Devin R. Karl, D.C., DAB CR6447 (2024)

DECISION

I sustain the determination of a Medicare contractor, as affirmed on reconsideration, to revoke the Medicare enrollment of Petitioner, Devin R. Karl, D.C., to impose a re-enrollment bar against him, and to place Petitioner on the Preclusion List.

I.    Background

This case was very recently transferred to my docket from that of another administrative law judge.

The Centers for Medicare & Medicaid Services (CMS) moved for summary judgment, alleging that there are no disputed issues of material fact.  Petitioner opposed the motion.  I find it unnecessary to determine whether the criteria for summary judgment are met. Additionally, I find that it is unnecessary that I convene an in-person hearing.  Neither CMS nor Petitioner offered witness testimony.  CMS filed 16 documents, identified as CMS Ex. 1 – CMS Ex. 16, in support of its case.  Petitioner did not object to my receiving these exhibits and offered no exhibits of its own.  It is appropriate, given that there is no testimony for me to hear, to decide this case based on the parties’ written exchanges.

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I receive CMS Ex. 1 – CMS Ex. 16 into the record.

II.    Issues, Findings of Fact and Conclusions of Law

1. Issues

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

2. 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 also provide CMS with authority to revoke a supplier’s enrollment under defined circumstances.

A Medicare contractor acting on behalf of CMS revoked Petitioner’s Medicare enrollment, citing two grounds for revocation:  Petitioner’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 his certification of misleading or false information on his enrollment application, by failing to report his conviction to CMS.  42 C.F.R. §§ 424.535(a)(3); 424.535(a)(4).  The determination was affirmed on reconsideration.

The evidence amply supports the determinations.

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

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

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beneficiaries.  It enumerates some felony convictions that are deemed to be detrimental.   Among these are any felony that would result in mandatory exclusion from Medicare or State Health Care participation pursuant to section 1128(a) of the Social Security Act (Act).  42 C.F.R. § 424.535(a)(3)(ii)(D).  Mandatory exclusions under that section include a conviction of a criminal offense consisting of a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.  Act, section 1128(a)(4).  CMS need not evaluate on a case-by-case basis the impact of a section 1128(a) 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 “detrimental” and therefore a basis for revocation.

CMS may also revoke the Medicare enrollment of any supplier who certifies false or misleading information on an enrollment application.  42 C.F.R. § 424.535(a)(9).

On June 12, 2013, Petitioner pled guilty in the Superior Court of New Jersey, Morris County, to possession with the intent to manufacture, distribute, or dispense a controlled substance, a felony under New Jersey law.  CMS Ex. 1 at 1; CMS Ex. 2 at 1.  The court accepted his plea and Petitioner was sentenced on September 6, 2013.  CMS Ex. 2 at 3.

Petitioner became a licensed chiropractor on November 16, 2021.  CMS Ex. 3 at 1.  On February 16, 2022, he applied to enroll in Medicare and to assign his benefits.  CMS Ex. 5; CMS Ex. 6.  The application asked whether Petitioner had ever been the subject of an adverse legal action.  Petitioner responded by stating “no.”  CMS Ex. 5 at 3.  He signed the application and attested to its accuracy.  Id. at 1.

On February 28, 2022, a Medicare contractor approved Petitioner’s application, effective February 1, 2022.  CMS Ex. 8 at 1; CMS Ex. 10 at 1.

On March 28, 2022, a criminal background check of Petitioner revealed his 2013 conviction.  CMS Ex. 9 at 4.  In a notice to Petitioner dated April 12, 2022, CMS revoked his Medicare billing privileges, effective February 1, 2022, based on his felony conviction and his failure to report that conviction, which was misleading.  CMS Ex. 11 at 1.  Petitioner sought reconsideration of this determination.  CMS denied reconsideration on August 1, 2022.  CMS Ex. 13 at 1.

CMS plainly is authorized to revoke Petitioner’s Medicare enrollment and billing privileges.  His conviction of a felony relating to unlawful manufacture, distribution, or dispensing of a controlled substance in 2013 was for a crime that is a per se basis for revocation pursuant to 42 C.F.R. § 424.535(a)(3)(ii)(D).  See Act, § 1128(a)(4).  An additional ground for revocation results from Petitioner’s failure to report his conviction when he applied to enroll as a Medicare supplier, which was misleading.  42 C.F.R. § 424.535(a)(4).

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CMS imposed two additional remedies against Petitioner.  It imposed a ten-year bar against re-enrollment in the Medicare program beginning 30 days after the postmark date of the notice letter, which was May 12, 2022.  CMS Ex. 11 at 4.  CMS also added Petitioner to the Medicare Preclusion List for the same period that the re-enrollment bar is in effect.  CMS Ex. 11 at 2.

CMS’s authority to impose a re-enrollment bar against Petitioner derives from its authority to revoke his Medicare enrollment and billing privileges.  The ten-year bar is within the range authorized by regulation.  42 C.F.R. § 424.535(c)(1)(i), (ii).  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 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, 8-12 (2016).

The function of the Preclusion List is to prohibit 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 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).  The Preclusion List regulations became effective on January 1, 2019.

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 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 may also 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).

CMS has discretionary authority to put an individual or an entity whose enrollment and Medicare billing privileges are revoked on the Preclusion List.  A party may challenge CMS’s authority to exercise its discretion – that is, the grounds for placement on the preclusion list – but it may not challenge CMS’s discretion to act if CMS has the authority to do so.  If a supplier is convicted of a felony within the previous ten years that

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CMS finds to be detrimental to the best interests of the Medicare program, then CMS has the authority to put that supplier on the Preclusion List.

Petitioner does not deny that he was convicted within the previous 10 years of a felony that is per se “detrimental” to the best interests of the Medicare program.  Petitioner likewise does not dispute his placement on the list based on his revocation for certifying false or misleading information.  Rather, petitioner disputes the effective dates of CMS’s remedy determinations.  Additionally, he argues that placing him on the Preclusion List is unreasonable, essentially on equitable grounds.

Petitioner contends that the effective date of revocation of his billing privileges and his re-enrollment bar must be the date of his 2013 conviction and not February 1, 2022, as determined by a Medicare contractor and ratified by CMS.  Petitioner’s Pre-hearing Brief, Opposition to Respondent’s Motion for Summary Judgment, and Response to the Order to Show Cause (Petitioner’s brief) at 7-10.  As support for this contention Petitioner relies on 42 C.F.R. § 424.535(g), which states:

Revocation becomes effective 30 days after CMS or the CMS contractor mails notice of its determination to the provider or supplier, except if the revocation is based on Federal exclusion or debarment, felony conviction, license suspension or revocation, . . . When a revocation is based on a Federal exclusion or debarment, felony conviction, license suspension or revocation, . . . the revocation is effective with the date of exclusion or debarment, felony conviction, license suspension or revocation . . . .

Petitioner argues that the plain language of the regulation requires that revocation and the re-enrollment bar be effective no later than the date of his conviction.

I find this argument to be unpersuasive for two reasons.  First, the regulatory language is inapplicable.  Petitioner was not a supplier of Medicare items or services in 2013, when he was convicted.  He did not become a supplier until February 1, 2022, the effective date of his enrollment.  Consequently, the regulation has no bearing on Petitioner’s status prior to the date of his enrollment.  Brenda Lee Jackson, DAB No. 2903, 2 (2018).²

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Second, revocation and the re-enrollment bar in this case are based not just on Petitioner’s conviction, but on an alternate additional ground, that being his failure to report his conviction when he applied to become an enrolled supplier, which was misleading.  Revocation pursuant to 42 C.F.R. § 424.535(a)(4) relates only indirectly to Petitioner’s conviction.  Pursuant to this regulation, it is the certification of false or misleading information that is an additional basis for revocation and the re-enrollment bar.  In such cases, the revocation and re-enrollment bar goes into effect after the date of the revocation notice.  It is therefore not necessary for CMS to predicate the effective date of revocation or the re-enrollment bar on the date of Petitioner’s conviction.

Petitioner makes a similar argument about the effective date of Petitioner’s placement on the Preclusion List, citing the text of 42 C.F.R. § 422.222(a)(5)(iii):

Except as provided in paragraph (a)(5)(iv) of this section, an individual or entity, regardless of whether they were enrolled in Medicare, that is included on the preclusion list because of a felony conviction will remain on the preclusion list for a 10-year period beginning on the date of the felony conviction[.]

On its face this section links the effective date of placement of an individual or an entity to the date of that individual’s conviction.

CMS asserts, however, that two other sections govern the effective date of placement on the Preclusion List.  These are, 42 C.F.R. § 422.222(a)(3)(i)(B), which states:

If the individual or entity files a reconsideration request under § 498.5(n)(1) of this chapter, the individual or entity will be added to the preclusion list effective on the date on which CMS, if applicable, denies the individual's or entity's reconsideration.

Additionally, 42 C.F.R. § 422.222(a)(5)(i), states, with exceptions not applicable here, that an individual whose enrollment has been revoked pursuant to 42 C.F.R. § 424.535 will be placed on the Preclusion List for the same length of time as that individual’s bar on re-enrollment.

I do not see any inconsistency in these sections.  The general rule plainly is that placement on the Preclusion List should be coterminous with a re-enrollment bar.  42 C.F.R. § 422.222(a)(5)(i).  However, if an individual or entity seeks reconsideration, then the effective date becomes the date on which reconsideration is denied.  That may be a different date than the date that the individual’s or entity’s re-enrollment bar commences.  42 C.F.R. § 422.222(a)(5)(iii) then states an additional exception to the general rule:  if revocation is based on a felony conviction, then the controlling date for placement on the Preclusion List would be the date of that conviction.

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As I have explained, two separate grounds exist for revocation of Petitioner’s enrollment and billing privileges:  his conviction of a felony and his failure to report that conviction, which was misleading.  The general rule governing the effective date of preclusion applies here, based on revocation for certifying false or misleading information.  That would be the date of denial of reconsideration, August 1, 2022.

Petitioner contends that, in making its Preclusion List determination, CMS failed to apply the factor that may reduce its preclusion list period below 10 years, such as the amount of time that had elapsed since his felony conviction, character development and maturation since his conviction.  Petitioner’s brief at 9.

However, and as I explain above, while CMS’s authority to place an individual on its Preclusion List is subject to appeal, its exercise in discretion about whether to do so, and for how long, is not.  Furthermore, I am without authority consider equitable arguments.  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.

²  Petitioner relies on two decisions by administrative law judges to support its argument.  Basem Abdulla Attum, M.D., DAB CR6029 (2022) and Stephen D. White, M.D., DAB CR5809 (2021).  Neither decision offers any support to Petitioner.  Attum was an appeal from a denial of an enrollment application and not a challenge to a determination to revoke enrollment.  There was no issue in that case as to the effective date of revocation.  White involved an issue of collateral estoppel in which an effective enrollment date had been previously litigated and decided.  That is not the case here.