Dr. Eric Thomas, DAB CR5868 (2021)

DECISION

Noridian Healthcare Solutions (Noridian), an administrative contractor for Respondent, the Centers for Medicare & Medicaid Services (CMS), revoked the Medicare enrollment and billing privileges of Petitioner, Dr. Eric Thomas, pursuant to 42 C.F.R. § 424.535(a)(12) because the State of New Jersey disqualified Petitioner from participation in New Jersey’s Medicaid program.  Petitioner timely sought hearing before an Administrative Law Judge (ALJ) to dispute the revocation.  Because Petitioner was disqualified from participating in a state Medicaid program and has exhausted all applicable appeal rights in regard to that disqualification, I affirm CMS’s revocation. 

I.         Background

Petitioner is a physician who at times relevant here was licensed to practice medicine and surgery in the State of New Jersey.  CMS Ex. 7 at 3.  On November 25, 2015, the New Jersey State Board of Medical Examiners (State Board) temporarily suspended Petitioner’s license to practice medicine and surgery based on allegations that he improperly prescribed controlled substances to seven patients.  CMS Ex. 9.  On February 22, 2018, Petitioner entered into a Consent Order with the State Board relating to these allegations.  CMS Ex. 7.  Petitioner agreed to retire his license to practice medicine and surgery in New Jersey.  Id. at 3.  This action was deemed by the State Board to be a “permanent suspension,” effective February 22, 2018.  Id.

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On March 19, 2018, New Jersey’s Office of the State Comptroller’s Medicaid Fraud Division notified Petitioner that because his license was permanently suspended, he was disqualified and precluded “from participating as a New Jersey Medicaid provider or being employed by a New Jersey Medicaid provider permanently, pursuant to N.J.S.A. 30:4D-17.1(a) and N.J.A.C. 10:49-11.1(d).”  CMS Ex. 8 at 1.  The Medicaid Fraud Division’s notice letter explained that if Petitioner disagreed with the disqualification action, he could “request a pre-hearing conference or,” in the alternative, “request a hearing to appeal [his] disqualification in the Office of Administrative Law . . . no later than 20 days from the date” of the notice letter.  Id. at 2.  The Medicaid Fraud Division further explained that if Petitioner did not request a pre-hearing conference or a hearing within the time provided, his disqualification would “become a self-executing Order as well as the Final Agency Decision in this matter.”  Id. 

On July 23, 2018, Noridian issued a notice letter revoking Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(12).  CMS Ex. 1.  Noridian explained it took this action because Petitioner “was terminated from the New Jersey Medicaid program” and his “appeal rights have been exhausted with respect to this termination.”  Id. at 1.  Noridian barred Petitioner from re‑enrolling in the Medicare program for two years.  Id. at 2.

Petitioner requested reconsideration, and CMS upheld Noridian’s initial determination to revoke Petitioner’s Medicare enrollment and billing privileges by letter dated November 20, 2018.  CMS Ex. 2.  On December 31, 2018, Petitioner filed a notice of appeal of his disqualification with the New Jersey Superior Court, Appellate Division.  P. Ex. 3. 

On January 3, 2019, Petitioner timely sought ALJ review of his revocation and submitted the reconsidered determination and six attachments (P. Exs. 1‑6).  I was designated to hear and decide this case and on January 9, 2019, issued an Acknowledgment and Pre‑hearing Order (Pre‑hearing Order) setting forth a schedule for the parties to submit arguments and evidence. 

Petitioner also submitted a motion for stay of his revocation pending resolution of his appeal.  CMS opposed Petitioner’s motion.  On January 23, 2019, I issued an order denying Petitioner’s motion.  CMS submitted a pre-hearing brief and motion for summary judgment (CMS Br.) with 11 proposed exhibits (CMS Exs. 1-11).  Petitioner filed his pre‑hearing brief (P. Br.) with 5 additional proposed exhibits (Dr. Thomas Exs. 1-1A, 2-4). 

II.          Admission of Exhibits and Decision on the Record

Petitioner did not object to any of CMS’s proposed exhibits.  I therefore admit CMS Exs. 1-11 into the record.  Pre-hearing Order ¶ 8; Civ. Remedies Div. P. § 14(e).

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CMS objected to P. Ex. 5 because Petitioner did not offer good cause for failing to submit this document earlier in the administrative appeals process.  I agree that Petitioner did not show good cause for failing to submit this exhibit at the reconsideration stage.  I sustain CMS’s objection and exclude P. Ex. 5.  42 C.F.R. § 498.56(e); Pre‑hearing Order ¶ 7.  Absent any objection to the remainder of Petitioner’s proposed exhibits, I admit P. Exs. 1-4, 6 and Dr. Thomas Exs. 1-1A, 2-4 into the record. 

Neither party offered the written direct testimony of a witness as part of its pre-hearing exchange, meaning an in-person hearing is not necessary in this matter.  Pre-hearing Order ¶¶ 9-11.  Therefore, I will decide this case on the record, meaning the parties’ written submissions and arguments.  Civ. Remedies Div. P. § 19(d).  CMS’s motion for summary judgment is denied as moot. 

III.      Issue

Whether CMS had a legitimate basis for revoking Petitioner’s Medicare billing privileges under 42 C.F.R. § 424.535(a)(12).

IV.      Jurisdiction

I have jurisdiction to decide the issue in this case.  42 C.F.R. §§ 498.3(b)(17), 498.5(l)(2); see also Soc. Sec. Act (Act) § 1866(j)(8) (codified at 42 U.S.C. § 1395cc(j)(8)).

V.       Applicable Law

The Act authorizes the Secretary of Health and Human Services to establish regulations for enrolling providers and suppliers in the Medicare program.  42 U.S.C. § 1395cc(j)(1)(A).  Suppliers must enroll in the Medicare program and receive a billing number in order to obtain payment for services rendered to Medicare beneficiaries.  42 C.F.R. § 424.505.

At the time of Petitioner’s revocation, 42 C.F.R. § 424.535(a)(12) provided that CMS could revoke a supplier’s Medicare enrollment and billing privileges where “Medicaid billing privileges are terminated or revoked by a State Medicaid Agency.”  42 C.F.R. § 424.535(a)(12)(i).In 2019 this regulation was modified to expand CMS’s authority to revoke not only when a State Medicaid agency first terminates a supplier’s enrollment in a Medicaid program, but also where a “supplier is terminated, revoked or otherwise barred from participation in a State Medicaid program or any other federal health care program.”  84 Fed. Reg. 47,794, 47,854 (Sep. 10, 2019) (eff. Nov. 4, 2019).  This change occurred well after the revocation action taken by CMS at issue before me.  I therefore cite to the regulatory provision in effect at that time.  That regulation further provided that “Medicare may not terminate

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unless and until a . . . supplier has exhausted all applicable appeal rights.”  42 C.F.R. § 424.535(a)(12)(ii).

Upon revoking a supplier’s enrollment and billing privileges, CMS will bar that supplier from re-enrolling in the Medicare program for a period of one to three years.  42 C.F.R. § 424.535(c).The regulation now permits CMS to bar a supplier from re-enrollment for up to 10 years.  84 Fed. Reg. at 47,855.

VI.      Findings of Fact, Conclusions of Law and Analysis

1.  CMS had a legitimate basis to revoke Petitioner’s Medicare enrollment and billing privileges under 42 C.F.R. § 424.535(a)(12) because he was permanently disqualified from participation in New Jersey’s Medicaid program. 

 Pursuant to 42 C.F.R. § 424.535(a)(12), CMS may revoke a supplier’s Medicare billing privileges when two elements have been satisfied.  A state Medicaid agency must have first “terminated or revoked” that supplier’s Medicaid’s billing privileges.  42 C.F.R. § 424.535(a)(12)(i).  Second, the supplier must have “exhausted all applicable appeal rights.”  42 C.F.R. § 424.535(a)(12)(ii).  Based on the evidence of record, I conclude that both elements are satisfied here.

There is sufficient evidence to conclude Petitioner was “terminated, revoked, or otherwise barred” from participating in New Jersey’s Medicaid program by that state’s Medicaid agency.  The notice letter issued by New Jersey’s Medicaid Fraud Division to Petitioner explained he was permanently “disqualified” from participating in New Jersey’s Medicaid program as a result of the suspension of his medical license.New Jersey state regulations define “disqualification” as a “debarment or a suspension which denies or revokes a qualification to . . . engage in State contracting which has been granted or applied for pursuant to statute, rules or regulations.”  N.J. Admin. Code § 10:49-11.1(c).  CMS Ex. 8 at 1. 

The use of the label “disqualification” rather than “termination” or “revocation” is immaterial; I instead focus on the “nature and effect” of the disqualification action and consider whether it “is consistent with – and likely necessary to achieve – section 424.535(a)(12)’s purpose, which is to coordinate the effort of federally-financed healthcare programs to protect their fiscal integrity and beneficiaries.”  See Douglas Bradley, M.D., DAB No. 2663 at 7-8 (2015).

Doing so, I find the disqualification action taken by New Jersey’s Medicaid Fraud Division against Petitioner is equivalent to termination or revocation because it bars him

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from billing for reimbursement for services rendered to that state’s Medicaid beneficiaries.  The disqualification action here shares the same purpose as a “for cause” Medicaid termination; it protects the trust fund and its beneficiaries from fraud, integrity and quality issues.  See 42 C.F.R. § 455.101 (defining “termination” as applying to instances “where providers, suppliers, or eligible professionals were terminated or had their billing privileges revoked for cause which may include, but is not limited to,” fraud, integrity or quality). 

The notice of Petitioner’s disqualification makes clear the Medicaid Fraud Division took this action because of the permanent suspension of his license to practice medicine in New Jersey.  CMS Ex. 8 at 1 (“As a result of the permanent suspension of your medical license . . . you are disqualified from New Jersey Medical Assistance and Health Services (New Jersey Medicaid) . . .”).  It is reasonable to conclude New Jersey’s Medicaid Fraud Division deemed Petitioner’s permanent loss of his medical licensure a threat to the fiscal integrity of the state’s Medicaid program and its beneficiaries.The Secretary of Health and Human Services similarly deems a supplier who does not comply with state licensure requirements to be a threat to the Medicare program’s fiscal integrity.  See 42 C.F.R. §§ 424.535(a)(1), 424.516(a)(2), and 410.20(b).  Petitioner’s disqualification was therefore “necessary to achieve… section 424.535(a)(12)’s purpose, which is to coordinate the effort of federally-financed healthcare programs to protect their fiscal integrity and beneficiaries.”  Bradley, DAB No. 2663 at 7-8. 

Petitioner’s effort to contest the allegations of professional misconduct on which New Jersey’s actions were predicated do not affect the outcome here.  It is the permanent suspension of Petitioner’s New Jersey medical license, not the underlying misconduct allegations that resulted in that suspension, which provided the basis for the state’s disqualification action taken by the state against Petitioner.  Therefore, I find sufficient evidence to conclude the disqualification action taken against Petitioner is the same as a Medicaid termination or revocation for the purpose of Medicare revocation under 42 C.F.R. § 424.535(a)(12). 

Petitioner’s remaining arguments are unavailing.  It is immaterial to the outcome here that Montana granted Petitioner a license to practice medicine with full knowledge of the allegations, that CMS accepted Medicare enrollment applications for Petitioner and his practice in Montana, or that the Inspector General for the Department of Health and Human Services declined to bring an exclusion action against Petitioner.  P. Br. at 4, 8; CMS Exs. 10-11.  And to the extent Petitioner argues CMS should not have exercised its discretion to revoke his enrollment as a Medicare supplier, I have no authority to entertain such arguments.  See Abdul Razzaque Ahmed, M.D., DAB No. 2261 at 19 (2009), aff’d, Ahmed v. Sebelius, 710 F. Supp.2d 167 (D. Mass. 2010).

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2.  Petitioner exhausted all applicable appeal rights related to his disqualification.

Petitioner “exhausted all applicable appeal rights” within the meaning of 42 C.F.R. § 424.535(a)(12)(ii).  In its notice letter, the state clearly and explicitly provided Petitioner with a right to seek administrative review if he requested a pre-hearing conference or hearing within 20 days from the date of the notice.  CMS Ex. 8 at 2.  Petitioner does not dispute that he failed to administratively appeal his disqualification within the time allotted.  See P. Ex. 2.  Rather, he argues that he received the notice 15 days after the date of the notice letter, leaving him only five days to appeal.  P. Br. at 7.  The regulation at section 424.535(a)(12), however, “does not require a finding by CMS that a State Medicaid Agency’s action was . . . consonant with due process.”  Bradley, DAB No. 2663 at 15.  It requires only a finding that the “action has become unappealable, or otherwise final, under state law.”  Id. at 16. 

Under New Jersey state law, appellate review of final agency decisions or actions is only available as a matter of right if a party has exhausted all applicable avenues of administrative review.  See N.J. Ct. R. 2:2-3(a)(2); N.J. Stat. Ann. § 52:14B-12.Petitioner asserts that the Medicaid Fraud Division’s December 6, 2018 letter, P. Ex. 2, provided that “he still had appeal rights to the New Jersey Superior Court, Appellate Division.”  P. Req. for Hearing at 2.  This is inaccurate.  The letter in fact stated that “[a]ny appeal rights you have would be to the New Jersey Superior Court, Appellate Division.”  P. Ex. 2.  Petitioner did not do so here.  Even assuming Petitioner could appeal his disqualification to the New Jersey Superior Court, Appellate Division, without first availing himself of the administrative appeals process, New Jersey Court Rule 2:4-1(b) mandates “[a]ppeals from final decisions or actions of state administrative agencies . . . be filed within 45 days from the date of service of the decision or notice of the action taken.” 

The disqualification action taken against Petitioner became a final agency decision on April 8, 2018, 20 days after the date of the notice letter.  See CMS Ex. 8 at 1-2.  The 45-day deadline to appeal a final decision fell on May 23, 2018.  Noridian did not issue its revocation notice until two months later, on July 23, 2018, and Petitioner did not appeal his disqualification until December 31, 2018, over eight months later.  There is sufficient evidence to find Petitioner’s applicable appeal rights were exhausted in this matter by the time Noridian issued its revocation letter, and Petitioner has submitted no evidence to rebut that conclusion.

3.  I have no authority to reinstate Petitioner’s Medicare enrollment and billing privileges based on his equitable arguments.

Petitioner states that there is “significant need for medical practitioners in the State of Montana . . . .”  P. Req. for Hearing at 3.  He asserts that he has been seeing patients that require home visits, the majority of whom “are insured by Medicare.”  Id.  He also asserts

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that he provides medical care “to over 1,600 patients/inmates of the Montana Department of Corrections because of the difficulty in getting primary care physicians to attend to their medical needs there.”  Id. 

Petitioner’s efforts are laudable, but to the extent Petitioner seeks equitable relief based on these claims, I have no authority to grant that relief.  US Ultrasound, DAB No. 2302 at 8 (2010) (providing an ALJ may not grant equitable relief in an instance where statutory or regulatory requirements are not met); see Pac. Islander Council of Leaders, DAB No. 2091 at 12 (2007); Office of Pers. Mgmt. v. Richmond, 496 U.S. 414, 421 (1990) (providing the equitable remedy of estoppel is unavailable against the federal government). 

VII.    Conclusion

I affirm CMS’s revocation of Petitioner’s Medicare enrollment and billing privileges under 42 C.F.R. § 424.535(a)(12).