Mark G. Boles, M.D., DAB CR6244 (2023)

DECISION

I affirm the determination of the Centers for Medicare & Medicaid Services (CMS) to deny the enrollment of Petitioner, Mark G. Boles, M.D., in the Medicare program. 

I.    Background and Procedural History

Petitioner is a physician.  In July 2022, Petitioner, submitted a CMS-855O Medicare Enrollment Application to “enroll[] for the sole purpose of ordering/certifying and/or prescribing [Medicare] Part D drugs.”  CMS Ex. 2 at 8, 12, 22.  Petitioner’s enrollment application showed that Petitioner pleaded no contest in December 2016 to the felony of being an employee of a corrupt organization.  CMS Ex. 2 at 10. 

In a July 28, 2022 notice of initial determination, a Medicare contractor denied Petitioner’s enrollment application for the following reason: 

42 C.F.R. § 424.530(a)(3) Felonies
[CMS] has been made aware of your September 12, 2016, felony conviction, as defined in 42 C.F.R. § 1001.2, for

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Corrupt Organizations in violation of 18 Pennsylvania Criminal Statutes § 911(b)(3) in the Court of Common Pleas of Westmoreland County, State of Pennsylvania.  After reviewing the specific facts and circumstances surrounding your felony conviction, CMS has determined that your felony conviction is detrimental to the best interests of the Medicare program and its beneficiaries. 

CMS Ex. 3 at 1. 

In August 2022, Petitioner requested that CMS reconsider the denial of enrollment.  CMS Ex. 4.  Petitioner submitted supporting exhibits with the request.  CMS Ex. 4 at 15-83. 

In an October 6, 2022 reconsidered determination, a CMS hearing officer upheld the denial of enrollment.  The CMS hearing officer applied the definition of the word “convicted” in 42 C.F.R. § 1001.2 to conclude that Petitioner had been convicted of a felony offense within ten years of the denial of enrollment.  CMS Ex. 9 at 4.  Further, the CMS hearing officer concluded that Petitioner’s crime of “Corrupt Organizations” was per se detrimental to the Medicare program and its beneficiaries under 42 C.F.R. § 424.530(a)(3)(i)(B) as a financial crime.  CMS Ex. 9 at 4.  In addition, the CMS hearing officer separately concluded, based on the facts underlying Petitioner’s felony conviction, that Petitioner’s trustworthiness and willingness to exercise good judgment were called into question and that, in this way, Petitioner’s felony offense was detrimental to the Medicare program and its beneficiaries.  CMS Ex. 9 at 4-5. 

Petitioner timely requested a hearing to dispute the reconsidered determination.  The Civil Remedies Division (CRD) acknowledged receipt of the hearing request and issued my Standing Prehearing Order (SPO), which provided instructions and dates for prehearing submissions.  As its prehearing submission, CMS filed a brief (CMS Br.), which included a motion for summary judgment, with 14 marked exhibits (CMS Exs. 1-14).  Petitioner then filed his prehearing submission, consisting of a prehearing brief (P. Br.) and five proposed exhibits (P. Exs. A-E).  CMS declined to file a reply brief. 

Petitioner filed a request that I allow the submission of additional exhibits.  Petitioner only provided a copy of the United States Supreme Court’s opinion in Ruan v. United States, 142 S. Ct. 2370 (2022).  CMS objected to Petitioner’s late filing. 

II.    Admission of Evidence

I admit CMS Exhibits 1 through 14 and Petitioner Exhibits A through E into the record, without objection.  SPO ¶ 10; CRD Procedures § 14(e). 

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I sustain CMS’s objection to Petitioner’s late and unmarked proposed exhibit.  It is not a substantive exhibit, but a published United States Supreme Court opinion in an unrelated case.  Therefore, it is unnecessary for me to admit this proposed exhibit into the record as an evidentiary exhibit.  In any event, the opinion is neither directly related to nor directly affects the outcome of this case because it involves the interpretation of a federal criminal statute not implicated in this case.  Ruan, 142 S. Ct. at 2374-75, 2382,  (2022). 

III.    Decision on the Written Record

I directed the parties to submit the written direct testimony for any witnesses they wanted to offer and explained that an evidentiary hearing would only be necessary if a party requested to cross-examine a witness for which written direct testimony had been submitted.  SPO ¶¶ 11-13; CRDP §§ 16(b), 19(b).  Because neither party submitted written direct testimony from any witnesses, there is no need for an evidentiary hearing, and I issue this decision based on the written record.  SPO ¶ 14; CRDP § 19(d).  As a result, I deny CMS’s summary judgment motion because it is now moot. 

IV.    Issue

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

V.    Jurisdiction

I have jurisdiction to hear and decide this case.  42 U.S.C. § 1395cc(j)(8); 42 C.F.R. §§ 424.545(a), 498.3(b)(17), 498.5(l)(2). 

VI.    Findings of Fact

1. Petitioner is a physician who has practiced medicine continuously since the 1980s.  P. Ex. C. 
2. From 2007 to 2009, Petitioner worked at Pittsburgh Healthworx, P.C. (Healthworx), a physical rehabilitation and pain management clinic.  P. Ex. C at 3. 

Criminal Conviction 

3. Following an investigation into Healthworx, on July 29, 2013, a Pennsylvania grand jury filed a “Presentment” with the Court of Common Pleas for Allegheny County, Pennsylvania (Common Pleas Court) because the grand jury found reasonable grounds to believe violations of criminal law had occurred.  The grand jury’s investigation included Petitioner’s conduct while he was employed at Healthworx.  CMS Ex. 11 at 8-31. 

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4. On January 16, 2014, the Pennsylvania Attorney General’s office filed a criminal complaint in the Common Pleas Court that charged Petitioner with several felonies, including one for being employed by a Corrupt Organization under section 911(b)(3) of title 18 of Pennsylvania’s Consolidated Statutes (§ 911(b)(3)).  CMS Ex. 11 at 1, 39-44.  The criminal complaint alleged the following concerning the § 911(b)(3) charge (CMS Ex. 11 at 40): 

Between the time period of April 2007 and December 23, 2010, [Petitioner] did conduct or participate, directly or indirectly, while employed or associated with an enterprise, namely Pittsburgh Healthworx, P.C., in the conduct of such enterprise[’]s affairs through a pattern of racketeering activity, namely, violations of the Controlled Substance, Drug, Device and Cosmetics Act and/or Medicaid Fraud-Provider Prohibited Acts, and/or Dealing in Proceeds of Unlawful Activities. 

5. On April 1, 2014, the Pennsylvania Attorney General’s office filed an Information, again charging Petitioner with various offenses, including a single felony offense for violating § 911(b)(3).  CMS Ex. 11 at 3, 33-37. 
6. On September 12, 2016, Petitioner signed a Nolo Contendere Petition in which he pleaded nolo contendere to the charge that he violated § 911(b)(3).  CMS Ex. 11 at 66-71.  Also on that date, the Common Pleas Court accepted Petitioner’s nolo contendere plea and noted that the other charges against Petitioner were dropped.  CMS Ex. 11 at 65; see CMS Ex. 1; CMS Ex. 11 at 5. 
7. On December 12, 2016, the Common Pleas Court sentenced Petitioner to the following:  five years of probation; payment of $12,567.40 in restitution to the Department of Human Services; and “100 h[ou]rs of community service educating on drug programs.”  CMS Ex. 11 at 5, 64. 
8. On November 5, 2020, the Common Pleas Court terminated Petitioner’s probation.  CMS Ex. 11 at 7, 72. 

Pennsylvania Medical Assistance Program (Medicaid) and the Medicare Program

9. On March 13, 2017, the Pennsylvania Department of Human Services issued a Notice of Sanctions.  The notice stated that, based on Petitioner’s criminal conviction in the Common Pleas Court, “[Petitioner’s] participation in the [Medicaid] Program is precluded by law as of December 12, 2016 and shall remain in effect until December 12, 2021.”  CMS Ex. 6 at 1. 

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10. On January 30, 2022, Petitioner was enrolled again as a provider in the Pennsylvania Medicaid program.  CMS Ex. 5 at 2. 
11. CMS revoked Petitioner’s enrollment in the Medicare program due to his felony conviction based on 42 C.F.R. § 424.535(a)(3).  The revocation was effective June 7, 2017, and a bar to reenrollment expired on July 5, 2020.  CMS Ex. 12.  

New York State Medical License

12. New York State issued a medical license to Petitioner in 1998.  CMS Ex. 7 at 4. 
13. In May 2017, the New York State Bureau of Professional Medical Conduct issued a Statement of Charges indicating that the criminal conduct for which Petitioner was convicted in the Common Pleas Court would constitute misconduct under the laws of New York State.  CMS Ex. 7 at 15-16. 
14. In May 2017, the New York State Bureau of Professional Medical Conduct issued a notice that a committee of the New York State Board for Professional Medical Conduct (New York State Board) would hold a hearing based on the Statement of Charges filed against Petitioner.  CMS Ex. 7 at 11-14. 
15. In May 2017, the New York State Board summarily prohibited Petitioner from practicing medicine in New York State pending the outcome of the disciplinary hearing.  CMS Ex. 7 at 9-10. 
16. On July 20, 2017, a New York State Board committee held a hearing in Petitioner’s disciplinary case.  CMS Ex. 7 at 3. 
17. On July 28, 2017, the New York State Board committee issued a Determination and Order in which it sustained the misconduct charged by the New York State Bureau of Professional Medical Conduct and revoked Petitioner’s New York State medical license.  CMS Ex. 7 at 5-7. 
18. The Determination and Order stated the following in support of the revocation of Petitioner’s medical license (CMS Ex. 7 at 6): 

The Hearing Committee considered the full spectrum of penalties available by statute, including revocation, suspension and/or probation, censure and reprimand, and the imposition of monetary penalties and found that the sustained specification shows the [Petitioner’s] use of his medical license in Pennsylvania to participate in a pattern of corrupt medical practices.  The Hearing Committee found that based

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on the [Petitioner’s] inability to recognize how his continued employment at the clinic contributed to patients receiving improper medical care and unlawful prescriptions for drugs, his attempts to distance himself from the wrongdoings committed by the staff working there were not credible.  Contributing to this determination was the [Petitioner’s] failure to include his tenure at the clinic on his curriculum vitae, suggesting a lack of candor.  While the Hearing Committee took note of the [Petitioner’s] recent volunteer work as part of his criminal sentence involving educating youth about drugs, they concluded that his conduct in Pennsylvania shows his willingness to choose participation in improper medical practices over the proper and safe care of patients.  As such, the Hearing Committee concluded that the evidence supported that the [Petitioner’s] license to practice medicine in the state of New York be revoked. 

Pennsylvania Medical License

19. The state of Pennsylvania issued a medical license to Petitioner in 1988.  P. Ex. B. 
20. On May 25, 2018, a disciplinary proceeding against Petitioner was commenced before the Pennsylvania State Board of Medicine (Pennsylvania Board) based on Petitioner’s felony conviction.  P. Ex. D at 2. 
21. In a January 2019 Adjudication and Order, a hearing examiner concluded that Petitioner should be publicly reprimanded and placed on indefinite probation.  P. Ex. D at 2, 16; CMS Ex. 14 at 1.  
22. The hearing examiner found that “[Petitioner’s] criminal charges did not directly involve unprofessional conduct in the delivery of medical services” and his conviction “does not raise any concerns related to his competence or safety to practice medicine in [Pennsylvania].”  P. Ex. D at 14.  The hearing examiner also indicated that Petitioner instituted new protocols at Healthworx and discharged over 100 patients who violated office guidelines regarding controlled substances before leaving Healthworx.  P. Ex. D at 14.  The hearing examiner also considered the following:  the prosecutor recommended probation; Petitioner “accepted responsibility for his mistake”; Petitioner practiced ten years since his employment at Healthworx without incident; and Petitioner completed numerous continuing education courses on opioid and addiction medicine since 2016.  P. Ex. D at 15. 
23. On May 30, 2019, the Pennsylvania Board adopted the hearing examiner’s Adjudication and Order.  CMS Ex. 4 at 41. 

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24. On August 9, 2021, the Pennsylvania Board reinstated Petitioner’s medical license to unrestricted status (i.e., ended his indefinite period of probation).  CMS Ex. 4 at 57.  Petitioner currently maintains an active license in Pennsylvania.  P. Ex. B. 

Drug Enforcement Administration (DEA)

25.  At an unknown date, prior to Petitioner’s conviction, the DEA provided Petitioner with a registration number to prescribe controlled substances.  On August 1, 2018, Petitioner voluntarily surrendered his DEA registration.  CMS Ex. 13 at 1. 
26. On January 14, 2019, Petitioner applied for registration with the DEA to prescribe, administer, and dispense schedule III-V controlled substances.  CMS Ex. 13 at 1. 
27. In lieu of denying Petitioner’s application for registration, the DEA and Petitioner entered into a Memorandum of Agreement that provided Petitioner with limited “prescriptive privileges-only.”  The agreement indicated that, if Petitioner successfully complied with a number of requirements for three years, the DEA would remove all restrictions on his handling of controlled substances.  CMS Ex. 13 at 2-4. 
28. On July 20, 2022, the DEA issued a Controlled Substance Registration Certificate to Petitioner.  CMS Ex. 4 at 83. 

VII.    Conclusions of Law and Analysis

The Social Security Act (Act) directed the Secretary of Health and Human Services (Secretary) to establish by regulation a process for the enrollment of providers and suppliers in the Medicare program.  42 U.S.C. § 1395cc(j).  The Act requires the Secretary to screen applicants for enrollment to determine if they are a risk of fraud, waste, and abuse, which includes a criminal background check.  42 U.S.C. § 1395cc(j)(2).  Under the Act, physicians enroll as “suppliers” in the Medicare program.  42 U.S.C. § 1395x(d). 

Under the Secretary’s regulations, a supplier must enroll in the Medicare program to receive payment for covered Medicare items or services provided to beneficiaries.  42 C.F.R. § 424.505.  To enroll, a supplier must complete and file an enrollment application with CMS and meet all of the requirements to be a supplier.  42 C.F.R. §§ 424.510, 424.530. 

Once enrolled, CMS may revoke a supplier’s enrollment for any of the reasons stated in 42 C.F.R. § 424.535(a).  When CMS revokes enrollment, it will establish a reenrollment bar from one to ten years in duration.  42 C.F.R. § 424.535(c). 

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A supplier may request a hearing before an administrative law judge to dispute CMS’s denial or revocation of enrollment.  42 C.F.R. § 498.3(b)(17).  However, “the right to review of CMS’s determination by an [administrative law judge] serves to determine whether CMS had the authority to [deny or] revoke [the supplier’s] Medicare billing privileges, not to substitute the [administrative law judge’s] discretion about whether to [deny or] revoke.”  Letantia Bussell, M.D., DAB No. 2196 at 13 (2008) (emphasis omitted).  A supplier may request administrative review of an administrative law judge’s decision concerning the denial or revocation of enrollment.  42 C.F.R. § 498.5(l)(3). 

Most relevant to this case, the Act authorizes the following: 

The Secretary may refuse to enter into an agreement with a physician or supplier under this subsection, or may terminate or refuse to renew such agreement, in the event that such physician or supplier 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 program or program beneficiaries. 

42 U.S.C. § 1395u(h)(8).  The Secretary implemented this authority by promulgating regulations that provide for the denial and revocation of enrollment as follows: 

The provider, supplier, or any owner, managing employee, managing organization, officer, or director of the provider or supplier was, within the preceding 10 years, convicted (as that term is defined in 42 CFR 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. §§ 424.530(a)(3), 424.535(a)(3)(i). 

Therefore, in order for CMS to legitimately deny or revoke enrollment of a prospective supplier, the supplier must have been:  1) convicted of a felony under federal or state law; 2) within the preceding ten years; 3) that CMS determines to be detrimental to the best interests of the Medicare program and its beneficiaries. 

As explained below, I conclude that the record supports CMS’s discretionary decision to deny Petitioner’s enrollment application under 42 C.F.R. § 424.530(a)(3). 

1. Petitioner was convicted of a felony offense under state law.

I conclude that Petitioner was convicted of a felony offense under state law. 

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For purposes of § 424.530(a)(3), the word “convicted” means:

1. 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;
2. A Federal, State or local court has made a finding of guilt against an individual or entity
3. Federal, State or local court has accepted a plea of guilty or nolo contendere by an individual or entity; or

4. 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 (definition of Convicted) (emphasis added).  Based on the record, the third definition above is shown to apply to this case because the Common Pleas Court’s order records both Petitioner’s nolo contendere plea and the court’s acceptance of that plea.  CMS Ex. 11 at 65.

Further, the record is clear that Petitioner’s plea was to the § 911(b)(3) offense, which appeared as Count 1 in the charging documents.  CMS Ex. 11 at 66, 68.  The Information filed in Petitioner’s criminal case specifically identifies the § 911(b)(3) offense as a felony and as a violation of Pennsylvania state law.  CMS Ex. 11 at 34-35. 

Therefore, Petitioner was convicted of a state law felony. 

2. Petitioner was convicted a felony offense within ten years of the denial of enrollment.

Petitioner entered a plea of nolo contendere to the § 911(b)(3) offense on September 12, 2016, and the Common Pleas Court accepted that plea on the same date.  CMS Ex. 11 at 65-71.  Based on the third definition of the term “convicted” in 42 C.F.R. § 1001.2, Petitioner is considered convicted as of September 12, 2016.  CMS denied Petitioner’s enrollment application on July 28, 2022.  CMS Ex. 3 at 1.  Therefore, CMS denied Petitioner’s enrollment within ten years of his conviction for a felony offense. 

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3. Petitioner’s felony conviction is per se detrimental to the best interests of the Medicare program and its beneficiaries.

The Secretary promulgated, through formal notice and comment procedures, a non-exhaustive list of the types of felony offenses that CMS will treat as per se detrimental to the best interests of the Medicare program and its beneficiaries.  42 C.F.R. § 424.530(a)(3)(i); 71 Fed. Reg. 20,754, 20,768 (Apr. 21, 2006); Bussell, DAB No. 2196 at 9.  The list is as follows: 

Offenses include, but are not limited in scope or severity to -

(A) Felony crimes against persons, such as murder, rape, assault, and other similar crimes for which the individual was convicted, including guilty pleas and adjudicated pretrial diversions.  
(B) Financial crimes, such as extortion, embezzlement, income tax evasion, insurance fraud and other similar crimes for which the individual was convicted, including guilty pleas and adjudicated pretrial diversions.  
(C) Any felony that placed the Medicare program or its beneficiaries at immediate risk, such as a malpractice suit that results in a conviction of criminal neglect or misconduct.  
(D) Any felonies that would result in mandatory exclusion under section 1128(a) of the Act. 

42 C.F.R. §§ 424.530(a)(3)(i), 424.535(a)(3)(ii).

In the reconsidered determination, the CMS hearing officer indicated that Petitioner’s felony offense was per se detrimental to the best interests of the Medicare program and its beneficiaries because it was a financial crime.  The reconsidered determination stated: 

CMS has determined, through public notice-and-comment rulemaking, that certain types of offenses are per se detrimental to the best interests of the Medicare program and its beneficiaries.  The per se detrimental offenses enumerated at §§ 424.530(a)(3)(i)(A)-(D) include, but are not limited in scope or severity to, financial crimes, such as extortion, embezzlement, income tax evasion, insurance fraud and other similar crimes.  Dr. Boles claims that his felony offense is not akin to these enumerated financial crimes.  However, CMS disagrees and finds Dr. Boles’ felony conviction for Corrupt Organization to be akin to the enumerated financial crimes under § 424.530(a)(3)(i)(B).  Under 18 Pa. C.S. § 911(b)(3), a

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person is guilty of Corrupt Organization when, “any person employed by or associated with any enterprise to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity.” 

CMS Ex. 9 at 4.  The only additional support that CMS provided in briefing for this view was that Petitioner was ordered to pay restitution to the Pennsylvania Medicaid program, showing that his crime had a financial component to it.  CMS Br. at 12. 

Petitioner disagreed that the crime for which he was convicted is a financial crime.  Petitioner asserted that, at Healthworx, he was a part-time hourly employee and not an administrator, in management, or an owner, and was not involved with billing practices, purchases, or involved in the overall services provided by that entity.  Petitioner also had no intent to defraud the Medicare program.  P. Br. at 4, 12, 14. 

A review of the grand jury’s investigative findings provides the most significant evidence in the record as to the facts surrounding Petitioner’s crime.  Healthworx was owned by a chiropractor and managed by the chiropractor’s father.  Petitioner worked at Healthworx for approximately two years from 2007 to 2009.  Healthworx was a rehabilitation and pain management practice, which also offered access to medical doctors who would prescribe pain medications to patients so long as they were also maintaining regular chiropractic and therapy appointments.  CMS Ex. 11 at 9-10.  

The grand jury concluded that many of the patients at Healthworx “were drug seeking and/or drug addicted individuals.”  CMS Ex. 11 at 14.  The grand jury report stated that: 

[W]hen [Petitioner] was employed at the facility, there were upwards of 90 patients a day scheduled to be seen by [Petitioner].  It was known as “doctor day” at the office whenever [Petitioner] was present and meeting with patients; the parking lot would be full of cars and patients were located inside and outside of the building waiting to see the doctor.  Due to the high volume of patients, there were many occasions when staff and [Petitioner] would remain at the office seeing patients until approximately 2:00 a.m.  The volume of patients would substantially decrease whenever a medical doctor was not employed at the facility. 

CMS Ex. 11 at 14-15. 

The grand jury obtained as evidence a letter dated January 1, 2008, that was signed by the chiropractor/owner of Healthworx and Petitioner, addressed to patients advising that Petitioner would no longer prescribe Oxycodone, Oxycontin, Fentanyl, Methadone, or

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Morphine.  However, the grand jury concluded that neither the chiropractor owner nor the medical doctors employed by Healthworx ever fully followed this policy.  CMS Ex. 11 at 16. 

Healthworx also implemented a policy for conducting random drug tests for patients.  Petitioner would seek to discharge patients who failed drug tests; however, his decision could be overridden by the chiropractor owner or the manager (i.e., the chiropractor’s father).  Due to a loss of patients, the chiropractor owner and the manager ended testing of patients, even though Petitioner wanted it continued.  CMS Ex. 11 at 16-18. 

A special agent from the Medicaid Fraud Control Section testified that he interviewed Petitioner, and Petitioner explained that he attempted to implement drug testing of patients and the discharge of patients who failed the drug test.  However, Petitioner also said he would continue to see and prescribe scheduled narcotic pain medications to patients who had been discharged from the practice.  CMS Ex. 11 at 18. 

In addition, the grand jury found that Pennsylvania Medicaid paid for prescriptions written by Petitioner and filled by a patient.  From May 22, 2008 through June 13, 2009, Medicaid paid nearly $4,000 for the prescriptions written by Petitioner for that specific patient.  The prescriptions included Oxycodone, a Schedule II pain narcotic.  CMS Ex. 11 at 24-25.  The grand jury noted that a medical consultant who reviewed the records related to that patient indicated that Petitioner knew that the patient was being treated in a methadone clinic for addiction.  However, Petitioner began his treatment of the patient “by prescribing short-acting, rapidly acting, highly abuse-prone medications to an active addict without adequate planned follow-up.”  CMS Ex. 11 at 25.  The medical consultant indicated that the patient had multiple drug screenings that either showed she had illegal street drugs in her system or did not have the drugs prescribed to her by Petitioner (and other Healthworx doctors) in her system.  Concerning the prescribing of controlled substances, the medical consultant believed that Petitioner and others at Healthworx had: 

[F]ailed to follow generally accepted treatment principles of any responsible segment of the medical community.  Having recognized the risk at which [the patient] placed herself and others, the doctors had a responsibility to protect her and the community-at-large.  They did not.  They fueled her addiction for reasons that are not specified in the medical record but may be surmised by others. 

CMS Ex. 11 at 26. 

Based on a review of the record, there is insufficient evidence to conclude that Petitioner’s conviction was a financial crime.  As quoted above, examples of financial crimes are extortion, embezzlement, income tax evasion, and insurance fraud. I cannot

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conclude that Petitioner’s crime involved anything similar to those examples simply because the word “racketeering” appears in § 911(b)(3) and Petitioner was ordered to pay restitution to Medicaid.  Based on the grand jury report, that restitution may have simply been money paid as reimbursement to the patients who filled Petitioner’s prescriptions.  It may not have involved the type of fraud that would usually have been expected when one thinks of insurance fraud. 

However, Petitioner’s conviction is per se detrimental to the Medicare program and its beneficiaries because it should have resulted in a mandatory exclusion from participating in federal health care programs under section 1128(a) of the Act (42 U.S.C. § 1320a(a)).  42 C.F.R. § 424.530(a)(3)(i)(D). 

The Secretary must exclude an individual who: 

[H]as been convicted for an offense which occurred after August 21, 1996 [the date of the enactment of the Health Insurance Portability and Accountability Act of 1996], under Federal or State law, of a criminal offense consisting of a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. 

42 U.S.C. § 1320a-7(a)(4).  Although § 911(b)(3) does not specifically make the unlawful prescription of controlled substances an element of that offense, for purposes of§ 1320a‑7(a)(4), the conviction only needs to be for conduct relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.  The terms “related to” and “relating to” in 42 U.S.C. § 1320a-7(a) simply mean that there must be a nexus or common sense connection.  See James Randall Benham, DAB No. 2042 at 5 (2006) (internal citations omitted); see also Friedman v. Sebelius, 686 F.3d 813, 820 (D.C. Cir. 2012) (describing the phrase “related to” in another part of section 1320a-7 as “deliberately expansive words,” “the ordinary meaning of [which] is a broad one,” and one that is not subject to “crabbed and formalistic interpretation.”) (internal quotation marks omitted). 

There is a nexus or common sense connection between Petitioner’s felony offense and illegal prescription of controlled substances.  As summarized above, the portions of the grand jury investigation report pertaining to Petitioner only discuss Petitioner in relation to prescribing controlled substances to patients at Healthworx.  Further, evidence related to the prescribing of controlled substances generally dominates the report.  Although the charges that Petitioner illegally dispensed controlled substances were dropped, his felony conviction is still related to the unlawful prescription of controlled substances.  This can be seen by the fact that his sentence included Petitioner performing 100 hours of community service “educating on drug programs.”  CMS Ex. 11 at 64; see CMS Ex. 4 at 17-29. Certainly the New York State Board evaluated Petitioner’s crime as having

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involved the unlawful prescribing of drugs.  CMS Ex. 7 at 6 (“[Petitioner’s] continued employment at the clinic contributed to patients receiving improper medical care and unlawful prescriptions for drugs.”).  Petitioner also voluntarily surrendered his DEA certificate.  CMS Ex. 13 at 1.  Therefore, I conclude that Petitioner’s conviction should have resulted in a mandatory exclusion under section 1128(a) of the Act and is thus per se detrimental to the Medicare program and its beneficiaries. 

4. CMS’s case-specific determination that Petitioner’s felony conviction is detrimental to the best interests of the Medicare program and its beneficiaries is sufficient to be upheld.

In addition to comparing Petitioner’s felony conviction to the listed examples of criminal offenses in 42 C.F.R. § 424.530(a)(3)(i) that are per se detrimental, CMS also had the authority to determine that Petitioner’s felony conviction is detrimental to the Medicare program and its beneficiaries based on “a case-specific, adjudicative determination.”  Eva Orticio Villamor-Goubeaux, DAB No. 2997 at 9-10 (2020); see Fayad v. Sebelius, 803 F. Supp. 2d 699, 704 (E.D. Mich. 2011).  Because the Secretary has authorized CMS to make the determination as to whether a felony conviction is detrimental, my review of that determination is necessarily deferential. 

Despite this, CMS still must “explain[] why the offense is detrimental to the Medicare program and its beneficiaries.”  Michael Scott Edwards, OD, and M. Scott Edwards, OD, PA, DAB No. 2975 at 11 (2019).  Further, the determination must be reasonable.  Villamor-Goubeaux, DAB No. 2997 at 10; see Fayad v. Sebelius, 803 F. Supp. 2d 699, 704 (upholding a determination that the Plaintiff’s particular felony offense was detrimental because “the Secretary reasonably concluded that Plaintiff’s continued participation in the Medicare program was contrary to the best interests of that program.”).  However, my review of CMS’s determination is more limited in this case. 

In this case, CMS previously revoked Petitioner’s Medicare enrollment under 42 C.F.R. § 424.535(a)(3) based on the same felony conviction at issue in this case.  CMS Ex. 12.  As a result, CMS has already issued a determination, which has become binding, that Petitioner’s felony conviction is detrimental to the best interests of the Medicare program and its beneficiaries.¹ 

Despite this, an administrative law judge may not simply consider the denial of enrollment, which is based on the same felony conviction as a previous revocation, to be res judicata.  This is because CMS engages in a discretionary act each time it revokes or denies enrollment.  As stated in one case:

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Because CMS’ authority under the regulation is discretionary rather than mandatory, a provider may re-apply during the ten-year time frame.  CMS may, at its discretion, consider the amount of time that has passed since the conviction a factor in determining whether to approve the application.  Thus, each application is based on different facts, rendering the application of res judicata inappropriate.  

Ronald Paul Belin, DPM, DAB No. 2629 at 4 (2015).  Although CMS has the discretion to evaluate the enrollment anew before denying it, the administrative law judge has limited authority to review CMS’s determination. 

It is true that the issues to be resolved by the [administrative law judge] in this appeal may be narrow.  First, specific issues of fact or law that have actually been already litigated and resolved between the parties may indeed be subject to preclusion under the res judicata provision of section 498.70(a). [footnote omitted]  Second, the Board has held that, where CMS is legally authorized to deny an enrollment application, neither an [administrative law judge] nor the Board itself is empowered to substitute for CMS or its contractor in determining how to exercise its discretion. 

Belin, DAB No. 2629 at 5. 

In the present case, the CMS hearing officer provided an explanation as to why Petitioner’s felony conviction was detrimental in the reconsidered determination.  The CMS hearing officer discussed the following as part of the case-specific determination:  

In addition, CMS finds [Petitioner’s] felony conviction of Corrupt Organizations to be detrimental to the best interests of the Medicare program and its beneficiaries based on the specific facts underlying the conviction.  Between approximately April of 2007 and December of 2010, [Petitioner] was employed as physician at HealthWorx and he engaged in illegal activities, including improper business dealings and inappropriate prescriptions for controlled substances to patients (see Exhibit 7).  [Petitioner] claims that the owners of HealthWorx approached him to stop discharging patients with drug-positive results.  [Petitioner] states that he succumbed to the owner’s wishes and overprescribed certain substances to patients (see Exhibit 8).

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 Based on [Petitioner’s] conduct, he was sentenced to five years of supervised probation with one year of electronic monitoring, 100 hours of community service, education on drug programs, fines in the amount of $7,236.75 and restitution to the Pennsylvania Medicaid program in the amount of $12,567.40.  Moreover, [Petitioner’s] felony conviction led to the suspension of his medical licenses in Pennsylvania and New York (see Exhibits 4 and 7).  [Petitioner’s] actions call into question his trustworthiness, willingness to exercise good judgment.  Under the Medicare program, payment is made for claims submitted in a manner that relies on the trustworthiness and integrity of our Medicare partners.  Given the facts underlying [Petitioner’s] felony conviction, the CMS Trust Funds may be at risk if [Petitioner] is allowed to participate in Medicare program.  It necessarily follows that risk to the Trust Funds is a detriment to Medicare beneficiaries. 

[Petitioner] contends that he has contributed to the community through the drug and alcohol education program he created for middle schools.  [Petitioner] further contends that, due to the completion of the penalties assessed, his DEA and Pennsylvania medical license have been reinstated (see Exhibit 4).  In addition, [Petitioner] claims that he has been reinstated back into the Pennsylvania Medicaid program (see Exhibit 5).  While various medical licensing agencies have reinstated [Petitioner’s] medical privileges, these agencies’ authority to suspend or reinstate an individual’s license to practice is separate and distinct from CMS’ authority to deny enrollment in the Medicare program.  Furthermore, the reinstatement of professional privileges does not
negate the fact that CMS has determined that [Petitioner’s] felony conviction is detrimental to the best interests of the Medicare program and its beneficiaries.  Therefore, CMS finds that [Petitioner’s] Medicare enrollment application was properly denied pursuant to 42 C.F.R. § 424.530(a)(3). 

CMS Ex. 9 at 4-5. 

Petitioner takes issue with this analysis, providing a detailed discussion as to why Petitioner is not a threat to the Medicare program and its beneficiaries, and pointing out the CMS hearing officer’s failure to give more weight to various evidence, such as the favorable Pennsylvania Board’s disciplinary decision and the reinstatement of

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Petitioner’s DEA certificate.  Petitioner also argues that his entire career should be considered by CMS when determining whether to deny his enrollment application.  P. Br. at 6-12. 

I find Petitioner’s arguments to be relatively persuasive as to why CMS should enroll him in the Medicare program.  However, I also acknowledge that CMS’s concern with doing so is reasonable.  While the Pennsylvania Board thought Petitioner largely acted appropriately while working at Healthworx, the New York State Board did not.  CMS could appropriately consider all of the evidence and reasonably conclude, based on a case-specific evaluation, that Petitioner’s felony conviction is still detrimental to the Medicare program and its beneficiaries.  Therefore, I uphold that determination.

VIII.  Conclusion

I affirm CMS’s denial of Petitioner’s Medicare enrollment under 42 C.F.R. § 424.530(a)(3).

 

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Endnotes

¹   There is no evidence or suggestion from the parties that Petitioner requested reconsideration of the revocation of his enrollment.  Therefore, the initial determination is binding.  42 C.F.R. § 498.20(b).