Pennsylvania Physicians, P.C., DAB No. 2980 (2019)

FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE DECISION

Pennsylvania Physicians, P.C. (Petitioner) is a medical practice whose sole owner and practitioner is John P. Leichner, M.D.  On April 22, 2109, an Administrative Law Judge (ALJ) issued a decision sustaining the revocation of Petitioner’s Medicare billing privileges.  Pennsylvania Physicians, P.C., DAB CR5297 (2019).  The ALJ held that the Centers for Medicare & Medicaid Services (CMS) lawfully issued the revocation based on Dr. Leichner’s 2009 felony conviction.  Petitioner appeals the ALJ’s decision on various grounds.  We conclude that the decision is supported by substantial evidence and free of legal error and accordingly affirm it.1

Legal Background

A physician, physician organization (such as a professional corporation or group medical practice), or other “supplier” of health care services must be enrolled in Medicare in order to bill the program for services furnished to program beneficiaries.  42 C.F.R. § 424.500.  Medicare enrollment is governed by regulations in 42 C.F.R. Part 424, subpart P (sections 424.500-.570).  Those regulations authorize CMS to revoke an enrolled supplier’s Medicare billing privileges for any of the “reasons” specified in paragraphs (1) through (14) of section 424.535(a).  (In this decision, unless otherwise indicated, we cite and apply the version of section 424.535 that was in effect on the date of the challenged revocation determination.  John P. McDonough III, Ph.D., DAB No. 2728, at 2 n.1 (2016).)

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Under paragraph (3) of section 424.535(a), CMS may revoke a supplier’s billing privileges if its “owner or managing employee . . . 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.”  42 C.F.R. § 424.535(a)(3)(i).  Paragraph (3) specifies certain criminal offenses or categories of criminal offenses that CMS has determined to be detrimental to Medicare and its beneficiaries.  Id. § 424.535(a)(3)(ii)(A-D).  One such offense category is “financial crimes, such as extortion, embezzlement, income tax evasion, insurance fraud and other similar crimes.”  Id. § 424.535(a)(3)(ii)(B). 

Revocation bars the affected supplier from participating in the Medicare program from “the date of the revocation until the end of the re-enrollment bar.”  Id. § 424.535(b), (c).  The re-enrollment bar is set by CMS and lasts a minimum of one year and a maximum of three years depending on the severity of the basis for revocation.  Id. § 424.535(c)(1).  A revocation based on a felony conviction – that is, a revocation issued under section 424.535(a)(3) – is “effective with the date of . . . [the] felony conviction[.]”  Id. § 424.535(g).

A supplier may contest a revocation in accordance with the administrative appeal regulations in 42 C.F.R. Part 498.  Id. § 424.545(a).  The supplier must first request “reconsideration” of the initial revocation determination.  Id. §§ 498.5(l), 498.22.  If dissatisfied with the “reconsidered determination,” the supplier may request a hearing before an ALJ.  Id. § 498.40.  A party dissatisfied with an ALJ’s decision may seek review by the Departmental Appeals Board (Board).  Id. § 498.80.

Case Background

The facts narrated in this section are undisputed unless otherwise indicated. 

By letter dated June 14, 2016, Novitas Solutions, a CMS contractor, notified Petitioner that its Medicare billing privileges were being revoked effective September 16, 2009.  CMS Ex. 5.  Novitas stated in the letter that Petitioner’s revocation was authorized by 42 C.F.R. § 424.535(a)(3) and based on the conviction of Petitioner’s owner, Dr. Leichner, for “conspiracy to defraud the United States in violation of 18 U.S. Code § 371.”  Id.  The record confirms that, on September 16, 2009, Dr. Leichner was convicted of conspiracy to defraud the United States and sentenced to six months in prison and ordered to pay restitution of $349,391.  Request for Review (RR) at 3; CMS Ex. 14, at 25-29.  Petitioner states that the offense of conviction involved personal income tax “indiscretions” or “improprieties.”2   RR at 3-4.   

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Petitioner requested reconsideration of the June 14, 2016 revocation, but Novitas denied the request on July 26, 2016.  CMS Exs. 1-2.  Petitioner then filed a request for a hearing before the ALJ.  CMS responded to the hearing request with a motion for summary judgment. 

In support of its summary judgment motion, CMS submitted documents revealing that, on December 11, 2009, approximately three months after Dr. Leichner’s conviction (and prior to Petitioner’s enrollment in Medicare), CMS revoked Dr. Leichner’s billing privileges under paragraph (1) of section 424.535(a) and imposed a one-year reenrollment bar.3   CMS Ex. 18.  Paragraph (1) of section 424.535(a) authorizes revocation of a supplier who “is determined to not be in compliance with the enrollment requirements [in 42 C.F.R. Part 424] or in the enrollment application applicable for its provider or supplier type.”  As stated in its December 11, 2009 revocation notice, CMS found that Dr. Leichner was not in compliance with Medicare enrollment requirements because he did not then have an active valid medical license – the Pennsylvania State Board of Medicine having just suspended his license for six months (starting October 27, 2009) based on its finding that the actions constituting his criminal offense involved “moral turpitude” as that term is defined under Pennsylvania law – and because Dr. Leichner failed to comply with his obligation under 42 C.F.R. § 424.516(d)(1)(ii) (Oct. 1, 2009) to report “[a]ny adverse legal action” to CMS within 30 days of the reportable event.4   CMS Exs. 18-19; CMS Ex. 8, at 46-55. 

In October 2010, after completing his six-month prison sentence, Dr. Leichner submitted an application to enroll Petitioner, his professional corporation, in Medicare.5   CMS Ex. 14.  The October 2010 application disclosed Dr. Leichner’s 2009 conviction, noting that his crime involved “personal income tax improprieties,” and furnished pertinent criminal court and prison records.  Id. at 9, 20-30.  CMS approved the application effective September 21, 2010.  CMS Ex. 9.  More than five years later, on April 6, 2016, Petitioner submitted an application to validate its Medicare enrollment.  CMS Ex. 8.  That application too disclosed Dr. Leichner’s 2009 conviction.  Id. at 16.   Nine weeks later, on June 14, 2016, CMS issued the revocation determination at issue in this case.

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In response to CMS’s motion for summary judgment, Petitioner argued that the June 14, 2016 revocation is “contrary to CMS’ regulations” and should be reversed because it “was essentially the second billing privilege revocation for its owner, Dr. John P. Leichner, for the same underlying offense that led to a prior [December 2009] revocation and bar to reenrollment.”  Pet.’s Dec. 6, 2016 Motion for a Favorable Decision on the Record and Response to CMS’s Motion for Summary Judgment at 1, 7-12 (emphasis in original).  “By subjecting [it] to a second revocation action for the same conduct,” said Petitioner, “CMS ignore[d] all principles of due process, fundamental fairness, and subject[ed] [it] to ‘double jeopardy’ for the same offense.”  Id. at 9.  Petitioner further contended that the June 14, 2016 revocation is improper because CMS failed to make a supportable determination that Dr. Leichner’s conviction is detrimental to the best interest of Medicare and its beneficiaries.  Id. at 12-14.  To the contrary, said Petitioner, when it filed the 2010 enrollment application, CMS considered whether Dr. Leichner “presented any threat to the Medicare program or its beneficiaries” but apparently found no such threat because it ultimately approved the application.  Id.  Finally, Petitioner argued that the June 14, 2016 revocation constitutes an unlawful “reopening” of CMS’s decision to approve the 2010 enrollment application.6   Id. at 14-18. 

After Petitioner filed its written opposition to the summary judgment motion, the ALJ issued the decision now before us.  Preliminarily the ALJ determined that, because neither party had proposed to question any witness, an in-person hearing was unnecessary and that she could and would decide the case “based on the written record, without considering whether the standards for summary judgment [were] satisfied.”  ALJ Decision at 2.  (Neither party has objected to this decisional framework.)   

Turning to the substance of the parties’ dispute, the ALJ found that, within 10 years preceding the challenged revocation determination, Petitioner’s owner, Dr. Leichner, had been convicted of a felony “financial crime” that CMS has determined is detrimental to the best interests of Medicare.  ALJ Decision at 3.  Based on that finding, the ALJ concluded that CMS had lawfully revoked Petitioner’s Medicare billing privileges under 42 C.F.R. § 424.535(a)(3)(ii)(B).  Id. at 3, 6.  The ALJ also rejected Petitioner’s double-jeopardy and unlawful-reopening arguments.  Id. at 4-5. 

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Standard of Review

“The standard of review on a disputed factual issue is whether the ALJ decision is supported by substantial evidence in the record as a whole.  The standard of review on a disputed issue of law is whether the ALJ decision is erroneous.”  Guidelines - Appellate Review of Decisions of Administrative Law Judges Affecting a Provider’s or Supplier’s Enrollment in the Medicare Program at https://www.hhs.gov/about/agencies/dab/ different-appeals-at-dab/appeals-toboard/guidelines/enrollment/index.html.

Analysis

In reviewing the revocation of a supplier’s Medicare billing privileges, the Board and its ALJs decide only whether CMS has established a lawful basis for the revocation.  Cornelius M. Donohue, DPM, DAB No. 2888, at 4 (2018).  In this case, that means we consider only whether the conditions in section 424.535(a)(3) – the stated legal ground for the challenged revocation – are met.  Id.  If those conditions are met, then we must sustain the revocation.  Stanley Beekman, D.P.M., DAB No. 2650, at 10 (2015).

1. The ALJ correctly held that CMS had established a lawful basis for revocation of Petitioner’s Medicare billing privileges.

Section 424.535(a)(3) authorizes the revocation of Petitioner’s Medicare billing privileges if two conditions are met:  (1) its “owner” or managing employee was convicted of a state or federal felony offense within 10 years prior to the revocation; and (2) the conviction was for an offense that CMS has determined to be detrimental to the best interests of Medicare and its beneficiaries. 

The first condition is unquestionably met:  Dr. Leichner is Petitioner’s owner, and he was convicted of a federal felony offense in 2009, within 10 years prior to June 14, 2016, the date of the challenged revocation determination. 

The ALJ held that the second condition is met because Dr. Leichner’s felony offense involved “tax fraud” and because tax fraud is a “financial crime” that CMS has “by regulation” determined to be detrimental to Medicare and its beneficiaries.  ALJ Decision at 3.  Petitioner concedes that Dr. Leichner was convicted of a financial crime as defined in section 424.535(a)(3)(ii))(B).  RR at 3.  However, Petitioner submits that the regulatory finding that financial crimes are detrimental to Medicare should not dictate the outcome in this case. 

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Petitioner emphasizes that it timely reported Dr. Leichner’s conviction on its 2010 enrollment application, then provided services to Medicare beneficiaries for six years “without CMS raising any concerns” about the “quality of care [that it] provided to its patients or [its] adherence to Medicare coverage and payment rules.”  RR at 17-18; see also Reply at 8-9 (stating that after Petitioner’s 2010 enrollment, CMS had an opportunity to “closely scrutinize[ ] the services being rendered and claims being submitted” to assess whether its enrollment in Medicare posed a threat of harm to the program and its beneficiaries).  Given these circumstances, says Petitioner, it is appropriate to treat section 424.535(a)(3) as creating a “rebuttal presumption” that Dr. Leichner’s conviction was detrimental to Medicare and to find that the presumption has been rebutted.  RR at 17; Reply at 6, 8-9.  Petitioner submits that “CMS cannot be allowed to revoke billing privileges, supported only by the same underlying facts, many years after the provider or supplier rendered services without any identified harm to a Medicare beneficiary or the Medicare trust fund and then claim that the adverse action is per se detrimental, without presenting facts that prove such detriment to the Medicare program or its beneficiaries.”  RR at 19 (emphasis in original). 

This argument finds no support in section 424.535(a)(3)’s text.  Nothing there precludes CMS from relying upon its regulatory finding that financial crimes are categorically detrimental to Medicare, or requires CMS to weigh circumstances besides the timing and nature of a felony conviction (such as the supplier’s good behavior during a post-conviction period of enrollment) in deciding whether to revoke a supplier’s billing privileges.  Furthermore, section 424.535(a)(3) does not permit an ALJ or the Board to treat that regulatory standard as if merely a rebuttable presumption. 

Petitioner’s argument is also at odds with Board precedent.  The Board has consistently held that “the categories of offenses specified in section 424.535(a)(3), including financial crimes, are ones that CMS has determined to be detrimental to Medicare “asa matter of law.”  Donohue at 4-5; Letantia Bussell, M.D., DAB No. 2196, at 7, 9 (2009) (agreeing with the ALJ that income tax evasion is detrimental to Medicare as a matter of law); John Hartman, D.O., DAB No. 2564, at 4-5 (2014) (citing cases and rulemaking preambles).  Hence, a conviction for a felony financial crime that occurs within the required ten-year timeframe adequately supports a revocation under section 424.535(a)(3), regardless of the merit of any effort by the supplier to show that it now poses little risk to Medicare or its beneficiaries.  In other words, if the felony offense upon which the revocation is based is one that CMS has identified in the regulation as categoricallydetrimental to Medicare, then an ALJ or the Board must conclude that the offense is detrimental to Medicare and may not make a conflicting case-specific finding.  Donohue at 6 (rejecting the complaint that CMS failed to make a case-specific determination about whether the supplier’s financial crime was detrimental to Medicare

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because financial crimes are detrimental as a matter of law); see also John Hartman, D.O., DAB No. 2564, at 5 (holding that “the Board may not evaluate the circumstances of [the supplier’s] offense, or otherwise look behind his conviction, in order to make a conflicting determination about the offense’s actual or potential impact on the Medicare program”); John A. Hartman, D.O., DAB No. 2911, at 14-15 (2018) (holding, in a case involving a section 424.530(a)(3) enrollment denial, that the ALJ was not required to make a case-specific determination about whether the physician’s felony offense was detrimental to Medicare because the offense was one that fell within one of the categories of crimes that CMS has determined by rulemaking to be detrimental to Medicare). 

In short, the ALJ correctly held that the felony conviction supporting the June 14, 2016 revocation determination met the criteria for a revocation under section 424.535(a)(3)(ii)(B).  We therefore affirm her conclusion that CMS had a lawful basis to revoke Petitioner’s Medicare billing privileges. 

2. The ALJ did not err in rejecting Petitioner’s double-jeopardy argument.

Petitioner asserts that the 2016 revocation and the 2009 revocation (of Dr. Leichner’s enrollment) are both based, directly or indirectly, on Dr. Leichner’s 2009 felony conviction.  RR at 2.  For that reason, says Petitioner, the 2016 revocation subjected Dr. Leichner to “double jeopardy.”  RR at 2, 5-7, 8 (asserting that CMS effectively revoked Dr. Leichner’s billing privileges “twice for the same underlying offense”).

To the extent that Petitioner is stating a claim under Fifth Amendment’s Double Jeopardy Clause, we cannot overturn the revocation on that ground.  The Board has held it lacks authority to overturn, on constitutional grounds, a revocation that was imposed in accordance with the applicable enrollment regulations.  Donohue at 8.  Consequently, “if the regulatory prerequisites for revocation (both procedural and substantive) are satisfied” – as they are in this case – we must sustain the revocation.  Id. at 8-9. 

Furthermore, the Double Jeopardy Clause does not apply to revocations.  While the clause bars “multiple punishments for the same offense,” Dept. of Revenue of Montana v. Kurth Ranch, 511 U.S. 767, 769 n.1 (1994) (italics added), the clause “does not prohibit the imposition of all additional sanctions that could, ‘in common parlance,’ be described as punishment.”  Hudson v. United States, 522 U.S. 93, 98-99 (1997) (internal quotation marks omitted).  Rather, “[t]he Clause protects only against the imposition of multiple criminal punishments for the same offense.”  Id. at 99.  Enrollment revocation, like an “exclusion” imposed by the Secretary of Health and Human Services under section 1128 of the Act, is not criminal punishment.  It is neither intended nor designed to punish a program participant for past wrongdoing.  Rather, it is a civil “remedial measure whose purpose is . . . to protect the program and its beneficiaries from fraud, abuse, and other

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harm that might arise in the future.”  Robert F. Tzeng, M.D., DAB No. 2169, at 14 (2008); Donohue at 9 (quoting Tzeng); see also Shaikh M. Hasan, M.D., DAB No. 2648, at 14 (2015) (citing decisions rejecting double-jeopardy claims in the exclusion context); Manocchio v. Kusserow, 961 F.2d 1539, 1543 (11th Cir. 1992) (rejecting a double-jeopardy challenge to the exclusion statute, finding that an exclusion under section 1128 of the Act is not a punitive sanction “but rather remedial in nature and purpose”). 

As Petitioner indicates (RR at 5-6), a civil penalty regime may be “so punitive either in purpose or effect . . . as to transfor[m] what was clearly intended as a civil remedy into a criminal penalty.”  Hudson, 522 U.S. at 99 (internal quotation marks omitted).  But Petitioner makes no attempt to apply the criteria that the Supreme Court has identified as relevant in deciding whether a particular civil sanction constitutes criminal punishment.  See Joann Fletcher Cash, DAB No. 1725, at 4-5 (2000) (discussing the test specified in Hudson).  Nor does Petitioner cite any judicial or Board decisions which apply those criteria in a context similar to this one.    

Even assuming, for argument’s sake, that revocation constitutes criminal punishment, the 2016 and 2009 revocations did not “punish” Dr. Leichner or his professional corporation twice for the “same offense.”  As the ALJ found, and the record confirms, the 2009 revocation was based on Dr. Leichner’s noncompliance with certain Medicare “enrollment requirements” – more specifically, his failure to maintain an active medical license and failure to comply with his obligation to report adverse legal actions to the Medicare program – while the 2016 revocation was based on the fact of Dr. Leichner’s felony conviction.7   License suspension, failure to report an adverse legal action, and a felony conviction are plainly distinct “offenses” or grounds for revocation:  the first two arise under paragraphs (a)(1) and (a)(10) of section 424.535(a), while the third (the one at issue in this revocation) arises under paragraph (a)(3).  Successive revocations based on different and distinct legal grounds would raise no double-jeopardy concerns, even if a revocation did constitute punishment.  Orton Motor Co., DAB No. 2717, at 23 (2016) (noting that a federal agency’s actions to hold a regulated party “responsible” for different violations of the applicable regulation, each of which must be based on proof of different facts, would not implicate the Double Jeopardy Clause), aff’d, Orton Motor, Inc. v. U.S. Dep’t of Health & Human Servs., 844 F.3d 1205 (D.C. Cir. 2018).

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3. CMS correctly made Petitioner’s revocation effective on the date of Dr. Leichner’s conviction.

Next, Petitioner contends that CMS had “no authority” to impose a “retroactive revocation” based on the felony conviction of its owner (Dr. Leichner).  RR at 11, 12, 16-17.  By “retroactive revocation” Petitioner means a section 424.535(a)(3) revocation whose effective date is the date of the qualifying felony conviction.  Id. at 11, 16-17.  Petitioner asserts that “CMS has never finalized a rule that would allow the retroactive effect in 42 C.F.R. § 424.535(g) to be applied to a situation in which it [the revocation] is based on an owner’s final adverse action.”8   RR at 16-17.  Petitioner further contends that the section 424.535(a)(3) revocation of an enrolled business entity (such as a physician’s professional corporation or other business entity) must be given only “prospective” effect.  RR at 17 (asserting that Petitioner’s revocation based on Dr. Leichner’s conviction in his capacity as Petitioner’s owner “is inconsistent with the prospective revocation applicable to owners”).

These contentions are meritless.  Since 2006, when the Medicare enrollment regulations in 42 C.F.R. Part 424 were first issued, section 424.535(a)(3) has expressly authorized CMS to revoke the billing privileges of anysupplier whose “owner” has a qualifying felony conviction.9   See 71 Fed. Reg. 20,754, 20,780 (April 21, 2006).  And since January 1, 2009, as the result of a November 19, 2008 rulemaking, section 424.535(g) has directed CMS to make a revocation based on a felony conviction – that is, a section 424.535(a)(3) revocation – effective on the date of the qualifying conviction.  73 Fed. Reg.  69,726, 69,865-66, 69,940-41.  In short, since January 1, 2009, the regulations have authorized CMS to revoke a supplier’s enrollment based on the qualifying conviction of the supplier’s owner, and have required CMS to make such a revocation effective on the date of the owner’s conviction.  The effective-date rule in section 424.535(g) makes no distinction between the section 424.535(a)(3) revocation of a physician or practitioner (whose Medicare enrollment is in his or her own name), and a section 424.535(a)(3) revocation of a physician’s or practitioner’s business organization. 

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Petitioner cites section 424.535(e) (RR at 12), but this regulation does not purport to limit or qualify section 424.535(g)’s effective-date rule; it merely specifies conditions under which a revocation based on the “adverse activity” of a supplier’s owner, managing employee, or other personnel may be “reversed.”  Petitioner also cites page 69,777 of the preamble to CMS’s November 19, 2008 rulemaking.  See RR at 11; Reply at 11, 12.  CMS covers two main subjects on that page:  (1) changes to the reporting requirements applicable to Medicare enrollees; and (2) the addition of a paragraph in section 424.535(a) allowing CMS to revoke a supplier’s billing privileges when the supplier fails to report (or timely report) an “adverse legal action” or other “reportable change” in enrollment information.  73 Fed. Reg. 69,777.  According to Petitioner, the discussion on page 69,777 shows that “CMS did not intend that a billing privilege revocation based on an owner’s final adverse action [an action such as a felony conviction] could have a retroactive effective date.”  RR at 11.  However, nothing on page 69,777 addresses the effective date of “revocation[s] based on an owner’s final adverse action.”  The only type of revocation discussed on that page is one that is based on a supplier’s failure to report or timely report such an action.  See, e.g., 73 Fed. Reg. at 69,777 (stating that a “failure to comply with the reporting requirements . . . may result in the revocation of Medicare billing privileges and [by operation of section 424.565] a Medicare overpayment due from the date of the reportable change”).  The preamble elsewhere makes clear that any revocation based on a felony conviction is effective on the date of conviction.  Id. at 69,866.   

Petitioner submits that CMS is applying a “re-revocation policy” that was never published in accordance with notice-and-comment rulemaking requirements and which retroactively imposes “new legal consequences” to Dr. Leichner’s conviction.  RR at 14-17; see also Reply at 12-15.  What Petitioner means by a “re-revocation policy” is unclear.  What is clear, though, is that the challenged revocation does not retroactively impose “new legal consequences” for Dr. Leichner’s conviction because the regulations authorizing that revocation – paragraphs (a)(3) and (g) of section 424.535(g) – took effect prior to the conviction.  Cf. Landgraf v. USI Film Products, 511 U.S. 244, 270 (1994) (in deciding whether a law is impermissibly retroactive, a tribunal must ask whether the law “attaches new legal consequences to events completed before its enactment”).

In its reply brief, Petitioner asserts that when CMS modified section 424.516’s reporting requirements in November 2008, “CMS made no mention of the implications of a final adverse action for an owner of” a physician’s business entity and “did not authorize a retroactive revocation based on a final adverse action of a group’s owner.”  Reply at 14 (emphasis in original).  This statement illogically conflates the reporting requirements applicable to suppliers (under section 424.516) and CMS’s revocation authority (under section 424.535).  Nothing in section 424.516 purports to constrain CMS’s revocation

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authority under section 424.535(a) or limit the applicability of the effective-date rule in section 424.535(g).  There is, for example, no provision in section 424.516 which says that the effective date of a revocation based on the conviction of a supplier’s owner is contingent on whether the supplier must report an “adverse legal action” involving the supplier’s owner.

Citing judicial, Board, and ALJ decisions, Petitioner makes various other points in support of its contention that CMS lacked authority to “retroactively” revoke its billing privileges.  RR at 12-17; Reply at 12-15.  We have considered all of those points (and the supporting citations), but none persuades us that the CMS erred in making Petitioner’s revocation effective on the date of its owner’s conviction.10

4. Petitioner’s contentions regarding the cross-termination database and preclusion list are irrelevant and not reviewable in any event.

Petitioner asserts that CMS recently “attempted” to “retroactively re-revoke” Dr. Leichner’s “individual billing privileges” based on his 2009 felony conviction; that the revocation notice CMS sent to Dr. Leichner on that occasion was “invalid” because it was incorrectly addressed; that CMS withheld information about this attempted enforcement action until after the request for review in this case was filed; that CMS has improperly or prematurely placed Dr. Leichner’s name on its “preclusion list” and in the “Medicaid cross-termination database”; and that these actions have “drastically affected Dr. Leichner’s individual capacity to continue to render services as a qualified physician with an unrestricted license without due process” and also taken an “emotional toll” on him and his patients.”11   RR at 7-11, 22; Reply at 1-4. 

We do not address these contentions for two reasons.  First, CMS’s enforcement actions affecting Dr. Leichner’s “individual enrollment” are irrelevant in deciding whether the conditions for a section 424.535(a)(3) revocation are met with respect to Petitioner’s (Dr. Leichner’s medical practice’s) enrollment.  Second, such actions are beyond the scope of our review in this proceeding.  The only adverse enrollment action or determination appealed to the ALJ under 42 C.F.R. Part 498, and hence the only action or determination subject to review in this case, is the July 26, 2016 reconsidered determination to revoke

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Petitioner’s billing privileges.  See Willie Goffney, Jr., M.D., DAB No. 2763, at 4 (2017) (explaining that the reconsidered determination appealed by the supplier “sets the parameters of the issues before the ALJ (and the Board)”), aff’d, Goffney v. Azar, No. 2:17-cv-08032 (C.D. Cal. Sept. 25, 2019).  If Dr. Leichner objects to the alleged recent revocation of his individual enrollment, he must pursue that objection in a separate administrative appeal.

Petitioner also objects to the mechanics of the Medicare enrollment process, asserting that its “billing privileges were inappropriately combined with Dr. Leichner’s individual enrollment.”  RR at 10.  However, we have no authority to review, modify, or disapprove CMS’s established procedures or requirements for enrolling suppliers in the Medicare program. 

5. The ALJ correctly held that the June 14, 2016 revocation determination was not an illegal reopening of CMS’s 2010 decision to approve Petitioner’s enrollment application.

Title 42 C.F.R. § 498.30 provides that, with one irrelevant exception, CMS may reopen an “initial determination” within 12 months after notice of that determination.  Petitioner contends the June 14, 2016 revocation determination should be overturned because it “reopened” CMS’s 2010 decision to approve its Medicare enrollment application in violation of section 498.30.  RR at 20; Reply at 10. 

In rejecting this contention, the ALJ held that section 498.30 is inapplicable because the approval of an enrollment application is not an “initial determination” within the meaning of that regulation.  ALJ Decision at 5.  We agree with the ALJ.  Under 42 C.F.R. Part 498, “initial determinations” are determinations that CMS (or the Inspector General) makes “with respect to the matters specified in paragraph (b) of” section 498.3.  42 C.F.R. § 498.3(a).  Those “matters” include a denial of Medicare enrollment under section 424.530 and a revocation of Medicare enrollment under section 424.535 – but not a decision to approve such enrollment.  Id. § 498.3(b)(17).   

Petitioner correctly notes that, in accordance with 42 C.F.R. § 424.520(d), CMS determines the effective date of a supplier’s approved enrollment, and that this effective-date determination is an initial determination under section 498.3(b)(15).  See Victor Alvarez, M.D., DAB No. 2325 (2010).  But the 2016 revocation did not reopen the 2010 effective-date determination because the revocation did not change the date upon which Petitioner’s initial enrollment took effect.  The revocation was, instead, a valid exercise of authority under 424.535(a)(3) – authority that the regulation confers without reference to, or regard for, any prior action or inaction (favorable or unfavorable) relating to the supplier’s enrollment. 

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6. The Board is not authorized to review any exercise or non-exercise of discretion by CMS.

Petitioner asserts that when CMS processed the 2010 enrollment application, it “considered whether Petitioner posed any threat to the Medicare program or its beneficiaries” and “concluded that [it] did not pose such a threat.”  RR at 18.  According to Petitioner, that and other circumstances show that the June 14, 2016 revocation was an abuse of discretion.  RR at 17-18.

We may not review CMS’s exercise of discretion.  “[W]hen reviewing a Medicare enrollment revocation, the Board and its ALJs are limited to deciding whether the regulatory prerequisites for revocation have been satisfied.”  Donohue at 10.  If the relevant regulatory conditions (in section 424.535(a)) for revoking the supplier are met, as they are here, “then we must sustain the revocation and may not substitute our discretion for that of CMS in determining whether revocation is appropriate under all the circumstances.”  Id. (internal quotation marks omitted).  “In other words, we must sustain a revocation that is lawful under the applicable regulations regardless of other factors,” such as the financial impact of the revocation on the supplier, “that CMS might reasonably have weighed in exercising its discretion about whether or not to revoke.”  Id. (internal quotation marks omitted); see also Vital Care Med. Transp., LLC, DAB No. 2930, at 8 (2019) (stating that the Board “has no authority to modify, rescind, or direct CMS to reconsider a revocation based on mitigating circumstances”); Meadowmere Emergency Physicians, PLLC, DAB No. 2881, at 8-9 (2018) (“ALJs and the Board may not substitute their discretion for that of CMS in determining whether revocation is appropriate under all the circumstances” (internal quotation marks and brackets omitted)).   

Petitioner asserts that, in light of CMS’s actions in this case, no supplier that secures Medicare billing privileges after reporting a potentially disqualifying felony conviction on an enrollment application can feel assured that CMS will not later revoke its participation based on that conviction.  The ALJ acknowledged that sentiment, stating that she and her colleagues “find deeply troubling . . . [Medicare] contractors’ propensity for enrolling suppliers who, on their applications, disclose serious felony convictions, only to revoke those enrollments years later” and making those suppliers potentially liable for repaying Medicare funds received during their intervening participation in the program.  ALJ Decision at 5 n.4.  While that concern is understandable, the revocation must be sustained because it is lawful under the applicable regulations and because Petitioner has alleged no prejudicial procedural error during the administrative appeal process.  Our decision is consistent with other Board decisions which hold that CMS’s revocation authority is not constrained by prior decisions not to take an adverse action affecting the supplier’s enrollment.  Cf. Central Kan. Cancer Inst., DAB No. 2749, at 10

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(2016) (rejecting a supplier’s suggestion that CMS was precluded from “lawfully exercising” its revocation authority by a “any prior decision by itself or its contractor not to exercise it”); Michael Scott Edwards, OD, et al., DAB No. 2975, at 11-14 (2019) (rejecting various arguments that it was improper for CMS to revoke the supplier’s enrollment under section 424.535(a)(3) years after the supplier had reported the relevant conviction on its Medicare revalidation applications); Donohue at 9 (noting that the Board has rejected arguments, based on various legal theories, that a section 424.535(a)(3) revocation is invalid because CMS delayed in issuing a revocation after learning of the relevant felony conviction). 

Conclusion

For the reasons stated above, we affirm the ALJ’s conclusion that CMS lawfully revoked Petitioner’s Medicare billing privileges effective September 16, 2009.

1. On August 30, 2019, CMS requested leave to file a surreply brief, asserting that Petitioner’s reply addressed topics not raised in Petitioner’s opening brief.  Petitioner did not oppose CMS’s request.  We find CMS’s request justified and accordingly admit the surreply to the record of this appeal.
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2. A consent order issued by the Pennsylvania State Board of Medicine indicates that the indictment which initiated the criminal prosecution of Dr. Leichner charged him with failing to file federal income tax returns for 1990 through 2005.  CMS Ex. 8, at 47.
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3. The 2009 revocation determination was addressed to Dr. Leichner in his capacity as an individual physician. CMS Ex. 18. Although Dr. Leichner formed his professional corporation in 1996 (see CMS Ex. 13), there is no indication that that business entity became enrolled in Medicare until 2010. CMS states that Dr. Leichner currently has a “separate individual enrollment,” existing apart from the enrollment of his professional corporation, “under which he practice[s] both individually, and under other practice groups.” Surreply at 2.
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4. The revocation notice does not specify whether the unreported “adverse legal action” was Dr. Leichner’s conviction or the ensuing license suspension, or both.
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5.  Section 4 of the application indicates that Dr. Leichner was Petitioner’s sole owner and that he intended to bill Medicare through his professional corporation.  CMS Ex. 14, at 10.
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6. Petitioner raised other issues in its response to the summary judgment motion that it does not pursue in this appeal.
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7.  Petitioner implies that Dr. Leichner’s conviction was an implicit or subtextual reason for the 2009 revocation.  However, there is no evidence that CMS weighed the conviction in deciding to revoke his billing privileges in 2009.  That CMS imposed only a one-year re-enrollment bar following the 2009 revocation is some evidence that the conviction was not a factor in that determination.  Nonbinding CMS program guidance, published in the Medicare Program Integrity Manual, indicates that three-year re-enrollment bars are the norm for revocations based on felony convictions.  See Vijendra Dave, M.D., DAB No. 2672, at 3 n.3 (2016); John A. Hartman, D.O., DAB No. 2911, at 23. 
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8. In raising this issue, Petitioner incorrectly states that Dr. Leichner’s revocation became effective with the “date of conviction.”  RR at 14.  In fact, according to the December 11, 2009 notice of revocation, CMS made Dr. Leichner’s revocation effective October 27, 2009, the date of his medical-license suspension, consistent with section 424.535(g).  CMS Ex. 18.
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9.  The term “supplier” means “a physician or other practitioner, or an entity other than a provider, that furnishes health care services under Medicare.”  42 C.F.R. § 400.202 (italics added).  The term “provider” includes a hospital, nursing home, or other institution, but does not include a physician or practitioner organization.  Id.   
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10. Petitioner cites Azar v. Allina Health Services, 139 S. Ct. 1804 (2019).  In that decision, the Supreme Court held that the Medicare statute’s notice-and-comment requirements extend in some circumstances to informal statements of policy and interpretive rules.  139 S.Ct. at 1810-13, 1817.  Allina is inapposite because the challenged revocation was issued in accordance with regulations established by notice-and-comment rulemaking.  CMS did not cite an agency policy statement or interpretive rule as its legal basis for revoking Petitioner’s Medicare billing privileges.
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11. Petitioner asserts that these actions also show that Dr. Leichner has been, or is being, subjected to double jeopardy, RR at 8, a proposition we reject for the reasons stated in the previous section. 
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