Stephen D. White, M.D., DAB CR5809 (2021)

DECISION

Petitioner’s Medicare enrollment and billing privileges are revoked pursuant to 42 C.F.R. § 424.535,Citations are to the 2018 revision of the Code of Federal Regulations (C.F.R.), unless otherwise stated. effective November 2, 2010.

I.  Procedural History

On March 21, 2019, Novitas Solutions (Novitas), a Medicare administrative contractor (MAC) with responsibility for the State of Texas,A map of MAC jurisdictions is available at https://www.cms.gov/files/document/ab-jurisdiction-map-dec-2020.pdf. notified Petitioner of its initial determination to revoke Petitioner’s Medicare enrollment and billing privileges effective November 2, 2010, and to impose a three-year re-enrollment bar.  The MAC cited 42 C.F.R. § 424.535(a)(3) as authority for the revocation.  Centers for Medicare & Medicaid Services (CMS) Exhibit (Ex.) 1 at 10-11.

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Petitioner requested reconsideration.  CMS Ex. 1 at 8-9.  The MAC issued its reconsidered determination on July 23, 2019, upholding revocation under 42 C.F.R. § 424.535(a)(3).  CMS Ex. 1 at 1-7.  Petitioner timely requested a hearing (RFH) before an administrative law judge (ALJ). 

On September 23, 2019, CMS filed a motion for summary judgment (CMS Br.), with CMS Ex. 1.  Petitioner filed his response to CMS’s motion for summary judgment on October 22, 2019 (P. Br.).  CMS filed a waiver of reply on October 24, 2019.  On October 19, 2020, I issued an order notifying the parties that I was considering the possibility of granting summary judgment in favor of Petitioner.  I granted the parties a period for filing supplemental briefing.  Petitioner filed his supplemental brief in favor of summary judgment for Petitioner on November 3, 2020 with Petitioner’s exhibits (P. Exs.) A and B.  CMS filed a brief in opposition on November 13, 2020 (CMS Op.) with CMS Exs. 2 and 3.  CMS filed a corrected CMS Ex. 2 on November 17, 2020. 

On November 23, 2020, I ordered the parties to file any objections to the offered evidence; identify disputed or undisputed facts; and respond to specified issues.  Petitioner filed a supplemental brief (P. Supp.) responding to my Order on January 7, 2021.  CMS filed a supplemental brief (CMS Supp.) with CMS Ex. 4 on January 7, 2021.  On January 22, 2021, I issued an Order for the filing of any objections to CMS Ex. 4.  No objections have been made to my consideration of CMS Exs. 1 through 3 or P. Exs. A and B, and they are admitted and considered as evidence.  On January 26, 2021, Petitioner filed an objection to CMS Ex. 4, the declaration of Minisha C. Hicks that she signed on January 7, 2021.  Petitioner objects to CMS Ex. 4 on grounds that the declaration lacks proper foundation, is partly hearsay or fails to identify which statements are based on personal knowledge and which are hearsay, and Ms. Hicks engages in legal analysis.  Objection to CMS Ex. 4.  Under 42 C.F.R. § 498.61, evidence may be admitted and considered in this case that would be inadmissible under evidentiary rules applicable in the courts.  Under 42 C.F.R. § 498.60(b), I receive as evidence any documents that are relevant and material.  Although not specifically provided for by the regulations, I am responsible when deciding a case on the merits to judge the weight to be accorded to evidence admitted in this proceeding.  The Federal Rules of Evidence are not required to be applied in this proceeding; however, they provide useful guidance.  For example, Fed. R. Evid. 401 defines relevant evidence as evidence with any tendency to make a fact of consequence in determining the case more or less probable than without the evidence.  Fed. R. Evid. 401 covers both relevance (any tendency to make a fact more or less probable) and materiality (the fact is of consequence to the case).  Fed. R. Evid. 402 provides that irrelevant evidence is not admissible.  As a preliminary matter, it is always necessary to determine that a document is authentic, i.e., it is what it purports to be.  Black’s Law Dictionary 142 (8th ed. 2004).  CMS Ex. 4 is a declaration executed pursuant to 28 U.S.C. § 1746 and it is effectively self-authenticating.  There is also no challenge to Ms. Hicks’ identity or position with CMS.  CMS Ex. 4 at 1 ¶¶ 1-2.  There is no doubt that Ms. Hicks considered extra-record information when preparing her

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declaration and she so admits.  CMS Ex. 4 at 2 ¶ 2.  However, that fact does not make her declaration or the opinions she expresses inadmissible.  Rather, I am required to weigh her statements understanding that some are based on hearsay.  Petitioner is correct that some of Ms. Hicks’ statements reflect her or CMS’s interpretation of regulations related to provider and supplier enrollments and administration of the Medicare program.  I understand that I have ultimate responsibility to decide the legal issues that are presented by this case.  However, Ms. Hicks’ statements are important evidence to allow me to understand how CMS and the MACs interpret and apply regulations that govern enrollment and administration of Medicare.  Accordingly, I conclude that Petitioner’s objection to CMS Ex. 4 is overruled and the document is admitted, considered as evidence, and accorded the weight I determine appropriate.

II.  Discussion

A.  Applicable Law

Section 1831 of the Social Security Act (the Act) (42 U.S.C. § 1395j) establishes the supplementary medical insurance benefits program for the aged and disabled known as Medicare Part B.  Administration of the Part B program is through the MACs.  Act § 1842(a) (42 U.S.C. § 1395u(a)).  Payment under the program for services rendered to Medicare-eligible beneficiaries may only be made to eligible providers of services and suppliers.A “supplier” furnishes services under Medicare and includes physicians or other practitioners and facilities that are not included within the definition of the phrase “provider of services.”  Act § 1861(d) (42 U.S.C. § 1395x(d)).  A “provider of services,” commonly shortened to “provider,” includes hospitals, critical access hospitals, skilled nursing facilities, comprehensive outpatient rehabilitation facilities, home health agencies, hospice programs, and a fund as described in sections 1814(g) (42 U.S.C. § 1395f(g)) and 1835(e) (42 U.S.C. § 1395n(e)) of the Act.  Act § 1861(u) (42 U.S.C. § 1395x(u)).  The distinction between providers and suppliers is important because they are treated differently under the Act for some purposes.  Act §§ 1835(a) (42 U.S.C. § 1395n(a)), 1842(h)(1) (42 U.S.C. § 1395u(h)(1)).  Petitioner, a physician, is a supplier under the Act.  Act § 1861(d), (q), (r) (42 U.S.C. § 1395x(d), (q), (r)); 42 C.F.R. § 424.502.

The Act requires the Secretary of Health and Human Services (Secretary) to issue regulations that establish a process for enrolling providers and suppliers in Medicare, including the requirement to provide the right to a hearing and judicial review of certain enrollment determinations, such as revocation of enrollment and billing privileges.  Act § 1866(j) (42 U.S.C. § 1395cc(j)).  The Supreme Court recently clarified that under

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sections 1871(a)(1)-(2) and (b) of the Act (42 U.S.C. § 1395hh(a)(1)-(2), (b)), the Secretary must use notice and comment rulemaking in order to impose substantive legal standards upon regulated entities that are intended to have the force and effect of law.  Act § 1871(a)(2); Azar v. Allina Health Servs., 587 U.S. ___, 139 S. Ct. 1804 (2019).

Pursuant to 42 C.F.R. § 424.505, suppliers such as Petitioner must be enrolled in the Medicare program and be granted billing privileges to be eligible to receive payment for care or services rendered to a Medicare-eligible beneficiary.

The Secretary has delegated the authority to revoke enrollment and billing privileges to CMS.  42 C.F.R. § 424.535.  CMS or a MAC has discretion to revoke an enrolled supplier’s Medicare enrollment and billing privileges and supplier agreement for any of the reasons listed in 42 C.F.R. § 424.535.  Pursuant to 42 C.F.R. § 424.535(a)(3), CMS may revoke a supplier’s Medicare billing privilegesEffective November 4, 2019, the term “billing privileges” previously used in 42 C.F.R. § 424.535(a) was changed to “enrollment” to clarify that revocation could occur for any enrolled provider or supplier whether or not the provider or supplier had billing privileges.  84 Fed. Reg. 47,794, 47,840 (Sep. 10, 2019).  I note that prior to the change, the title of 42 C.F.R. § 424.535 was “[r]evocation of enrollment in the Medicare program” indicating that not only billing privileges but also enrollment were subject to revocation. if the supplier was, within the preceding ten years, convicted of a federal or state felony offense that CMS determines is detrimental to the best interests of the Medicare program and its beneficiaries.  Generally, when CMS revokes a supplier’s Medicare billing privileges for not complying with enrollment requirements, the revocation is effective 30 days after CMS or its contractor mails notice of its determination to the supplier.  42 C.F.R. § 424.535(g).  However, when a revocation is based on a federal exclusion or debarment, felony conviction, license suspension or revocation, the revocation is effective with the date of exclusion or debarment, felony conviction, license suspension or revocation.  42 C.F.R. § 424.535(g).  After a supplier’s Medicare enrollment and billing privileges are revoked, the supplier is barred from re-enrolling in the Medicare program for one to three years.  42 C.F.R. § 424.535(c).Effective November 4, 2019, the maximum re-enrollment bar was raised to 10 years with a maximum of 20 years for a second revocation.  84 Fed. Reg. 47,794, 47,826 (Sep. 10, 2019).  This change does not apply in this case.

A supplier whose enrollment and billing privileges have been revoked may request reconsideration and review as provided by 42 C.F.R. pt. 498.  A supplier submits a

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written request for reconsideration to CMS or its contractor.  42 C.F.R. § 498.22(a).  CMS or its contractor must give notice of its reconsidered determination to the supplier, giving the reasons for its determination and specifying the conditions or requirements the supplier failed to meet, and advising the supplier of its right to an ALJ hearing.  42 C.F.R. § 498.25.  If the decision on reconsideration is unfavorable to the supplier, the supplier has the right to request a hearing by an ALJ and further review by the Board.  Act § 1866(j)(8) (42 U.S.C. § 1395cc(j)(8)); 42 C.F.R. §§ 424.545, 498.3(b)(17), 498.5(l)(2). 

B.  Issues

Whether summary judgment is appropriate;

Whether there is a basis for the revocation of Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(3); and

The effective date of revocation.

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

My conclusions of law are set forth in bold followed by the pertinent findings of fact and analysis. 

1.  Summary judgment is appropriate.

CMS moved for summary judgment.  Petitioner filed a response to the CMS motion.  Petitioner did not specifically object to summary judgment.  Rather, Petitioner identified two issues for resolution:  (1) whether Petitioner was convicted of a felony within the meaning of the regulations; and (2) whether, if convicted, Petitioner’s offense was one that was detrimental to Medicare or placed the program at immediate risk.Petitioner noted that the parties “substantially agree as to the facts and procedural history of these matters; the parties even agree on much of the applicable evidence.”  P. Br. at 2.  P. Br. at 1-2.  Petitioner also argues that CMS’s actions in this case are arbitrary, capricious, and retaliatory because CMS failed to take this action earlier, that is, before Petitioner filed his civil suit in federal court.  P. Br. at 2.  In this case, these are issues of law as the underlying facts are not disputed.  However, Petitioner has not waived an oral hearing, despite not identifying any witnesses who require examination or cross-examination.  On October 19, 2020, I informed the parties that I would consider whether or not summary judgment for Petitioner may be appropriate based on facts as they were then known to

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me.  Because I conclude that there are no genuine disputes of material fact, I also conclude that summary judgment is appropriate. 

A provider or supplier denied enrollment in Medicare or whose enrollment has been revoked has a right to a hearing and judicial review pursuant to sections 1866(h)(1) and (j) of the Act and 42 C.F.R. §§ 498.3(b)(17), 498.5(l).  A hearing on the record, also known as an oral hearing, is required under the Act.  Act §§ 205(b), 1866(h)(1), (j)(8); Crestview Parke Care Ctr. v. Thompson, 373 F.3d 743, 748-51 (6th Cir. 2004).  A party may waive appearance at an oral hearing but must do so affirmatively in writing.  42 C.F.R. § 498.66.  Petitioner has not filed a written waiver of the right to appear and present evidence.  Because Petitioner has not waived the right to oral hearing, disposition on the written record alone is not permissible unless summary judgment is appropriate.

Summary judgment is not automatic upon request but is limited to certain specific conditions.  The Secretary’s regulations at 42 C.F.R. pt. 498 that establish the procedure to be followed in adjudicating Petitioner’s case do not establish a summary judgment procedure or recognize such a procedure.  However, the Board has long accepted that summary judgment is an acceptable procedural device in cases adjudicated pursuant to 42 C.F.R. pt. 498.  See, e.g., Ill. Knights Templar Home, DAB No. 2274 at 3-4 (2009); Garden City Med. Clinic, DAB No. 1763 (2001); Everett Rehab. & Med. Ctr., DAB No. 1628 at 3 (1997).  The Federal Rules of Civil Procedure do not apply in administrative adjudications such as this.  However, the Board has accepted that Rule 56 of the Federal Rules of Civil Procedure and related court decisions provide useful guidance for determining whether summary judgment is appropriate.  The Prehearing Order advised the parties that a summary judgment procedure was adopted as a matter of judicial economy within my authority to regulate the course of proceedings and that court decisions related to Rule 56 may be applied.  Prehearing Order ¶¶ II.D, G.

Summary judgment is appropriate when there is no genuine dispute as to any material fact for adjudication and/or the moving party is entitled to judgment as a matter of law.  In determining whether there are genuine issues of material fact for trial, the reviewer must view the evidence in the light most favorable to the non-moving party, drawing all reasonable inferences in that party’s favor.  The party requesting summary judgment bears the burden of showing that there are no genuine issues of material fact for trial and/or that it is entitled to judgment as a matter of law.  Generally, the non-movant may not defeat an adequately supported summary judgment motion by relying upon the denials in its pleadings or briefs but must furnish evidence of a dispute concerning a material fact, i.e., a fact that would affect the outcome of the case if proven.  Mission Hosp. Reg’l Med. Ctr., DAB No. 2459 at 5 (2012) (and cases cited therein); Experts Are Us, Inc., DAB No. 2452 at 5 (2012) (and cases cited therein); Senior Rehab. & Skilled Nursing Ctr., DAB No. 2300 at 3 (2010) (and cases cited therein); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

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The standard for deciding a case on summary judgment and an ALJ’s decision-making in deciding a summary judgment motion differ from that used in resolving a case after a hearing.  On summary judgment, the ALJ does not make credibility determinations, weigh the evidence, or decide which inferences to draw from the evidence, as would be done when finding facts after a hearing on the record.  Rather, on summary judgment, the ALJ construes the evidence in a light most favorable to the non-movant and avoids deciding which version of the facts is more likely true.  Holy Cross Vill. at Notre Dame, Inc., DAB No. 2291 at 5 (2009).  The Board also has recognized that on summary judgment, it is appropriate for the ALJ to consider whether a rational trier of fact could find that the party’s evidence would be sufficient to meet that party’s evidentiary burden.  Dumas Nursing & Rehab., L.P., DAB No. 2347 at 5 (2010).  The Secretary has not provided in 42 C.F.R. pt. 498 for the allocation of the burden of persuasion or the quantum of evidence required to satisfy the burden.  However, the Board has provided some persuasive analysis regarding the allocation of the burden of persuasion in cases subject to 42 C.F.R. pt. 498.  Batavia Nursing & Convalescent Ctr., DAB No. 1904 (2004), aff’d, Batavia Nursing & Convalescent Ctr. v. Thompson, 129 Fed. App’x 181 (6th Cir. 2005).

There is no genuine dispute as to any material fact in this case.  The issues raised by Petitioner are issues of law that must be resolved against Petitioner. 

2.  Petitioner pleaded guilty and was, thereby, convicted within the meaning of 42 C.F.R. § 1001.2, of felony possession of a controlled substance in violation of state law.

3.  The Secretary has determined and provided by regulation that CMS may revoke the Medicare enrollment of a supplier who, within the preceding 10 years, was convicted of any felony that CMS determines is detrimental to the best interests of Medicare and its beneficiaries.  42 C.F.R. § 424.535(a)(3); 79 Fed. Reg. 72,500, 72,509-513, 72,532 (Dec. 5, 2014).

4.  There is a basis for revocation of Petitioner’s enrollment in Medicare pursuant to 42 C.F.R. § 424.535(a)(3) based upon Petitioner’s state felony conviction, which occurred within the 10 years preceding the revocation action, and which CMS determined is detrimental to Medicare and its beneficiaries.

5.  The issue to be decided is whether there is a basis for revocation of Petitioner’s Medicare enrollment and, if there is a basis for revocation, my jurisdiction does not extend to review of whether CMS properly exercised its discretion to revoke Petitioner’s Medicare enrollment and billing privileges.

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6.  The effective date of revocation of Petitioner’s Medicare enrollment and billing privileges is, as a matter of law, November 2, 2010, the date of his felony conviction.  42 C.F.R. § 424.535(g). 

7.  I have no authority to review CMS’s determination to impose a three-year bar to Petitioner’s re-enrollment in Medicare.

8.  The three-year bar to re-enrollment began on April 20, 2019, 30 days after the date on which Novitas mailed the notice of revocation in this case.  42 C.F.R. § 424.535(c)(1).

a.  Undisputed Facts

On November 2, 2010, Petitioner pleaded guilty to felony possession of a controlled substance of less than one gram in the 124th Judicial District Court in Gregg County, Texas (state court).  CMS Ex. 1 at 14, 26, 38-40.  The state court entered an order of deferred adjudication on November 2, 2010.  The state court ordered community supervision of Petitioner for four years.  CMS Ex. 1 at 38.  The state court noted in its order that it found Petitioner made his plea voluntarily, the plea was received and entered in the record,Petitioner’s representation that his guilty plea was not entered in the state court record (P. Br. at 3) is inconsistent with the statement to the contrary in the November 2, 2010 Order of Deferred Adjudication.  CMS Ex. 1 at 40. and determined that the evidence substantiated Petitioner’s guilt.  The state court also found it was appropriate to defer proceedings “without entering an adjudication of guilt . . . .”  CMS Ex. 1 at 39.  On June 26, 2012, the state court entered an order ending Petitioner’s community supervision and dismissed the criminal case.  CMS Ex. 1 at 19.

On April 10, 2018, an ALJ issued a decision upholding the denial of Petitioner’s Medicare enrollment by Noridian Healthcare Solutions (Noridian) (the MAC with responsibility for the State of Washington) pursuant to 42 C.F.R. § 424.530(a)(3).  The ALJ found that on February 9, 2017, Petitioner filed an application (CMS-855I) to enroll in Medicare.  On June 8, 2017, Noridian denied Petitioner’s application to enroll based on Petitioner’s November 2, 2010 Texas conviction and failure to report the conviction on his CMS-855I.  The ALJ specifically addressed the issue raised by Petitioner of whether his November 2, 2010 deferred adjudication in Texas was a conviction pursuant to 42 C.F.R. § 1001.2.  The ALJ concluded that:  (1) Petitioner’s November 2, 2010 Texas deferred adjudication was a conviction within the meaning of 42 C.F.R. § 1001.2; (2) Petitioner was convicted of a felony offense that CMS reasonably determined to be

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detrimental to the best interests of Medicare and its beneficiaries; and (3) Petitioner’s conviction was a basis for denial of his enrollment application pursuant to 42 C.F.R. § 424.530(a)(3).The ALJ declined to consider whether CMS also had a basis to deny Petitioner’s enrollment application pursuant to 42 C.F.R. § 424.530(a)(4).  CMS Ex. 1 at 27-37 (Stephen White, M.D.,DAB CR5069 (2018)). 

Petitioner requested that the Board review the April 10, 2018 ALJ decision.  The Board upheld the ALJ’s determination that:  (1) Petitioner’s November 2, 2010 Texas deferred adjudication was a conviction within the meaning of 42 C.F.R. § 1001.2; (2) CMS made a case-by-case determination that Petitioner’s felony conviction was detrimental to Medicare and its beneficiaries; and (3) Petitioner’s conviction was a basis for denial of Petitioner’s enrollment application pursuant to 42 C.F.R. § 424.530(a)(3).  Stephen White, M.D., DAB No. 2912 at 12-17 (2018).Petitioner has challenged the Board’s decision in the federal district.  White v. Azar, 2:19-cv-00037-SAB (E.D. Wash. Jan. 24, 2019).  The district court case is currently stayed pending administrative review of the revocation in this case.  P. Br. at 7; RFH at 3.

There is no dispute that:

Petitioner and CMS were both parties to the ALJ and Board proceedings in White, DAB CR5069, aff’d, DAB No. 2912;

The underlying conviction at issue before the ALJ and the Board in White, DAB CR5069, aff’d, DAB No. 2912 is the same conviction that is at issue before me; and

The litigation and decisions in White, DAB CR5069, aff’d, DAB No. 2912 involved the same issues of whether:  (1) Petitioner’s November 2, 2010 Texas deferred adjudication was a conviction within the meaning of 42 C.F.R. § 1001.2; and (2) CMS made a case-by-case determination that Petitioner’s felony conviction was detrimental to Medicare and its beneficiaries.  Those issues were considered in the context of denial of an enrollment application pursuant to 42 C.F.R. § 424.530(a) rather than revocation of enrollment pursuant to 42 C.F.R. § 424.535(a), which is the CMS action at issue in this case.

After completion of the administrative review in White, DAB CR5069, aff’d, DAB No. 2912, Novitas informed Petitioner by letter dated March 21, 2019, that his Medicare privileges were revoked effective November 2, 2010.  The MAC cited 42 C.F.R.

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§ 424.535(a)(3) as the authority for the revocation based on Petitioner’s November 2, 2010 Texas deferred adjudication.  The MAC imposed a three-year re-enrollment bar effective April 20, 2019.  CMS Ex. 1 at 10-11. 

Petitioner requested a reconsidered determination on May 17, 2019.  CMS Ex. 1 at 8-9.  On July 23, 2019, a CMS hearing officer, Minisha C. Hicks, upheld the revocation of Petitioner’s Medicare enrollment and billing privileges.  The hearing officer cited as authority for the revocation 42 C.F.R. § 424.535(a)(3) based on Petitioner’s November 2, 2010 Texas deferred adjudication.  The hearing officer found that Petitioner’s November 2, 2010 Texas deferred adjudication was a conviction within the meaning of 42 C.F.R. § 1001.2.  The hearing officer also specifically analyzed whether Petitioner’s conviction was detrimental to the best interests of Medicare and its beneficiaries, and concluded it was.  CMS Ex. 1 at 1-7.

b.  Analysis

(i.)  Petitioner is barred from relitigating issues by the doctrine of collateral estoppel.

Petitioner argues that the November 2, 2010 Texas deferred adjudication was not a conviction.  He also argues that his offense was “not one that is detrimental to Medicare or placed the program at immediate risk.”  P. Br. at 1, 3-6.  This case is appropriate for the application of the doctrine of mutual defensive collateral estoppel to preclude Petitioner from relitigating the issues resolved against him in White, DAB CR5069, aff’d, DAB No. 2912, i.e., the issues of whether:  (1) Petitioner’s November 2, 2010 Texas deferred adjudication was a conviction within the meaning of 42 C.F.R. § 1001.2; and (2) CMS made a case-by-case determination that Petitioner’s felony conviction was detrimental to Medicare and its beneficiaries.Petitioner requests the application of the doctrine of res judicata based on the 2017 denial of enrollment proceedings, noting the involvement of the same parties and the same issues and that the regulations involved are nearly identical.  P. Br. at 5.  Petitioner confuses res judicata (claim preclusion) and collateral estoppel (issue preclusion).  Petitioner’s argument is that CMS should be precluded from further arguments that Petitioner’s offense was akin to the per se detrimental offenses listed in 42 C.F.R. § 424.535(a)(3).  It is not necessary to analyze Petitioner’s argument further as I conclude that CMS did the necessary case-by-case determination and did not rely upon the listing of per se detrimental offenses.  U.S. v. Stauffer Chemical Company, 464 U.S. 165 (1984).  The Board has recognized the doctrine of collateral estoppel (issue preclusion).

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Collateral estoppel, also termed “issue preclusion,” is defined as “[t]he binding effect of a judgment as to matters actually litigated and determined in one action on later controversies between the parties involving a different claim from that on which the original judgment was based” and “[a] doctrine barring a party from relitigating an issue determined against that party in an earlier action, even if the second action differs significantly from the first one.”  Black’s Law Dictionary (9th ed. 2009).

Michael Scott Edwards, OD and M. Scott Edwards, OD, PA, DAB No. 2975 at 12 (2019) (citing Gregory J. Salko, M.D., DAB No. 2437 (2012), aff’d, Salko v. Sebelius, No. 3:12-cv-515, 2013 WL 618779 (M.D. Pa. Feb. 19, 2013)).  The Board stated that, in the case of an unreviewed agency action, it would consider whether the agency acted in a judicial capacity, whether the agency properly resolved the issues before it, and whether the parties had an adequate opportunity to litigate, before giving the agency determination preclusive effect.  Id. at 12-13.

Petitioner and CMS were both parties to the ALJ and Board proceedings in White, DAB CR5069, aff’d, DAB No. 2912.  The November 2, 2010 Texas state court order of deferred adjudication at issue before me is the same as that at issue before the ALJ and the Board in White, DAB CR5069, aff’d, DAB No. 2912.  The litigation and decisions in White, DAB CR5069, aff’d, DAB No. 2912 involved the same issues that were resolved against Petitioner:  (1) Petitioner’s November 2, 2010 Texas deferred adjudication was a conviction within the meaning of 42 C.F.R. § 1001.2; and (2) CMS made a case-by-case determination that Petitioner’s felony conviction was detrimental to Medicare and its beneficiaries.  The issues were considered in the context of denial of an enrollment application pursuant to 42 C.F.R. § 424.530(a) in White, DAB CR5069, aff’d, DAB No. 2912.  However, 42 C.F.R. § 424.535(a)(3), which is CMS’s authority for revocation in this case, includes the same elements for revocation as those required for denial under 42 C.F.R. § 424.530(a)(3), i.e., conviction of a felony, conviction must have occurred during the 10 years preceding the action, conviction is defined by 42 C.F.R. § 1001.2, and CMS must determine that the conviction is of an offense that is detrimental to the best interests of Medicare and its beneficiaries.  42 C.F.R. § 424.535(a)(3).  Considering the Board’s factors for the application of collateral estoppel, I conclude that the ALJ and the Board in White, DAB CR5069, aff’d, DAB No. 2912 were acting in a judicial capacity; based on the following analysis, the ALJ and Board correctly resolved the issues; and Petitioner had the opportunity to fully litigate the issues in that case.

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Accordingly, I conclude that the doctrine of collateral estoppel is appropriately applied in this case to preclude Petitioner from litigating again the very same issues that have already been resolved against him in White, DAB CR5069, aff’d, DAB No. 2912.CMS did not raise collateral estoppel in this case.  However, as the Supreme Court has stated, the doctrines of res judicata and collateral estoppel have the dual purposes of protecting parties from the burden of repetitive litigation and protecting judicial resources.  Montana v. U.S., 440 U.S. 147, 153-54 (1979).  Therefore, it is appropriate to raise the doctrine, an issue of law, sua sponte and further briefing by the parties would not affect the application of the doctrine in this case.

(ii.)  There is a basis to revoke pursuant to 42 C.F.R. § 424.535(a)(3).

Petitioner’s challenges to revocation of his Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(3) are the same challenges he made to denial of his enrollment and addressed in White, DAB CR5069, aff’d, DAB No. 2912.  Even if one were to conclude that collateral estoppel did not preclude Petitioner’s arguments challenging revocation before me, my conclusions regarding those challenges are no different than those of the ALJ and the Board in the prior case. 

Pursuant to 42 C.F.R. § 424.535(a)(3), CMS may revoke a “currently enrolled” supplier’s Medicare enrollment and billing privileges and any related provider or supplier agreements if:  (1) the provider or supplier or an owner or managing employee was convicted; (2) of a state or federal felony offense; (3) during the 10 years preceding the revocation action; and (4) the offense is one that CMS determines is detrimental to Medicare and its beneficiaries.  The regulation uses the definition for conviction found in 42 C.F.R. § 1001.2:

Convicted means that—

(a) A judgment of conviction has been entered against an individual or entity by a Federal, State or local court, regardless of whether:

(1) There is a post-trial motion or an appeal pending, or

(2) The judgment of conviction or other record relating to the criminal conduct has been expunged or otherwise removed;

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(b) A Federal, State or local court has made a finding of guilt against an individual or entity;

(c) A Federal, State or local court has accepted a plea of guilty or nolo contendere by an individual or entity; or

(d) An individual or entity has entered into participation in a first offender, deferred adjudication or other program or arrangement where judgment of conviction has been withheld.

42 C.F.R. § 1001.2 (italics in original).

Petitioner asserts that his 2010 Texas deferred adjudication was not a conviction.  P. Br. at 1, 3-4.  However, the state court’s Order of Deferred Adjudication clearly shows that Petitioner entered a guilty plea to a state felony which is described in that order as a violation of Texas Health and Safety Code § 481.115.  CMS Ex. 1 at 38.  The offense is knowingly or intentionally possessing a controlled substance, unless received under a valid prescription or order of a practitioner acting in the course of professional practice.  Tex. Health & Safety Code § 481.115 (2009).Available at https://statutes.capitol.texas.gov/Docs/HS/htm/HS.481.htm#481.115 (last visited Jan. 27, 2021).  The order specifically states that a guilty plea was entered, it was received by the state court, and entered to the record. The order also specifically states that the evidence disclosed to the state court substantiated Petitioner’s guilt.  However, the order states that the state court found it was appropriate to “defer proceedings without entering an adjudication of guilt” and to place Petitioner on community supervision.  CMS Ex. 1 at 39.  The state court clearly accepted Petitioner’s guilty plea and simply withheld the adjudication of guilt, while nevertheless imposing four years of community supervision (probation).  I conclude that pursuant to 42 C.F.R. § 1001.2(c), Petitioner was convicted by the state court’s acceptance of his guilty plea.  Furthermore, pursuant to 42 C.F.R. § 1001.2(d), even though adjudication of guilt was deferred, Petitioner was also convicted.  The fact that Petitioner was eventually released from community supervision on June 26, 2012, and the criminal charge was dismissed (CMS Ex. 1 at 19), does not negate the undisputed facts that he pleaded guilty, the guilty plea was accepted, and he was granted deferred adjudication.  White, DAB No. 2912 at 13 (federal, not state law, controls the meaning of conviction).

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There is no dispute that Petitioner entered his plea of guilty and deferred adjudication was granted on November 2, 2010.  CMS Ex. 1 at 38-40.  There is also no dispute that Novitas revoked Petitioner’s Medicare enrollment and billing privileges on March 21, 2019, fewer than 10 years after the state court entered the order of deferred adjudication.  CMS Ex. 1 at 10, 38-40.  Therefore, Petitioner’s conviction occurred during the 10 years preceding the revocation. 

The hearing officer’s July 23, 2019 reconsidered determination also shows that she made the case-by-case determination that Petitioner’s offense was detrimental to the interests of Medicare and its beneficiaries.  The reconsidered determination states:

CMS also finds that Dr. White’s felony conviction is detrimental to the best interests of the Medicare program and its beneficiaries based on the particular circumstances surrounding it.  First, because Dr. White’s conviction of possessing a controlled substance involves disregard for abiding by laws and a lack of good judgment.  The circumstances surrounding Dr. White’s conviction involved his possession of one to four grams of crack and powdered cocaine, which was discovered in Dr. White’s hotel room as a result of an ongoing investigation conducted by the Gregg County Organized Drug Enforcement (see Exhibit 6). Additionally, Dr. White’s involvement with illegal drugs present a danger to the health, safety and welfare of Medicare beneficiaries, regardless of Dr. White’s argument that these events took place during a time when he was not practicing medicine.

CMS Ex. 1 at 4.  Pursuant to 42 C.F.R. § 424.535(a)(3), CMS is granted the discretion to make this individualized determination.  White, DAB No. 2912 at 15-16.  (CMS may make case-by-case determination of whether felony conviction is detrimental even if not a listed offense).  The hearing officer’s conclusion is not unreasonable, and there is no evidence the CMS hearing officer failed to consider the seriousness of Petitioner’s offense or otherwise failed to properly exercise her discretion.  Id. at 16-17.

I conclude that CMS had a basis to revoke Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(3).  When I conclude, as I have here, that CMS has a legal basis for its action, I may not substitute my discretion for that of CMS.  White, DAB No. 2912 at 14.

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(iii.)  Despite a prior denial of enrollment, Petitioner remained enrolled in Medicare, and revocation of that enrollment was appropriate.

Upon initial review of this case, I observed that it was undisputed that on June 8, 2017, Noridian (the MAC responsible for Washington) denied Petitioner’s application to enroll in Medicare.  Petitioner requested and received administrative review related to the denial of his enrollment in Medicare.  White, DAB CR5069, aff’d, DAB No. 2912.  It seemed incongruous that after the denial of his enrollment in Medicare in 2017, Novitas (the MAC responsible for Texas) and CMS believed that Petitioner was enrolled in Medicare and was subject to revocation of that enrollment on March 21, 2019. 

Section 424.535(a) provides in pertinent part: 

(a) Reasons for revocation.  CMS may revoke a currently enrolledprovider or supplier’s Medicare billing privileges and any corresponding provider agreement or supplier agreement . . . .

42 C.F.R. § 424.535(a) (italics in original, emphasis added).  Arguably, if Petitioner was not enrolled in Medicare when Novitas made the initial determination to revoke his Medicare enrollment and billing privileges on March 21, 2019 (CMS Ex. 1 at 10-11), then under the regulation, CMS and the MAC had no delegated authority to take the revocation action.  Therefore, on October 19, 2020, I notified the parties that I would consider whether summary judgment for Petitioner was appropriate and ordered the parties to address the issue.  On November 23, 2020, I ordered that the parties identify disputed or undisputed facts and respond to specified issues. 

CMS filed two declarations by Ms. Hicks, who also issued the reconsidered determination in this case on July 23, 2019.  CMS Ex. 1 at 1-7; CMS Ex. 2 at 1-2 ¶¶ 1-2; CMS Ex. 4 at 1-2 ¶¶ 1-2.  Ms. Hicks provided information that is not readily apparent from the regulations or the policy statements of CMS.  Ms. Hicks explained that Medicare is administered at the state-level by MACs assigned responsibilities for those states.  According to Ms. Hicks, Petitioner was enrolled in Medicare as a supplier practicing in Texas when his application to enroll as a supplier in Washington was denied on June 8, 2017 (the subject of White, DAB CR5069, aff’d, DAB No. 2912).  Ms. Hicks’ position is that Petitioner remained enrolled in Texas even though he had terminated a prior reassignment of his Medicare billing privileges to Texoma Orthopedic and Spine PLLC (Texoma Orthopedic) on August 1, 2016.  CMS Ex. 4 at 6 ¶¶ 15-16; P. Exs. A, B.  Implicit in Ms. Hicks’ testimony is that CMS treated the denial of Petitioner’s enrollment application in 2017 as having no effect on Petitioner’s existing enrollment in Texas.  Therefore, the separate revocation action was necessary to end Petitioner’s enrollment and billing privileges.  I find nothing in the Act, regulations, or policies of CMS that

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prohibits the approach to administering Medicare that Ms. Hicks described.  Whether it is good policy (given concerns about waste, fraud and abuse) is not within my discretion to decide.  Petitioner has presented no evidence to rebut Ms. Hicks’ testimony.  The facts related to Petitioner’s existing enrollment in Texas are not in dispute.  There is no evidence presented that Petitioner took action to voluntarily terminate the enrollment in Texas and Petitioner does not argue he did so.  There is also no evidence that CMS or Novitas took any action authorized by the regulations to end the enrollment related to Texas prior to the revocation.  Accordingly, I conclude as a matter of law, that Petitioner remained enrolled in Medicare related to Texas after his denial of enrollment in 2017, and CMS and the MAC had authority to revoke Petitioner’s enrollment and billing privileges. 

It is undisputed that on August 1, 2016, Petitioner voluntarily terminated his reassignment of the right to bill Medicare for care and services he delivered to Medicare beneficiaries at Texoma Orthopedics.  P. Exs. A, B; CMS Ex. 2 at 2 ¶ 7; CMS Ex. 3 at 5, 118-21; CMS Ex. 4 at 5 ¶ 14.  Petitioner argues that because he terminated his reassignment to Texoma Orthopedics, CMS should have deactivated his billing privileges when no Medicare claims were filed for 12 months, or as part of the recertification process, or when Petitioner changed his reassignment in Texas.  P. Supp. at 2-4.  Petitioner recognizes that under the regulations, deactivation of billing privileges means that a supplier’s billing privileges are stopped but can be restored.  42 C.F.R. § 424.502; P. Supp. at 3.  However, revocation means that a supplier’s billing privileges are terminated.  42 C.F.R. § 424.502; P. Supp. at 4-5.  Furthermore, 42 C.F.R. § 424.540, which governs deactivation of billing privileges, provides that the purpose of deactivation is to protect a supplier from misuse of its billing number and to protect the Trust Fund from unnecessary overpayments, and does not have any effect on the supplier’s participation agreement or the conditions of participation.  42 C.F.R. § 424.540(c).  However, revocation, which is governed by 42 C.F.R. § 424.535, revokes any supplier agreement and billing privileges; re-enrollment is barred for at least one year; and the supplier must re-enroll as a new supplier.  42 C.F.R. § 424.535(b)-(d).  Therefore, even if Petitioner’s billing privileges could have been deactivated by CMS or the MAC, deactivation is not revocation. 

(iv.)  Petitioner’s other arguments do not provide a basis for relief. 

Pursuant to 42 C.F.R. § 424.530(d), when Petitioner’s enrollment was denied in 2017, CMS was supposed to automatically review all other related enrollment files associated with Petitioner to determine whether adverse action was required.  P. Supp. at 8.  This apparently did not occur due to miscommunication between the two MACs, as conceded by Ms. Hicks.  CMS Ex. 4 at 6 ¶ 15.  However, I find no authority for the proposition that the MACs’ failure to communicate, which resulted in the failure to consider Petitioner’s

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Texas enrollment for revocation in 2017 when he was denied enrollment, vests any rights in Petitioner. 

Petitioner argues that the revocation of his Medicare enrollment and billing privileges was retaliatory and arbitrary and capricious because CMS was well aware of Petitioner’s conviction as evidenced by the denial of enrollment in 2017 and only took the revocation action after Petitioner sued CMS in federal court.  P. Supp. at 4, 8-9; P. Br. at 2, 6-7.  The Board has previously stated that the arbitrary and capricious standard is a standard for court review of final agency action pursuant to 5 U.S.C. § 706.  ALJs and the Board adjudicate administrative appeals and are not courts reviewing final agency action.  The CMS reconsidered determination is not final agency action, unless there is no request for ALJ review.  42 C.F.R. § 498.25(b).  Either the ALJ’s decision, if not appealed to the Board, or the Board’s decision may be final agency action under 42 C.F.R. §§ 498.74(b) and 498.90.  However, the arbitrary and capricious standard has no application in the administrative appeal process, only court review of that process.  NMS Healthcare of Hagerstown, DAB No. 2603 at 5 (2014).NMS Healthcare of Hagerstown’s appeal of the Board decision was dismissed for lack of jurisdiction based on the narrow issue presented on appeal.  NMS Healthcare of Hagerstown v. U.S. Dep’t of Health & Human Servs., 619 F. App’x 225 (4th Cir. 2015).  Even if I had authority to judge whether CMS’s actions were arbitrary and capricious in this case, I would conclude they were not.  There is a basis for revocation and CMS acted within its authority to revoke.  The fact that CMS failed to revoke at the time of the denial of enrollment or before, shows weakness in the current system for administering provider and supplier enrollment.  However, the delay did not deprive CMS of its authority to revoke or to do so in the best interests of Medicare and its beneficiaries. 

To the extent Petitioner’s arguments are requests for equitable relief, I have no authority to grant equitable relief.  When I determine, as I have here, that CMS has a basis for revocation, I have no authority to substitute my judgment and void the revocation based on equitable considerations.  US Ultrasound, DAB No. 2302 at 8 (2010).  Furthermore, I am required to follow the Act and regulations and have no authority to declare statutes or regulations invalid.  1866ICPayday.com, L.L.C., DAB No. 2289 at 14 (2009). 

(v.)  The effective date of revocation is November 2, 2010.

The effective date of the revocation is controlled by 42 C.F.R. § 424.535(g).  The regulation provides that when revocation is based on a felony conviction, the effective date of revocation is the date of the conviction.  42 C.F.R. § 424.535(g).

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(g) Effective date of revocation. Revocation becomes effective 30 days after CMS or the CMS contractor mails notice of its determination to the provider or supplier, except if the revocation is based on Federal exclusion or debarment, felony conviction, license suspension or revocation, or the practice location is determined by CMS or its contractor not to be operational.  When a revocation is based on a Federal exclusion or debarment, felony conviction, license suspension or revocation, or the practice location is determined by CMS or its contractor not to be operational, the revocation is effective with the date of exclusion or debarment, felony conviction, license suspension or revocation or the date that CMS or its contractor determined that the provider or supplier was no longer operational.

42 C.F.R. § 424.535(g) (emphasis added).  This regulation grants CMS and its contractor no discretion to choose an effective date of revocation other than the date of the conviction.  Accordingly, the effective date of Petitioner’s revocation pursuant to 42 C.F.R. § 424.535(a)(3) was November 2, 2010, the date the state court accepted Petitioner’s guilty plea and entered the order of deferred adjudication. 

(vi.)  CMS’s decision to impose a three-year re-enrollment bar is not subject to review. 

When a supplier’s Medicare enrollment and billing privileges are revoked, the supplier is barred from re-enrolling in the Medicare program for one to three years.  42 C.F.R. § 424.535(c).  In this case, CMS determined that a three-year bar was appropriate.  There is no statutory or regulatory language establishing a right to review of the duration of the re-enrollment bar CMS imposes, or when it commenced or ended.  Act § 1866(j)(8); 42 C.F.R. §§ 424.535(c), 424.545, 498.3(b), 498.5.  The Board has held that the duration of a revoked supplier’s re-enrollment bar is not an appealable initial determination listed in 42 C.F.R. § 498.3(b) and, thus, is not subject to ALJ review.  Vijendra Dave, M.D., DAB No. 2672 at 10-11 (2016).

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III.  Conclusion

For the foregoing reasons, I conclude that there is a basis to revoke Petitioner’s Medicare enrollment and billing privileges, effective November 2, 2010.