Edward J.S. Picardi, M.D., DAB No. 3045 (2021)

FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE DECISION

Edward J.S. Picardi, M.D. (Petitioner) appeals the November 16, 2020 decision of the Administrative Law Judge (ALJ).  Edward J.S. Picardi, MD, DAB CR5764 (2020) (ALJ Decision).  In that decision, the ALJ affirmed on summary judgment a determination by the Centers for Medicare & Medicaid Services (CMS) to deny Petitioner’s application to enroll in the Medicare program under 42 C.F.R. § 424.530(a)(3) based on his conviction for felony income tax evasion and other felony crimes within  ten years preceding his application.

Undisputed facts establish that CMS was authorized to deny Petitioner’s enrollment, and Petitioner’s arguments for reversal rely on reasoning that is not applicable to this case and seek what is essentially equitable relief we are not authorized to grant.  We therefore affirm the grant of summary judgment to CMS.

Legal Background

The Medicare program provides health insurance benefits to persons 65 years and older

and to certain disabled persons.  Social Security Act (Act) §§ 1811, 1831.The current version of the Social Security Act can be found at http://www.socialsecurity.gov/OP_Home/ssact/ssact-toc.htm. Each section of the Act on that website contains a reference to the corresponding United States Code chapter and section. Cross-reference tables for the Act and the United States Code can be found at http://uscode.house.gov/table3/1935_531.htm and https://www.ssa.gov/OP_Home/comp2/G-APP-H.html.  Medicare is administered by CMS, which delegates certain program functions to private contractors that function as CMS’s agents in administering the program – in this case, CGS Administrators, LLC (CGS).  See Act §§ 1816, 1842, 1866, 1874A; 42 C.F.R. § 421.5(b).

A “supplier” of Medicare services (which includes physicians and physician practices) must be enrolled in the Medicare program in order to receive payment for items and services covered by Medicare.  42 C.F.R. § 424.505.  Supplier enrollment in Medicare is governed by regulations in 42 C.F.R. Part 424, subpart P (§§ 424.500-.570).  Those

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regulations authorize CMS to deny a supplier’s application to enroll in the Medicare program for any of the “reasons” specified in section 424.530(a).

Section 1842(h)(8) of the Act gives the Secretary of Health and Human Services discretion to refuse to enter into an agreement or to terminate or refuse to renew an agreement with a physician or supplier who “has been convicted of a felony under Federal or State law for an offense which the Secretary determines is detrimental to the best interests of the program or program beneficiaries.”  Section 424.530(a)(3) accordingly provides that “CMS may deny a provider’s or supplier’s enrollment in the Medicare program” for the following reason:

Felonies.  The provider, supplier, or any owner or managing employee of the provider or supplier was, within the preceding 10 years, convicted (as that term is defined in 42 CFR 1001.2) of a Federal or State felony offense that CMS determines is detrimental to the best interests of the Medicare program and its beneficiaries.

(i) Offenses include, but are not limited in scope or severity to —

*   *   *

(B) Financial crimes, such as extortion, embezzlement, income tax evasion, insurance fraud and other similar crimes for which the individual was convicted, including guilty pleas and adjudicated pretrial diversions.

*   *   *

(ii) Denials based on felony convictions are for a period to be determined by the Secretary, but not less than 10 years from the date of conviction if the individual has been convicted on one previous occasion for one or more offenses.

42 C.F.R. § 424.530(a)(3).

A provider or supplier may appeal an initial determination by CMS to deny its application for Medicare enrollment by first requesting that CMS “reconsider” the initial determination.  42 C.F.R. §§ 498.5(l)(1), 498.22; see also id. § 424.545(a) (providing that a prospective provider or supplier may appeal an enrollment denial in accordance with the procedures in 42 C.F.R. Part 498, subpart A).  If the provider or supplier requests reconsideration in accordance with the regulations, CMS “[m]akes a reconsidered determination, affirming or modifying the initial determination and the findings on which it is based.”  Id. § 498.24(c).  A provider or supplier dissatisfied with CMS’s “reconsidered determination” may

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then request a hearing before an administrative law judge to review that determination.  Id. §§ 498.5(l)(2), 498.40(a); see also Act § 1866(j)(8) (providing a right to an ALJ hearing for any supplier whose application for enrollment is denied).

Case Background

1. Petitioner’s felony convictions for income tax evasion and other offenses

Petitioner is a physician who was convictedPetitioner does not dispute the fact that he had been “convicted” for purposes of the Medicare statute and related regulations. Convicted means that –

(a) A judgment of conviction has been entered against an individual or entity by a Federal, State or local court, regardless of whether:
(1) There is a post-trial motion or an appeal pending, or
(2) The judgment of conviction or other record relating to the criminal conduct has been expunged or otherwise removed;
(b) A Federal, State or local court has made a finding of guilt against an individual or entity;
(c) A Federal, State or local court has accepted a plea of guilty or nolo contendere by an individual or entity; or
(d) An individual or entity has entered into participation in a first offender, deferred adjudication or other program or arrangement where judgment of conviction has been withheld.

42 C.F.R. § 1001.2; see also 42 C.F.R. § 424.530(a)(3) (referencing the definition of “convicted” in 42 C.F.R. § 1001.2). by a jury in the United States District Court of South Dakota of 13 felony counts of income tax evasion, making and subscribing a false tax return, statement, or other document, and other offenses.  CMS Ex. 1, at 15, 92, 101.  Petitioner served 38 months of a 60-month prison sentence.  Id. at 17, 102.  On February 18, 2020 (within 10 years of his felony conviction and sentencing), Petitioner submitted a Medicare application for enrollment as a supplier of Medicare Part B services via the Provider Enrollment, Chain and Ownership System (PECOS), CMS’s electronic enrollment portal, in which Petitioner disclosed his felony conviction.The jury returned its verdict on October 5, 2012. CMS Ex. 1, at 92. However, the court did not impose its judgment of conviction and sentence on Petitioner until May 7, 2013. Id. at 97, 101-06. Throughout the appeals process, CMS has recognized October 5, 2012 as the date of Petitioner’s conviction for purposes of calculating the time elapsed between his felony conviction and when he submitted his enrollment application.  Id. at 124-132.

2. The Initial Determination

On May 19, 2020, CGS issued an initial determination denying Petitioner’s enrollment application.  Id. at 10.  Petitioner requested reconsideration, arguing that CMS had not made a finding that his felony conviction is detrimental to the best interests of the Medicare program, and that his conviction is not detrimental to the best interest of the Medicare program or its beneficiaries.  Id.  Specifically, Petitioner argued that, since his conviction, medical boards in four states reinstated his medical licenses with knowledge of his felony conviction.  Id.  Further, Petitioner argued, Medicaid programs in three

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states have approved his participation, allowing him to care for Medicaid patients in those states.  Id.  In addition, Petitioner argued, his service in the United States Air Force and work in Liberia during an Ebola epidemic made him “‘uniquely qualified to provide care for patients’” during the current Coronavirus Disease 2019 (COVID-19) pandemic and thus should benefit from a CMS COVID-19 emergency declaration of blanket participation waivers for health care providers.  Id. at 4-5 (quotation marks in original).

3. The Reconsidered Determination

Through its Provider Enrollment & Oversight Group, CMS issued a reconsidered determination dated July 20, 2020 upholding the initial determination on the same grounds.  Id. at 1. CMS summarized the reasoning for its reconsidered determination by stating:

Income Tax Evasion is an offense that CMS has determined is per se detrimental to the best interests of the Medicare program and its beneficiaries.  Furthermore, CMS has determined that [Petitioner’s] conviction is detrimental to the Medicare program based on the specific facts and circumstances of his conviction.  As a result, CMS upholds the denial of [Petitioner’s] Medicare enrollment application under § 424.530(a)(3).

Id. at 7.  In reaching its reconsidered determination, CMS considered, along with the applicable regulatory authority and Petitioner’s arguments, 22 exhibits, comprising 199 pages, a detailed list of which CMS included in the reconsidered determination.  Id. at 1-3.

Petitioner timely requested a hearing before an ALJ on the July 20, 2020 reconsidered determination.

4. Petitioner’s Request for Hearing

In his Request for Hearing (RFH), Petitioner argued that CMS made several errors in reaching its reconsidered determination, citing three incorrect factual findings and eight incorrect conclusions of law.  RFH at 1.  Petitioner disagreed with CMS’s findings of fact that Petitioner’s conviction was for an offense that CMS had determined is per se detrimental to the best interests of the Medicare program and its beneficiaries; that CMS determined that Petitioner’s conviction is detrimental to the Medicare program based on the specific facts and circumstances of his conviction; and that CMS made no error in denying Petitioner’s enrollment application.  RFH at 1.  Petitioner also disagreed with CMS’s legal conclusions, arguing that, among other bases, the mere existence of a felony

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conviction in the last ten years for any offense enumerated in “42 CFR § 424.535(a)(3)”This reference, which Petitioner’s then-legal counsel repeated in a subsequent paragraph, apparently is a typographical error. Section 424.535(a) of the regulations concerns revocation of a supplier’s or provider’s enrollment and billing privileges. The text of the two subsections relating to conviction for felony offenses is essentially the same. Below we discuss how CMS developed sections 42 C.F.R. 424.530(a) and 424.535(a) in tandem. is not a sufficient basis to deny a Medicare enrollment application; there is no evidence in the record demonstrating that CMS reviewed any evidence and actually made a determination that Petitioner’s conviction was detrimental to the best interests of the Medicare program and its beneficiaries under “42 C.F.R. § 424.535(a)(3)”; the conclusion that certain types of offenses are per se detrimental to the best interests of the Medicare program and its beneficiaries is not found within, and contrary to, the plain language of 42 C.F.R. § 424.530(a)(3); the facts underlying Petitioner’s conviction demonstrate that his offenses were not detrimental to the best interests of the Medicare program or its beneficiaries; and there is no evidence that, in denying Petitioner’s application for enrollment in the Medicare program, CMS considered other evidence that Petitioner’s 30-year medical career was otherwise “unblemished,” his “service to humanity” subsequent to his conviction, and “unanimous approval” to practice by colleagues, state and federal agencies and by his professional certifying board.  RFH at 2.  Petitioner argued further that the evidence on which he was convicted of income tax invasion and other offenses does not demonstrate that he is unwilling to provide true and correct information to CMS, and that the reconsidered determination is contrary to the policy determination articulated in CMS’s “COVID-19 Emergency Declaration Blanket Waivers for Health Care Providers” in view of “the concordant national shortage of practitioners needed to battle the COVID-19 pandemic.”  Id.

5. CMS’s Motion for Summary Judgment

In its Pre-Hearing Brief and Motion for Summary Judgment (MSJ), CMS argued, in pertinent part, that denial of Petitioner’s enrollment application was lawful based on undisputed facts showing Petitioner’s conviction within the preceding 10 years for a “‘felony offense that CMS determines is detrimental to the best interests of the Medicare program and its beneficiaries.’”  MSJ at 2 (quoting 42 C.F.R. § 424.530(a)(3)).  CMS further argued that it “has the discretion to determine if a particular felony offense is detrimental to the best interests of the Medicare program and its beneficiaries.”  Id. at 3 (citing Stanley Beekman, D.P.M., DAB No. 2650, at 2-3 (2015) (upholding revocation under 42 C.F.R. § 424.535 of the regulations)).  In support of its motion for summary judgment, CMS argued that Petitioner does not dispute the fact of his felony income tax evasion conviction within the preceding 10 years, or that CMS has, under its discretionary authority, determined felony income tax evasion is detrimental to the best interests of the Medicare program.  Id. at 5.  Moreover, CMS argued, “[i]f the threshold criteria of the regulation are met (a felony conviction within the previous ten years) and CMS decides that the crime that underlies the conviction is detrimental, then CMS may

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reject an application for enrollment.”  Id. at 6 (citing the ALJ decision in Ronald Paul Belin, DPM, DAB CR3796, at 2 (2015)).  Further, CMS argued that it had “properly exercised its discretion and determined that [Petitioner’s] felony offenses were detrimental to the best interests of the Medicare program and its beneficiaries based both on their being per se detrimental under the regulation and based on the particular facts and circumstances surrounding the specific offenses.”  Id. (citing CMS Ex. 1, at 1-12).  CMS set forth its rationale for determining Petitioner’s offense to be detrimental due to the specific facts of Petitioner’s conviction in addition to being per se detrimental, explaining:

CMS stated in its reconsideration decision that facts surrounding [Petitioner’s] conviction for income tax evasion “[call] into question not only his integrity, but also his ability and willingness to abide by the rule of law.”  [Citation omitted.]  Likewise, CMS found that the facts surrounding [Petitioner’s] conviction for making and subscribing a false return, statement or other document “call into question [Petitioner’s] willingness to provide true and correct information to CMS,” and was therefore detrimental to the best interests of the Medicare program and its beneficiaries.

Id. (quoting CMS Ex. 1, at 5-7).  Thus, CMS argued, “[t]he threshold criteria of the regulation are met, and CMS properly denied Petitioner’s enrollment in the Medicare program.”  Id. (citing Ronald Paul Belin, DPM, DAB CR3796, at 2).

CMS also argued that information establishing other factors which Petitioner submitted on reconsideration, such as his “multiple state licenses and a letter of support”; his collateral attack on the merits of his criminal conviction; and undue Internal Revenue Service (IRS) scrutiny due to his opposition to the Affordable Care Act comprise, at best, equitable considerations and mitigating factors.  Id. at 7.  CMS argued that, on reconsideration, it may but is not required to consider equitable arguments and mitigating or other factors.  Id. at 7-8 (citing Brian K. Ellefsen, DO, DAB No. 2626, at 9 (2015); and Norman Johnson, M.D., DAB No. 2779, at 17-18 (2017)).

6. Petitioner’s Opposition to Summary Judgment

Petitioner contended that summary judgment was improper because, in reviewing the evidence in a light most favorable to Petitioner:  (1) it is unclear whether CMS actually exercised discretion to grant or deny Petitioner’s enrollment application; (2) CMS did not consider the nature of Petitioner’s conviction or the severity of the underlying offense; and (3) CMS failed to abide by Medicare Program Integrity Manual (MPIM) requirements related to corrective action plans.  Petitioner’s Pre-Hearing Brief and Memorandum in Opposition of Summary Judgment.  Under Board precedent, Petitioner, argued, section 424.530(a)(3) provided CGS with discretion to grant Petitioner’s

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enrollment application, even if Petitioner submitted the application before his convictions were ten years old, in the event that the contractor determined that other factors justified granting the application.  Id. at 8 (citing Ellefsen at 7-8).  Thus, Petitioner argued, CGS erred when it concluded that it did not have discretion to enroll Petitioner in the Medicare Program until October 2022.  Id.  Further, Petitioner argued that he was wrongly denied the opportunity to submit a Corrective Action Plan based on CGS and CMS misapplying 42 C.F.R. § 405.809(a)(1), which, he asserted, applies only to revocation.  Id. at 8, 11.  Petitioner requested an oral hearing and stated that he would rely on the evidence in CMS Exhibit 1 (detailed above).  Id. at 12.

7. CMS’s Reply Brief

In its Reply Brief in Support of Summary Judgment (MSJ Reply), CMS argued, generally, that there is no genuine dispute of material fact and that CMS is entitled to judgment as a matter of law for two reasons.  More specifically, CMS contended that it is undisputed that Petitioner was convicted for felony offenses, including income tax evasion and other crimes; that CMS has determined that income tax evasion and other similar financial crimes are per se detrimental to the Medicare program and its beneficiaries; and that CMS “provided an analysis of the facts surrounding his conviction in its July 20, 2020 Reconsideration Decision and again made the determination that the nature of Petitioner’s offenses were detrimental to the Medicare program and its beneficiaries.”  MSJ Reply at 2-3.

8. The ALJ Decision

By his November 16, 2020 decision granting summary judgment for CMS, the ALJ upheld the denial of Petitioner’s February 18, 2020 Medicare enrollment application under section 424.530(a)(3).  The ALJ determined that there was no need for a hearing because “there [was] no genuine dispute as to any material fact pertinent to a denial of enrollment under 42 C.F.R. § 424.530(a)(3) that requires a trial.”  ALJ Decision at 7.  The ALJ reasoned, in sum, that since Petitioner was convicted of felony income tax evasion, and since CMS has, in its discretion, determined that income tax evasion in general, and Petitioner’s income tax evasion in particular, are detrimental to the Medicare program or its beneficiaries, there is a basis for denial of Petitioner’s Medicare enrollment application pursuant to 42 C.F.R. § 424.530(a)(3); and where there is a basis for denial under the regulation of Petitioner’s enrollment in the Medicare program, the ALJ has no jurisdiction to review whether CMS properly exercised its discretion to deny Petitioner’s Medicare enrollment application.  Id. at 7, 9-11.

The ALJ accepted as true each of Petitioner’s assertions in opposition to summary judgement, including:

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that he paid approximately $2 million in back taxes, penalties, interest, court costs, and civil fines. [Citations omitted.]  Petitioner states that he regained his licenses to practice medicine in South Dakota, Nebraska, and Ohio; he was newly licensed in Iowa; and the Drug Enforcement Administration granted him an unrestricted registration.  He states that multiple insurers have approved Petitioner as a network provider, but those approvals will be withdrawn based on the denial of Petitioner’s enrollment in Medicare.  Petitioner states that he was certified by the American Board of Surgery.

Id. at 8.  However, the ALJ found none of these facts material to the decision because they did not “negate or rebut” the facts that are material, and that he also could not consider those facts as bases for equitable relief.  Id.  Further, the ALJ noted that Petitioner offered no evidence to support his contention that the CMS hearing officer who conducted the reconsideration of the denial of his Medicare enrollment application failed to review the facts and consider them; in fact the ALJ found that “the detailed recitation” in the reconsidered determination of the facts asserted by Petitioner supported the conclusion that the hearing officer had considered those facts.  Id.  The weight the hearing officer accorded those facts, the ALJ explained, lay beyond his purview, but that it was “clear that the hearing officer was aware of all of Petitioner’s assertions of fact and exercised the discretion to uphold denial of Petitioner’s enrollment.”  Id.

In view of those findings of fact, the ALJ concluded that CMS had made a “prima facie showing of a basis for denial” of Petitioner’s Medicare enrollment application under 42 C.F.R. § 424.530(a)(3).  Id. at 9.  The ALJ explained that, within 10 years prior to CMS’s receipt of Petitioner’s February 18, 2018 enrollment application, Petitioner was convicted of felony income tax evasion (among other crimes), an offense that CMS has determined is detrimental to the best interests of the Medicare program (“[t]ax evasion is one of the specifically listed felony offenses that CMS has determined is presumptively detrimental[]”).  Id. at 9-10.  The ALJ further indicated that he was limited to “determining whether CMS had a basis for denial of enrollment under 42 C.F.R.

§ 424.530(a)(3), and that because he concluded that there is a basis for denial of Petitioner’s Medicare enrollment application, he had “no authority to review the exercise of discretion by CMS or its contractor to deny enrollment where there is a basis for such action.”  Id. at 12 (citing John A. Hartman, D.O., DAB No. 2911, at 17 (2018); Letantia Bussell, M.D., DAB No. 2196, at 13 (2008); Abdul Razzaque Ahmed, M.D., DAB No. 2261, at 19 (2009), aff’d, 710 F. Supp. 2d 167 (D. Mass. 2010)).

The ALJ rejected Petitioner’s reliance on the Board’s decision in Ellefsen because, unlike in Ellefsen, the reconsidered determination here clearly shows that CMS’s hearing officer understood that she had discretion to grant or deny enrollment and exercised it in denying Petitioner’s Medicare enrollment application.  Id. at 10.  The ALJ also rejected Petitioner’s argument that he was denied in error his opportunity to submit a CAP, calling

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the single line in the notification of denial referring to the “Right to Submit a Corrective Action Plan” a “scrivener’s error” which cannot create a right to submit a CAP not provided for in the regulation at 42 C.F.R. § 424.530(a)(3) – a fact that Petitioner acknowledged in his brief to the ALJ.  Id. at 11.  Moreover, the ALJ stated, the decision not to accept a CAP is not an initial determination subject to ALJ review under the regulations.  Id. (citing Conchita Jackson, M.D., DAB No. 2495, at 5-7 (2013)).

This appeal followed.

Standard of Review

Whether summary judgment is appropriate is a legal issue that we address de novo viewing the facts in the light most favorable to Petitioner and giving him the benefit of all reasonable inferences. 1866ICPayday.com, L.L.C., DAB No. 2289, at 2-3 (2009) (citing Lebanon Nursing & Rehab. Ctr., DAB No. 1918 (2004)).  Summary judgment is appropriate when there is no genuine dispute about a fact or facts material to the outcome of the case and the moving party is entitled to judgment as a matter of law.  Id. at 2(citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-25 (1986)).  The party moving for summary judgment (here, CMS) has the initial burden of demonstrating that there is no genuine issue of material fact for trial and that it is entitled to judgment as a matter of law.  Celotex, 477 U.S. at 322-23.   If the moving party carries that burden, the non-moving party must “come forward with ‘specific facts showing that there is a genuine issue for trial.’”  Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting Rule 56(e) of the Federal Rules of Civil Procedure)).

The Board’s standard of review on a disputed conclusion of law is whether the ALJ’s decision is erroneous.  Guidelines – Appellate Review of Decisions of Administrative Law Judges Affecting a Provider’s or Supplier’s Enrollment in the Medicare Program (Guidelines), accessible at https://www.hhs.gov/about/agencies/dab/different-appeals-at-dab/appeals-to-board/guidelines/enrollment/index.html.

Petitioner’s Request for Review

On appeal, Petitioner argues that summary judgment was inappropriate because he disputes CMS’s conclusions that (1) his felony income tax evasion and related convictions give rise to legitimate “concerns over whether [he] could/would abide by Medicare rules,” and (2) his enrollment in Medicare would be detrimental to the program and its beneficiaries.  Request for Review (RR) at 3, 5.  Petitioner contends that his lack of involvement in his employer’s billing process indicates that he poses no risk of non-compliance with Medicare rules, and that the employer performed “due diligence” prior to hiring him and is aware of his conviction.  He argues that this due diligence should impact the Medicare enrollment application process (and, presumably, CMS’s determination to accept or deny his application) because it would be consistent with

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CMS’s “Mission Statement,”Petitioner makes several references to this “Mission Statement” without providing a citation or offering any argument for or authority in support of its applicability, force, and effect. i.e., to make decisions in the best interest of Medicare beneficiaries.  Id. at 4.  Failure to consider this and other factors, Petitioner contends, renders CMS’s determination to deny his enrollment application an additional form of punishment on top of that already imposed by the justice system, which is not CMS’s role.  Id.  He argues that, despite vigorous investigation by the IRS, he was never accused of fraudulently billing Medicare or any other insurer.  Id. at 5.  Since he has been thoroughly investigated by the IRS and vetted by his employer, and since he will have no role in billing the Medicare program, there is no evidence, he argues, that his enrollment in Medicare would be detrimental to the program or its beneficiaries and that denial of his enrollment application simply constitutes additional unwarranted punishment which is not CMS’s to impose.  Id. at 4-5.

Rather than a detriment to the Medicare program and its beneficiaries, Petitioner asserts, his enrollment would instead be beneficial.  If, as CMS says, its vision is for “[a]ll CMS beneficiaries [to] achieve[ ] their highest level of health, and [for] disparities in health care quality and access [to be] eliminated,” then it follows that decisions which harm beneficiaries are contrary to the Mission.  Id. at 5-6.  Petitioner contends that the evidence shows that he is one of only four surgeons on staff at the charity hospital where he works in eastern Ohio, and that the hospital is not a designated trauma center, so elderly, critically ill, and trauma patients with significant morbidities must be transferred more than 50 miles away to an adjacent state, thus worsening morbidity, raising mortality rates, and raising costs.  Id. at 8.  Thus, Petitioner argues, his “expertise in providing health care to trauma and critically ill patients” along with his experience working in pandemic zones as a volunteer missionary would benefit the Medicare program and its beneficiaries.  Id. at 9.  Petitioner argues that summary judgment denied him the right to a hearing and prevented issues he raises in his appeal from being considered by the ALJ.  Id. at 13, 19.

Petitioner submitted three exhibits with his Request for Review and later submitted a fourth document styled “amicus curiae.”  Because Petitioner submitted only one of these four exhibits at the ALJ level of review, three constitute new evidence.  In addition, following CMS’s Response to the request for review, Petitioner replied with a document described as an “Addendum_Attestation” wherein Petitioner reiterated points previously made and further argued that denial of his Medicare enrollment application was detrimental to Medicare beneficiaries, and that the ALJ ignored that CMS’s decisions must not violate CMS policy.  Therefore, Petitioner argued (in so many words), the ALJ erred in granting summary judgment and the case should be remanded to the ALJ for further proceedings.

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CMS’s Response to Petitioner’s Request for Review

CMS filed a brief in response, arguing that CMS was authorized to deny Petitioner’s Medicare enrollment application based solely on his felony convictions.  CMS’s Response to Petitioner’s Request for Review (Response Br.) at 4.  According to CMS, none of the disputes Petitioner seeks to raise is material to the issues presented, and the only issue properly before the ALJ was “whether there was a basis for the denial of Petitioner’s application to enroll in the Medicare program.”  Id. at 5.  CMS also argued that the ALJ correctly concluded that Board precedent precluded equitable relief.  Id. at 6.  CMS did not address Petitioner’s submission of new evidence at the Board level.

Analysis

The central question before the ALJ, and in turn the Board, in an appeal of a Medicare provider or supplier enrollment denial is whether CMS had a valid legal basis for the denial.  “[W]here CMS is legally authorized to deny an enrollment application,” the Board has explained, “neither an ALJ nor the Board itself is empowered to substitute for CMS or its contractor in determining how to exercise its discretion.”  Ronald Paul Belin, DPM, DAB No. 2629, at 5 (2015) (emphasis in original).

The Board has reviewed de novo the administrative record below and considered the parties’ arguments, and we affirm CMS’s reconsidered determination upholding denial of Petitioner’s Medicare supplier enrollment application.  Below we explain that summary judgment was appropriate because there exists no dispute of material fact.  Petitioner was convicted of a felony within ten years preceding the filing of his enrollment application, and the ALJ did not err when he held that CMS had lawfully determined that Petitioner’s felony income tax evasion conviction was detrimental to the Medicare program and its beneficiaries.  First, however, we address the additional evidence Petitioner submitted in support of his Request for Review.

A. We exclude the new evidence Petitioner submitted for the first time on appeal to the Board.

Petitioner submitted three exhibits along with his Request for Review:  two letters from his employer, Trinity Health System/Trinity Medical Center (Trinity) in Steubenville, Ohio, dated July 13, 2020 and November 16, 2020, respectively; and Petitioner’s own affidavit.  In the letters, a Trinity executive endorses Petitioner’s application for enrollment in the Medicare program.  The July 13, 2020 letter, which is identical to the letter included in CMS Exhibit 1 at pages 27-28, describes Petitioner’s positive impact on medical care in the region, explains that Trinity took seriously Petitioner’s felony convictions when considering him for employment, and notes that Petitioner has been

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accepted into several state Medicaid programs.CMS has already contemplated the effect of denial of enrollment in Medicare on participation in Medicaid, stating that “under [42 C.F.R.] § 455.416(c), a State Medicaid agency must deny enrollment or terminate the enrollment of any provider whose Medicare enrollment is revoked for cause, although there is no corresponding requirement in cases where a provider is denied enrollment in the Medicare program.” Final Rule, Centers for Medicare & Medicaid Servs., Medicare Program; Requirements for Medicare Incentive Award Program and Provider Enrollment, 79 Fed. Reg. 72,500, 72,510 (Dec. 5, 2014).  In the November 16, 2020 letter, the same Trinity executive describes the impact of having Petitioner’s experience on hand as their region copes with the ongoing COVID-19 pandemic, and notes Petitioner’s licensing by several state medical boards, his surgical fellowship, surgical certification, and DEA license, along with acceptance by several private insurance programs.  In his affidavit, Petitioner describes events in his personal and professional background, both before and since his felony convictions, and details the various boards, societies and organizations which have licensed, certified, or accepted him into membership since his convictions.  He also offers anecdotal support for his contention that denial of his Medicare enrollment application has been detrimental to patients in the community Trinity serves.  The two-page “Amicus Curiae” document includes an unsworn statement by Petitioner in which he introduces a letter from a West Virginia attorney who claims he is “intimately familiar” with Petitioner’s “court case” (without specifying whether it was his tax evasion conviction) and that Petitioner relied on advice from his then-counsel (now deceased).  The West Virginia attorney also opines that Petitioner would help fill a “desperate” need for physicians in the region and would pose no danger to Petitioner’s patients.

We have thoroughly reviewed the administrative record and find that none of the latter three exhibits – the November 16, 2020 letter from Trinity, Petitioner’s affidavit, and the “Amicus” document – was made part of the record during proceedings before the ALJ.We note that the “Amicus” document is styled as if a pleading or brief but in fact is a vehicle by which Petitioner seeks impermissibly to introduce unsworn testimony. As with Petitioner’s affidavit, we need not discuss whether the statements in the “Amicus” document comprise competent evidence because it is inadmissible under 42 C.F.R. § 498.86(a). However, it is also evident that the content of these documents is in large part duplicative of evidence already in the administrative record; accordingly, Petitioner is not prejudiced by their exclusion.  By regulation, the Board must decide this appeal based on the record as developed by the ALJ.  See 42 C.F.R. § 498.86(a) (excepting “provider or supplier enrollment appeals” from those appeals in which the Board may admit evidence in addition to evidence that was submitted to the ALJ); Guidelines, “Development Of The Record On Appeal,” ¶ (f) (citing 42 C.F.R. § 498.86(a)).  Therefore, the new evidence is not admitted.

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B.  CMS lawfully denied Petitioner’s February 18, 2020 enrollment application under 42 C.F.R. § 424.530(a)(3).

1. The regulation at 42 C.F.R. § 424.530(a)(3) provides that CMS may deny a provider’s or supplier’s enrollment in the Medicare program if, within the preceding ten years, the provider or supplier was convicted of a felony offense that CMS determines is detrimental to the best interests of the Medicare program and its beneficiaries.

Undisputed evidence in the administrative record establishes that, within ten years preceding his February 18, 2020 application for Medicare enrollment, Petitioner was convicted for felony income tax evasion and other felony offenses in the United States District Court for the District of South Dakota.  CMS Ex. 1, at 15, 36, 75, 101, 128.  All of the evidence in the administrative record in this case is contained in CMS Exhibit 1, a 199-page PDF (Portable Document Format) aggregation of several documents.  CMS Exhibit 1 is replete with examples of Petitioner freely admitting to his 2013 felony convictions including, for example, before various state medical licensing boards and in his Medicare enrollment application.A close reading of the administrative record reveals that either the word “conviction” or the word “guilty” appears in every document included in CMS Exhibit 1 except the CMS Blanket Waivers policy document, which comprises pages 140 through 180 of CMS Exhibit 1. Although some of Petitioner’s arguments at the reconsideration and ALJ levels could be construed as collateral attacks on his criminal convictions, Petitioner offers no such arguments before the Board.   There is no evidence in the record that Petitioner has ever disputed the fact of his conviction following a jury trial in federal court.  Because this evidence is voluminous and undisputed, we next discuss CMS’s determination that the felony conviction for income tax evasion is detrimental to the Medicare program and its beneficiaries.

2. CMS designated felony income tax evasion an offense detrimental to the Medicare program and its beneficiaries through the notice-and-comment rule-making process.

When CMS revised the Medicare regulations (effective February 2015) establishing requirements for provider and supplier enrollment, it proposed to expand the list of felonies in each section such that any felony conviction that it determined to be detrimental to the best interests of the Medicare program and its beneficiaries would constitute a basis for denial or revocation.  See Final Rule, Centers for Medicare & Medicaid Servs., Medicare Program; Requirements for Medicare Incentive Award Program and Provider Enrollment, 79 Fed. Reg. 72,500, 72,509-72,511 (Dec. 5, 2014).In its summary of the final rule, CMS stated “[t]his final rule implements various provider enrollment requirements. These include: Expanding the instances in which a felony conviction can serve as a basis for denial or revocation of a provider or supplier’s enrollment[.]” 79 Fed. Reg. 72,500.  Although CMS had enumerated in the regulation many felony offenses deemed

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detrimental to the Medicare program and its beneficiaries, CMS clarified that not “every felony conviction will automatically result in” denial or revocation, and that “each case will be carefully reviewed on its own merits” and that CMS would “act judiciously and with reasonableness in our determinations.”  Id. at 72,510.  However, CMS also explained why (despite having named some for illustration purposes) it could not name every felony in the regulation which could form the basis for denial or revocation.  In response to a comment, CMS stated:

In light of the differences in state laws, it would be impossible to identify in our revised §§ 424.530(a)(3) and 424.535(a)(3) every felony offense that could result in a denial or revocation; indeed, if we accepted the commenter’s suggestion, hundreds of crimes – perhaps even identified on a state-by-state basis – might have to be listed.  Nevertheless, we agree that retaining the lists of felonies in the current versions of §§ 424.530(a)(3) and 424.535(a)(3) could prove helpful in identifying for the public some of the felonies that may serve as a basis for denial or revocation, respectively.  Therefore, we are combining our proposed revisions to §§ 424.530(a)(3) and 424.535(a)(3) with the existing language in both provisions.

Section 424.530(a)(3) will state that the provider, supplier, or any owner or managing employee of the provider or supplier was, within the preceding 10 years, convicted (as that term is defined in 42 CFR 1001.2) of a Federal or State felony offense that CMS determines is detrimental to the best interests of the Medicare program and its beneficiaries.

Id.  What next followed was a list of offenses already determined to be detrimental to the Medicare program and its beneficiaries, and which therefore form the basis for denial or revocation, including income tax evasion.  See 42 C.F.R. § 424.530(a)(3)(i)(B).  Therefore, we conclude that CMS correctly found that it had a legal basis to deny Petitioner’s enrollment application.

However, the administrative record shows that CMS did not rely solely on the fact that income tax evasion is deemed by its regulation to be detrimental to the Medicare program and its beneficiaries.  CMS also examined the specific facts and circumstances surrounding Petitioner’s case.  CMS Ex. 1, at 1, 4-7.  For example, in rejecting one of Petitioner’s principal arguments for why his enrollment in the Medicare program would be beneficial rather than detrimental, the reviewing officer stated:

Dr. Picardi’s [criminal] conduct . . . raises concerns about whether he could or would abide by Medicare program rules.  Payment under the Medicare program is made for claims submitted in a manner that relies upon the trustworthiness and best judgment of our Medicare partners.  Dr. Picardi’s felony conviction indicates to CMS that Trust Funds may be at risk if Dr.

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Picardi participates in the Medicare program, even if he is not directly involved in billing. It necessarily follows that risk to the Trust Funds is a detriment to beneficiaries. . . .

[Petitioner] argues that CMS should overturn the denial of his enrollment application because of the critical need for health care services as a result of the COVID-19 emergency. However, the current public health emergency represents even greater opportunities for fraud, waste, and abuse in the Medicare program. Therefore, this potential for waste, fraud, and abuse further increases the importance of denying [Petitioner’s] Medicare enrollment application as we have found the felony conviction to be detrimental to the best interests of the Medicare program and its beneficiaries.

Id. at 6.

We agree with the ALJ that CMS weighed the benefit of enrolling Petitioner in the program against the cost and, in its discretion, concluded that the financial risk to the Medicare program was too great.  This is consistent with CMS’s concurrent policy pronouncements when promulgating the Medicare provider and supplier enrollment regulations at issue in this appeal.  See 79 Fed. Reg. 72,500 (“This final rule will strengthen program integrity and help ensure that fraudulent entities and individuals do not enroll in or maintain their enrollment in the Medicare program.”).  We conclude that CMS exercised its discretion in determining to deny Petitioner’s Medicare enrollment application.

3. The Board, like the ALJ, may not review how CMS exercises its discretion.

Petitioner argues, in essence, that summary judgment was inappropriate because he has produced evidence to rebut CMS’s prima facie showing that a legal basis existed to deny his Medicare enrollment application.  The evidence, he argues, shows that his enrollment in the Medicare program would not be detrimental to the program or its beneficiaries.  Moreover, Petitioner argues, it is the denial of his application which is detrimental to the Medicare program and beneficiaries, particularly any beneficiaries who may need the kind of medical care only he can provide in the region that his hospital serves.  The reasoning is that, if only he can furnish desperately needed medical services to the region, and if Medicare denies his enrollment, then CMS’s denial determination contravenes other CMS policy priorities and the CMS mission itself.

This line of argument addresses CMS’s exercise of discretion, not its legal authority to act, a stratagem we have rejected.  See Robert J. Tomlinson, M.D. DAB No. 2916, at 7 (2018) (“At heart, Petitioner’s appeal is essentially an attack on how CMS exercised its discretion – that is, to deny, rather than approve, his application – not on CMS’s authority

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under the regulations to take that action.”).  In Tomlinson, CMS denied the enrollment application of a physician who had been convicted of health care fraud within the preceding ten years.  The physician produced evidence showing that he had been reinstated by a state medical licensing board, the HHS Office of the Inspector General, and the Office of Personnel Management, authorities which had sanctioned him upon conviction.  We declined what we viewed to be the physician’s request that the Board “review CMS’s exercise of discretion and to conclude that CMS should have determined based on these reinstatements that he was no longer a threat to the Medicare program or its beneficiaries and approved his application to re-enroll as a supplier in the Medicare program.”  Robert J. Tomlinson, M.D. at 8.  Similarly, Petitioner argues here that the Board should conclude that his medical expertise, history of service in uniform, and good works make his enrollment beneficial, not detrimental, to the Medicare program and its beneficiaries.  In rejecting the physician’s argument in Tomlinson, the Board wrote:

Neither the ALJ nor the Board is allowed to review CMS’s exercise of discretion to deny Petitioner’s application or to substitute its opinion as to whether Petitioner remains a threat to the Medicare program and its beneficiaries based on his felony conviction.  While the regulations afford CMS discretion to revoke or not revoke in a particular case, neither an ALJ nor the Board may review how CMS exercises that discretion or substitute its own discretion.  As the Board explained in Ellefsen, “The ALJ and CMS are correct that where CMS is legally authorized to deny an enrollment application, an ALJ cannot substitute his or her discretion for that of CMS . . . in determining whether, under the circumstances, denial is appropriate. Nor can the Board.”  DAB No. 2626, at 7 (citations omitted).

Id.

C. The ALJ correctly determined that he had no authority to grant equitable relief to Petitioner; neither does the Board.

All of the evidence Petitioner has marshaled in this appeal opposing summary judgment for CMS goes to CMS’s exercise of discretion and not whether CMS had a legal basis to deny his enrollment application.  Those facts do not generate a dispute of material fact because the facts material to deciding the dispute are:  (1) the fact of Petitioner’s felony conviction within 10 years preceding his February 18, 2020 enrollment application; and (2) the fact that the felony conviction was for an offense deemed – and when scrutinized found to be specifically – detrimental to the Medicare program and its beneficiaries.  Laudatory and mitigating information relating to topics such as Petitioner’s medical background, experience, and expertise; his record of military service; his volunteer work abroad during foreign pandemics; the approbation of various state medical boards; endorsements from colleagues; board certifications and fellowships, and other information in the record can only form the basis for a request for equitable relief.  We

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commend Petitioner for his many accomplishments and generous efforts on behalf of others; we also take notice of and respect the decisions of the various other authorities which have admitted or readmitted Petitioner into good standing with them.

However, even if we wanted to consider this information, we cannot.  In an appeal of a lawful CMS determination affecting a supplier’s Medicare enrollment, neither the ALJ nor the Board has the authority to reverse CMS’s action on equitable grounds.  Donna Maneice, M.D., DAB No. 2826, at 7 (2017) (citing, inter alia, Patrick Brueggeman, D.P.M., DAB No. 2725, at 15 (2016)).  As we have explained, CMS’s determination was lawful; consequently, we uphold the determination and may not disturb it for any of the reasons offered by Petitioner.

Conclusion

For the reasons stated above, we affirm the ALJ’s decision upholding the denial of Petitioner’s February 18, 2020 Medicare enrollment application.