Respiratory Support Services, Inc., DAB CR5647 (2020)

DECISION

I sustain the determination of a Medicare contractor, acting on behalf of the Centers for Medicare & Medicaid Services (CMS), to revoke the Medicare billing privileges of Petitioner, Respiratory Support Services, Inc.

I.  Background

CMS moved for summary judgment asserting that there are no disputed issues of material fact in this case.  Petitioner opposed the motion.  With its motion, CMS filed four exhibits that it identified as CMS Ex. 1-CMS Ex. 4.  In opposition, Petitioner filed four exhibits, identified as P. Ex. 1-P. Ex. 4.  Petitioner filed additional documents with its hearing request, not specifically identified as exhibits, which Petitioner intends to serve as evidence on its behalf.  These include a copy of a surety bond dated March 16, 2020.  Neither CMS nor Petitioner filed proposed witness testimony.

Petitioner did not object to my receiving any of CMS’s proposed exhibits into the record. CMS objected on two grounds to my receiving the March 16, 2020 surety bond into evidence.  It notes, first, that Petitioner did not file this surety bond as part of its request

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for reconsideration of the Medicare contractor’s initial determination.  It contends that the surety bond is new evidence and that Petitioner cannot offer such evidence absent a showing of good cause.  42 C.F.R. § 498.56(c).  CMS contends that this document clearly was in Petitioner’s possession when it filed its reconsideration request and that Petitioner cannot establish good cause for filing it untimely.  Second, CMS argues that the March 16, 2020 surety bond is irrelevant.  CMS motion at 5-7.

I sustain CMS’s objection.  As I discuss below, the determinative issue in this case is whether Petitioner had a valid surety bond as of the date that the Medicare contractor determined to revoke Petitioner’s Medicare billing privileges.  Petitioner knew or should have known that this was the determinative issue when it requested a reconsidered determination.  Indeed, it filed a different version of the surety bond, also dated March 16, 2020, with its reconsideration request.  CMS Ex. 3 at 25-28.  Consequently, Petitioner has no excuse for failing to offer with its reconsideration request the version of the surety bond that it now offers.1

I also agree with CMS’s contention that this surety bond is irrelevant.  As I discuss below, the issue in this case is whether Petitioner had a valid surety bond as of the date —November 17, 2019—that the Medicare contractor determined that Petitioner failed to meet participation requirements for DMEPOS suppliers.  CMS Ex. 2 at 1.  A subsequently obtained bond, whether valid or not, is irrelevant to that determination, for reasons that I shall explain.

It is unnecessary that I decide whether the traditional criteria for summary judgment are satisfied.  Neither party offers the testimony of a witness.  I decide the case based on the parties’ written exchanges.  I receive into evidence CMS Ex. 1-CMS Ex. 4 and P. Ex. 1‑P. Ex. 4.

II.  Issue, Findings of Fact and Conclusions of Law

A. Issue

The issue is whether, as of November 17, 2019, Petitioner satisfied the Medicare participation requirements governing DMEPOS suppliers.

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B. Findings of Fact and Conclusions of Law

The Medicare Act (Act) establishes as a condition of participation for a DMEPOS supplier that the supplier continuously maintain a surety bond.

Disclosure of Information and Surety Bond.  The Secretary shall not provide for the issuance (or renewal) of a provider number for a supplier of durable medical equipment, for purposes of payment under this part for durable medical equipment furnished by the supplier, unless the supplier provides the Secretary on a continuing basis –

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(B) with a surety bond in a form specified by the Secretary and in an amount that is not less than $50,000 that the Secretary determines is commensurate with the volume of the billing of the supplier.

42 U.S.C. § 1395m(a)(16) (emphasis added).

Regulations intended to implement the Act require explicitly that a DMEPOS supplier must maintain a continuous surety bond in order to participate in Medicare.  42 C.F.R. § 424.57(c)(26), (d)(4)(i).  CMS may revoke a DMEPOS supplier’s participation if the supplier fails to meet the requirement that it maintain a continuous surety bond.  42 C.F.R. § 424.57(d)(4)(ii)(B), (d)(11)(i).

The facts of this case establish that Petitioner was without a requisite surety bond from November 17, 2019 until after February 11, 2020, the date when the Medicare contractor notified Petitioner of revocation of its Medicare billing privileges.  CMS Ex. 1; CMS Ex. 2 at 1.  The contractor thus revoked Petitioner’s Medicare billing privileges consistent with the requirements of the Act and governing regulations.2

Petitioner does not deny that its surety bond had expired as of November 17, 2019, nor does it assert that it obtained a valid surety bond at any time prior to the date when the contractor determined to revoke Petitioner’s Medicare billing privileges.  Petitioner

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argues, however, that it cured this deficiency by obtaining a valid surety bond effective February 16, 2020.3

Petitioner made this identical argument to the contractor in its request for a reconsidered determination, and the contractor rejected that argument.  The bond that Petitioner presented to the contractor in its reconsideration request was incomplete in that it lacked a signature from Petitioner’s President.  However, that bond would not have required that Petitioner be reinstated, even if it had been properly executed by one of Petitioner’s officers and even if it was effective on February 16, 2020, as Petitioner asserts.

The possibility that Petitioner may have obtained a new surety bond after November 17, 2019 provides Petitioner no argument that the contractor incorrectly revoked Petitioner’s Medicare billing privileges.  As I have discussed, the Act and implementing regulations require that a DMEPOS supplier continuously maintain a valid surety bond.  Any lapse in coverage is a basis for revocation of that supplier’s Medicare billing privileges.  42 U.S.C. § 1395m(a)(16); 42 C.F.R. § 424.57(c)(26), (d)(4)(i), (d)(4)(ii)(B), (d)(11)(i).  “CMS revokes the DMEPOS supplier’s billing privileges if an enrolled DMEPOS supplier fails to obtain, file timely, or maintain a surety bond as specified in this subpart and CMS instructions.”  42 C.F.R. § 424.57(d)(11)(i).  Cancellation of a surety bond will be a basis for revocation unless the DMEPOS supplier provides a new bond that is effective prior to the date of cancellation.  42 C.F.R. § 424.57(d)(6)(ii); Pepper Hill Nursing & Rehab. Ctr. L.L.C., DAB No. 2395 (2011).

Petitioner also seems to argue that it should have been given a grace period by the contractor to allow it to cure the deficiency in its surety bond coverage.  In this circumstance, there is no regulatory provision (and none cited by Petitioner) that requires the contractor to give a DMEPOS supplier without a surety bond the opportunity to

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obtain one prior to revocation of its billing privileges.  Here, the Act’s requirement, and that of implementing regulations, is for continuous coverage.  Any lapse in coverage justifies revocation.

1. The difference between the surety bond that Petitioner submitted with its reconsideration request and the one that it currently offers is that the version that Petitioner submitted originally is not signed by an officer of Petitioner, whereas the currently offered version is signed by Petitioner’s president.  Compare CMS Ex. 3 at 26 with Departmental Appeals Board Electronic Filing System Docket 1c at 2; see also CMS Ex. 3 at 17, 22.
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2. The contractor imposed a two-year bar on reenrollment.  CMS Ex. 2 at 1.  That is consistent with CMS’s authority to impose a bar on reenrollment of up to three years in circumstances where it revokes a supplier’s participation. 42 C.F.R. § 424.535(c)(1); see 84 Fed. Reg. 47,794, 47,794, 47,854-56 (Sept. 10, 2019) (extending reenrollment bar to 10 years).  I have no authority to decide whether the length of the reenrollment bar is reasonable, inasmuch as the length of a bar on reenrollment is not an initial determination that creates a right to a hearing.  See 42 C.F.R. § 498.3, .5.
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3. In its brief, Petitioner asserts that it obtained a new surety bond effective February 16, 2020.  Petitioner’s Brief at 4; P. Ex. 1.  That date is not the date of the bond (March 16, 2020).  However, even if Petitioner’s new bond became effective on February 16, that is insufficient to find the contractor’s determination incorrect.  By Petitioner’s own admission, there is a gap in Petitioner’s surety bond coverage from November 17, 2019 until February 16, 2020, contravening the statutory and regulatory requirement of continuous coverage.
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