Lily Creek Medical Group, PSC and Robert L. Bertram, Jr., D.O., DAB CR5396 (2019)

DECISION

The Centers for Medicare & Medicaid Services (CMS), through a CMS contractor, revoked the Medicare enrollment and billing privileges of the Petitioners in this case: Robert Bertram, D.O. (Dr. Bertram) and the practice group that Dr. Bertram owns, Lily Creek Medical Group, PSC (Lily Creek). The bases for revoking Petitioners were Dr. Bertram's criminal conviction for aiding and abetting health care fraud and Petitioners' failure to timely report the conviction to CMS. Petitioners requested a hearing before an administrative law judge (ALJ) to dispute the revocations. Because Dr. Bertram was convicted of felony offenses considered to be per se detrimental to the Medicare program and its beneficiaries, and a jury rendered a verdict in which it found Dr. Bertram guilty on March 31, 2017, I affirm the revocations, retroactive to March 31, 2017.

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I. Background and Procedural History

Dr. Bertram is a physician licensed in Kentucky who had been enrolled in the Medicare program as a supplier. See CMS Exhibit (Ex.) 11 at 4, 6.

In a January 4, 2018 initial determination, a CMS contractor revoked Dr. Bertram's Medicare enrollment and billing privileges effective March 31, 2017. CMS Ex. 1 at 1. The basis for the revocation was:

42 CFR § 424.535(a)(3) – Felonies

[CMS] has been made aware of Robert Bertram's March 31, 2017, felony conviction for multiple counts of Health Care Fraud – Aiding and Abetting in violation of 18 U.S. Code § 1347 and 18 U.S. Code § 2 in the United States District Court, Eastern Di[strict] of Kentucky – Central Division at Frankfort.

42 CFR § 424.535(a)(9) – Failure to Report

[CMS] has been made aware of Robert Bertram's March 31, 2017, felony conviction from multiple counts of Health Care Fraud – Aiding and Abetting in violation of 18 U.S. Code § 1347 and 18 U.S. Code § 2 in the United States District Court, Eastern Di[strict] of Kentucky – Central Division at Frankfort. [Dr. Bertram] did not notify [CMS] of this adverse legal action as required under 42 C.F.R. § 424.516.

CMS Ex. 1 at 1 (emphasis in original). The CMS contractor barred Dr. Bertram from re‑enrolling in the Medicare program for three years effective 30 days from the date on the initial determination. CMS Ex. 1 at 2.

In another initial determination dated January 12, 2018, the CMS contractor revoked the Medicare enrollment and billing privileges for Lily Creek effective March 31, 2017, and imposed a 3-year re-enrollment bar effective 30 days from the date of the letter. CMS Ex. 2 at 1, 2. The CMS contractor provided the same factual and legal bases for revocation as stated in Dr. Bertram's initial determination. The CMS contractor noted that "Robert Bertram is listed as the sole owner on Lily Creek Medical Group, PSC's Medicare enrollment record." CMS Ex. 2 at 1.

Petitioners separately requested reconsideration of their respective revocations, each providing substantially the same arguments. Petitioners neither disputed Dr. Bertram's conviction nor his sole ownership of Lily Creek. Petitioners requested that the CMS

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contractor rescind the revocations because the CMS contractor failed to find that Dr. Bertram's conviction related to patient care or is detrimental to CMS. Further, Petitioners argued that the retroactive effective date of revocation should be December 19, 2017, and not March 31, 2017, because Dr. Bertram only received a guilty verdict on March 31, but that it was not until December 19, 2017, that the court issued a written judgment of conviction. Based on that argument, Petitioners also maintain that they were not obligated to report Dr. Bertram's conviction following the March 31 guilty verdict, but only after the December 19, 2017 written judgment of conviction. CMS Exs. 3, 4.

On May 11, 2018, a CMS hearing officer issued substantially similar reconsidered determinations upholding Petitioners' revocations. The hearing officer explained that 42 C.F.R. § 424.535(a)(3)(ii)(D) justified revocation because a criminal conviction that would result in a mandatory exclusion from participation in federal health care programs is considered per se detrimental to the Medicare program and its beneficiaries. The hearing officer then noted that the Inspector General for the Department of Health and Human Services (IG) had excluded Dr. Bertram from participation in all federal health care programs in May 2018 due to his conviction. The hearing officer also concluded that Petitioners needed to report Dr. Bertram's conviction within 30 days of March 31, 2017, but did not do so. CMS Ex. 5 at 5-7; CMS Ex. 6 at 5-7.

On June 21, 2018, Petitioners each timely requested a hearing to dispute CMS's reconsidered determinations. Petitioners' hearing requests included the same arguments as were in their reconsideration requests. Judge Leslie A. Weyn was assigned to both cases. On July 5, 2018, Judge Weyn issued Acknowledgment and Pre-Hearing Orders (Pre-hearing Order) in those cases and proposed to consolidate Petitioners' appeals. Receiving no objection from the parties, on July 18, 2018, Judge Weyn consolidated Petitioners' appeals under docket number C-18-1063.

In accordance with the Pre-hearing Order, CMS filed its pre-hearing exchange, which included a motion for summary judgment and pre-hearing brief (CMS Br.) along with 11 proposed exhibits (CMS Exs. 1-11). Petitioners filed a pre-hearing exchange, which included a brief and response to the motion for summary judgement (P. Br.), one proposed exhibit (P. Ex. 1), and a witness list naming Dr. Bertram as a witness. CMS filed a reply brief in support of summary judgement (CMS Reply).

On November 20, 2018, I was assigned to hear and decide this case.

II. Decision on the Record

I admit CMS Exs. 1-11 into the record without objection. Pre-hearing Order ¶ 8; Civil Remedies Division Procedures (CRDP) § 14(e). I exclude P. Ex. 1 because it is the same document as CMS Ex. 9. CRDP § 14(a) ("Parties ... should not file as an exhibit a document already filed as an exhibit by the opposing party.").

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The Pre-hearing Order advised the parties that they must submit written direct testimony for each proposed witness and that an in-person hearing would only be necessary if the opposing party requested an opportunity to cross-examine a witness. Pre-hearing Order ¶¶ 9-12; CRDP §§ 16(b), 19(b), (d); Vandalia Park, DAB No. 1940 (2004); Pac. Regency Arvin, DAB No. 1823 at 8 (2002) (holding that the use of written direct testimony for witnesses is permissible so long as the opposing party has the opportunity to cross‑examine those witnesses). The parties did not offer any written direct testimony. Although Petitioners submitted a witness list indicating that Dr. Bertram would be a witness, Petitioners failed to comply with the clear requirement in the Pre-hearing Order that the parties needed to submit Dr. Bertram's written testimony with their pre-hearing exchanges. Because there is no written direct testimony, there is no need to conduct cross-examination of any witnesses. Therefore, I decide this case based on the written record.

III. Issues

1. Whether CMS had a legitimate basis to revoke Petitioners' Medicare enrollment and billing privileges based on 42 C.F.R. §§ 424.535(a)(3) and (a)(9).
2. Whether CMS properly assigned March 31, 2017, as Petitioners' retroactive effective date of revocation.

IV. Jurisdiction

I have jurisdiction to hear and decide this case. 42 U.S.C. § 1395cc(j)(8); 42 C.F.R. §§ 424.545(a), 498.1(g), 498.3(b)(17), 498.5(l)(2).

V. Findings of Fact

1. In November 2015, a Grand Jury empaneled by the United States District Court for the Eastern District of Kentucky (District Court) indicted Dr. Bertram, along with several other individuals, on 99 counts of violating 18 U.S.C. § 1347 due to aiding and abetting the submission of materially false and fraudulent health insurance claims for services that were not medically indicated or necessary. CMS Ex. 7 at 8-12.
2. Dr. Bertram pleaded not guilty to the charges. CMS Ex. 9 at 1.
3. Following a trial, on March 31, 2017, a jury found Dr. Bertram guilty on 17 counts in the indictment, all of which involved claims submitted to Anthem BlueCross BlueShield. CMS Ex. 7 at 9-12; CMS Ex. 8; CMS Ex. 9 at 1; CMS Ex. 11 at 14.

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4. On November 2, 2017, Dr. Bertram completed a CMS-855I enrollment application, which he used to inform CMS of a final adverse action, i.e., a "Jury Conviction" on "03/31/2017." CMS Ex. 11 at 5, 14, 27.
5. On December 19, 2017, the District Court issued a Judgment in a Criminal Case in which the District Court stated that Dr. Bertram is: "adjudicated guilty" of 17 counts; sentenced to 21 months of incarceration; and ordered to pay $3,378.37 in restitution to Anthem Health Plans of Kentucky, Inc. CMS Ex. 9 at 1-3, 7.
6. Effective May 20, 2018, the IG excluded Dr. Bertram from participation in all federal health care programs under § 1128(a)(3) of the Social Security Act (42 U.S.C. § 1320a-7(a)(3)). CMS Ex. 10 at 2.

VI. Conclusions of Law and Analysis

My conclusions of law are set forth in italics and bold font.

The Social Security Act (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).

Under the Secretary's regulations, CMS may revoke a supplier's Medicare enrollment and billing privileges if the "supplier[] or any owner or managing employee of the ... 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." 42 C.F.R. § 424.535(a)(3)(i). Further, the Secretary provided in the regulations a non-exhaustive list of the types of felony offenses that CMS will treat as per se detrimental to the best interests of the program and its beneficiaries. 42 C.F.R. § 424.535(a)(3)(ii); 71 Fed. Reg. 20,754, 20,768 (Apr. 21, 2006); Letantia Bussell, M.D.,DAB No. 2196 at 9 (2008). That list includes "[a]ny felonies that would result in mandatory exclusion under section 1128(a) of the [Social Security] Act." 42 C.F.R. § 424.535(a)(3)(ii)(D).

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1. CMS had a legitimate basis under 42 C.F.R. § 424.535(a)(3) to revoke Petitioners' Medicare enrollment and billing privileges because Dr. Bertram was convicted of 17 felonies within the last ten years that would result in a mandatory exclusion under § 1128(a)(3) of the Act, resulting in those felonies being per se detrimental to the best interests of the Medicare program and its beneficiaries.

As stated above, CMS may revoke a supplier's Medicare billing privileges if the supplier is: (1) convicted of a federal or state felony offense within the last ten years; and (2) the felony offense is one that CMS has determined to be detrimental to the best interests of the Medicare program and its beneficiaries. 42 C.F.R. § 424.535(a)(3).

Dr. Bertram was convicted of 17 counts of a federal crime for which there is a maximum sentence of 10 years in prison. 18 U.S.C. § 1347(a). Therefore, Dr. Bertram was convicted of a Class C felony. 18 U.S.C. § 3559(a)(3).

Further, Dr. Bertram was convicted in 2017, making CMS's 2018 revocation action within ten years of the conviction.

Finally, the felony that Dr. Bertram was convicted of committing is one that CMS has determined to be detrimental to the best interests of the Medicare program and its beneficiaries because Dr. Bertram's offenses were ones for which he would be excluded under § 1128(a)(3) of the Act.

Section 1128(a)(3) of the Act provides for a mandatory exclusion for an individual who:

has been convicted for an offense which occurred after August 21, 1996, under Federal or State law, in connection with the delivery of a health care item or service or with respect to any act or omission in a health care program (other than those specifically described in [§ 1128(a)(1)]) operated by or financed in whole or in part by any Federal, State, or local government agency, of a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.

42 U.S.C. § 1320a-7(a)(3). Therefore, the three essential elements necessary to support a mandatory exclusion under § 1128(a)(3) are: (1) the individual to be excluded must have been convicted of a felony offense related to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct; (2) the felony offense must be in connection with the delivery of a health care item or service; and (3) the felonious conduct must have occurred after August 21, 1996.

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Dr. Bertram's conviction meets these requirements. As concluded above, Dr. Bertram's offenses are felonies under federal law. Further, Dr. Bertram was convicted of violating a statute entitled "Health care fraud," which provides that an offense occurs when an individual either (1) defrauds a health benefit program or (2) obtains money or property from a health care benefit program through false or fraudulent pretenses, representations, or promises. 18 U.S.C. § 1347(a). The specific facts in the case involved Dr. Bertram and others sending urine samples to a testing company they owned, even though they knew their company could not start testing the samples for months. Their testing company ultimately completed the tests and billed for them months later, by which time intervening urine tests were completed for those patients. CMS Ex. 7 at 4-6. Dr. Bertram and his co-conspirators, therefore, caused the submission of "materially false and fraudulent claims for services, specifically, for urine drug screens that were not medically indicated or necessary to those beneficiaries, and the results of which were not used in directing the care of the patient." CMS Ex. 7 at 9. The criminal conduct took place in 2011. CMS Ex. 7 at 9-12; CMS Ex. 9 at 1. Therefore, the record shows that Dr. Bertram was convicted of felonies that would result in a mandatory exclusion under § 1128(a)(3) of the Act. Indeed, the IG excluded Dr. Bertram on that basis in 2018. CMS Ex. 10 at 2.

Petitioners argue that "CMS failed to relate or make a finding that [Dr. Bertram's conviction] related to the care and treatment of Dr. Bertram's patients or the integrity of the program ... ." P. Br. at 2. Further, Petitioners assert that the conviction "does not ... relate to the billing practices of Dr. Bertram in his clinic." P. Br. at 2. Therefore, Petitioners conclude that Dr. Bertram's conviction was not for offenses detrimental to the best interests of the Medicare program and its beneficiaries. P. Br. at 3-4.

However, as noted above, Dr. Bertram's conviction was for offenses that CMS has determined by regulation are per se detrimental to the best interests of the Medicare program or its beneficiaries. The CMS hearing officer noted this in the reconsidered determinations. CMS Ex. 5 at 6; CMS Ex. 6 at 6. This forecloses, as a matter of law, any argument that Dr. Bertram's conviction is not detrimental to the best interests of the Medicare program or its beneficiaries. Dr. Bertram's crime is such that Congress mandated that he should be excluded from participating in all federal health care programs. CMS's revocations are consistent with Congress's wishes.

2. CMS properly set the retroactive effective date for revocation as March 31, 2017, because Dr. Bertram was convicted on that date.

Under the regulations, revocations generally take effect 30 days after CMS or its contractor mails notice of the revocation to the supplier. 42 C.F.R. § 424.535(g). Where the revocation is based on a criminal conviction, however, the revocation takes effect the date of the conviction. Id.

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Petitioners argue that Dr. Bertram was convicted when the District Court issued its judgment of conviction on December 19, 2017. Therefore, according to Petitioners, CMS ought to have imposed a revocation retroactive to that date. P. Br. at 4-5.

However, § 424.535(a)(3) expressly defines "convicted" as that term is defined in 42 C.F.R. § 1001.2. That definition is based on § 1128(i) of the Act, which is the definition for "convicted" as used in IG exclusion cases.

Whether under the statute or regulation, an individual is "convicted" when there has been a finding of guilt against the individual by a federal, state, or local court. 42 U.S.C. § 1320a-7(i); 42 C.F.R. § 1001.2. The record in this case makes it clear that, on March 31, 2017, a jury found Dr. Bertram guilty on 17 counts of violating 18 U.S.C. § 1347(a). CMS Ex. 8. The District Court's judgment supports this reading because it used the past tense to state that Dr. Bertram "was found guilty" on the 17 counts. CMS Ex. 9 at 1. This is consistent with the difference between jury and bench trials. Had Dr. Bertram opted for a bench trial, it is the judge who "must find the defendant guilty or not guilty." Fed. R. Crim. P. 23(c). Otherwise, it is the jury that renders the verdict. Fed. R. Crim. P. 31(a). Therefore, Dr. Bertram was convicted, for revocation purposes, on March 31, 2017, and CMS properly set the effective date for the retroactive revocation to March 31, 2017.

3. I do not need to decide whether 42 C.F.R. § 424.535(a)(9) is another basis to support revocation.

Because I uphold 42 C.F.R. § 424.535(a)(3) as a legitimate basis for revocation, and 42 C.F.R. § 424.535(g) requires revocation retroactive to the date of conviction, I conclude there is no need for me to decide whether CMS could also revoke Petitioners based on 42 C.F.R. § 424.535(a)(9). I note that the severity of Dr. Bertram's criminal offense that resulted in revocation, i.e., 17 counts of health care fraud resulting in nearly two years of imprisonment, is more than sufficient to justify the imposition of a three‑year re-enrollment bar without further discussion of 42 C.F.R. § 424.535(a)(9).

VII. Conclusion

I affirm the revocation of Petitioner's Medicare enrollment and billing privileges, effective March 31, 2017.