Joseph A. DeLucca and Joseph A. DeLucca, DPM, LLC, DAB CR5709 (2020)

DECISION

The Centers for Medicare & Medicaid Services (CMS), through its Medicare administrative contractor, Novitas Solutions, Inc. (Novitas), revoked the enrollment and billing privileges of Joseph A. DeLucca, DPM (Dr. DeLucca), and his podiatry practice, Joseph A. DeLucca, DPM, LLC (together, Petitioners), based on its determination that Petitioners had abused their billing privileges within the meaning of 42 C.F.R. § 424.535(a)(8)(i).  CMS determined Petitioners had submitted claims to Medicare for services that could not have been furnished to the corresponding beneficiaries on the claimed dates of service. 

Subsequently, CMS placed Petitioners on its preclusion list.  See 42 C.F.R. §§ 422.2 and 423.100.  Medicare Advantage (Part C) organizations and Part D prescription drug plan sponsors may not make any payment for health care items, services, or drugs that are

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furnished, ordered, or prescribed by an individual or entity included on the preclusion list.  See 42 C.F.R. §§ 422.222 and 423.120(c)(6).  Petitioners appealed the revocation of their enrollment and billing privileges and their placement on CMS’s preclusion list.  As explained below, I conclude that CMS had legal bases to revoke Petitioners’ Medicare enrollment and billing privileges and to place Petitioners on its preclusion list.

I.  Case Background and Procedural History

Dr. DeLucca and his practice participated in the Medicare program as “suppliers” of services.A “supplier” is “a physician or other practitioner, or an entity other than a provider, that furnishes health care services under Medicare.”  42 C.F.R. § 400.202.  In separate notice letters, both dated August 24, 2018, Novitas informed Petitioners that, effective September 23, 2018, their enrollment and billing privileges would be revoked for abuse of billing privileges under 42 C.F.R. § 424.535(a)(8)(i) and they would be barred from re-enrolling in Medicare for three years pursuant to 42 C.F.R. § 424.535(c).  CMS Exhibits (Exs.) 3, 4.CMS Exs. 1-12 and P. Ex. 1-5 are located in the Departmental Appeals Board (DAB) Electronic Filing System (E-File) under prior Docket No. C-19-532 (see Docket Entries #8b through #10b and #14b through #14f).  The notice letters both stated that:

CMS performed claims analysis on claims submitted by Joseph A. Delucca, DPM, LLC, on which Joseph Delucca was listed as the rendering provider for dates of service between January 1, 2014 and May 4, 2018.  During this period, Joseph A. Delucca, DPM, LLC submitted 59 claims for 59 unique Medicare beneficiaries.  The claims were submitted for procedure code 11721, which represents nail debridement of six (6) or more toes.  However, the 59 Medicare beneficiaries in question had, prior to submission of Joseph A. Delucca, DPM, LLC’s claims, previously undergone a lower extremity amputation; therefore, the nail debridement of 6 or more toes was not possible for these Medicare beneficiaries.

CMS Ex. 3 at 1; CMS Ex. 4 at 1.

Through counsel, Petitioners requested reconsideration.  CMS Ex. 7.  In separate reconsidered determinations, both dated January 23, 2019, a hearing officer in CMS’s Provider Enrollment & Oversight Group upheld Novitas’ determinations to revoke Petitioners’ enrollment and billing privileges and to bar Petitioners from re-enrolling in Medicare for three years.  CMS Exs. 1, 2.  The hearing officer found that Dr. DeLucca and his practice had abused their billing privileges by submitting claims to Medicare for the nail debridement of six or more toes, which could not have been furnished to at least

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52 of the beneficiaries because “it is simply impossible to debride six or more toes when one lower extremity has been amputated.”  CMS Ex. 1 at 4; CMS Ex. 2 at 4.

On March 11, 2019, Petitioners requested hearings before an administrative law judge.  Dr. DeLucca’s hearing request was docketed as Docket No. C-19-531, his practice’s hearing request was docketed as Docket No. C-19-532, and each case was assigned to me.  On April 10, 2019, I issued a Consolidation Order consolidating both appeals under Docket No. C-19-532.

By letters dated April 1, 2019, CMS notified Petitioners that they would be added to CMS’s preclusion list effective September 1, 2019.  CMS Ex. 13.CMS Ex. 13 is the notice to Dr. DeLucca that he would be placed on CMS’s preclusion list.  Neither party submitted the initial notice that Dr. DeLucca’s practice would be placed on the preclusion list, but the reconsidered determination pertaining to the practice refers to the “[l]etter from CMS to Joseph A. Delucca, DPM, LLC[,] dated April 1, 2019, notifying it that it is being added to the CMS preclusion list, effective September 1, 2019, due to the revocation of its Medicare billing privileges and current re-enrollment bar.”  CMS Ex. 15 at 2.  Petitioners requested reconsideration and, in reconsidered determinations dated July 31, 2019, CMS upheld its determinations to place Dr. DeLucca and his practice on the preclusion list.  CMS Exs. 14, 15; see E-File for Docket No. C-19-1124, Docket Entry #1a (July 31, 2019 reconsidered determination pertaining to Dr. DeLucca).

On September 20, 2019, Petitioners filed separate hearing requests with respect to the July 31, 2019 reconsidered determinations.  Dr. DeLucca’s hearing request was docketed as Docket No. C‑19‑1124, his practice’s hearing request was docketed as Docket No. C‑19‑1123, and each case was assigned to me.  On October 17, 2019, I issued an Acknowledgment, Consolidation, and Pre-hearing Order (Pre-hearing Order) consolidating appeals C-19-532, C-19-1123, and C-19-1124 under Docket No. C‑19‑1124.

In response to the Pre-hearing Order, CMS filed a motion for summary judgment or, in the alternative, its pre-hearing brief (CMS Br.) and 15 proposed exhibits (CMS Exs. 1‑15).  CMS did not propose any witnesses.  Petitioners, through counsel, filed a combined response to CMS’s motion for summary judgment and cross-motion for summary judgment (P. Br.), as well as five proposed exhibits (P. Exs. 1-5), including the

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written declarations of Petitioners’ two proposed witnesses.The parties also filed briefs under prior Docket No. C-19-532 (see Docket Entries #8 and #11).  I have reviewed those briefs and considered the arguments therein; however, they are substantially similar to the parties’ briefs in Docket No. C-19-1124 except that the briefs in Docket No. C-19-1124 also address Petitioners’ inclusion on CMS’s preclusion list.  Therefore, for simplicity, I cite to the parties’ briefs in Docket No. C‑19‑1124 when addressing the parties’ contentions.  Neither party has objected to the other party’s exhibits.CMS objected to Petitioners’ original proposed Ex. 4.  See E-File for Docket No. C‑19‑532, Docket Entries #11b and #12.  In response to my July 10, 2019 show cause order, Petitioners filed an amended proposed Ex. 4 (P. Ex. 4).  See id. at Docket Entry #14e.  CMS did not object to amended P. Ex. 4 (or any other proposed exhibit) and I therefore conclude CMS does not object to P. Exs. 1-5.  Pre-hearing Order ¶ 7.  Therefore, in the absence of objection, I admit into the record CMS Exs. 1-15 and P. Exs 1-5.  Pre-hearing Order ¶ 7.

CMS has not requested to cross-examine Petitioners’ witnesses.  Thus, a hearing is not necessary, and I decide this case on the written record without considering whether the standard for summary judgment is met.  Pre-hearing Order ¶ 10.  The parties’ cross-motions for summary judgment are denied as moot.

II.  Issues

The issues in this case are:

Whether CMS had a legal basis to revoke Petitioners’ Medicare enrollment and billing privileges under 42 C.F.R. § 424.535(a)(8)(i); and

Whether CMS had a legal basis to place Petitioners on its preclusion list, as defined at 42 C.F.R. §§ 422.2 and 423.100.

III.  Jurisdiction

I have jurisdiction to hear and decide this case.  42 C.F.R. §§ 498.3(b)(17) and (20), 498.5(l)(2) and (n)(2);CMS amended 42 C.F.R. part 498 to add sections 498.3(b)(20) and 498.5(n) (authorizing providers and suppliers to appeal their inclusion on the preclusion list) effective June 15, 2018.  83 Fed. Reg. 16,440, 16,757 (Apr. 16, 2018). see also Social Security Act (Act) § 1866(j)(8) (42 U.S.C. § 1395cc(j)(8)).

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IV.  Discussion

A. Statutory and Regulatory Framework

Petitioners participated as “suppliers” in the Medicare program, as Dr. DeLucca is a doctor of podiatric medicine and his practice is an entity that furnishes health care services.  See Act § 1861(d) (42 U.S.C. § 1395x(d)); 42 C.F.R. §§ 400.202 (definition of supplier), 410.20 (definition of physician services).  To participate in the Medicare program as a supplier, an individual or entity must meet certain criteria to enroll and receive billing privileges.  42 C.F.R. §§ 424.505, 424.510.

CMS may revoke the enrollment and billing privileges of a supplier for any reason stated in 42 C.F.R. § 424.535(a).  Revocation is effective 30 days after CMS mails the initial determination revoking Medicare billing privileges, except in certain circumstances not applicable in this case.  42 C.F.R. § 424.535(g).  After a supplier’s Medicare enrollment is revoked, the supplier is “barred from participating in the Medicare program from the effective date of the renovation until the end of the re-enrollment bar.”  42 C.F.R. § 424.535(c).  At the time of the initial revocation determinations, the length of the re-enrollment bar ranged from one to three years.  42 C.F.R. 424.535(c)(1) (2018).

Individuals and entities whose enrollment has been revoked and who are under a re-enrollment bar may also, in certain circumstances, be placed on CMS’s preclusion list.  Medicare Advantage organizations and Medicare Part D plan sponsors may not provide reimbursement for any items or services furnished by an individual or entity on CMS’s preclusion list, or for prescriptions the individuals write.  42 C.F.R. §§ 422.2, 422.222, 422.224, 423.100, and 423.120(c)(6).

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

1. CMS had a legal basis to revoke Petitioners’ Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(8)(i) because Petitioners submitted claims pertaining to at least 52 beneficiaries for services that could not have been furnished to those individuals on the claimed dates of service.

Pursuant to 42 C.F.R. § 424.535(a)(8), CMS may revoke a supplier’s enrollment in the Medicare program if a supplier abuses its billing privileges.  As relevant here, abuse of billing privileges occurs if:

(i)  The provider or supplier submits a claim or claims for services that could not have been furnished to a specific individual on the date of service.  These instances include but are not limited to the following situations:

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(A) Where the beneficiary is deceased.
(B) The directing physician or beneficiary is not in the state or country when services were furnished.
(C) When the equipment necessary for testing is not present where the testing is said to have occurred.

42 C.F.R. § 424.535(a)(8)(i).

On its face, section 424.535(a)(8)(i) authorizes CMS to revoke enrollment and billing privileges when a provider or supplier submits even a single claim for services that could not have been furnished to a specific individual on the date of service.Appellate panels of the Departmental Appeals Board (DAB) have referred to claims that are improper in the manner described in section 424.535(a)(8)(i) by way of shorthand as “impossible” claims.  See, e.g., Rural Metro Corp. of Fla., Inc., DAB No. 2977 at 7 (2019).  However, in the preamble to the regulation, the drafters explained that CMS will exercise its discretion to revoke only in instances where a provider or supplier has submitted at least three such claims.  73 Fed. Reg. 36,448, 36,455 (June 27, 2008).

Here, the parties do not dispute that the number of impossible claims is well in excess of three.  With its revocation notices, Novitas enclosed spreadsheets identifying claims submitted by Dr. DeLucca’s practice for services Dr. DeLucca purportedly rendered to 59 Medicare beneficiaries on various dates of service between January 2, 2014, and March 20, 2018.Several beneficiaries are associated with more than one date of service; therefore, the number of actual claims that Novitas identified as impossible exceeds 59.  See CMS Ex. 3 at 3-6; CMS Ex. 4 at 3-6 (identifying, for certain beneficiaries, multiple claim submission dates and the corresponding Claim Control Numbers).  CMS Ex. 3 at 3-6, CMS Ex. 4 at 3-6.  Every service is identified by Healthcare Common Procedure Coding System (HCPCS) code 11271, CMS developed HCPCS to represent medical items and services, and to facilitate claim processing.  Current Procedural Terminology (CPT) codes were developed by the American Medical Association and are a component of HCPCS.  See CMS, MLN Fact Sheet, ICD-10-CM, ICD-10-PCS, CPT, and HCPCS Code Sets (2019), https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/Downloads/ICD9-10CM-ICD10PCS-CPT-HCPCS-Code-Sets-Educational-Tool-ICN900943.pdf (last visited August 18, 2020). which signifies the debridement of six or more nails.  CMS Ex. 3 at 3-6, CMS Ex. 4 at 3-6; see also CMS Ex. 5.  Novitas determined, however, that the services could not have been furnished as

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billed because each beneficiary had undergone a lower extremity amputation prior to the date of service identified on the claims.  CMS Ex. 3 at 1; CMS Ex. 4 at 1.  The Novitas spreadsheets indicated that, for 58 of the beneficiaries, the “Date of Amputation” was prior to “Date of Service.”  But see CMS Ex. 3 at 3; CMS Ex. 4 at 3 (indicating a date of amputation that is after the date of service for beneficiary D.L., identified here by his initials for privacy).

In their reconsideration requests, Petitioners asserted that seven of the beneficiaries (including D.L.) were not lower extremity amputees on the relevant dates of service and that Novitas had erroneously included claims pertaining to those beneficiaries in its spreadsheet summaries.  CMS Ex. 7 at 2-3.  Petitioners included patient medical records in support of those contentions.  CMS Exs. 9-11.  Petitioners did not dispute that the remaining 52 beneficiaries could not have received the specific services for which Petitioners had billed Medicare.  See CMS Ex. 7.

In this proceeding, CMS has conceded that at least six of the beneficiaries were not lower extremity amputees on the date of service identified in the Novitas spreadsheet.CMS contends that Petitioners did not submit medical records for one of the seven beneficiaries (P.W.) who Petitioners assert was not a lower extremity amputee on the relevant date of service.  CMS Br. at 2 n.1; CMS Ex. 12 at 2.  CMS Ex. 12.  Nevertheless, CMS contends that even if seven of the beneficiaries could have received the claimed services, “at least 52 beneficiaries had claims submitted by Petitioners for procedure [code] 11721 (services on 6-10 toes) on beneficiaries that had previously undergone a lower extremity amputation, making a debridement of 6 or more toes impossible.”  CMS Br. at 14.

Petitioners do not dispute that they billed Medicare for the debridement of six or more toes for at least 52 beneficiaries for whom that service was not possible on the claimed dates of service.  See P. Br. at 2; see also CMS Ex. 7.  Rather, Petitioners contend that in each instance, Dr. DeLucca furnished the debridement of five or fewer toenails, a service identified by HCPCS/CPT code 11720, but his billing agent entered an incorrect code – 11721 – which differs by the last digit.  P. Br. 3-4; P. Ex. 4 at ¶¶ 3, 4; see CMS Ex. 7 at 3.

Petitioners explain that, when he sees patients, “Dr. DeLucca, like many doctors, makes notations on a document called a ‘superbill’ and submits these superbills to a third-party medical billing service,” and that, with respect to the claims at issue:

[T]he billing service utilized by Dr. DeLucca apparently did key in the wrong code approximately 12 times per year in this sample period while processing nearly 34,000 procedures for nail debridement in the same nearly 5-year sample.  This was an error rate of only 0.18%.  However,

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until CMS alerted him of the issue via the notice of revocation, Dr. DeLucca was completely unaware that his third-party biller . . . was deviating from written instructions regarding the care and treatment provided by Dr. DeLucca.

P. Br. at 3.

Further, Petitioners state that Dr. DeLucca furnished debridement services to the beneficiaries at issue, “properly notated them on his superbills, and expected that such services would be properly billed on behalf of the beneficiaries receiving Dr. DeLucca’s care.”  P. Br. at 9.  But, Petitioners represent that, “in nearly every instance” the claims identified by CMS as improper occurred because the third-party biller failed “to accurately follow Dr. DeLucca’s instructions on the superbill.”  Id.  In support of this explanation, Petitioners offered the written direct testimony of an employee of the third-party biller.  P. Ex. 5.  The witness identified four specific claims for which “Dr. DeLucca specified CPT Code 11720 in the superbill for this patient and I mistakenly input CPT code 11721 when submitting this claim to Medicare.”  Id. at 2.

On this basis, Petitioners contend that CMS has failed to make a prima facie showing of abusive billing.  P. Br. at 8.  In Petitioners’ view, their billing privileges may not be revoked because Dr. DeLucca “provided credible explanations sufficient to show that the few mistakes in the billings submitted on his behalf were each the result of simple billing errors by a third-party and not an abuse of billing privileges.”  Id.  Petitioners premise much of their argument on the preamble to the final rule promulgating 42 C.F.R. § 424.535(a)(8).  See P. Br. at 7-8 (quoting 73 Fed. Reg. at 36,455, 36,457).

Petitioners contend that “[o]nly where a Petitioner’s evidence and testimony does ‘not establish how the errors occurred, nor demonstrate that the errors did not result from multiple instances of negligence or reckless disregard’ should a conclusion be drawn that there is a pattern of improper billing by the [supplier.]”  P. Br. at 11 (citing Louis J. Gaefke, D.P.M., DAB No. 2554 at 9 (2013)).  Petitioners state that, unlike the petitioner in Gaefke, “Dr. DeLucca has explained in detail why and how the few errors alleged by CMS could have occurred without negligence or reckless disregard on his part.”  Id.Petitioners assert that Dr. DeLucca has explained how the billing errors could have occurred without negligence on his part.  However, Petitioners have not proved that all their errant claims in fact occurred because of keystroke errors by their third-party biller.  Even accepting the declaration at P. Ex. 5 at face value, it establishes only that four claims out of the 52 “impossible” claims submitted were the result of keystroke errors.

Petitioners misread the Gaefke decision.  In that case, the appellate panel stated unequivocally that 42 C.F.R. § 424.535(a)(8)(i) “authorizes revocation where the supplier submits ‘a claim or claims for services that could not have been furnished to a specific

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individual on the date of service’” and that the statements in the preamble “do not bar CMS from revoking the enrollment of a supplier or provider whose incorrect billing falls within the plain language of the regulation.”  Gaefke, DAB No. 2554 at 7-8 (quoting Howard B. Reife, D.P.M., DAB No. 2527 at 5 (2013)).In any event, the statements in the preamble are an articulation of enforcement policy rather than a rule establishing essential elements that CMS must prove to uphold a revocation under section 424.535(a)(8)(i).  CMS’s decision to revoke billing privileges is, after all, discretionary.  See 42 C.F.R. § 424.535(a) (“CMS may revoke a currently enrolled provider or supplier’s Medicare enrollment . . . for the following reasons . . .” (emphasis added)).  Consistent with this interpretation, the panel did not hold that CMS would lack a basis for revocation if a supplier “explained in detail why and how the few errors alleged by CMS could have occurred without negligence or reckless disregard.”  Rather, the panel found only that the petitioner in Gaefke had not established the absence of negligence or reckless disregard.  The panel noted that “[r]epeatedly making those same errors [submission of at least 35 improper claims by the same entity on behalf of the same supplier] reduces their credibility as ‘accidental’ and establishes a pattern of improper billing that suggests a lack of attention to detail.”  Gaefke, DAB No. 2554 at 9 (brackets in original) (quoting Reife, DAB No. 2527 at 6).  Similarly, the panel in Reife stated plainly that, “[n]othing in either the preamble language or the regulation requires CMS to establish that the improper claims were not accidental.”  DAB No. 2527 at 6 (emphasis in original).

Moreover, the appellate panel in Gaefke rejected the supplier’s contention that he was not at fault because the errant claims were submitted by a third-party biller.  The panel reasoned that Medicare suppliers are responsible for the accuracy of their claims and that “efforts to assign blame for the improper billing to [a] billing agent or [an] assistant do not relieve [a supplier] of . . . responsibility for the improper claims or bar CMS from revoking [the supplier’s] billing privileges.”  Gaefke, DAB No. 2554 at 6; see also 73 Fed. Reg. at 36,455 (explaining that “suppliers are responsible for the claims they submit or the claims submitted on their behalf” and that “it is essential that providers and suppliers take the necessary steps to ensure they are billing appropriately for services furnished to Medicare beneficiaries.” (emphasis added)).

Further, CMS does not need to prove that Dr. DeLucca provided no service at all on the claimed dates of service to support its revocation determinations.  See Realhab, Inc., DAB No. 2542 at 18 (2013) (where a supplier billed for services it “could not have possibly furnished as claimed[,] . . . [l]imiting the term ‘abuse of billing’ in the context of revocation to situations in which no services could possibly have been furnished . . . would not adequately protect the integrity of the Medicare program.” (emphasis in original)).  Nor does CMS need to prove that Petitioners’ conduct was intentional or fraudulent.  See Gaefke, DAB No. 2554 at 7 (“the regulation contains no requirement that

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CMS establish that the supplier acted with fraudulent or dishonest intent”).  Moreover, the regulation does not establish a minimum claims error rate or dollar amount that must be exceeded before CMS may revoke billing privileges.  Id. at 10; Reife, DAB No. 2527 at 7.  Thus, even if Petitioners were unaware their billing agent had inadvertently entered the wrong HCPCS code in a small percentage of claims for debridement procedures Dr. DeLucca furnished, those factors do not change the fact that Petitioners submitted, through their agent, well in excess of three claims for services that could not have been furnished as billed.  This is sufficient to establish “a pattern of improper billing that suggests a lack of attention to detail” as the appellate panel in Gaefke observed.  See DABNo. 2554 at 9.

In sum, the plain language of the regulation authorizes CMS to revoke a supplier’s Medicare billing privileges if a supplier (1) submits a claim for services and (2) those services could not have been furnished to a specific individual on the claimed date of service.  42 C.F.R. § 424.535(a)(8)(i).  As explained above, the parties do not dispute that Petitioners submitted, through their billing agent, at least 52 such claims.  I therefore conclude that CMS was authorized to revoke Petitioners’ Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(8)(i).  As explained below, Petitioners’ remaining contentions do not provide a defense to the submission of the impossible claims at issue or a rationale to reverse the revocation determinations.

2. Petitioners’ arguments in equity are not bases to reverse the revocation of Petitioners’ Medicare enrollment and billing privileges.

Petitioners assert that revocation of their Medicare enrollment and billing privileges is inequitable under the circumstances.  Petitioners represent that Dr. DeLucca cares deeply about his patients, a large percentage of whom are over 65 years old, disabled, and are often institutionalized in nursing homes or other extended care facilities.  P. Br. at 12; P. Ex. 4 at ¶ 1.  Petitioners also point out that the revocations and preclusions have a negative impact on Dr. DeLucca’s financial ability to provide for his family.  See, e.g., P. Br. at 2.

Petitioners contend that the claims they submitted to Medicare had a “statistically irrelevant error rate” and show “a pattern of proper record keeping, proper billing, and proper identification of the services rendered.”  P. Br. at 12.  Petitioners state that “[b]illing mistakes are inevitable” and that if “only three innocent, inadvertent and unintentional billing mistakes occurring at any time in a provider’s billing history are enough to show a ‘pattern of abusive billing’ sufficient to disqualify a provider from participating with Medicare,” then “no provider could be sufficiently error-free to participate with Medicare.”  Id. at 11 (underline omitted).

Additionally, Petitioners imply that CMS or its contractor targeted Dr. DeLucca for revocation.  In his written direct testimony, Dr. DeLucca alleges that his “billing service

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does the billing for three other podiatrists yet none of these other podiatrists were audited for these billing errors.”  P. Ex. 4 at ¶ 12.  His statement goes on to assert:

I believe CMS is targeting me because they lost a similar case to me several years ago, when they again presented false and misleading accusations and extrapolated the overpayment amount 100-fold.  Their case was so corrupt that they did not even show for the hearing.  I believe CMS is trying to ruin me financially out of spite.

P. Ex. 4 at ¶ 14.

However, an appellate panel of the DAB considered and rejected a similar claim by a supplier that CMS or its contractor had a motive beyond the supplier’s billing practices to single him out for revocation.  As the panel explained in Donald W. Hayes, D.P.M., DAB No. 2862 (2018), even if CMS’s stated basis for revocation was not the only basis for revocation, this did not undermine the conclusion that CMS had “a legal basis for its actions.”  DAB No. 2862 at 10, 13 (citing Letantia Bussell, M.D., DAB No. 2196 at 13 (2008)) (emphasis added).

Furthermore, in a case such as this one, where the regulatory requirements for revocation are met, the regulations do not authorize me to scrutinize CMS’s actions to determine whether CMS “targeted” a supplier for reasons unrelated to the basis for revocation.  CMS’s revocation of a supplier’s enrollment and billing privileges is discretionary and not subject to review based on equity or mitigating circumstances.  Letantia Bussell, M.D., DAB No. 2196 at 13.  Rather, “the right to review of CMS’s determination by an [administrative law judge] serves to determine whether CMS had the authority to revoke [the provider’s or supplier’s] Medicare billing privileges, not to substitute the [administrative law judge’s] discretion about whether to revoke.”  Id. (underline omitted).  Once CMS establishes a legal basis on which to proceed with a revocation, its determination to revoke becomes a permissible exercise of discretion, which I am not permitted to review.  See id. at 10; see also Abdul Razzaque Ahmed, M.D., DAB No. 2261 at 19 (2009) (if CMS establishes the regulatory elements necessary for revocation, an administrative law judge may not substitute his or her “discretion for that of CMS in determining whether revocation is appropriate under all the circumstances”), aff’d sub. nom. Ahmed v. Sebelius, 710 F. Supp. 2d 167 (D. Mass. 2010).

Accordingly, because I have determined that CMS had a legal basis to revoke Petitioners’ Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(8)(i), the regulations do not authorize me to second-guess CMS’s decision to revoke.

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3. CMS had a legal basis to add Petitioners to the preclusion list effective September 1, 2019.

As applicable to this case, each of the following three requirements must be met for CMS to include an individual or entity on its preclusion list:

(i)    The individual or entity is currently revoked from Medicare for a reason other than that stated in [42 C.F.R. § ]424.535(a)(3).
(ii)   The individual or entity is currently under a reenrollment bar under [42 C.F.R. §] 424.535(c).
(iii)  CMS determines that the underlying conduct that led to the revocation is detrimental to the best interests of the Medicare program.  In making this determination . . . CMS considers the following factors:

(A) The seriousness of the conduct underlying the individual’s or entity’s revocation.
(B) The degree to which the individual’s or entity’s conduct could affect the integrity of the Medicare program.
(C) Any other evidence that CMS deems relevant to its determination . . . .

42 C.F.R. § 422.2 (definition of preclusion list); see also 42 C.F.R. § 423.100.

Here, the regulatory requirements for Petitioners’ inclusion on CMS’s preclusion list have been met.  At the time CMS made its preclusion list determinations, Petitioners were “revoked from Medicare” under 42 C.F.R. § 424.535(a)(8) and were under a re-enrollment bar pursuant to 42 C.F.R. § 424.535(c).  CMS Exs. 1-4, 13.  Additionally, CMS determined that the underlying conduct was detrimental to the best interests of the Medicare program.  See CMS Ex. 13 at 1.

Petitioners do not dispute that their Medicare billing privileges have been revoked or that they are under a re-enrollment bar.  P. Br. at 12-13.  However, Petitioners argue that CMS erred in determining that their conduct was detrimental to the best interests of the Medicare program.  See id. at 12 (asserting that “CMS’s suggestion of a ‘three strikes and you’re out’ policy is not in accordance with the regulatory intent and is not in the best interest of the patients, providers or the Medicare program as a whole.”).

It is not clear to me that, in reviewing CMS’s decision to place a provider or supplier on the preclusion list, I am authorized to evaluate how CMS applied the factors enumerated in 42 C.F.R. §§ 422.2 and 423.100.  In other contexts, appellate panels of the DAB have emphasized that, where the regulations grant CMS discretion to determine that a provider or supplier’s underlying conduct is detrimental to Medicare, I may not substitute my own determination for that of CMS.  See Brian K. Ellefsen, DO, DAB No. 2626 at 7 (2015);

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see also Pa. Physicians, P.C., DAB No. 2980 at 13 (2019). Moreover, I may presume that CMS properly discharged its duty under the regulations absent “clear evidence to the contrary.”  Douglas Bradley, M.D., DAB No. 2663 at 14 (2015) (quoting United States v. Chemical Foundation, Inc., 272 U.S. 1, 14-15 (1926)).

Petitioners here have offered no evidence that CMS failed to consider the relevant factors or did so improperly.  Nor would I find any error by CMS, were I authorized to review its application of the factors.  In its reconsidered determinations, CMS explicitly considered the factors outlined in 42 C.F.R. §§ 422.2 and 423.100.  For example, the reconsideration pertaining to Dr. DeLucca’s practice states, in pertinent part:

CMS deems the conduct underlying the Practice’s revocation to be very serious and detrimental to the best interests of the Medicare program.  Medicare partners must accurately submit claims that meet Medicare requirements.  The Practice engaged in abusive billing for over four years when it submitted 59 claims for services that Dr. DeLucca, as the rendering supplier, could not have furnished.  This conduct calls into question the Practice’s ability to be a truthful and trustworthy Medicare partner as it was, at minimum negligent and at maximum, dishonest in submitting claims for services that could not have been rendered.  The integrity and overall financial stability of the Medicare program is dependent upon the integrity of its partners.

CMS Ex. 15 at 3; see E-File for Docket No. C-19-1124, Docket Entry #1a at 3 (CMS making identical findings with respect to Dr. DeLucca).  As this discussion demonstrates, CMS considered the seriousness of Petitioners’ conduct and the degree to which Petitioners’ conduct could impact the integrity of the Medicare program.  42 C.F.R. § 422.2; see also 42 C.F.R. § 423.100.

Petitioners further contend they “should not be added to the preclusion list until they have exhausted their first level of CMS appeal.”  P. Br. at 13.  Petitioners state that “Dr. DeLucca is still in the process of exhausting this appeal right, thus, inclusion on the preclusion list is premature.  Therefore, Dr. DeLucca’s inclusion on the preclusion list should be stayed pending the outcome of his appeal.”  Id.

Petitioners apparently interpret the “first level of CMS appeal” to include administrative law judge review.  However, Petitioners’ reading of the regulation is incorrect.  Reconsideration by CMS is the first level of appeal, as the current version of the regulations makes clear:

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[A]n individual or entity will only be included on the preclusion list after the expiration of either of the following:

(A) If the individual or entity does not file a reconsideration request under [42 C.F.R. § ]498.5(n)(1) . . . the individual or entity will be added to the preclusion list upon the expiration of the 60-day period in which the individual or entity may request a reconsideration; or

(B) If the individual or entity files a reconsideration request under [42 C.F.R. § ]498.5(n)(1) . . . the individual or entity will be added to the preclusion list effective on the date on which CMS, if applicable, denies the individual's or entity’s reconsideration.

42 C.F.R. § 422.222(a)(3)(i); see also 42 C.F.R. § 423.120(c)(6)(v)(C) (containing substantially identical language with respect to prescribers under Part D).The current provisions of 42 C.F.R. §§ 422.222(a)(3)(i) and 423.120(c)(6)(v)(C) were effective January 1, 2020.  See 84 Fed. Reg. 15,680, 15831 (Apr. 16, 2019).  However, the preamble to the final rule adopting the 2018 regulations similarly explained that it was CMS’s policy to place suppliers on the preclusion list following an unsuccessful first-level appeal.  See 83 Fed. Reg. 16,440, 16,656 (Apr. 16, 2018) (“no provider will be added to the preclusion list until they have exhausted their first level of CMS appeal or if they fail to appeal their addition to the list”).  I therefore do not regard the current version of the regulations as reflecting any change in policy.

Here, CMS upheld the determinations to place Dr. DeLucca and his practice on the preclusion list (i.e. denied Petitioners’ reconsideration requests) in reconsidered determinations dated July 31, 2019.  CMS Ex. 15; see E-File for Docket No. C‑19‑1124, Docket Entry #1a (reconsidered determination pertaining to Dr. DeLucca).  CMS did not include Petitioners on the preclusion list until September 1, 2019.  See, e.g., CMS Ex. 15 at 4 (specifying that “effective September 1, 2019, the Practice will be included on the CMS preclusion list.”).  Accordingly, CMS did not place Petitioners on the preclusion list until after Petitioners had exhausted their first-level appeal, i.e., they received unfavorable reconsidered determinations.  Therefore, I uphold CMS’s decision to include Petitioners on CMS’s preclusion list effective September 1, 2019.

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V.  Conclusion

For the reasons explained above, I affirm CMS’s revocation of Petitioners’ Medicare enrollment and billing privileges, and the inclusion of Petitioners on CMS’s preclusion list.