Thrive Medical Supplies, Inc., CR6319 (2023)

DECISION

The Centers for Medicare & Medicaid Services (CMS), through its Medicare administrative contractor, Palmetto GBA (Palmetto), denied the Medicare enrollment application of Thrive Medical Supplies, Inc. (Petitioner), a supplier of Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) pursuant to 42 C.F.R. § 424.530(a)(1), based on its failure to meet conditions of enrollment found at 42 C.F.R. § 424.57(c)(7) and (c)(8).  This decision affirms the denial of Petitioner’s Medicare enrollment application by Palmetto.

   I. Background and Procedural History

CMS issued a reconsidered determination dated January 20, 2023, which decided unfavorably on both Petitioner’s corrective action plan (CAP) and reconsideration request. CMS Ex. 1. Petitioner timely requested a hearing before an administrative law judge on January 25, 2023.  The case was assigned to me, and the Civil Remedies Division issued my Acknowledgment and Standing Prehearing Order dated January 25, 2023 (Prehearing Order).  The Prehearing Order directed each party to file a prehearing exchange consisting of a brief and any supporting documents.  Prehearing Order ¶ 6.

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CMS filed a brief (CMS Br.), including a motion for summary judgment, and eight proposed exhibits (CMS Exs. 1-8).  Petitioner filed a response (P. Br.).  Absent objection from Petitioner, CMS Exs. 1-8 are admitted into evidence.

Neither party submitted written direct testimony.  Therefore, no hearing is necessary, and this matter will be decided based upon the written record, without regard to whether the standards for summary judgment are met.  Prehearing Order ¶ 12; Civil Remedies Division Procedures ¶ 19(d).

II.  Jurisdiction

This tribunal has the authority to hear and decide this matter.  42 U.S.C. § 1395cc(j)(8); 42 C.F.R. §§ 424.545(a), 498.1(g), 498.3(b)(17), 498.5(l)(2).

III.  Issue

Whether CMS has a legitimate basis to deny Petitioner’s Medicare enrollment as a DMEPOS supplier under 42 C.F.R. §§ 424.530(a)(1), 424.57(c)(7) and (c)(8).

IV.  Legal Authorities

To receive Medicare payments for items furnished to a Medicare-eligible beneficiary, a supplier, such as Petitioner, must be enrolled in the Medicare program and must have a supplier number issued by the Secretary of Health and Human Services.  Social Security Act § 1834(j)(1)(A); 42 C.F.R. § 424.505.  To obtain and maintain that number, the supplier must be operational and in compliance with the supplier enrollment standards set forth in 42 C.F.R. § 424.57(c).  CMS may deny the DMEPOS supplier billing privileges if it fails to meet these standards.  42 C.F.R. § 424.530(a)(1), (5). 

A DMEPOS supplier must maintain a physical facility on an appropriate site.  Among other requirements, the location must be accessible to the public, Medicare beneficiaries, CMS, CMS contractors, and agents of CMS and CMS contractors.  The facility must be staffed during posted hours of operation, with a visible sign which posts the hours of operation.  42 C.F.R. § 424.57(c)(7). 

A DMEPOS supplier must permit CMS, CMS contractors, or agents of CMS and CMS contractors to conduct on-site inspections to verify supplier compliance with supplier standards.  42 C.F.R. § 424.57(c)(8).

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V.  Findings of Fact

Petitioner is a California-based company specializing in supplying DMEPOS products.  On September 8, 2022, Petitioner submitted an application to enroll in the Medicare program as a DMEPOS supplier.  CMS Ex. 6; CMS Ex. 7 at 6-15.  On the application, Petitioner listed its physical address as 185 Paularino Avenue, Suite D104, Costa Mesa, California 92626-3324 (Paularino Avenue location).  CMS Ex. 6 at 2.  Petitioner listed its hours of operation as Monday through Friday, open from 9:00 a.m. until 3:00 p.m. and indicated it was available to the public 30 hours a week.  CMS Ex. 6 at 3.

On September 16, 2022, Palmetto¹ sent Petitioner a notice that it had received Petitioner’s application; however, Palmetto stated the application was incomplete and requested additional information.  CMS Ex. 7 at 22.  On September 16, 2022, Petitioner provided the missing information via email.  CMS Ex. 7 at 20-21, 24-25.

On September 20, 2022, a site inspector for Palmetto attempted an on-site verification survey at Petitioner’s Paularino Avenue location at 11:15 a.m.  CMS Ex. 5 at 1.  The site inspector took pictures of the building and suite to confirm that it was the correct location for Petitioner’s business, as well as the signs on the door that listed the business name and hours of operation.  CMS Ex. 5 at 2, 4, 6.  The site inspector knocked on the door; however, no employees were present at the location, and the window blinds and office door were closed.  CMS Ex. 5 at 8, 18.  The following day, September 21, 2022, the site inspector attempted a second on-site verification survey at Petitioner’s Paularino Avenue location at 11:45 a.m.  CMS Ex. 5 at 1.  The site inspector knocked on the door of the suite again; however, there was no answer, and the blinds and office door were closed.  CMS Ex. 5 at 18.  The site inspector took additional pictures of the signage.  CMS Ex. 5 at 5, 19.

By letter dated October 10, 2022, Palmetto notified Petitioner that its application for enrollment was denied because it did not meet the requirements to qualify as a DMEPOS supplier under 42 C.F.R. §§ 424.530(a)(1), 424.57(c)(7) and (c)(8).  CMS Ex. 4 at 1.  The letter stated that, pursuant to 42 C.F.R. § 424.530(a)(1), Petitioner was noncompliant with required enrollment requirements, explaining that “[d]uring an attempt to conduct a site inspection at [Petitioner’s] facility on September 20, 2022 and September 21, 2022 it was discovered the facility was not open and staffed during the posted hours of operation[,]” as required under 42 C.F.R. § 424.57(c)(7), and also, because no one was available for

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the inspection, CMS was unable to conduct an inspection to verify Petitioner’s compliance, as required by 42 C.F.R. § 424.57(c)(8).  CMS Ex. 4 at 1-2.  The letter advised that Petitioner could submit a CAP in response to its denial of enrollment based on 42 C.F.R. § 424.530(a)(1).  The letter further noted that Petitioner could also request reconsideration, but noted that if Petitioner’s enrollment application “was denied under authorities other than 42 C.F.R. § 424.530(a)(l), [Petitioner] may only submit a reconsideration request in response to those denial bases.”  CMS Ex. 4 at 2. 

Petitioner submitted its CAP on October 26, 2022.  Petitioner’s CAP stated that the business was in operation since August 10, 2022, and that the office was usually staffed during their business hours.  However, Petitioner admitted that staff was unexpectedly out of town the week of September 19, 2022, and that they had left a note on the door that they would return on September 26, 2022.  Petitioner also stated that it would continue to be Medicare compliant, staff the office during operating hours, and post a note when staff left the office temporarily during operating hours.  Petitioner asked CMS to consider performing another site visit to verify that the office was operational.  CMS Ex. 3.

On December 22 and 23, 2022, the site inspector for Palmetto attempted two more site visits at Petitioner’s Paularino Avenue location during its hours of operation.  CMS Ex. 2.  On both visits, the site inspector again found no employees present, and the door to Petitioner’s business locked.  CMS Ex. 2 at 4, 6.  The site inspector took pictures and attempted to call the phone number Petitioner listed on its enrollment application; however, his calls went unanswered.  CMS Ex. 2 at 3-6; CMS Ex. 6 at 2; CMS Ex. 7 at 7.

V.  Analysis and Conclusions of Law

A.  CMS has a legal basis to deny Petitioner’s Medicare enrollment application pursuant to 42 C.F.R. §§ 424.530(a)(1), 424.57(c)(7) and (c)(8) because it was not accessible and staffed during its posted hours of operation at the time of the September 20 and 21, 2022 attempted site visits, and the Palmetto contractor was unable to conduct an on-site inspection to verify compliance

CMS may deny a supplier’s Medicare enrollment application if a supplier is “determined to not be in compliance with the enrollment requirements . . . or in the enrollment application applicable for its provider or supplier type . . . .”  42 C.F.R. § 424.530(a)(1).  The regulations require a supplier to, among other things, maintain a physical facility, and the location must be staffed and accessible to the public during the posted hours of operation.  42 C.F.R. § 424.57(c)(7).  Regulations also provide that suppliers must permit CMS, CMS contractors, or agents of CMS and CMS contractors to conduct an on-site inspection in order to verify compliance with enrollment standards.  42 C.F.R. § 424.57(c)(8).

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The facts of this case are not in dispute.  On September 8, 2022, Petitioner submitted a Medicare enrollment application.  CMS Ex. 6.  The address listed on the application as Petitioner’s “physical location” was 185 Paularino Avenue, Suite D104, Costa Mesa, California 92626-3324.  CMS Ex. 6 at 2.  In response to Petitioner’s enrollment application, Palmetto notified Petitioner that an “unannounced site visit will be required at the following location(s):  [185 Paularino Ave, Ste D 104 Costa Mesa, CA 92626-3324 ] . . . . Please ensure that staff at the location(s) above are aware that CMS contractor personnel will be conducting a site visit in the coming days.”  CMS Br. at 19; CMS Ex. 7 at 2.  The notice was emailed to Petitioner’s contact person on September 9, 2022.  CMS Ex. 7.

A site inspector attempted on-site inspections on September 20, 2022, and September 21, 2022, both occurring during Petitioner’s posted hours of operation.  CMS Ex. 5.  The inspector found that Petitioner’s facility was not staffed or accessible to the public and was unable to inspect the premises.  CMS Ex. 5.

The undisputed evidence establishes that Petitioner’s Paularino Avenue location was not open during posted business hours on the dates of the September site visits, and the location was unstaffed when the inspector visited both times.  Petitioner argues that during the week of the on-site visits, the facility was unstaffed because staff members were unexpectedly out of town.²  Petitioner contends that it posted a note on the door of the office explaining that they would return on September 26, 2022.³  P. Br. at 2.  However, during the on-site visits, there was no visible note posted on Petitioner’s door.⁴

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CMS Ex. 5 at 5-6.  Regardless, the Board has ruled that a temporary sign left by staff does not constitute compliance with the accessibility and staffing requirements set forth in 42 C.F.R. § 424.57(c)(7).  See Ita Udeobong, DAB No. 2324 at 7 (2010).  As the Board has held, a supplier who is “temporarily closed during its posted hours of operation” will be found to be out of compliance with 42 C.F.R. § 424.57(c)(7).  Complete Home Care, Inc., DAB No. 2525 at 5 (2013).  The evidence shows that Petitioner was not in compliance with regulations based on the on-site visits conducted on September 20 and 21, 2022.

B.  It is undisputed that Petitioner’s Paularino Avenue location was locked and unstaffed on December 22 and 23, 2022.

In the CAP, submitted on October 26, 2022, Petitioner indicated that it would maintain compliance by staffing the office during operating hours from Monday through Friday from 9:00 a.m. through 3:00 p.m.  Petitioner also requested that CMS consider performing another site visit to verify that the office was operational.  CMS Ex. 3.  CMS revisited Petitioner’s location on December 22 and 23, 2022, and found that the site was locked and unstaffed during the hours identified by Petitioner.  However, Petitioner contends that the December 22 and 23 site visits should not have occurred.  P. Br. at 2-4. Petitioner argues that “the process was flawed” because CMS did not notify it that a decision had been reached on its CAP, and that several CMS/Palmetto helpline agents told Petitioner that there would be no further action taken with regard to its Medicare application until a decision was made on its CAP, including any further site visits.  P. Br. at 2-3.  Thus, Petitioner alleges it believed that, until a decision was made on its CAP, it was not required to be staffed full time because its enrollment had been denied.  In Petitioner’s view:

It is clear by the site inspections that took place on December 22nd & 23rd, [2022], that CMS/[its contractor] received and read our CAP and looked upon it favorably enough to dispatch an inspector to our premises.  Where the process was flawed was the failure by CMS/[its contractor] to notify us of a favorable decision, reactive our account, and make us aware that our Company’s Enrollment Application was active again before dispatching any inspections.

P. Br. at 2-4.

I understand Petitioner’s confusion as to whether the business was required to be open and staffed between the time of the initial enrollment denial and the decision on its CAP.  Although CMS explained that a decision on the CAP would be issued within 60 days and a decision on a reconsideration would be issued within 90 days, there were no additional  instructions for Petitioner on whether to resume normal operations once the denial of

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enrollment was issued.  CMS Ex. 7 at 60-61.  Additionally, neither Petitioner nor CMS claims to have had any communication regarding whether Petitioner should have remained staffed during that period of time, other than Petitioner speaking with helpline agents.  However, because I am tasked with determining whether Petitioner was compliant with the supplier standards at the time of denial, and because I have determined that Petitioner was not in compliance during the September 2022 on-site visits, I do not need to consider Petitioner’s status during the site inspectors December 2022 visits to reach a decision.  The December 2022 on-site visits are not determinative to my decision as to whether CMS had a legal basis to deny Petitioner’s enrollment application.  

Petitioner’s Paularino Avenue location, which was the physical location provided to CMS in Petitioner’s enrollment application, was not open to the public during its listed operational hours and was not staffed during the September 20 and 21, 2022 on‑site visits.  Additionally, the site inspector did not have access to the facility in order to conduct an inspection to confirm compliance with enrollment standards.  Therefore, CMS had a legal basis to deny Petitioner’s enrollment application under 42 C.F.R. § 424.530(a)(1) because Petitioner was not in compliance with supplier standards # 7 and # 8, 42 C.F.R. § 424.57(c)(7) and (c)(8).

Petitioner claims that it has been diligent in meeting Medicare enrollment requirements and says the process “was flawed and contradictory to its own Agents descriptions and instructions of the process following initial denial.”  Petitioner requests that the Department of Health and Human Services re-establish the process and allow Petitioner to complete the enrollment process again.  P. Br. at 4.  Petitioner’s request is construed as a request for equitable relief.  However, the regulations do not provide this tribunal with the authority to grant equitable relief.  US Ultrasound, DAB No. 2302 at 8 (2010) (“[n]either the ALJ nor the Board is authorized to provide equitable relief by reimbursing or enrolling a supplier who does not meet statutory or regulatory requirements.”); Foot Specialists of Northridge, DAB No. 2773 at 17-18 (2017)(“[n]either the Board nor the ALJs have the authority to “overturn a legally valid agency action on equitable grounds or otherwise grant equitable relief.”); Neb Grp. of Ariz. LLC, DAB No. 2573 at 6 (2014) (“[t]the Board has consistently held that it (and the ALJs) lack the authority to restore a supplier’s billing privileges on equitable grounds.”).

C.  The evidence shows that Petitioner’s Medicare enrollment application was denied pursuant to 42 C.F.R. §§ 424.530(a)(1), 424.57(c)(7) and (c)(8), not 42 C.F.R. § 424.530(a)(5)(i).

Lastly, CMS argues that Petitioner was not operational, which constitutes another basis for denial of Medicare enrollment under 42 C.F.R. § 424.530(a)(5)(i).  CMS Br. at 11.  I recognize that the evidence relevant to assessing compliance with 42 C.F.R. § 424.57(c)(7) would also be relevant to assessing whether CMS had a basis to deny

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Petitioner’s enrollment under 42 C.F.R. § 424.530(a)(5)(i).  However, in the reconsidered determination, CMS denied enrollment under 42 C.F.R. § 424.530(a)(1), based on Petitioner’s failure to comply with the supplier standards at 42 C.F.R. § 424.57(c)(7) and (c)(8).  CMS Ex. 1 at 1, 5.  CMS did not cite 42 C.F.R. § 424.530(a)(5) as a basis for denying Petitioner’s enrollment in the reconsidered determination.  Therefore, whether there is a basis for denying enrollment on grounds that Petitioner was not operational is not properly before me.  The only determination of CMS or the Medicare administrative contractor subject to my review in a provider and supplier enrollment case is the reconsidered determination.  42 C.F.R. § 498.5(l)(1)-(2); Neb Grp of Ariz. LLC, DAB No. 2573 at 7; Benson Ejindu, DAB No. 2572 at 8-9 (2014).

VII.  Conclusion

Based on the evidence set forth, CMS established a legal basis for the denial of Petitioner’s Medicare enrollment application.  Therefore, the denial of Petitioner’s Medicare enrollment application under 42 C.F.R. § 424.530(a)(1), based on failing to meet the supplier standards found at 42 C.F.R. § 424.57(c)(7) and (c)(8), is affirmed.

Endnotes

¹  Palmetto was the administrator for the National Supplier Clearinghouse (NSC), an entity tasked with issuing or revoking Medicare billing privileges for suppliers of DMEPOS.  Most documents appear to be issued by both Palmetto and NSC.  For clarity, this decision refers to both Palmetto and NSC as Palmetto.

²  In its brief, Petitioner refers to the dates August 20 and 21, 2023, as the dates of the on‑site visits.  Additionally, throughout its brief, Petitioner refers to dates in August and October 2023, and August 2022.  Based on the context in Petitioner’s brief, Petitioner’s CAP and request for reconsideration, and the actual dates of relevant events, I have corrected the dates to reflect the dates I believe Petitioner intended to use, such as September 20 and 21, 2022 for the site visits, September 26, 2022, for its return to the facility, and August and October 2022 instead of 2023.

³  In its hearing request, Petitioner does not specifically reference any site visit dates, but admits that no one was present at “the Site Visit.”  Petitioner, however, offers a different explanation, stating that they “[had] been having issues with our Employee being present in our Office during working hours.”  Petitioner’s Request for Hearing.

⁴  Petitioner claims that it contacted a CMS agent prior to its absence and requested information on what it should do if the office would not be staffed.  Petitioner contends the CMS agent indicated that a note posted on the door notifying CMS of its absence would be sufficient.  P. Br. at 2.  Unfortunately, Petitioner does not provide verifiable evidence that it contacted CMS regarding its unexpected absence or put CMS on notice of its unexpected absence.