John T. Spannuth, DAB CR6396 (2023)

DECISION

Petitioner, John T. Spannuth, is an Advanced Registered Nurse Practitioner and Registered Nurse, who lives and works in the State of Washington.  After engaging in unprofessional conduct, he surrendered his license to practice in the State of California and was indefinitely suspended from the California Medicaid program (called Medi-Cal).  Petitioner subsequently applied to enroll in the Medicare program but, because of his Medi-Cal suspension, the Centers for Medicare & Medicaid Services (CMS) denied his application, citing 42 C.F.R. § 424.530(a)(14).  CMS also added Petitioner to the Medicare preclusion list for five years.

Petitioner Spannuth appeals.

I affirm CMS's determination.  I find that CMS is authorized to deny Petitioner Spannuth's Medicare enrollment application and to add his name to the Medicare preclusion list because the California State Medicaid agency suspended his Medi-Cal participation.

Page 2

Background

On October 17, 2022, Petitioner applied to enroll in the Medicare program.  CMS Ex. 17.  By letter dated January 10, 2023, the Medicare contractor, Noridian Healthcare Solutions, advised Petitioner Spannuth that his application to enroll was denied.  CMS Ex. 19.  As the notice letter explains, the contractor acted pursuant to 42 C.F.R. § 424.530(a)(14) because Petitioner's participation in Medi-Cal had been terminated.  CMS Ex. 13 at 2.

The letter also advised Petitioner that the contractor was adding him to the CMS preclusion list, as authorized by 42 C.F.R. §§ 422.2, 422.222, 423.100, and 423.120(c)(6).  It explained that, if Petitioner requested reconsideration, this action would become effective on the date the reconsidered determination was issued (which turned out to be June 14, 2023).  Id.

Petitioner requested reconsideration.  CMS Ex. 20.  In a reconsidered determination, dated June 14, 2023, a CMS hearing officer upheld the denial.  P. Ex. 11.  Petitioner timely appealed and that appeal is now before me.

Summary judgment/decision based on the written record.  The parties have filed cross-motions for summary judgment, and, while I agree that this case presents no dispute of material fact, I also find that it may be decided based on the written record, without considering whether the standards for summary judgment have been met.

My prehearing order instructs the parties to list any proposed witnesses and to submit their written direct testimony.  Acknowledgment and Prehearing Order at 4, 5 (¶¶ 4(c)(iv), 8) (August 14, 2023).  The order also directs the parties to indicate which, if any, of the opposing side's witnesses the party wishes to cross-examine and explains that an in-person hearing is needed only if a party wishes to cross-examine the opposing side's witnesses.  Id. at 5, 6 (¶¶ 9, 10).  The parties list no witnesses.  Because there are no witnesses to be examined or cross-examined, an in-person hearing would serve no purpose, and I may decide this case based on the written record without considering whether the standards for summary judgment are met.¹

Page 3

Exhibits.  With its pre-hearing brief and motion for summary judgment (CMS Br.), CMS filed 21 exhibits (CMS Exs. 1-21).  With his cross-motion and pre-hearing brief (P. Br.), Petitioner submitted 13 exhibits (P. Exs. 1-13), including a document submitted, for the first time, at this level of review.

New evidence.  Petitioner submits an August 1, 2023 letter from the California Department of Health Care Services, which he did not submit at the reconsideration level.  The letter advises Petitioner that the Department was granting his request for reinstatement in the Medi-Cal program.  P. Ex. 12.  CMS has not objected to my admitting the document.  Nevertheless, unless I find that good cause exists for Petitioner's submitting it, for the first time, at this level of review, I must exclude this evidence.  42 C.F.R. § 498.56(e).  Inasmuch as the document is dated more than six weeks after the CMS hearing officer issued the reconsidered determination, Petitioner obviously has established good cause for not submitting it at the reconsideration level.  It did not exist at that time.

I admit into evidence CMS Exs. 1-21 and P. Exs. 1-13.

Discussion

The Medicare Program.  The Medicare program, Title XVIII of the Social Security Act (Act), is a federally-subsidized insurance program that provides health care benefits to the elderly, disabled, and those suffering from end stage renal disease.  Medicare is divided into four parts:

• Part A is the hospital insurance program.  It covers hospital services, post-hospital extended care, home health, and hospice care.  Act § 1811 (42 U.S.C. § 1395c);
• Part B, which is voluntary, is the supplementary medical insurance program, covering physician, home health, hospice, and other services.  Act § 1832 (42 U.S.C. § 1395k);
• Part C is the Medicare Advantage program, which allows its participants to enroll in "Medicare + Choice" plans, managed by organizations, such as health maintenance organizations, that receive a fixed payment for each enrollee.  Act § 1851 (42 U.S.C. § 1395w-21); and
• Part D is the voluntary prescription drug benefit program.  Act § 1860D (42 U.S.C. § 1395w-101).

Page 4

The Medicare program is administered by CMS, acting on behalf of the Secretary of Health and Human Services.  CMS regulates the Medicare enrollment of providers and suppliers.  Act § 1866(j)(1)(A).  Physicians or other practitioners, such as Petitioner, may participate in the program as "suppliers" of services; however, they must enroll in the program in order to receive Medicare payments.  Act § 1861(d) (42 U.S.C. § 1395x(d)); 42 C.F.R. § 400.202.

CMS contracts with Medicare administrative contractors, who process and pay reimbursement claims and perform other duties necessary to carry out program purposes.  Act § 1842 (42 U.S.C. § 1395u).  Contractors pay claims to "providers" (Part A) and "suppliers" (Part B).

1. CMS may deny Petitioner Spannuth's enrollment in the Medicare program because the California Medicaid agency suspended his participation in the Medi-Cal program.²

Enrollment denial.  CMS may deny a supplier's enrollment in the Medicare program if the supplier "is currently terminated or suspended (or otherwise barred) from participation" in a state Medicaid program or any other federal health care program, or if the supplier's license "is currently revoked or suspended" in a state other than that in which the supplier is enrolling.  In determining whether to deny enrollment, CMS considers:  A) the reason(s) for the termination, suspension, or revocation; B) whether the supplier is currently terminated or suspended from more than one program, has been subject to any other sanctions or had any other final adverse actions imposed against it; and C) any other information CMS deems relevant.  42 C.F.R. § 424.530(a)(14).

So long as the regulatory elements for denial of enrollment under section 424.530(a) are present, I must affirm.  John A. Hartman, D.O., DAB No. 2911 at 17 (2018); Douglas Bradley, M.D., DAB No. 2663 at 6-7, 13-14 (2015) (citing Letantia Bussell, M.D., DAB No. 2196 at 10 (2008)).

Petitioner's misconduct and the loss of his license.  From November 2013 until February 2015, while Petitioner was an officer in the United States Navy's Nurse Corps, he had an affair with a married woman, the wife of a superior officer.  Notwithstanding the relationship, he medically treated this woman on numerous occasions (August 22, 2014, September 17, 2014, November 19, 2014).  The treatments included a full physical examination.  CMS Ex. 15 at 10.

Page 5

When the relationship ended, Petitioner's commanding officer ordered him to stop contacting the woman.  Petitioner disobeyed the order and was court martialed on June 1, 2015, charged with seven violations of the Uniform Code of Military Justice.  CMS Ex. 5; CMS Ex. 15 at 10-11 (Board of Registered Nurses Decision and Order ¶¶ 12, 13).  He pleaded guilty to four of the charges:  disrespect toward a superior commissioned officer; failure to obey an order or regulation; conduct unbecoming an officer; and adultery.  CMS Ex. 5; CMS Ex. 15 at 11 (Board of Registered Nurses Decision and Order ¶ 13).  He was sentenced to 161 days confinement, reduction in grade, and automatic forfeitures.  CMS Ex. 15 at 11 (Board of Registered Nurses Decision and Order ¶ 13).

On June 27, 2019, Petitioner surrendered his nursing license, as part of a "Stipulated Surrender of License and Order" with the California Board of Registered Nursing.  CMS Exs. 15, 16.  He admitted to having the affair and treating the woman with whom he had the affair.  He admitted to violating, repeatedly, two protective orders that he stay away from her.  He admitted that he was court martialed and pleaded guilty to four of the charges; he also admitted that penalties were imposed, including confinement.  CMS Ex. 15 at 2 (Board of Registered Nurses Decision and Order ¶ 8), 10-11 (Accusation ¶¶ 9-13).

In a letter dated October 7, 2021, the California Medicaid agency (California Department of Health Care Services) advised Petitioner that, effective June 27, 2019, he was indefinitely suspended from the Medi-Cal program because:  1) he had been convicted of a crime "substantially related to the qualifications, functions, or duties of a provider of service"; and 2) his license had been "suspended" while a disciplinary hearing was pending.  His name was added to the "Medi-Cal Suspended and Ineligible Provider List."  CMS Ex. 14 at 1-2.

Thus, at the time he applied to enroll in the Medicare program (October 17, 2022) through the time the reconsidered determination was issued (June 14, 2023), Petitioner was "currently" suspended from participating in the Medi-Cal program.  The reason for the suspensions related to his performance as a "provider of service."  CMS was therefore authorized to deny his Medicare enrollment application under 42 C.F.R. § 424.530(a)(14).  So long as CMS is legally authorized to deny an enrollment application, I must sustain its decision to do so.  Edward J.S. Picardi, M.D., DAB No. 3045 at 11 (2021); City of Sugar Land, DAB No. 2719 at 8 (2016).

Although Petitioner concedes that his California license and Medi-Cal participation were suspended, he points out that they have since been re-instated and asserts that he "expressly notified CMS that his reinstatement petition was approved" and that CMS therefore "knew at the time of its [d]ecision that he would also be removed from the Medi-Cal [e]xclusion list."  P. Br. at 10.

At the time the Medicare contractor denied his Medicare enrollment, Petitioner's California license had been suspended and had not been reinstated, which means that his

Page 6

state license was "currently" suspended, and the contractor was authorized to deny enrollment.  His license was reinstated, effective May 25, 2023, after the enrollment denial but before CMS issued the reconsidered determination.  P. Ex. 5.  Because Petitioner's medical license was suspended at the time that the Medicare contractor denied his enrollment, CMS could have cited that as a basis for the denial.  As the Medicare Hearing Officer explained, at the reconsideration level, "CMS reviews the initial determination to determine if an error was made at the time of implementation."  P. Ex. 11 at 7 (emphasis added); see 84 Fed. Reg. 47,794, 47,831 (Sept. 10, 2019) (acknowledging that program suspensions are generally temporary but noting that extended license suspensions involving serious transgressions trigger significant program integrity concerns).

In any event, in denying his program enrollment, CMS did not rely on Petitioner's license suspension; it relied solely on his Medi-Cal suspension, and, at the time the Medicare hearing officer issued his reconsidered determination, Petitioner was suspended from Medi-Cal.  P. Ex. 5 at 1.  Indeed, Petitioner did not even ask the state Medicaid agency to remove his name from its "Suspended and Ineligible" list until June 22, 2023, eight days after the reconsidered determination was issued.  P. Ex. 12 at 2.  His request for reinstatement was ultimately granted, but not until August 1, 2023.  Thus, at all relevant times – when the Medicare contractor denied his application and when the Medicare hearing officer issued the reconsidered determination – Petitioner was suspended from the California State Medicaid program.  See P. Ex. 11 at 7 (finding that Petitioner "remains suspended from the Medi-Cal program and is currently listed on the California Suspended and Ineligible Provider List" and concluding that "the reason for his enrollment denial remains.").

Further, as outlined in the reconsidered determination, in denying enrollment, CMS has carefully considered the relevant regulatory factors:

• It considered the underlying reasons for the suspension and concluded that such conduct "is problematic as it indicates that [Petitioner] does not adhere to rules and regulations and demonstrates an unwillingness to accept authority," and that his unlawful behavior "could be replicated in the Medicare program."  P. Ex. 11 at 6; see 42 C.F.R. § 424.530(a)(14)(i)(A).
• CMS acknowledged that it was not aware of any other suspensions or terminations outside of California, but it considered the conduct underlying the surrender of his license, as well as his termination from the Medi-Cal program "to be very serious" and to implicate patient safety concerns, which "weighs in favor of the denial."  P. Ex. 11 at 6; see 42 C.F.R. § 424.530(a)(14)(i)(B).
• With respect to "any other information CMS deems relevant," CMS considered that Petitioner's license was surrendered for a period of nearly four years (June 27,

Page 7

2019, through May 25, 2023) and cited the disciplinary actions taken by the U.S. Navy (161 days of confinement, reduction in grade, and automatic forfeitures), concluding that they "highlight the seriousness of his conduct."  P. Ex. 11 at 7; see 42 C.F.R. § 424.530(a)(14)(i)(C).

CMS thus reasonably exercised its discretion to deny Petitioner's Medicare enrollment.  Because the regulatory elements for denial of enrollment under section 424.530(a) are present, I cannot disturb its determination.

2. CMS acted within its authority when it added Petitioner to its preclusion list because he engaged in behavior for which CMS could have revoked his Medicare enrollment, had he been enrolled, and because CMS reasonably determined that the conduct that would have led to his revocation is detrimental to the best interests of the Medicare program.

The preclusion list.  Effective January 1, 2019, CMS implemented a "preclusion list" as part of its effort to "prevent fraud, waste, and abuse, and to protect Medicare enrollees," particularly with respect to prescription drug abuse.³  Pursuant to 42 C.F.R. § 422.2 (Part C) and 42 C.F.R. § 423.100 (Part D), CMS's "preclusion list" includes individuals who have engaged in behavior, other than that stated in section 424.535(a)(3),⁴ for which CMS could have revoked their Medicare enrollment had they been enrolled, and whose conduct, in CMS's view, is detrimental to the best interests of the Medicare program.  In determining whether conduct is detrimental, CMS considers:  the seriousness of the conduct underlying the revocation, the degree to which that conduct could affect the integrity of the Medicare program, and any other evidence that it deems relevant.

Had Petitioner been enrolled, his Medicare enrollment could have been revoked pursuant to 42 C.F.R. § 424.535(a)(12), which authorizes CMS to revoke the Medicare enrollment of a supplier who has been terminated, revoked, or otherwise barred from participating in a state Medicaid program.

Page 8

As discussed above, CMS also reasonably determined that Petitioner's conduct is detrimental to the Medicare program.  It found his underlying conduct "problematic," indicating that Petitioner does not adhere to rules and regulations and demonstrating an unwillingness to accept authority.  Such behavior "could be replicated in the Medicare program."  CMS also found that Petitioner's "very serious" misconduct, as well as his termination from the Medi-Cal program, implicated patient safety concerns.  P. Ex. 11 at 6-7, 8-9.

CMS has thus established a basis for placing Petitioner on the preclusion list, and I must therefore uphold its determination to do so.  See Wendell Foo, M.D., DAB No. 2904 at 3 (2018); Wassim Younes, M.D., DAB No. 2861 at 8 (2018) (citing Patrick Brueggeman, D.P.M., DAB No. 2725 at 15 (2016)).

Conclusion

CMS may deny Petitioner Spannuth's Medicare enrollment pursuant to 42 C.F.R. § 424.530(a)(14) because the California Medicaid agency suspended his Medicaid participation.  CMS may add him to the preclusion list because he engaged in behavior for which CMS could have revoked his Medicare enrollment, had he been enrolled, and because CMS reasonably determined that the conduct that would have led to his revocation is detrimental to the best interests of the Medicare program.

I therefore affirm CMS's determinations.

Endnotes

¹  That I decide this case based on the written record does not mean that it is decided without a hearing.  Courts have been careful to avoid any suggestion that a case decided on the written record (or on summary judgment) is decided without a hearing.  Throughout their decisions, they refer to deciding the case without an "oral hearing" or without an "evidentiary hearing."  By considering the evidence and applying the law, the administrative law judge has granted the petitioner a hearing, as required by sections 205(b) and 1866(h) of the Act.  See 42 C.F.R. § 498.66(d) (on conducting a hearing without oral testimony); CNG Transmission Corp. v. FERC, 40 F.3d 1289, 1293 (D.C. Cir. 1994) (holding that a "paper hearing" satisfies statutory requirements for "notice and opportunity for hearing.").

²  My findings of fact/conclusions of law are set forth, in italics and bold, in the discussion captions of this decision.

³  Apparently, CMS considered requiring Medicare enrollment for all providers and suppliers of Medicare Advantage services and prescribers of Part D drugs but, ultimately, opted for a preclusion list instead.  CMS concluded that the burden of requiring Medicare enrollment for hundreds of thousands of additional providers, suppliers, and prescribers would be too great and would threaten beneficiary access to prescriptions and services.  See 82 Fed. Reg. 56,336, 56,442, 56,448 (November 28, 2017); 83 Fed. Reg. 16,646 (April 16, 2018).

⁴  Section 424.535(a)(3) authorizes revocation based on certain felony convictions.  Those whose enrollments are revoked under section 424.535(a)(3) may also be added to the preclusion list pursuant to different subsections of 42 C.F.R. §§ 422.2 and 423.100.