Matthew David Cole, M.D., DAB CR5756 (2020)

DECISION

I affirm the determination by the Centers for Medicare & Medicaid Services (CMS) to deny Petitioner’s enrollment in the Medicare program as a supplier. 

I.  Background and Procedural History

Petitioner is a physician in California.  A CMS contractor revoked Petitioner’s Medicare enrollment and billing privileges based on a 2016 felony conviction.  That conviction involved the illegal acquisition of controlled substances.  Petitioner was barred from reenrollment in the Medicare program for three years.  CMS Exhibit (Ex.) 3.

In or about February 2020, Petitioner filed an application to reenroll in the Medicare program.  CMS Ex. 9.  On May 15, 2020, a CMS contractor issued an initial determination denying Petitioner’s enrollment based on the 2016 conviction.  CMS Ex. 6.  Petitioner requested reconsideration, providing evidence and argument as to why CMS ought to enroll him in the Medicare program.  CMS Ex. 1.  On July 24, 2020, a CMS hearing officer issued an unfavorable reconsidered determination upholding the denial of enrollment based on 42 C.F.R. § 424.530(a)(3).  Hearing Req. Attach. 

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Petitioner filed a detailed hearing request to dispute the denial of enrollment.  On August 12, 2020, the Civil Remedies Division acknowledged receipt of the hearing request and issued my Standing Prehearing Order.  In accordance with the Standing Prehearing Order, CMS filed its prehearing exchange, which included a motion for summary judgment/prehearing brief and 11 exhibits (CMS Exs. 1-11).  On October 21, 2020, Petitioner filed four unmarked exhibits. 

II.  Decision on the Record

I admit all of CMS’s proposed exhibits into the record because Petitioner did not object to any of them.  See Standing Prehearing Order ¶ 10; Civil Remedies Division Procedures (CRDP) § 14(e). 

I exclude the four unmarked exhibits that Petitioner filed on October 21, 2020, which are numbered 9-12 in DAB E-File.  The Standing Prehearing Order informed Petitioner that the regulations at 42 C.F.R. §§ 405.803(e) and 498.56(e) prohibit him from submitting evidence that was not provided during the reconsideration stage of the appeal unless Petitioner expressly provided good cause for submitting the evidence to me.  Standing Prehearing Order ¶ 9.  Because there is no such statement included with these unmarked exhibits, I exclude them from the record. 

One of the documents that Petitioner submitted was a letter from a person at an entity that performed drug testing for Petitioner (DAB E-File document #12).  To the extent that this letter could be construed as written direct testimony, I still must exclude the letter.  As indicated in the Standing Prehearing Order, written direct testimony must be signed under oath, affirmation, or penalty of perjury.  Standing Prehearing Order ¶ 11; CRDP §§ 16(b), 19(b); see also 28 U.S.C. § 1746; 42 C.F.R. § 498.62.  Therefore, it does not meet an essential requirement to be considered testimony. 

Because neither CMS nor Petitioner submitted written direct testimony, there is no need to hold an evidentiary hearing in this matter, and I decide this case based on the written record.  Standing Prehearing Order ¶¶ 11-14; CRDP § 19(d).

III.  Issue

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

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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); 498.3(b)(17); 498.5(l)(2).

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

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

1. Petitioner pleaded guilty to one count of Conspiracy to Acquire Controlled Substances by Fraud, Deception, and Subterfuge.  On April 18, 2016, a judge with the United States District Court for the Southern District of California (District Court) signed a Judgment in a Criminal Case and sentenced Petitioner to a year of supervised release and a $1,000 fine. 

On December 15, 2015, an Assistant United States Attorney filed a one count Information in the District Court charging Petitioner and his spouse with Conspiracy to Acquire Controlled Substances by Fraud, Deception, and Subterfuge in violation of 21 U.S.C. §§ 843(a)(3), 843(d)(1), and 846.  The Information specified that the controlled substances involved in the charge were oxycodone (Schedule II), zolpidem tartrate (Schedule IV), and alprazolam (Schedule IV).  Further, the Information charged that the offenses began on an unknown date, but they continued up to and included March 12, 2015.  CMS Ex. 8. 

Petitioner pleaded guilty to the charge in the Information and, on April 18, 2016, the District Court judge signed a Judgment in a Criminal Case.  Petitioner was sentenced to one year of supervised release and a $1,000 fine.  CMS Ex. 7. 

Petitioner’s period of supervised release ended on April 17, 2017.  CMS Ex. 4. 

2. 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 a felony within the last ten years related to the unlawful distribution, prescription, and/or dispensing of controlled substances.  Petitioner’s felony offense was per se detrimental to the best interests of the Medicare program and its beneficiaries because Petitioner’s conviction would subject him to mandatory exclusion under 42 U.S.C. § 1320a-7(a)(4).  42 C.F.R. § 424.530(a)(3)(i)(D).  

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 refuse to enter into a supplier agreement with any physician 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

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beneficiaries.”  42 U.S.C. §§ 1395u(h)(8), 1395cc(j).  For Medicare program purposes, a physician is a supplier.  42 U.S.C. § 1395x(d). 

Under the Secretary’s regulations, CMS may deny enrollment in the Medicare program to any supplier who has been convicted within the last ten years of a federal or state felony offense that CMS determines is detrimental to the best interests of the Medicare program or its beneficiaries.  42 C.F.R. § 424.530(a)(3)(i).  Further, the regulations provide a non-exhaustive list of the types of felony offenses that CMS considers detrimental to the best interests of the program and its beneficiaries.  42 C.F.R. § 424.530(a)(3)(ii).  That list of felonies includes all felonies the conviction of which would result in a mandatory exclusion from participation in federal health care programs under section 1128(a) of the Act (42 U.S.C. § 1320a-7(a)).  42 C.F.R. § 424.535(a)(3)(ii)(D).  The Act mandates exclusion when an individual is convicted, after 1996, of a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.  42 U.S.C. § 1320a-7(a)(4).

When a supplier is convicted of a felony specifically listed in the regulations, such felonies are considered per se detrimental to the best interests of the Medicare program and its beneficiaries.  Letantia Bussell, M.D., DAB No. 2196 at 9 (2008).

In the present case, the record establishes that Petitioner was convicted of a felony within the last ten years.  Petitioner pleaded guilty to acquiring oxycodone and other controlled substances by misrepresentation, fraud, forgery, deception and subterfuge, in violation of 21 U.S.C. § 843(a)(3), as charged in the Information.  CMS Ex. 8 at 1.  The District Court adjudged Petitioner guilty on April 18, 2016.  CMS Ex. 7 at 1.  Further, a violation of 21 U.S.C. § 843(a)(3) is a felony offense.  See 21 U.S.C. § 843(d)(1), 18 U.S.C. § 3559(a)(5).   

In addition, Petitioner’s guilty plea, along with the court’s finding of guilt, meets the definition of “conviction” under 42 C.F.R. § 1001.2.  This definition for “conviction” is used both for enrollment denial purposes and for exclusion purposes under section 1128(a)(4) of the Act.  42 U.S.C. § 1320a-7(i); 42 C.F.R. § 424.530(a)(3).   

Further, the record 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 a felony related to the unlawful distribution, prescription, and/or dispensing of a controlled substance, and the felony offense occurred after August 21, 1996.  42 U.S.C. § 1320a-7(a)(4).  Petitioner unlawfully obtained controlled substances for himself and his wife by writing prescriptions.  At the time, they both were addicted to prescription medications.  Hearing Req. at 1.  Further, Petitioner engaged in a scheme of writing prescriptions for other individuals, but he and his wife would fill those prescriptions.  CMS Ex. 11 at 1. 

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According to the Department of Justice, Petitioner improperly obtained 1,820 tablets of scheduled pharmaceuticals, of which 1,280 were oxycodone.  CMS Ex. 11 at 2. 

Petitioner does not directly state that CMS incorrectly denied his enrollment application.  Indeed, CMS previously revoked Petitioner’s Medicare enrollment and billing privileges in response to his criminal conviction for the same reason that CMS now denies his enrollment application.  CMS Ex. 3 at 1.  Rather, Petitioner argues that he had fully served the three-year reenrollment bar imposed on him at the time of the revocation and believes that he should now be allowed to reenroll in the Medicare program.  Hearing Req. at 1; see CMS Ex. 3 at 2.  Petitioner considers a ten-year period of being denied reenrollment to be harsh.  Petitioner also stated that the law indicates that a five-year exclusion is warranted and asks to serve that length of time.  Hearing Req. at 2. 

Petitioner has understandably confused three different actions that can be taken against suppliers.  Petitioner’s Medicare enrollment and billing privileges were revoked by a CMS contractor and the CMS contractor imposed a reenrollment bar.  CMS Ex. 3; 42 C.F.R. § 424.535.  Revocation means that the supplier’s Medicare billing privileges have been terminated.  42 C.F.R. § 424.502.  Once a supplier completes the term of the reenrollment bar, the supplier has to file a new enrollment application in order to receive Medicare billing privileges again.  42 C.F.R. § 424.535(d).

Once a supplier submits an enrollment application following the reenrollment bar, the CMS contractor will evaluate it based on the general enrollment requirements in the regulations.  CMS has the authority to deny enrollment for any of the reasons stated in   42 C.F.R. § 424.530, including for a felony conviction in the last ten years that is detrimental to the best interests of the Medicare program or its beneficiaries.  42 C.F.R. § 424.530(a)(3).  Denial means that the enrolling provider has been determined to be ineligible to receive Medicare billing privileges.  42 C.F.R. § 424.502. 

In the present case, a CMS contractor denied Petitioner’s enrollment application based on his felony conviction because, in part, the conviction is less than ten years old.  CMS Ex. 3.  Further, on reconsideration, the CMS hearing officer provided a factual analysis as to why she thought that Petitioner’s conviction was detrimental to the best interests of the Medicare program and its beneficiaries.  Hearing Req. Attach. at 3-4.  As stated above, I conclude that the conviction is per se detrimental.  Therefore, I need not review the hearing officer’s factual analysis.  However, it is clear that the hearing officer believed denial of the enrollment application was in the best interests of the Medicare program. 

Finally, the Inspector General of the Department of Health and Human Services (IG) determines when individuals or entities are excluded from participation in all federal health care programs based on section 1128 of the Act.  42 C.F.R. pt. 1001.  Exclusion means that items and services furnished, ordered, or prescribed will not be reimbursed under Medicare, Medicaid, or any other federal health care program until the IG

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reinstates the individual.  42 C.F.R. § 1000.10.  When the IG excludes an individual or entity under section 1128(a) of the Act, the exclusion must be for at least five years, but may be longer if there are aggravating circumstances.  42 C.F.R. § 1001.102.  In this matter, the IG did not exclude Petitioner. 

Although CMS revoked and denied Petitioner’s enrollment, in part, because his conviction meets the requirements for exclusion under section 1128(a)(4), it does not mean that CMS imposed an exclusion on Petitioner.  CMS’s authority to deny or revoke is distinct from the IG’s authority to exclude.  See Ahmed v. Sebelius, 710 F. Supp. 2d 167, 175-176 (D. Mass. 2010); Dr. Robert Kanowitz, DAB No. 2942 at 6 (2019).  Therefore, the statutory five-year length of exclusion is not applicable in this case and does not control the length of time CMS may deny Petitioner’s enrollment in the Medicare program based on his conviction. 

Petitioner also argues that he has undergone extensive rehabilitation.  In particular, he has completed a three-month inpatient program and has been subject to monitoring for more than four years by Pacific Assistance Group (a monitoring group for physicians).  Hearing Req. at 1.  In addition, Petitioner states that he has an active medical license and is in compliance with the State Medical Board’s probation requirements, including those related to writing prescriptions and drug testing.  Hearing Req. at 1.  He also indicates that the Drug Enforcement Administration has reissued a Controlled Substance Registration Certificate to him.  Hearing Req. at 1; CMS Ex. 5. 

Petitioner’s efforts to correct his previous abuse of controlled substances are admirable and substantial.  However, my authority is limited to determining if CMS had a legitimate basis to deny Petitioner’s enrollment application.  CMS has discretion to deny enrollment or to allow enrollment.  In this case, CMS did not believe Petitioner ought to be reenrolled.  I must uphold that determination so long as there is a legal and factual basis to do so.  See Bussell, DAB No. 2196 at 13.  As explained above, there is such a legal and factual basis. 

VI.  Conclusion

I affirm the denial of Petitioner’s Medicare enrollment and billing privileges.