Wade D. Abbey, O.D., DAB CR5855 (2021)

DECISION

Wisconsin Physicians Service Insurance Corporation (WPS), an administrative contractor for Respondent, the Centers for Medicare & Medicaid Services (CMS), revoked the Medicare enrollment of Petitioner, Wade D. Abbey, O.D., pursuant to 42 C.F.R. § 424.535(a)(3).  WPS premised its revocation action on its determination Petitioner had been subject to a felony conviction.  Petitioner requested a hearing before an administrative law judge (ALJ) to dispute the revocation.  Because Petitioner’s felony conviction is a financial crime that is detrimental to the best interests of the Medicare program and its beneficiaries, I affirm CMS’s revocation action.

I.     Background and Procedural History

At times relevant here, Petitioner was an optometrist enrolled as a supplier in the Medicare program.  CMS Br. at 3.  He and his wife, also an optometrist, worked for Vision Doctors of Optometry (VDO) from 1995 to September 2010.  CMS Exhibit (Ex.) 8 at 1.In the plea agreement he made to resolve the charges against him, Petitioner expressly admitted to the first five counts of this indictment, all wire fraud charges pursuant to 18 U.S.C. § 1343.  CMS Ex. 4 at 1; CMS Ex. 8 at 2-3.  I therefore cite to particulars from the indictment as admissions made by Petitioner.  The

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optometrists were compensated for their professional services with a base salary and an additional fee for each “full” eye exam conducted.  Id. at 1-2.  Petitioner and his wife e-mailed the number of “full” eye exams they performed to VDO’s accountant every two weeks, and their pay was calculated and prepared based on the information they provided.  Id. at 2.  During the course of their employment, Petitioner and his wife inflated the number of “full” eye exams they performed and were thus overpaid based on this false information.  Id.

On March 1, 2012, Petitioner and his wife were charged by a grand jury in the U.S. District Court for the District of Kansas (District Court) with five counts of wire fraud in violation of 18 U.S.C. §§ 1343 and 2, and one count of theft in connection with health care in violation of 18 U.S.C. §§ 669 and 2.  Id. at 2-4.  The grand jury charged that for the purpose of executing a scheme to defraud and obtain money by false and fraudulent means, Petitioner and his wife transmitted, by means of wire communication, false information concerning the number of “full” eye exams they provided in order to inflate the payment of their wages.  Id. at 2‑3.  The grand jury specified that on five occasions between January and June of 2010, Petitioner and his wife falsely claimed to have performed a total of 1,869 “full” eye exams.  Id. at 3.

On February 27, 2013, Petitioner pleaded guilty to the wire fraud charges provided in Counts 1 through 5 of the indictment, admitting he “inflated the number of full eye exams performed by me and [my wife]” and that this “led to increased compensation to [us], even though she was not aware of what I did.”  CMS Ex. 4 at 1.  The District Court accepted Petitioner’s plea, id. at 5, and subsequently entered judgment against him on January 16, 2014.Exhibit 5, provided by CMS, is a “Second Amended Judgment.”  Neither the original District Court judgment of May 29, 2013, nor what I presume to be a “First Amended Judgment” were included in the record before me.  See CMS Br. at 3.  CMS Ex. 5.  The District Court sentenced Petitioner to 41 months’ imprisonment for each count, to run concurrently, and three years of supervised release.  Id. at 3-6.  The court also imposed a $500 assessment and ordered Petitioner to repay $583,060 in restitution.  Id.

On May 11, 2018, WPS revoked Petitioner’s Medicare billing privileges pursuant to 42 C.F.R. § 424.535(a)(3).  CMS Ex. 1.  WPS explained that Petitioner’s revocation was based on his felony conviction for wire fraud and would be effective February 27, 2013.  Id.  WPS also imposed a three‑year re-enrollment bar on Petitioner, effective 30 days from the postmark of its notice letter.  Id. at 2. 

Petitioner timely requested reconsideration of the revocation determination.  CMS Ex. 2.  On September 17, 2018, CMS issued a reconsidered determination upholding WPS’s revocation determination.  CMS Ex. 3.  CMS explained that Petitioner’s felony wire fraud conviction was a financial crime akin to the enumerated crimes and therefore deemed per se detrimental to the Medicare program.  Id. at 4.  CMS also found that Petitioner’s felony conviction was otherwise detrimental because he participated in a fraud scheme in which he received undeserved wage increases by giving false information, and that his continued participation in the Medicare program posed a risk to the Medicare Trust.  Id. at 4.

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Petitioner timely sought review by an Administrative Law Judge in the Civil Remedies Division, and I was designated to hear and decide this case.  On October 5, 2018, I issued an Acknowledgment and Pre‑hearing Order (Pre‑hearing Order) setting forth directives concerning the submission of arguments and evidence by the parties.  CMS timely submitted a motion for summary judgment, a brief in support of its motion (CMS Br.),CMS’s Brief lists a different docket number, C-14-1811, in the caption.  This appears to be a single typographical error as the body of the brief pertains to this case, and CMS’s other pre-hearing submissions bear the correct docket number. an exhibit list, a witness list (identifying no witnesses), and CMS Exs. 1-8. 

On November 10, 2018, Petitioner submitted a one-paragraph document describing his financial hardship but no arguments or evidence in support of his appeal.  On December 17, 2018, I issued an Order to Show Cause requiring Petitioner to file his pre-hearing exchange by January 4, 2019.  On December 19, 2018, Petitioner submitted a response opposing CMS’s motion for summary judgment (P. Br.) which included substantive arguments about the case, along with a copy of WPS’s December 5, 2017 enrollment approval letter.  I designate Petitioner’s submission as P. Ex. 1.  Having considered Petitioner’s response, I found good cause to discharge the order to show cause and accepted Petitioner’s response as his pre-hearing submissions.  CMS filed no written objections in the time I provided to do so.

II.     Admission of Exhibits

On October 22, 2019, Petitioner filed a copy of an order by the Kansas Board of Examiners in Optometry reinstating his license to practice on July 2, 2018.  Petitioner did not request leave to submit further exhibits or documents after the submission deadline.  In any case, evidence of his reinstatement by a state licensing board is not relevant to whether CMS had a basis to revoke his enrollment as a supplier in the Medicare program.  I therefore decline to admit Petitioner’s April 2019 submission into the record.

Turning to the remaining exhibits, neither party objected to the opposing party’s proposed exhibits.  I therefore admit CMS Exs. 1-8 and P. Ex. 1 into the record.

III.     Decision on the Record

In my Pre-hearing Order, I required the parties to submit written direct testimony for each proposed witness and advised an in‑person hearing would only be necessary if the opposing party requested an opportunity to cross‑examine a witness.  Pre‑hearing Order ¶¶ 8, 10; Civ. Remedies Div. P. §§ 16(b), 19(b); Pac. Regency Arvin, DAB No. 1823 at 8 (2002).

Here, neither CMS nor Petitioner submitted written direct testimony for witnesses for which the opposing party could request cross-examination.  Consequently, I will not hold an in‑person hearing in this matter, and I issue this decision based on the written record.  Civ. Remedies Div. P. § 19(b).  CMS’s motion for summary judgment is denied as moot.

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IV.     Issue

Whether CMS had a legitimate basis to revoke Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(3).

V.     Jurisdiction

I have jurisdiction to decide this case.  42 C.F.R. §§ 493.3(b)(17), 498.5(l)(2).

VI.     Findings of Fact, Conclusions of Law, and AnalysisMy findings of fact and conclusions of law are set forth in bold italics.

A.  Applicable Law

The Social Security Act authorizes the Secretary of Health and Human Services (Secretary) to promulgate regulations governing the enrollment of suppliers in the Medicare program and to discontinue the enrollment of a physician or other supplier who “has been convicted of a felony under Federal or State law for an offense which the Secretary determines is detrimental to the best interests of the [Medicare] program or program beneficiaries.”  42 U.S.C. §§ 1395u(h)(8), 1395cc(j).  By regulation, CMS may revoke a currently enrolled provider or supplier’s Medicare enrollment and billing privileges if:

The provider, supplier, or any owner or managing employee of the provider or supplier was, within the preceding 10 years convicted (as that term is defined in 42 C.F.R. § 1001.2) of a Federal or State felony offense that CMS determines is detrimental to the best interests of the Medicare program and its beneficiaries.

42 C.F.R. § 424.535(a)(3)(i).  Section 1001.2 defines “convicted” to mean, among other things, “[a] Federal, State or local court has accepted a plea of guilty or nolo contendere by an individual or entity.”  42 C.F.R. § 1001.2(c).

The regulations specify several criminal offenses that the Secretary deems to be per se detrimental to the Medicare program and its beneficiaries.  Among others, they identify “[f]inancial crimes, such as extortion, embezzlement, income tax evasion, insurance fraud and other similar crimes for which the individual was convicted, including guilty pleas” to be offenses that are per se detrimental and therefore provide a basis for CMS to revoke a provider’s or supplier’s enrollment.  42 C.F.R. § 424.535(a)(3)(ii).

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The level of deference I show to CMS’s determination depends on the offense in question.  Felony offenses specifically enumeratedSection 424.535(a)(3)(ii) sets forth four categories of felony offenses that can serve as a basis for revocation:  felony crimes against persons; any felony that placed the Medicare program or its beneficiaries at immediate risk; any felonies that would result in mandatory exclusion under section 1128(a) of the Social Security Act; and applicable here, financial crimes. in the regulations enjoy the greatest level of deference, because the Secretary has determined these offenses to be per se detrimental, and my authority does not extend to disregarding validly promulgated regulations.  Letantia Bussell, M.D., DAB No. 2196 at 13 n.13 (2008) (“Once the Secretary . . . has exercised that authority by regulation as to a class of felonies, an ALJ cannot revisit that determination . . . .”).

I accord less deference where CMS relies on felony offenses which do not appear in the regulations, but are similar to them in terms of offense elements.The use of the words “include” or “including” in 42 C.F.R. § 424.535(a)(3)(ii) signifies that the list of proscribed financial crimes is not intended to be exhaustive but illustrative.  42 C.F.R. § 424.535(a)(3)(ii)(B); see Fady Fayad, M.D., DAB No. 2266 at 8 (2009).  The regulations prescribe no method or criteria for judging whether an offense is similar to one of the financial crimes named in section 424.535(a)(3)(ii)(B).  Abdul Razzaque Ahmed, M.D., DAB No. 2261 at 11 (2009), aff’d, Ahmed v. Sebelius, 710 F. Supp. 2d 167 (D. Mass. 2010) (“Absent explicit regulatory guidance to the contrary, . . . it is reasonable to conclude that a supplier’s offense of conviction is similar to a financial crime when the facts and circumstances that are admitted to be the basis for the conviction would appear to satisfy one or more elements of a named financial crime.”).

Finally, even if a felony offense is not specifically listed or similar to those listed in the regulations, CMS may determine, on a case-by-case basis, that a felony conviction is detrimental to the best interests of the Medicare program and program beneficiaries.  Brenda Lee Jackson, DAB No. 2903 at 8 (2018).  In that instance, I must assess whether CMS’s determination that a felony offense is detrimental to the best interests of the program and its beneficiaries is reasonable.  See Fady Fayad, M.D., DAB No. 2266 at 8, 16-17 (2009), aff’d, Fayad v. Sebelius, 803 F. Supp. 2d 699, 704 (E.D. Mich. 2011).

B.  CMS had a valid basis to revoke Petitioner’s enrollment as a supplier in the Medicare program as of February 27, 2013.

1.  Petitioner was convicted, as defined in 42 C.F.R. § 1001.2, of a felony offense, and that felony conviction occurred within the 10-year period preceding revocation.

On February 27, 2013, Petitioner pleaded guilty to five felony counts of wire fraud.  CMS Ex. 4 at 1.  The District Court accepted his plea that same day.  Id. at 5.  The applicable regulations define “convicted” to include when a “court has accepted a plea of guilty” by an

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individual.  42 C.F.R. § 1001.2(c).  I therefore find Petitioner was convicted of a felony offense within the meaning of the Social Security Act on February 27, 2013. 

On May 11, 2018, WPS, acting on behalf of CMS, revoked Petitioner’s enrollment as a supplier in the Medicare program.  CMS Ex. 1.  The record before me therefore demonstrates Petitioner was convicted of a felony offense within the 10 years preceding his revocation.  42 C.F.R. § 424.535(a)(3)(i).

2.  CMS had a legal basis to revoke Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(3)(ii)(B) because Petitioner was convicted of a felony offense that was similar to a per se financial crime.

CMS found that Petitioner’s revocation was based on his felony conviction of a crime similar to a per se financial crime within the meaning of 42 C.F.R. § 424.535(a)(3)(ii).  CMS Ex. 3 at 4.  Based on the record before me, I concur.  As part of his plea agreement, Petitioner pleaded guilty to five counts of wire fraud in violation of 18 U.S.C. § 1343.18 U.S.C. § 1343 defines wire fraud as the “obtaining money or property by means of false or fraudulent pretenses, representation, or promises.”  CMS Ex. 4 at 1.  He admitted he “inflated the number of full eye exams performed by me and [my wife]” and this “led to increased compensation,” thus ensuring he improperly profited from his efforts.  Id.  As a result, Petitioner was ordered to pay $558,060 to VDO and $25,000 to an insurer for a total of $583,060 in restitution.  CMS Ex. 5 at 6. 

Obtaining money under false pretenses by overbilling an insurance company for pecuniary gain is obviously a financial crime that can be described as insurance fraud or closely akin to it.  42 C.F.R. § 424.535(a)(3)(ii).  Similarly, Petitioner caused a $558,060 loss to his own employer, which is substantially similar to embezzlement, as that term is commonly understood.  In any case, Petitioner engaged in a fraud scheme for his own financial gain and in the process caused substantial financial loss to an insurance company and his own employer.  Petitioner’s offense of conviction is plainly a financial crime. 

3.  CMS otherwise had a legitimate basis to revoke Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(3)(i) because Petitioner was convicted of a felony offense that CMS reasonably determined to be detrimental to the best interests of the Medicare program and its beneficiaries.

Even if I found Petitioner’s convictions were not enumerated in the regulations as “financial crimes,” I otherwise find reasonable CMS’s individualized determination that Petitioner’s offense conduct was detrimental and that his continued enrollment would pose a risk to the Medicare program.  Petitioner falsely claimed to have conducted “full” eye exams he and his wife did not actually perform.  He induced losses to both an insurance company and his own employer for his own personal gain.  The nature of Petitioner’s offense specifically calls into

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question his trustworthiness to submit claims to the Medicare program.  As CMS Hearing Officer Hicks correctly observed in her reconsidered determination,

It stands to reason that allowing Dr. Abbey to continue to participate in the Medicare program has the potential to be detrimental to the Medicare program, as Trust Funds may be placed at risk. Without pre-payment review, the Medicare program relies on the honesty and trustworthiness of its providers and suppliers when processing and issuing payments for submitted claims. Dr. Abbey’s felony conviction demonstrates a propensity for dishonesty, as he made numerous claims for examinations that he did not provide, resulting in the increase of his wages. Since the Medicare Trust Funds may be placed at risk, it follows that his continued participation in the Medicare program would also be detrimental to Medicare beneficiaries.

CMS Ex. 3 at 3-4. 

Petitioner argued to CMS in his reconsideration request that he was sufficiently trustworthy for CMS to entrust him with access to the Medicare program because he truthfully disclosed his conviction, which was eight years in the past, and because he had no restrictions to practice, either from his licensing state or by federal exclusion action.  CMS Ex. 2.  Petitioner asserts he is not “a risk for the Medicare program because my felony had nothing to do with harming the public or insurance billing.”  P. Br.; see also CMS Ex. 2 (his “felony had nothing to do with insurance or patient care” and he is a “very good, competent optometrist”).  As I have explained, however, Petitioner’s offense of conviction very much did concern insurance billing, and otherwise reflected his willingness to defraud his own employer for his personal gain by submitting false claims.  In any event, even if I agreed with Petitioner as to his trustworthiness, it would not matter.  CMS has the discretion to revoke billing privileges if a provider or supplier has been convicted of a felony detrimental to the best interests of the Medicare program and its beneficiaries within the 10 years preceding the revocation action.  42 C.F.R. § 424.535(a)(3)(i).  CMS has established these elements here.  

Accordingly, I conclude CMS had a valid basis in its determination that Petitioner was convicted of a financial crime detrimental to the Medicare program and its beneficiaries, and therefore, CMS’s revocation of Petitioner’s billing privileges pursuant to 42 C.F.R. § 424.535(a)(3) was proper. 

4.  I do not have the authority under the regulations to review the length of the re-enrollment bar because it is not an appealable initial determination.

Petitioner requested that if his appeal of CMS’s revocation action “is denied I would like to request that my re-enrollment bar be shortened since I beleve [sic] it is excessive.”  P. Br.  However, I have no authority to review CMS’s exercise of discretion, which includes the

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setting of a re-enrollment bar.  The duration of a revoked provider or supplier’s re‑enrollment bar is not an appealable determination and therefore is not subject to my review.  Vijendra Dave, M.D., DAB No. 2672 at 10-11 (2016); 42 C.F.R. § 498.3(b). 

5.  I have no authority to consider Petitioner’s equitable arguments.

Petitioner argues that “sufficient time has elapsed and I am trying to get back on my feet.”  P. Br.  He points out the Kansas state board of optometry has reinstated his license without restriction.  Id.  Petitioner claims that he was approved to enroll as a supplier in the Medicare program in October 2017, “fully disclosed [his] felony” on his application, and had practiced for seven months and billed Medicare on behalf of his employer without incident before his revocation.  Id. 

While Petitioner may believe he should be re-enrolled in Medicare, my review here is limited to whether CMS had a legitimate basis to revoke his enrollment.  I may not substitute my discretion for CMS’s in making a revocation determination.  Fayad, DAB No. 2266 at 8.  Furthermore, I have no authority to grant Petitioner equitable relief.  See, e.g., US Ultrasound, DAB No. 2302 at 8 (2010) (“Neither the ALJ nor the [Departmental Appeals] Board is authorized to provide equitable relief by reimbursing or enrolling a supplier who does not meet statutory or regulatory requirements.”); Pepper Hill Nursing & Rehab. Ctr., LLC, DAB No. 2395 at 11 (2011) (holding that the ALJ and Board were not authorized to provide equitable relief by reimbursing or enrolling a supplier who does not meet statutory or regulatory requirements); UpturnCare Co., DAB No. 2632 at 19 (2015) (providing the Board may not overturn denial of provider enrollment in Medicare on equitable grounds).

VII.     Conclusion

For the foregoing reasons, I affirm CMS’s revocation of Petitioner’s Medicare enrollment and billing privileges.