Alan Marcus, M.D. and South Orange County Endocrinology, DAB CR5794 (2021)

DECISION

I enter summary judgment in favor of the Centers for Medicare & Medicaid Services (CMS), sustaining the determinations of a Medicare contractor, as affirmed on reconsideration, to revoke the Medicare participation of Petitioners Alan O. Marcus, M.D. (Petitioner Marcus), and South Orange County Endocrinology (Petitioner SOCE).  Additionally, I sustain the determination to put these Petitioners on the Medicare preclusion list.

I. Background

CMS moved for summary judgment.  Petitioners opposed the motion.  With its motion CMS filed 12 proposed exhibits that it identified as CMS Ex. 1-CMS Ex. 12.  In opposition, Petitioners filed 42 exhibits that they identified as P. Ex. 1-P. Ex. 42.  Petitioners attached numerous additional documents to their brief under the heading "Exhibit A."  I have reviewed these documents and they consist of statements of support from various parties on behalf of Petitioner Marcus.

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It is unnecessary that I decide whether to admit or to exclude any of the parties' exhibits or attachments inasmuch as I conclude that there are no disputed material facts.  I refer to some of the exhibits in this decision, but only to illustrate facts that are undisputed.

II. Issues, Findings of Fact and Conclusions of Law

A. Issues

The issue is whether CMS is authorized to revoke Petitioners' Medicare participation and to put these Petitioners on the Medicare preclusion list.

B. Findings of Fact and Conclusions of Law

These facts are undisputed.

Petitioner Marcus is a physician in southern California.  Petitioner SOCE is a group medical practice.  Petitioner Marcus is the director of Petitioner SOCE and owns five percent or more of that entity.  CMS Ex. 1 at 15.

In April 2012 Petitioner Marcus pled guilty in a southern California court to felonious possession of a controlled substance (cocaine) and to two related misdemeanors.  CMS Ex. 3 at 4-11.  On February 28, 2014, the Medical Board of California (Medical Board) revoked Petitioner Marcus' license to practice medicine based on his admission that he unlawfully possessed and used cocaine in April 2011.  The Medical Board suspended the license revocation and placed Petitioner Marcus on probation, a probation that extended until January 26, 2017.  CMS Ex. 4.

On November 21, 2019, Petitioner Marcus filed an enrollment application to revalidate his Medicare enrollment.  The application asked Petitioner Marcus whether a final adverse legal action had ever been imposed against him.  That same application form defined an adverse legal action to include any past or current revocation or suspension of a medical license.  Petitioner Marcus answered "no" to the question and electronically signed a certification statement, certifying that the information that he had provided in the application was true and complete.  CMS Ex. 5 at 1, 3; CMS Ex. 12.

Petitioner SOCE did not report to Medicare that Petitioner Marcus had been convicted of a felony and that his license to practice medicine in California had been subject to an adverse action.

A Medicare contractor, acting on behalf of CMS, determined to revoke Petitioners' Medicare participation.  It imposed ten-year reenrollment bars on both Petitioners and placed their names on the preclusion list.

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CMS argues that two grounds justify revocation of Petitioner Marcus' Medicare participation.  First, CMS asserts that it may revoke his participation because he was convicted of a felony within the past ten years, establishing that his continued participation would be detrimental to the best interests of the Medicare program and its beneficiaries.  Second, CMS argues that it may revoke Petitioner Marcus' participation because he falsely stated on a Medicare recertification application that no adverse legal actions had been taken against him when, in fact, he had been convicted of a felony and his license to practice medicine in California had been subject to an adverse action by the Medical Board.

CMS asserts that it may revoke Petitioner SOCE's participation because Petitioner Marcus was an owner and director of this entity and his felony was therefore imputed to Petitioner SOCE.  Additional grounds for revocation of this Petitioner's participation exist, according to CMS, in Petitioner SOCE's failure to report to Medicare Petitioner Marcus' felony conviction and the adverse action against his license.

CMS contends that it may place Petitioner Marcus on its Medicare preclusion list because this Petitioner was convicted of a felony within the previous ten years and because CMS determined, in light of this conviction, that Petitioner Marcus' conduct was detrimental to the best interests of the Medicare program.  It argues that it has a basis to add Petitioner SOCE to the preclusion list because it had revoked this Petitioner's participation and because it determined that this Petitioner's conduct was detrimental to the best interests of the Medicare program.

The regulatory authority to revoke a supplier's participation in Medicare is set forth at 42 C.F.R. § 424.535(a).  Pursuant to subsection (a)(3) of this regulation, CMS may revoke the participation of any supplier who has been convicted, within the previous ten years, of a felony that CMS determines is detrimental to the best interests of the Medicare program or its beneficiaries.  The regulation provides a non-exclusive list of the types of felonies that CMS will determine to be detrimental.  These include any felonies that would result in mandatory exclusion under section 1128(a) of the Social Security Act (Act).  42 C.F.R. § 424.535(a)(3)(ii)(D).  The regulation also authorizes revocation of the participation of any supplier who provides false or misleading information on an application to enroll or maintain enrollment in Medicare.  42 C.F.R. § 424.535(a)(4).

These regulations authorize the revocation of an entity's participation in Medicare if that entity is owned or controlled by an individual whose conduct meets the criteria for revocation.  Ownership or control is defined as owning a five percent or greater interest in an entity.  42 C.F.R. § 424.502.

The "preclusion list" consists of a list of prescribers, providers, and suppliers that are barred from receiving payment under Medicare Parts C and D.  42 C.F.R. §§ 422.222, 423.120(c)(6).  CMS may place a supplier's name on the preclusion list if the following

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conditions are met:  (i) a supplier's participation is currently revoked pursuant to 42 C.F.R. § 424.535; (ii) the supplier is currently barred from reenrollment pursuant to 42 C.F.R. § 424.535(c); and (iii) CMS determines that the underlying conduct that led to revocation is detrimental to the best interests of the Medicare program.  In making the determination that conduct is detrimental CMS considers factors that include:  (A) the seriousness of the conduct underlying the revocation determination; (B) the degree to which the individual or entity's conduct could affect Medicare program integrity; and (C) any other evidence that CMS determines to be relevant.  42 C.F.R. §§ 422.2, 423.100.

The regulations state other grounds for preclusion that are not relevant here.

I have limited authority to hear and decide challenges to a determination by CMS to revoke a supplier's participation in Medicare, to impose a period of debarment against a supplier whose participation is revoked, and/or to place a supplier's name on the preclusion list.  I must decide whether CMS adduced and considered evidence that conforms to the regulatory criteria governing these determinations.  Eva Orticio Villamor-Goubeaux, DAB No. 2997 at 13 (2020); Douglas Bradley, M.D., DAB No. 2663 at 13 (2015).  However, I am not authorized to second-guess CMS's determination by substituting my judgment for CMS's judgment.  I may not intrude on CMS's discretionary authority to weigh evidence that is relevant to the regulatory factors that I have outlined above.  If evidence exists that conforms to those factors, then I must accept CMS's evaluation of that evidence.

Here, the undisputed facts plainly support CMS's determinations.  Those facts establish that Petitioner Marcus was convicted of a felony justifying revocation pursuant to 42 C.F.R. § 424.535(a)(3).  It is undisputed that Petitioner Marcus was convicted of a felony within the previous ten years.  Further, the undisputed facts concerning the conviction are grounds for concluding that the felony conviction was for conduct that is detrimental to the best interests of Medicare and its beneficiaries.

Petitioner Marcus' conviction for cocaine possession is akin to a conviction pursuant to section 1128(a)(4) of the Act for unlawful manufacture, prescription, distribution, or dispensing of a controlled substance.  Such a conviction mandates exclusion pursuant to section 1128(a)(4).  The rationale underlying this mandatory exclusion requirement is that an individual who unlawfully manufactures, prescribes, distributes, or dispenses a controlled substance is clearly untrustworthy to provide care to program beneficiaries.

Very similar considerations apply to an individual who unlawfully possesses or uses a controlled substance.  Such behavior calls into question that individual's judgment and his or her trustworthiness to provide care.  A conviction for felonious possession of a controlled substance is therefore sufficient for CMS to determine that Petitioner Marcus' felony conviction was for conduct detrimental to the best interests of the Medicare program and its beneficiaries.

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In reaching this conclusion I stress that I am not evaluating independently the evidence considered by the Medicare contractor or CMS concerning Petitioner Marcus' conviction.  As I have stated, my authority in this case is limited to finding that there exist facts upon which the contractor or CMS could have concluded that revocation is appropriate.  Such facts plainly exist.

The undisputed facts establish an additional basis for revoking Petitioner Marcus' Medicare participation.  Petitioner Marcus admittedly falsely stated on an application for recertification of his Medicare participation that he had not been subject to an adverse action.  In fact, he had been convicted of a felony and his license had been subject to an adverse disciplinary action.  These undisputed facts squarely conform to the regulatory basis for revocation set forth at 42 C.F.R. § 424.535(a)(4).

The undisputed facts also establish grounds for revocation of Petitioner SOCE's participation pursuant to 42 C.F.R. § 424.535(a)(3).  It is undisputed that Petitioner Marcus had a greater than five percent ownership interest in Petitioner SOCE and that he directed this entity's operations.  An additional ground for revocation of Petitioner SOCE's participation exists under 42 C.F.R. § 424.535(a)(9), due to Petitioner SOCE's failure to report Petitioner Marcus' felony conviction and the adverse action against his medical license.

The determination to put Petitioner Marcus on the preclusion list is plainly supported by undisputed facts.  The contractor making the initial determination reviewed these facts and concluded, consistent with the requirements of 42 C.F.R. §§ 422.2 and 423.100, that facts relating to Petitioner Marcus' felony conviction – including the severity of the offense and its impact on program integrity – justified preclusion.  CMS Ex. 8 at 7-8.  It found also that Petitioner Marcus' false and misleading statements in his application for recertification constituted an additional basis for putting his name on the preclusion list, again considering the appropriate regulatory factors.  Id.  In the same fashion, the contractor reviewed the undisputed facts and concluded that, consistent with regulatory requirements, Petitioner SOCE should be put on the preclusion list.  CMS Ex. 11 at 8.

Petitioners have not denied that facts exist that support the determinations that are at issue here.  Petitioners contend that Petitioner Marcus did not make willfully false statements on his application for recertification, but they do not deny that those statements are false.  Nor do they challenge the fact that the application itself clearly warned applicants not to make false statements.

Rather, Petitioners argue that CMS's determinations are unlawful because CMS did not fully consider all of the facts that weigh to Petitioners' benefit.  They contend that the contractor and CMS failed to take into account Petitioner Marcus' corrective actions, his service to Medicare beneficiaries since his conviction, and the voluntary medical services that he has rendered.

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These assertions are unsupported by the facts.  Petitioners' arguments notwithstanding, the undisputed facts show that the contractor reviewed allegedly exculpatory material furnished by Petitioners and determined that it was insufficient to rebut the contractor's determinations.  The reconsideration determinations for Petitioner Marcus and Petitioner SOCE list numerous emails and other communications that Petitioners provided and that they asserted supported their arguments against revocation of participation and preclusion.  The reconsideration determination for each Petitioner discusses these materials and concludes that revocation of participation and preclusion are nevertheless appropriate.  For example, in reconsidering the determination to impose remedies against Petitioner SOCE, the contractor stated:

While [Petitioner] Marcus' volunteer work . . . is commendable, as is his other community service and completion of his drug treatment program, these do not negate his conviction.

Reconsideration determination (Petitioner SOCE) at 6.

At bottom, Petitioners' arguments fail because Petitioners demand that I do what I have no authority to do – and that is, to substitute my judgment for that of the contractor and determine that the facts and equities preponderate in Petitioners' favor.  As I have explained, I may not question the contractor's or CMS's exercise of discretion so long as facts exist that satisfy the regulatory criteria for revocation of participation and preclusion.  The undisputed facts establish that such facts exist and consequently, I must sustain CMS's determinations.