Total Care and Rehabilitation Medicine, PC, and Ehab Kodsi, M.D., DAB CR6436 (2024)

DECISION

I sustain the determination of a Medicare contractor, as affirmed on reconsideration, to revoke the Medicare enrollment of Petitioners, Ehab Kodsi, M.D. (Petitioner Kodsi) and Total Care and Rehabilitation Medicine, PC, (Petitioner Total Care), to impose a re‑enrollment bar against them, and to place Petitioners on the Preclusion List. 

I.   Background

The Centers for Medicare & Medicaid Services (CMS) moved for summary judgment, alleging that there are no disputed issues of material fact.  Petitioners opposed the motion.  I find it unnecessary to determine whether the criteria for summary judgment are met.  Neither CMS nor Petitioners offered witness testimony, relying instead on documentary exhibits.  Neither party filed objections to any of the proposed exhibits.  It is therefore

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appropriate to decide this case based on the parties’ written exchanges and without convening an in-person hearing or deciding whether the material facts are undisputed. 

CMS offered seven exhibits, identified as CMS Ex. 1 – CMS Ex. 7.  Petitioners offered a single exhibit, identified as P. Ex. 1.  I receive these exhibits into the record. 

II.   Issues, Findings of Fact and Conclusions of Law

A. Issues

The issues are whether CMS may revoke Petitioners’ Medicare enrollment, impose a re-enrollment bar against them, and place them on the Preclusion List. 

B. Findings of Fact and Conclusions of Law

1. Revocation of Enrollment and Re-enrollment Bar

A supplier of Medicare items and services does not have a right to participate in the Medicare program.  Regulations establish the criteria for enrollment and participation.  They provide CMS with authority to revoke a supplier’s enrollment under defined circumstances. 

A Medicare contractor acting on behalf of CMS determined to revoke Petitioners’ Medicare enrollment, citing two grounds for revocation:  Petitioner Kodsi’s conviction within the previous 10 years of a federal felony offense that CMS determined was detrimental to the best interests of the Medicare program and its beneficiaries; and Petitioners’ failure to report Petitioner Kodsi’s conviction to CMS.  42 C.F.R. §§ 424.535(a)(3); 424.535(a)(9). 

The evidence amply supports the determination to revoke Petitioners’ participation. 

CMS or a contractor acting on its behalf may revoke a provider or a supplier’s Medicare participation where: 

The provider, supplier, or any owner or managing employee of the provider or supplier was, within the preceding 10 years, convicted . . . of a Federal or State felony offense that CMS determines is detrimental to the best interests of the Medicare program and its beneficiaries.¹

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42 C.F.R. § 424.535(a)(3)(i).  The regulation allows CMS to exercise discretion to determine what felonies are detrimental to the best interests of Medicare and its beneficiaries.  It enumerates some felony convictions that are deemed to be detrimental.  Among these are financial crimes that include but are not limited to extortion, embezzlement, income tax evasion, insurance fraud, and other similar crimes.  42 C.F.R. § 424.535(a)(3)(ii)(B).  CMS need not evaluate on a case-by-case basis the impact of a financial felony on the Medicare program or its beneficiaries as a predicate to revoking the enrollment of an individual or entity who is convicted of such a crime.  Conviction of these crimes is per se a basis for revocation. 

On May 4, 2022, Petitioner Kodsi pleaded guilty to filing a false federal income tax return, a felony, defined by 26 U.S.C. § 7206(1).  Petitioner Kodsi admitted that he: 

[I]mproperly and willfully (1) omitted income received from third parties reimbursing services provided by Total Care; (2) deducted personal expenses as business expenses; (3) deducted the same business expenses multiple times; and (4) overstated as business expenses the amount that he was entitled as deductions for personal vehicles driven by him, his wife, and his two children. 

CMS Ex. 1 at 5-6.  In pleading guilty, Petitioner Kodsi admitted that he engaged in a pattern of underreporting business revenues and improperly deducting personal and business expenses for a four-year period consisting of tax years 2015 through 2018.  Id. at 5.  He admitted that he did not believe that his tax return, which contained a written declaration that it was made under the penalty of perjury, was true and correct as to every material fact.  Id. at 3-4.  He also admitted that, in the tax years 2015 through 2018, he failed to report gross revenues totaling $257,467 and overreported expenses of $366,125.  Id. at 6. 

Petitioner Kodsi was sentenced to one year probation, and ordered to pay a fine of $25,000, and $245,212 in restitution.  CMS Ex. 2 at 2-6. 

The crime of filing a false income tax return falls squarely within the financial crimes described at 42 C.F.R. § 424.535(a)(3)(ii)(B) that are per se grounds for revocation.  Although Petitioner Kodsi may not have been convicted explicitly of “income tax evasion” his conviction of filing a false income tax return is a felony conviction that is indistinguishable from income tax evasion for the purpose of establishing grounds for revocation of his Medicare enrollment.  Francis J. Cinelli, Sr., D.O.,DAB No. 2834 at 7‑8 (2017).  The substance of Petitioner Kodsi’s crime was a classic fraud committed by him against the taxpayers of the United States – deliberate concealment of income coupled with deliberate overstatement of deductible expenses. 

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CMS may revoke Petitioner Kodsi’s Medicare enrollment even if his conviction was not of a crime that is a per se basis for revocation.  CMS may revoke a supplier’s Medicare enrollment for convictions of felony offenses that are not per se grounds for revocation if it determines that the supplier’s crime is detrimental to the best interests of the Medicare program and its beneficiaries.  42 C.F.R. § 424.535(a)(3)(i).  There is overwhelming evidence in this case to support a determination that continuing Petitioner Kodsi’s Medicare enrollment would not be in the best interests of Medicare and its beneficiaries. 

Petitioner Kodsi admitted to a protracted and deliberate scheme to defraud the taxpayers of this country, a scheme that continued for four taxable years.  He falsely declared expenses that were not legitimate, and he illegally hid income that was taxable.  He did so knowingly and willfully, and the consequence of his fraud was that taxpayers were deprived of more than $250,000 in tax revenues.  Petitioner Kodsi’s scheming establishes him to be a highly untrustworthy individual.  

Petitioner Kodsi’s conviction also is a basis for revoking the Medicare enrollment of Petitioner Total Care, because it is wholly owned and managed by Petitioner Kodsi.  42 C.F.R. § 424.535(a)(3)(i). 

Petitioner Kodsi’s conviction of a felony is sufficient in and of itself to establish grounds for revocation of both Petitioners’ Medicare enrollment.  However, a second ground exists, too.  Petitioners were required to report Petitioner Kodsi’s felony conviction as a condition of their Medicare enrollment.  42 C.F.R. § 424.516(d).  CMS may revoke the Medicare enrollment of any supplier who fails to comply with this requirement.  42 C.F.R. § 424.535(a)(9). 

Neither Petitioner Kodsi nor Petitioner Total Care reported Petitioner Kodsi’s conviction.  CMS Ex. 6 at 5, 15.  The failure to report constitutes an independent basis for revocation of both Petitioners’ Medicare enrollment. 

CMS imposed 10-year re-enrollment bars against both Petitioners.  The length of the re‑enrollment bar is within the range authorized by regulation.  42 C.F.R. § 424.535(c)(1)(i), (ii). 

The authority to impose a re-enrollment bar derives from the authority to revoke Petitioners’ enrollment. 

Petitioners may not challenge the length of their re-enrollment bars.  The authority to impose a re-enrollment bar emanates from the authority to revoke Medicare enrollment.  Although a supplier whose Medicare enrollment is revoked may appeal the revocation determination, and consequently, CMS’s authority to impose a bar on re-enrollment, that supplier has no right to challenge the length of the re-enrollment bar.  A challenge to the

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length of a re-enrollment bar is not one of the determinations for which there are hearing rights.  See 42 C.F.R. § 498.3; Vijendra Dave, M.D., DAB No. 2672 (2016). 

2. Preclusion List

CMS determined to put Petitioners on its Preclusion List for 10 years, in addition to revoking their Medicare enrollment. 

The function of the Preclusion List is to prohibit organizations that provide items or services pursuant to the Medicare Advantage and Part D programs from making otherwise reimbursable payments for items or services provided by individuals or entities who are on the Preclusion List and to reject prescriptions for medications written by such individuals or entities.  42 C.F.R. §§ 422.222(a)(1)(i), 423.120(c)(6)(i). 

CMS may put an individual or an entity on its Preclusion List if that individual or entity has been convicted of a federal or a state felony within the previous 10 years that CMS determines to be detrimental to the best interests of the Medicare program.  42 C.F.R. § 422.2.  The basis for putting an individual or entity on the Preclusion List is thus very similar to the basis for revoking Medicare enrollment based on the conviction of a felony.  See 42 C.F.R. § 424.535(a)(3). 

In deciding whether to put an individual or entity on the Preclusion List, CMS considers the following factors:  (1) the severity of the offense of which that individual has been convicted; (2) when the offense occurred; and (3) any other information that CMS determines to be relevant.  42 C.F.R. § 422.2.  An individual or entity who is put on the Preclusion List for conviction of a felony will remain on that list for a 10-year period beginning with the date of the felony conviction, unless CMS determines that a shorter period is warranted.  42 C.F.R. § 422.222(a)(5)(iii).  However, an individual or entity whose enrollment is revoked will be put on the Preclusion List for the same period as that individual or entity’s re-enrollment bar.  42 C.F.R. § 422.222(a)(5)(i). 

The seriousness of the crime of which Petitioner Kodsi was convicted is ample ground to support putting him and Petitioner Total Care on the Preclusion List.  Petitioner Kodsi admitted to a deliberate, willful scheme to defraud taxpayers, a scheme that extended over a period of four tax years.  He lied about his income, he lied about his deductible expenses, and he succeeded in unlawfully withholding tax payments of more than $250,000.  That is enough to establish him to be manifestly untrustworthy to deal with program funds. 

Petitioner Total Care is wholly owned and operated by Petitioner Kodsi.  It is his corporate alter ego.  A determination to put Petitioner Total Care on the Preclusion list thus logically follows the determination to put Petitioner Kodsi on that list. 

3. Petitioners’ Arguments

I have considered Petitioners’ arguments.  I find them to be unpersuasive. 

Petitioners argue that Petitioner Kodsi’s conviction was not for a crime that is listed at 42 C.F.R. § 424.535(a)(3)(ii)(B) as establishing a per se basis for revocation of Medicare enrollment.  Petitioners’ Pre-hearing Brief with Incorporated Reply in Opposition to CMS’s Motion for Summary Judgment (Petitioners’ brief) at 6.  According to Petitioners, Petitioner Kodsi’s conviction was not of a per se crime because it is not specifically listed in the regulation as one of the examples of per se felonies. 

The examples of per se felonies listed by the regulation are exactly that – examples.  The list of examples is explicitly non-inclusive.  A per se felony consists not only of the listed examples but of other crimes of the same nature.  As I have explained, Petitioner Kodsi was convicted of evading payment of federal taxes even if the felony of which he was convicted is not specifically entitled “tax evasion.” 

Petitioners assert that Petitioner Kodsi’s felony had “nothing to do with the Medicare program” and therefore cannot be considered to be detrimental to the Medicare program’s and beneficiaries’ best interests.  In support of this assertion Petitioners contend that:  Petitioner Kodsi’s felony was unrelated to his Medicare participation and the items and services that he provided; his tax filings were unintentional and not willful; and revocation of his Medicare participation and placement on the Preclusion List will deprive beneficiaries of needed and valuable care.  He asserts also that the effect of the remedies will be to take Total Care’s 21 employees out of the Medicare network.  Petitioners’ brief at 7-8. 

That Petitioner Kodsi’s crime was not directly related to the care he rendered to Medicare beneficiaries provides him with no defense.  CMS revoked his enrollment and put him on the Preclusion List because his crime, both as a matter of law and in fact establishes him to be untrustworthy to deal with program funds.  The tax fraud that Petitioner Kodsi committed – over a period of four tax years and involving over $250,000 – is a form of larceny.  Untrustworthiness is an essential element of that crime. 

Petitioner Kodsi may not now credibly deny what he previously admitted to.  There is nothing in the record that suggests that his tax fraud was inadvertent.  To the contrary, Petitioner Kodsi explicitly admitted to willfully defrauding the taxpayers by falsifying his federal tax returns. 

There is nothing in the record of this case to suggest that Medicare’s loss of Petitioner Kodsi’s services will adversely affect program beneficiaries.  For example, the record is devoid of any evidence that shows that Petitioner Kodsi’s practice will not be absorbed by other physicians working in his community.  As for the employees of Petitioner Total

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Care, their Medicare enrollment is not revoked.  They are free to seek employment in their community and to continue to provide care to program beneficiaries. 

Petitioners argue that CMS lacks authority pursuant to 42 C.F.R. § 424.535(a)(9) to revoke their Medicare enrollment.  Petitioners’ brief at 8-9.  As support for this argument Petitioners restate their contentions that Petitioner Kodsi did not intentionally file fraudulent tax returns, that his crime had nothing to do with the Medicare program, and that revocation of enrollment and placing Petitioners on the Preclusion List would be detrimental to the best interests of program beneficiaries.  Id. at 9. 

These arguments fail for reasons that I have addressed but also because they do not gainsay the fact that Petitioners did not report that which they were required by law to report – that Petitioner Kodsi had been convicted of a felony that is a per se basis for revocation of Petitioners’ Medicare enrollment. 

The reporting requirements of 42 C.F.R. § 424.516(d) do not exist in a vacuum.  As I have explained, a supplier’s participation in Medicare is not a right.  It is subject to CMS’s discretion and to regulations that state the circumstances under which CMS may revoke enrollment.  It is critically important that CMS be aware of information that may be grounds for revocation of enrollment.  Petitioners withheld that information from CMS.  That is all the reason CMS needs to revoke their enrollment pursuant to 42 C.F.R. § 424.535(a)(9). 

Petitioners argue also that their failure to notify CMS of Petitioner Kodsi’s conviction was inadvertent, that they were not aware of their duty to report.  Petitioners’ brief at 9.  If that is true it provides no support for Petitioners.  As Medicare participants Petitioners not only had a duty to report Petitioner Kodsi’s conviction to CMS but they also had the duty to be familiar with their reporting requirements. 

Petitioners assert that CMS lacks authority to impose a re-enrollment bar against them.  Petitioners’ brief at 9-10.  Their assertion hinges on their arguments that CMS lacks authority to revoke their Medicare enrollment.  Similarly, Petitioners reassert their arguments against revocation of their Medicare enrollment as basis for contending that they may not be placed on the Preclusion List.  Id. at 10.  I have addressed those arguments and found them to be unavailing.  I need not reiterate my analysis. 

Finally, Petitioners contend that they must be compensated for the care that they provided to beneficiaries from May 16, 2023, to September 29, 2023, and October 11, 2023.  Petitioners’ brief at 10-11.  They argue that the notices that they received from the Medicare contractor on July 13 and 14, 2023, stated that they would be put on the Preclusion List on the date of a reconsidered decision that affirmed the initial determination to put them on that list.  CMS Ex. 4 at 1, 5.  Petitioner Total Care’s adverse reconsideration decision is dated September 29, 2023, and that Petitioner Kodsi’s adverse

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reconsideration decision is dated October 11, 2023.  CMS Ex. 6 at 1, 11.  Therefore, according to Petitioners, Petitioner Total Care is entitled to reimbursement for all Medicare items or services it provided before September 29, 2023, and Petitioner Kodsi is entitled to reimbursement for all Medicare items or services that he provided before October 11, 2023. 

This argument conflates enrollment revocation with being put on the Preclusion List.  That is incorrect.  The remedies of enrollment revocation and being put on the Preclusion List may be justified by one inclusive set of facts but they are nonetheless separate remedies with distinct consequences.  The consequence of revocation of enrollment is to bar a former supplier or provider from receiving reimbursement for all items or services that he or it provides beginning with the effective date of revocation.  That remedy is not affected by a subsequent reconsidered determination to put the same provider or supplier on the Preclusion List.  Reimbursement barred by the Preclusion List (Medicare Advantage Payments or payments for medications supplied pursuant to Medicare Part D) may be distinguishable from reimbursement barred by enrollment revocation. 

Both Petitioners were given notice by the Medicare contractor that their Medicare enrollments were revoked, effective May 4, 2023.  CMS Ex. 4.  That effective date is not the date when Petitioners were placed on the Preclusion List.  Items or services that Petitioners may have provided to Medicare beneficiaries from May 4, 2023, and onward are not reimbursable because their Medicare enrollment was revoked effective May 4.  Putting Petitioners on the Preclusion List effective September 29, 2023 (Petitioner Total Care) and October 11, 2023 (Petitioner Kodsi) precludes possible additional sources of reimbursement, but it does not make reimbursable the items or services that Petitioners may have provided to beneficiaries from May 4 and onward. 

Petitioners contend that they were unable to cease their practice immediately and therefore it is inequitable to deny them reimbursement for services that they provided to Medicare beneficiaries during the three months after they received notices of their enrollment revocation.  Petitioners’ brief at 10.  I do not have the authority to rule on Petitioners’ equitable argument.  US Ultrasound,DAB No. 2302, at 8 (2010). 

Endnotes

¹  The regulation refers to another regulation, 42 C.F.R. § 1001.2 for a definition of “convicted.”  The definition subsumes all adjudications of guilt including guilty pleas, pleas of nolo contendere, and other forms of diversion.