petitioner, Tiffany Harris.  CMS upheld Petitioner’s revocation in a reconsidered determination in which it determined that, pursuant to Medicare program regulations, Petitioner had a felony conviction that was detrimental to the Medicare program and its beneficiaries.  For the reasons stated below, I affirm the revocation of Petitioner’s Medicare enrollment and billing privileges, effective July 22, 2011.

I. Background and Procedural History

Petitioner is a licensed clinical social worker.  See CMS Exhibits (Exs.) 3 at 1; 5 at 9.  On February 4, 2010, a grand jury returned a true bill of indictment charging that Petitioner had committed the following offenses:

Count 1:  Fraud in Department of Housing and Urban Development Transactions, in violation of 18 U.S.C. § 1012;

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Count 2:  Mail Fraud, in violation 18 U.S.C. § 1341;
Count 3:  Use of a False Document, in violation of 18 U.S.C. § 1001(a)(3).

CMS Ex. 4 at 1-7.  The scheme detailed in the indictment involved Petitioner’s receipt of “Section 8” rental assistance funds based her false reporting of earnings information in her rental assistance program application and federal tax return.  CMS Ex. 4 at 1-4.  The indictment charged that, as a result of her fraud, Petitioner received $16,248.00 in rental subsidy payments to which she was not entitled.  CMS Ex. 4 at 4.  On February 3, 2011, Petitioner entered a plea of guilty to the felony offensesPursuant to 18 U.S.C. §§ 1001(a)(3) and 1341, Counts 2 and 3 are felony offenses because the maximum period of incarceration for Count 2 is 20 years and the maximum period of incarceration for Count 3 is five years. See 18 U.S.C. § 3559(a) (classifying felonies as offenses punishable by more than one year of incarceration). charged in Counts 2 and 3 of the indictment.  CMS Ex. 5 at 32, 35.  On July 22, 2011, a United States District Judge imposed judgment.  CMS Ex. 5 at 35.  The sentence imposed included $16,248 in restitution payable to the Syracuse Housing Authority.  CMS Ex. 5 at 38.

In November 2015, Petitioner filed a Medicare enrollment application.  CMS Ex. 5 at 27.  Petitioner disclosed her felony conviction in Section 3 of the application and included ample documentation regarding her conviction.  CMS Ex. 5 at 14, 29-39.

By letter dated June 5, 2017, Palmetto revoked Petitioner’s Medicare enrollment and billing privileges,A copy of the Palmetto’s letter approving her enrollment application is not included in the evidentiary record. effective the same date as her July 22, 2011 conviction.  CMS Ex. 2.  Palmetto based the revocation on noncompliance with 42 C.F.R. § 424.535(a)(3) because Petitioner had a felony conviction within the preceding 10 years.  CMS Ex. 2 at 1.  Palmetto also established a re-enrollment bar for a period of three years, effective 30 days from the postmark date of the letter.  CMS Ex. 2 at 1.

On June 8, 2017, Petitioner requested reconsideration of Palmetto’s revocation determination.  CMS Ex. 3.  On September 8, 2017, CMS’s Provider Enrollment & Oversight Group issued a reconsidered determination in which it upheld the revocation of Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(3).  CMS Ex. 1.  CMS determined that, for purposes of revocation, Petitioner had been convicted of the felony offenses of mail fraud and use of a false document.  CMS Ex. 1 at 3.  CMS explained:

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Certain felony offenses have been determined by CMS as per se detrimental to the Medicare program.  Under 42 C.F.R. § 424.535(a)(3)(ii)(B), these per se crimes include financial crimes, such as extortion, embezzlement, income tax evasion, insurance fraud and other similar crimes for which the individual was convicted, including guilty pleas and adjudicated pretrial diversions.  By her own admission, Ms. Harris’ convictions involved her dishonesty concerning her financial matters, specifically her income.  This dishonesty led to her receipt of government funds that she was not entitled to receive.  Therefore, CMS determines that the felony crimes of mail fraud and use of a false document are financial crimes akin to the enumerated financial crimes that are deemed to be per se detrimental to the best interests of the Medicare program and its beneficiaries.

If, in the alternative, Ms. Harris’ felony crimes are not considered to be per se detrimental, CMS still finds that Ms. Harris’ felony crimes of mail fraud and use of a false document are detrimental to the best interests of the Medicare program and its beneficiaries.  Ms. Harris’ felony convictions involve financial deception and dishonesty which call into question her trustworthiness and veracity.  Payment in the Medicare program is made for claims submitted in a manner that relies upon the trustworthiness of our Medicare partners.  Given that Ms. Harris’ felony convictions were financial in nature, the Medicare Trust Funds and the Medicare beneficiaries would be at risk if she continues to participate in the program.  It necessarily follows that placing Trust Funds at risk is also a detriment to the beneficiaries.  Therefore, CMS finds that the revocation of Ms. Harris’ Medicare billing privileges is appropriate under 42 C.F.R. § 424.535(a)(3).

CMS Ex. 1 at 3-4.

Petitioner filed a timely request for hearing (RFH) on November 8, 2017.  Administrative Law Judge Leslie A. WeynThis case was reassigned to me on March 8, 2019. issued an Acknowledgment and Pre-Hearing Order (Pre-Hearing Order) on November 15, 2017.  CMS filed a motion for summary judgment in lieu of a brief (CMS Br.), along with five exhibits (CMS Exs. 1-5).  Petitioner submitted a filing captioned as a motion for summary judgment (P. Br.), along with one exhibit (P. Ex. 1).  As neither party has objected to any of the proposed exhibits, I admit all submitted exhibits.

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Neither party has submitted the written direct testimony of any witnesses, and a hearing is therefore unnecessary for the purpose of cross-examination of witnesses.  Pre-Hearing Order, §§ 8-10.  The record is closed, and the case is ready for a decision on the merits.As an in-person hearing to cross-examine witnesses is not necessary, it is unnecessary to further address the parties’ motions for summary judgment.

II. Issue

Whether CMS has a legal basis to revoke Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(3) based on her felony convictions within the preceding 10 years.

III. Jurisdiction

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

IV. Findings of Fact, Conclusions of Law, and AnalysisMy numbered findings of fact and conclusions of law are set forth in italics and bold font.

Petitioner is a “supplier” for purposes of the Medicare program.  See 42 U.S.C. § 1395x(d); 42 C.F.R. § 400.202 (definition of supplier).  In order to participate in the Medicare program, a supplier must meet certain criteria to enroll and receive billing privileges.  42 C.F.R. §§ 424.505, 424.510.  CMS may revoke a supplier’s enrollment and billing privileges for any reason stated in 42 C.F.R. § 424.535(a).

CMS may revoke a supplier’s enrollment based on the existence of a felony conviction, as set forth in 42 C.F.R. § 424.535(a)(3), which currently provides:

(3) Felonies.  (i) 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.

(ii) Offenses include, but are not limited in scope or severity to—

* * *

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(B) Financial crimes, such as extortion, embezzlement, income tax evasion, insurance fraud and other similar crimes for which the individual was convicted, including guilty pleas and adjudicated pretrial diversions.

42 C.F.R. § 424.535(a)(3)(i) and (ii)(B).

1. Petitioner is a licensed clinical social worker who participated in the Medicare program.

2. On February 4, 2010, a grand jury returned a true bill of indictment charging that Petitioner committed, inter alia, offenses of mail fraud and use of a false document in a scheme in which she received $16,248 in federally subsidized rental assistance based on her false reports of her income.

3. Petitioner entered a guilty plea to the felony offenses of mail fraud and use of a false document on February 3, 2011, and a United States District Judge imposed judgment for those crimes on July 22, 2011.

4. As part of her sentence, Petitioner was ordered to pay $16,248 in restitution to the Syracuse Housing Authority.

5. Petitioner’s felony convictions are for a financial crime pursuant to 42 C.F.R. § 424.535(a)(3).

6. An offense listed in 42 C.F.R. § 424.535(a)(3) has been determined by CMS to be per se detrimental to the best interests of the Medicare program and its beneficiaries.

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

Petitioner does not dispute that she has felony convictions for purposes of section 424.535(a)(3).  P. Br.; see CMS Ex. 3 (Petitioner’s concessions, in her request for reconsideration, that “it is considered mail fraud because I caused the governmental programs to send full payments on my behalf that I was not entitled to,” and “the false document conviction was the result of my signing paperwork back in 2005 acknowledging only one income, without disclosing the other.”).  Petitioner does not dispute that her convictions are for a financial crime, which is an offense contemplated by 42 C.F.R. § 424.535(a)(3).  Petitioner’s offense conduct involved, at its core, financial impropriety, as evidenced by the terms of her sentence, which included the payment of

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restitution to the Syracuse Housing Authority.See, e.g., 18 U.S.C. § 3663(a)(1) (noting that a federal criminal sentence may include an order that the defendant “make restitution to any victim of such an offense.”).  CMS Ex. 5 at 38.  CMS has determined that financial crimes, “such as extortion, embezzlement, income tax evasion, insurance fraud and other similar crimes” warrant the revocation of enrollment.  42 C.F.R. § 424.535(a)(3)(ii)(B) (emphasis added).  The words “such as” imply that the subsequent list of illustrative crimes, including crimes similar to those named in the list, are not the only set of crimes that may be considered “financial.”  In fact, the DAB addressed a similar issue in Stanley Beekman, D.P.M., stating that “CMS may revoke Medicare billing privileges under the authority of section 424.535(a)(3) based on any financial crime, regardless of whether the supplier’s particular financial crime is specified in the regulation’s illustrative list of financial crimes.”  DAB No. 2650 at 7 (2015) (emphasis in original).  Thus, Petitioner’s crime need not be one of the representative crimes listed in section 424.535(a)(3)(ii)(B), but rather, need only be a “financial crime” to render the regulation applicable.

The DAB has held that CMS “may revoke a . . . supplier’s billing privileges based solely on a qualifying felony conviction, without regard to equitable or other factors.” Brian K. Ellefsen, D.O., DAB No. 2626 at 9 (2015). The DAB has also explained that CMS may revoke billing privileges based solely on a qualifying felony conviction it has determined by regulation to be detrimental to the best interests of the Medicare program and its beneficiaries. See Fady Fayad, M.D., DAB No. 2266 at 15-16 (2009). CMS’s regulations permit CMS to revoke enrollment in such an instance without exercising discretion to determine anew whether the offenses underlying the conviction are detrimental to the Medicare program and its beneficiaries. 42 C.F.R. §§ 424.535(a)(3)(ii)(B) and 1001.2 (defining a conviction for purposes of revocation under section 424.535(a)(3)). CMS has determined that certain offenses, even if given lenient treatment by the criminal justice system, are nonetheless per se detrimental to the Medicare program and its beneficiaries.

Petitioner falsely reported her income in order to receive rental assistance funds.  CMS Exs. 3; 4; 5 at 35.  Petitioner’s offenses certainly constitute a “financial crime” because her false reporting of her income in order to obtain rental assistance funds to which she was otherwise not entitled is a financial crime.

Petitioner argues that she disclosed the felony conviction when she submitted her enrollment application and that she did not present any false or misleading information at that time.  P. Br. at 1.  I agree with Petitioner, and neither CMS nor Palmetto has alleged that Petitioner failed to disclose her felony convictions.Despite the fact that Petitioner unquestionably disclosed her felony convictions on her enrollment application, Palmetto not only enrolled her as a supplier in the Medicare program but allowed her to remain in the program until June 2017. CMS Ex. 2. Being that Petitioner’s convictions “involved her dishonesty concerning her financial matters, specifically her income” and that Medicare Trust Funds and beneficiaries would be at risk based on her participation in the program (CMS Ex. 1 at 3-4), it is unclear why Palmetto approved her enrollment application in the first place. When a Medicare administrative contractor or CMS enrolls a supplier who has a felony conviction within the preceding 10 years that is determined to be detrimental to the Medicare program and its beneficiaries, the contractor and CMS not only fail to protect the Medicare beneficiaries they are charged with protecting, they also unnecessarily expose individual suppliers to potential financial liability. See Michael Scott Edwards, OD, & Michael Scott Edwards, OD, PA, DAB CR5074 at 8 n.13 (2018) (my observations that Palmetto had an obligation to expeditiously act on information that the petitioner had a felony conviction so that it could protect Medicare beneficiaries and that Palmetto’s “inexcusable delay” in revoking enrollment based on section 424.535(a)(3), despite the petitioner’s report of a felony conviction on enrollment applications, resulted in “enormous financial liability” for the petitioner). Nonetheless, Petitioner’s

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disclosure of her felony convictions does not preclude revocation pursuant to section 424.535(a)(3).

Petitioner argues in both her request for hearing and her brief that character witnesses and references support that revocation is not warranted.  Even if Petitioner’s character witnesses speak effusively of her professional competence and integrity, such evidence is immaterial to the question of whether Palmetto and CMS had a legitimate basis to revoke her Medicare enrollment due to her felony convictions relating to a financial crime in the preceding 10 years.  Unfortunately for Petitioner, the fact that she has felony convictions for a financial crime in the preceding 10 years, regardless of the number of professional references who vouch for her complete rehabilitation, is sufficient alone to warrant revocation of enrollment.  42 C.F.R. § 424.535(a)(3).

For the aforementioned reasons, CMS had a legitimate basis to revoke Petitioner’s Medicare enrollment and billing privileges pursuant to section 424.535(a)(3).

8. The effective date of the revocation is appropriate.

The regulation at 42 C.F.R. § 424.535(g) states that when a revocation is based on a felony conviction, the revocation is effective as of the date of the felony conviction.  Petitioner’s revocation therefore became effective on July 22, 2011, the date judgment was imposed for her felony convictions.  Norman Johnson, M.D.,DAB No. 2779 at 19-20 (2017) (pursuant to section 424.535(g), “a revocation based on a felony conviction is effective on the date of conviction”).

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9. The three-year enrollment bar is not reviewable.

Petitioner does not challenge the three-year length of the re-enrollment bar.  The DAB has explained that “CMS’s determination regarding the duration of the re‑enrollment bar is not reviewable . . . .”  Vijendra Dave, M.D., DAB No. 2672 at 11 (2016).  The DAB has further stated that “the only CMS actions subject to appeal under Part 498 are the types of initial determinations specified in section 498.3(b).”  Id.  The DAB also explained that “[t]he determinations specified in section 498.3(b) do not, under any reasonable interpretation of that regulation’s text, include CMS decisions regarding the severity of the basis for revocation or the duration of a revoked supplier’s re-enrollment bar.”  Id.  The DAB discussed that a review of the rulemaking history showed that CMS did not intend to “permit administrative appeals of the length of a re-enrollment bar.”  Id.  Therefore, I do not disturb the three-year re-enrollment bar.

V.  Conclusion

For the reasons explained above, I affirm the revocation of Petitioner’s Medicare enrollment and billing privileges, effective July 22, 2011.