Curtis Holden, DPM, DAB CR5685 (2020)

AMENDED DECISION1

I affirm the determination of the Centers for Medicare & Medicaid Services (CMS) to deny Curtis Holden, DPM (Petitioner), enrollment in the Medicare program based on his conviction for health care fraud within ten years preceding his enrollment application. 

I.  Procedural History

On May 5, 2020, Petitioner filed a detailed request for hearing to dispute the denial of his enrollment in the Medicare program and his corrective action plan (CAP).  On May 6, 2020, the Civil Remedies Division (CRD) acknowledged receipt of the hearing request and issued my Standing Prehearing Order.  In conformance with that order, CMS filed its prehearing exchange comprised of a brief (CMS Br.) and ten proposed exhibits (CMS Exs. 1-10).  Petitioner did not submit a prehearing exchange. 

II.  Decision on the Record

I admit CMS Exs. 1-10 into the record without objection.  See Standing Prehearing Order ¶ 10; CRD Procedures § 14(e).

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My Standing Prehearing Order advised the parties that an in-person hearing would only be necessary if a party submitted the written direct testimony of a proposed witness and the opposing party requested an opportunity to cross-examine a witness.  Standing Prehearing Order ¶¶ 11-13; CRD Procedures §§ 16(b), 19(b); see 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).  Neither party offered written direct testimony.  Therefore, there is no need for an in-person hearing, and I decide this case based on Petitioner’s arguments in the hearing request and the written record CMS submitted in this case.  Standing Prehearing Order ¶ 14; CRD Procedures § 19(d). 

III.  Issue

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

IV.  Findings of Fact

1. In 2001, Petitioner was first licensed as a podiatric physician and surgeon in Washington State.  Petitioner participated as a podiatrist in the Medicare and Washington State Medicaid programs.  CMS Ex. 9 at 1-2.
2. On April 21, 2011, a grand jury, empaneled by the United States District Court for the Eastern District of Washington (District Court), indicted Petitioner on 56 counts of health care fraud and three counts of false statements related to health care.  CMS Ex. 8.
3. On June 19, 2012, the grand jury issued a Second Superseding Indictment in Petitioner’s criminal case charging 41 counts (i.e., Counts 1-41) of health care fraud in violation of 18 U.S.C. § 1347(a)(2) and three counts (i.e., Counts 42-44) of false statements relating to health care in violation of 18 U.S.C. § 1035(a)(2).  CMS Ex. 9.
4. The Second Superseding Indictment alleged that from July 1, 2004 through on or about August 10, 2010, Petitioner knowingly executed a scheme to obtain money from Medicare Part B, the Washington State Medicaid program, and private insurers by and through false or fraudulent representations as follows:  “(a) submitting claims for reimbursement for medical services that were not actually provided; (b) by submitting claims to indicate that the practitioner provided a higher level of service than was actually performed (‘upcoding’); and (c) by coding patient visits to indicate the patient was seen by a physician when in fact the patient was not seen by a physician (‘out-of-office billing.’).”  CMS Ex. 9 at 6‑7. 

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5. In September 2012, the Washington State Department of Health revoked Petitioner’s license to practice podiatry in Washington State.  CMS Ex. 4 at 18.
6. Petitioner received a jury trial before the District Court and, on December 13, 2012, the jury found Petitioner guilty on a total of 27 counts (i.e., Counts 3-10, 14‑18, 21, 24-41) of the Second Superseding Indictment.  CMS Ex. 6 at 1-3; CMS Ex. 7; see also CMS Ex. 4 at 18.
7. On October 25, 2013, the District Court issued a Judgment in a Criminal Case indicating that Petitioner:  1) was adjudicated guilty of Counts 3-10, 14-18, 21, 24‑41, which were all violations of 18 U.S.C. § 1347; 2) was sentenced to imprisonment for a year and a day and two years of probation; 3) was assessed a $3,200 criminal monetary penalty; and 4) was ordered to pay $129,675.84 in restitution.  CMS Ex. 6.
8. In June 2014, the Inspector General (IG) for the Department of Health and Human Services (HHS) excluded Petitioner from participation in all federal health care programs.  See CMS Ex. 4 at 18.
9. On April 3, 2018, Petitioner regained his podiatry license in Washington State.  CMS Ex. 4 at 5. 
10. On July 17, 2019, the IG reinstated Petitioner’s eligibility to participate in Medicare; however, the IG recommended contacting the appropriate Medicare contractor to determine Petitioner’s ability to participate in that program.  See CMS Ex. 5.
11. On or about August 17, 2019, Petitioner filed a CMS-855I Medicare enrollment application and sought reactivation of his Medicare enrollment as a podiatrist in the program.  CMS Ex. 4. 
12. In a November 22, 2019 initial determination, a CMS administrative contractor denied Petitioner’s “application to enroll in Medicare” under 42 C.F.R. § 424.530(a)(3), based on Petitioner’s December 13, 2012 felony conviction for health care fraud.  The initial determination advised Petitioner he could file a CAP and/or a request for reconsideration.  CMS Ex. 3.
13. On or about December 17, 2019, Petitioner filed a CAP in which Petitioner stated that he was “totally committed to correct any and all deficiencies in my medical record documentation” and proposed a detailed compliance program he would implement with CMS’s approval.  Petitioner stated that he retained Medical Compliance Associates to develop and implement the compliance program. 

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13. Petitioner also indicated a willingness to enter into a three-year Integrity Agreement with the IG.  CMS Ex. 1. 
14. On or about January 22, 2020, Petitioner requested reconsideration of the denial of his enrollment in the Medicare program, arguing that he had been reinstated by the IG and had submitted a CAP.  CMS Ex. 2.
15. On March 3, 2020, a CMS hearing officer issued a reconsidered determination denying the CAP and upholding the denial of enrollment.  In making those determinations, the CMS hearing officer found that Petitioner had been convicted of a felony within the preceding ten years and that the felony was considered per se detrimental to the best interests of the Medicare program and its beneficiaries under 42 C.F.R. § 424.530(a)(3)(i)(D).  Specifically, the CMS hearing officer found that Petitioner’s felony offenses were ones for which exclusion from participation in federal health care programs was required under 42 U.S.C. § 1320a-7(a) and noted that the IG had excluded Petitioner.  The CMS hearing officer stated that the IG’s authority to exclude was separate from CMS’s authority to deny enrollment and that the CAP did not correct the basis for the denial.  The CMS hearing officer further stated:

Under the Medicare program, payment is made for claims submitted in a manner that relies on the trustworthiness and integrity of our Medicare partners.  Dr. Holden’s criminal conduct indicates to CMS that the Medicare Trust Funds may seriously be at risk if he is allowed to participate in the Medicare program.  Therefore, CMS finds Dr. Holden’s felony offense to be per se detrimental and generally detrimental to the best interests of the Medicare program and its beneficiaries under § 424.530(a)(3)(i)(D) and based on the specific facts and circumstances underlying his conviction.  

CMS Ex. 10.

V.  Conclusions of Law and Analysis

The Social Security Act (Act) authorizes the Secretary of Health and Human Services (Secretary) to establish regulations governing the enrollment of suppliers in the Medicare program.  42 U.S.C. § 1395cc(j).  Petitioner is a podiatrist and, therefore, is considered a “physician” and a “supplier” for purposes of the Medicare program.  See 42 U.S.C. § 1395x(d), (r).  The regulations require suppliers to apply for enrollment in the Medicare program in order to obtain reimbursement for providing health care items and services to Medicare beneficiaries.  42 C.F.R. §§ 424.505, 424.507, 424.510.  CMS can deny an enrollment application for any of the reasons stated in 42 C.F.R. § 424.530.

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1. CMS had a legitimate basis under 42 C.F.R. § 424.530(a)(3) to deny Petitioner’s Medicare enrollment and billing privileges because Petitioner was convicted of felonies within the last ten years related to the delivery of items or services under the Medicare program and, therefore, was convicted of a felony that is per se detrimental to the best interests of the Medicare program and its beneficiaries. 

The Act authorizes the Secretary to refuse to enter into an agreement with 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).  The Secretary used this authority to promulgate a regulation permitting CMS to deny enrollment to a supplier who has been convicted of a federal or state felony within the preceding 10 years and CMS determines that the felony offense is detrimental to the best interests of the Medicare program and its beneficiaries.  42 C.F.R. § 424.530(a)(3).  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. § 424.530(a)(3)(i).  That list includes “[a]ny felonies that would result in mandatory exclusion under [42 U.S.C. § 1320a-7].”  42 C.F.R. § 424.530(a)(3)(i)(D).

In the present case, the record establishes that Petitioner was convicted by a jury of multiple counts of violating 18 U.S.C. § 1347 on December 13, 2012.  Further, the convicted offense was for a Class C felony because 18 U.S.C. § 1347 carries a maximum penalty of ten years imprisonment.  See 18 U.S.C. § 3559(a)(3).  Therefore, Petitioner was convicted of a felony within the preceding ten years. 

The record also supports the conclusion that Petitioner was convicted of an offense that is per se detrimental to the interests of the Medicare program and its beneficiaries.  Specifically, Petitioner was convicted of a criminal offense for which mandatory exclusion would result because Petitioner’s criminal offense was related to the delivery of items or services under the Medicare program.  42 U.S.C. § 1320a-7(a)(1); 42 C.F.R. §§ 424.530(a)(3)(i)(D), 1001.101(a).  The record is clear that Petitioner was found guilty of health care fraud related to the delivery of items or services in the Medicare program.  CMS Ex. 9 at 9-13; see CMS Ex. 7.

Petitioner argues that the CMS hearing officer issued a determination that was “predetermined” by an internal CMS policy requiring denial of enrollment for suppliers who were convicted of health care fraud.  Because “[t]he hearing officer’s decision was a foregone conclusion,” she failed to provide the “constitutionally required” opportunity to be heard under the due process clause.  Petitioner asserts that “there is no fair process in which [Petitioner] will be admitted or denied based upon the facts in his particular case.”  Hearing Request at 1-2.

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Petitioner considers the CMS hearing officer’s discussion that Petitioner’s conviction meets the criteria of being per se detrimental to the best interests of the Medicare program and its beneficiaries as “boilerplate reasoning.”  Hearing Request at 2.  Petitioner interprets this legal standard as meaning “there is no possible way that a person convicted of [health care fraud] could factually ensure that they can maintain a Medicare population of patients while simultaneously ensuring that all procedures are properly coded, including entering into a three year integrity agreement that could be enforced by CMS.”  Hearing Request at 2.  Rather, Petitioner asserts that “the hearing officer’s contentions can only be viewed, not as a statement of proven fact, but rather, as a capricious internal decision by CMS to continue to extract punishment far beyond [Petitioner’s] convictions on the basis of allegations of an augmented scheme for which [Petitioner] was never charged or convicted.”  Hearing Request at 3. 

Petitioner is incorrect in his arguments.  As mentioned earlier, the Secretary implemented statutory authority to deny enrollment to suppliers who had been convicted of felonies by promulgating regulations through public notice and comment rulemaking.  Petitioner views the Secretary’s decision to enumerate examples of the types of felony offenses that are considered to be detrimental to the best interests of the Medicare program and its beneficiaries as nefarious, but this is opposite from the truth.  The Secretary instead laid out clear rules of the types of offenses that are detrimental in the most transparent manner available in administrative law and, by doing so, sought to avoid the inconsistencies that inevitably follow from vague standards.    

Further, while the regulations provide examples of per se detrimental felony convictions, these examples do not foreclose CMS from exercising its discretion to consider each case individually.  In fact, CMS is obligated to exercise its discretion.  CMS or its contractors “would have discretion to grant a subsequent application for enrollment, even if Petitioner submitted the application before his felony convictions were 10 years old, if [the CMS contractor] determined that other factors justified granting that application.”  Brian K. Ellefsen, DO, DAB No. 2626 at 7-8 (2015). 

Based on the record in this case, I cannot conclude that the CMS hearing officer failed to consider Petitioner’s arguments for enrollment in the Medicare program.  As quoted above from the reconsidered determination, the CMS hearing officer simply believed that Petitioner’s conviction for an extended scheme to defraud the Medicare program was too much of a threat to that program since, as the CMS hearing officer pointed out, it relies heavily on providers and suppliers filing legitimate claims.  Ultimately, CMS must protect the Medicare Trust Funds to ensure that beneficiaries will have access to medical care.  The CMS hearing officer reasonably concluded that Petitioner may be a threat to those trust funds.  Accordingly, I conclude that CMS had a legitimate basis to revoke Petitioner’s Medicare enrollment and billing privileges under 42 C.F.R. § 424.535(a).

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2. CMS’s denial of Petitioner’s CAP is not subject to further review. 

When CMS determines that a supplier is not in compliance with enrollment requirements, the supplier may file a CAP.  42 C.F.R. § 424.530(a)(1).  In the present case, the CMS contractor that denied Petitioner’s enrollment application initially advised Petitioner of the right to file a CAP, and Petitioner filed a CAP.  The CMS hearing officer denied the CAP. 

Petitioner argues that CMS policy does not permit CAPs from suppliers who have been convicted of health care fraud to be approved.  Hearing Request at 1-2.  Petitioner argues that “[w]hat is lacking in this decision is a factual explanation by the hearings officer explaining how the expiration of a ten year period is a better determinant of factual compliance with Medicare regulations than a CAP in which every charge to Medicare will be scrutinized and corrected prior to submission.”  Hearing Request at 3.  As a result, Petitioner requested that I review the “factual efficacy of the [CAP].”  Hearing Request at 4. 

I do not have authority to review the CMS hearing officer’s decision to deny the CAP.  A denial of a CAP is not an initial determination under 42 C.F.R. pt. 498.  See 42 C.F.R. § 405.809(b)(2).  Only initial determinations confer a right to a hearing before an administrative law judge.  See 42 U.S.C. §§ 405(b), 1395cc(j)(8); 42 C.F.R. §§ 498.3‑498.40; DMS Imaging, Inc., DAB No. 2313 at 5-10 (2010).  Therefore, I cannot entertain Petitioner’s arguments regarding his CAP.   

VI.  Conclusion

I affirm CMS’s determination to deny Petitioner’s Medicare enrollment application.

1. This decision has been amended to correct a scrivener’s error in the date of issuance.
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