Wheelchair City Inc., DAB No. 3131 (2024)

FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE DECISION

Wheelchair City Inc. (Petitioner) appeals the decision of an administrative law judge (ALJ), Wheelchair City Inc., DAB CR6374, issued on October 20, 2023 (ALJ Decision).  The ALJ upheld a determination by the Centers for Medicare & Medicaid Services (CMS) to revoke Petitioner’s Medicare enrollment as a supplier of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS), and to place Petitioner on CMS’s preclusion list for 10 years, pursuant to the regulations in 42 C.F.R. Parts 422 and 424.  We affirm the ALJ Decision because it is supported by substantial evidence and free of legal error.

Legal Background

A healthcare provider or supplier, such as a DMEPOS supplier, must be enrolled in the Medicare program to receive payment for items and services covered by Medicare.  42 C.F.R. § 424.505.  “Enrollment” confers “billing privileges” – i.e., the right to claim and receive Medicare payment for health care items and services provided to Medicare beneficiaries.  See id. §§ 424.502 (defining “Enroll/Enrollment”), 424.505. 

CMS may revoke a supplier’s enrollment in the Medicare program for any of the reasons listed under 42 C.F.R. § 424.535(a).  Relevant to this case, section 424.535(a)(8) authorizes CMS to revoke a supplier’s enrollment when it determines that the supplier has abused its billing privileges.  Section 424.535(a)(8) defines abuse of billing privileges to include when the provider or supplier submits a claim or claims for services that could not have been furnished to a specific individual on the date of service, such as when the beneficiary is deceased on the claimed date of service.  See 45 C.F.R. § 424.535(a)(8)(i)(A).

If the supplier’s Medicare enrollment is validly revoked, the supplier is “barred from participating in the Medicare program from the effective date of the revocation until the end of the reenrollment bar.”  42 C.F.R. § 424.535(c)(1).  At the time of the revocation

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here, CMS regulations set the reenrollment bar for a period between one and ten years, depending on the severity of the basis for revocation.  Id. § 424.535(c)(1)(i).

CMS may put an entity on its “preclusion list” when (among other circumstances) all of the following conditions are met:  the entity is currently revoked from Medicare for a reason other than that stated in 42 C.F.R. § 424.535(a)(3); the entity is currently under a reenrollment bar imposed under 42 C.F.R. § 424.535(c); and CMS determines that the underlying conduct that led to the revocation is detrimental to the best interests of the Medicare program.  42 C.F.R. §§ 422.2 (definition of “Preclusion list” at subsection (1)).  In deciding whether the third condition is met, CMS considers the seriousness of the conduct underlying the revocation, the degree to which that conduct could affect the integrity of the Medicare program, and any other evidence that CMS deems relevant.  Id. (definition of “Preclusion list” at subsection (1)(iii)(A)-(C)).  An individual on the preclusion list may not be paid for Medicare items or services by Medicare Advantage plans under Medicare Part C (Medicare + Choice Program) or by Medicare Part D (Voluntary Prescription Drug Benefit Program) plans.  Id. §§ 422.222(a); 422.224(a), (b); 423.120(c)(6).

A supplier may request reconsideration of the revocation, and of its placement on the preclusion list, by a CMS hearing officer and may then request a hearing on the reconsidered determination before an ALJ.  42 C.F.R. §§ 422.222(a)(2), (3); 424.545(a); 498.5(l)(1), (2); 498.5(n)(1), (2); 498.22; 498.40.  A party dissatisfied with an ALJ’s decision may seek review by the Board.  Id. §§ 498.5(l)(3); 498.5(n)(3); 498.80.

Case Background¹ 

Petitioner was enrolled in the Medicare program as a DMEPOS supplier.  ALJ Decision at 1; CMS Ex. 2.  A DMEPOS supplier is “an entity or individual . . . which sells or rents Part B covered items to Medicare beneficiaries . . . .”  42 C.F.R. § 424.57(a). 

By letter dated September 24, 2021, CMS, through Medicare contractor Palmetto GBA, notified Petitioner that its Medicare enrollment was being revoked, pursuant to 42 C.F.R. § 424.535(a)(8)(i), for abuse of billing privileges – specifically, submitting claims for services (wheelchair rental) provided to multiple Medicare beneficiaries who were deceased on the claimed dates of service.  CMS Ex. 3, at 1.  CMS also imposed a 10-year reenrollment bar.  Id. at 1, 4.  Petitioner was concurrently notified that because of the revocation, it was being added to the CMS preclusion list.  Id. at 2; ALJ Decision at 2.

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Petitioner timely filed a request for reconsideration, asserting that all of the identified claims, dated between January 1, 2020 and April 18, 2021, involved monthly rentals based on 13-month rental agreements provided to 13 distinct Medicare beneficiaries.  CMS Ex. 4, at 1-2.²  Petitioner further described its claims submission process as being outsourced, stating that typically when Petitioner received an explanation of benefits (EOB) showing the death of a beneficiary (coded CO-13), it faxed its billing contractor to “stop billing,” but because of complications from the COVID-19 pandemic and resulting staff losses, “daily tasks and procedures quickly fell behind and ‘stop billing’ faxes were not sent in a timely manner.”  Id. at 2.  Petitioner also presented specific arguments with respect to several individual claim denials.  Id. at 2-3.  Finally, Petitioner asserted that the billings were “an oversight on our behalf” due to staff shortage and COVID-19, and that it did not “intentionally bill for a deceased patient or try to defraud [M]edicare.”  Id. at 3. 

On January 12, 2022, CMS issued a reconsidered determination upholding the revocation, the inclusion of Petitioner on the preclusion list, and the 10-year reenrollment bar.  CMS Ex. 2, at 1, 9.  Petitioner then timely filed a request for hearing (RFH) before an ALJ.  Petitioner stated in the hearing request that it had been a Medicare supplier for 23 years, with most of the staff having been there for 10 years, and that “to be accused of fraud is very disheartening to all of us, including our community, staff and patients.”  RFH at 1.  Petitioner asserted that the “primary issue has been found due to covid pandemic and extreme shortage in staff and was not intentional.”  Id.

Before the ALJ, CMS filed a pre-hearing brief and motion for summary judgment, along with eight proposed exhibits (CMS Exs. 1-8).  ALJ Decision at 2.  In response, Petitioner filed a brief with 11 proposed exhibits (P. Exs. 1-11).  Id.  Neither party identified a proposed witness, and there were no objections to either party’s proposed exhibits.  The ALJ admitted all of the exhibits, determined that an in-person hearing was unnecessary, and for that reason further determined they could decide the case based on the written record and need not determine whether summary judgment was appropriate.  Id. at 2 & 2 n.3.

1. The ALJ held the evidence established a legitimate basis to revoke Petitioner’s Medicare enrollment and billing privileges, pursuant to 42 C.F.R. § 424.535(a)(8)(i).

The ALJ found that Petitioner had submitted 43 Medicare payment claims, on behalf of 10 beneficiaries, with dates of service after the beneficiaries’ deaths.  ALJ Decision at 4.  The evidence before the ALJ included the following details about these claims:

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See id. at 4-6.

The ALJ considered Petitioner’s assertions that all the beneficiaries were eligible at the time they received the wheelchairs, but that the billing problems occurred because of the COVID-19 pandemic, which it characterized as a “notable circumstance” that CMS failed to account for in the revocation determination.  ALJ Decision at 2, 6, 7.  The ALJ also considered Petitioner’s claims that the billing problems occurred because of staff shortages and the California governor’s “stay at home” Executive Order (EO), which resulted in the “stop billing” notices to its billing contractor not being sent in a timely manner.³  Id. at 6-7; Petitioner’s Prehearing Brief (P. PH Br.) at 4-5.  The ALJ did not doubt the veracity of Petitioner’s statements but indicated they “provide no defense for the fact that Petitioner submitted ongoing claims to Medicare for 10 beneficiaries after having been notified that they had died.”  ALJ Decision at 7. 

With regard to the EO, the ALJ noted that at least two of the beneficiaries associated with the revocation [R.S. and J.S.] had died in December 2019, and that Petitioner was notified of their deaths in January 2020, before the EO was issued.  ALJ Decision at 7 n.5.  Additionally, the ALJ found that “[e]ven assuming that an [EO] from a state governor could stay federal regulations, a highly questionable position, the order itself contains exceptions to the ‘no travel’ provisions for the industries involved in the health care supply chain, which presumably, would include Petitioner.”  Id. at 7.  The ALJ further indicated that Petitioner had “provided no evidence that its employees were prevented from working in some capacity, even from home, as a result of this order,” and

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that Petitioner’s records indicated it “continued to rent and deliver wheelchairs after th[e] order was issued,” concluding that “[i]t appears then that [Petitioner] continued to do business, in spite of the [EO].”  Id. at 7-8.  The ALJ was also not persuaded by Petitioner’s argument that because of the pandemic, it was unable to pick up wheelchairs after the beneficiaries’ deaths, noting that “if Petitioner could deliver wheelchairs after the executive order, there is no apparent reason why it could not pick up wheelchairs,” and that even if it could not pick up deceased beneficiaries’ wheelchairs, that fact did not justify continuing to bill Medicare for equipment rental, as the regulation is quite clear that a supplier may not bill Medicare for services provided to beneficiaries who are deceased.  Id. at 8 (emphasis in original).  

The ALJ also rejected Petitioner’s argument that it had made changes to its billing system and protocols to prevent improper billing.  ALJ Decision at 8 (citing John P. McDonough III, Ph.D., et al., DAB No. 2728, at 8 (2016) (a plan to reduce improper billing in the future does not preclude CMS from taking action over improper claims already submitted)).  In addition, the ALJ rejected Petitioner’s argument that the revocation should be overturned because it did not “intentionally” submit improper Medicare claims, stating that the Board has “repeatedly rejected the contention that a supplier who has submitted claims for ‘services that could not have been furnished to a specific individual on the date of service’ under section 424.535(a)(8) must also be proven to have done so intentionally.”  Id. (quoting Patrick Brueggeman, D.P.M., DAB No. 2725, at 8-9 (2016)).  As examples of relevant Board precedent, the ALJ quoted the holding in Howard B. Reife, D.P.M., DAB No. 2527 (2013) that “the operative language of the regulation does not require that CMS demonstrate [the supplier] intended to defraud Medicare before it may revoke [the supplier]’s billing privileges,” and that section 424.535(a)(8) “simply authorizes revocation where the supplier submits a claim or claims for services that could not have been furnished to a specific individual on the date of service,” including where the beneficiary is deceased.  Id. (quoting Reife at 5) (internal quotation marks omitted).  The ALJ also cited the holding in Louis J. Gaefke, D.P.M., DAB No. 2554 (2013) that “the regulation’s plain language does not require CMS to establish fraudulent or dishonest intent to revoke a supplier’s billing privileges” and that “‘[t]he regulatory language also does not provide any exception for inadvertent or accidental billing errors.’”  Id. at 8-9 (quoting Gaefke at 7).  Having found Petitioner’s arguments to be without merit, the ALJ found there was a legitimate basis for revocation pursuant to 42 C.F.R. § 424.535(a)(8)(i).  Id. at 9.

2. The ALJ held they had no jurisdiction to adjudicate the 10-year reenrollment bar.

Petitioner argued before the ALJ that the 10-year reenrollment bar is “excessive” and was imposed without consideration of the regulatory provisions of 42 C.F.R. § 1003.140.  P. PH Br. at 10.  The ALJ indicated, however, that the only CMS actions subject to appeal under 42 C.F.R. Part 498 (the governing administrative appeal regulations) are the types

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of initial determinations specified in 42 C.F.R. § 498.3(b).  ALJ Decision at 9.  The ALJ further indicated that the Board has held that CMS’s determination of the length of the reenrollment bar under section 424.535(c) is not an appealable initial determination, and that Petitioner cited no contrary authority.  Id. (citing Vijendra Dave, M.D., DAB No. 2672, at 10 (2016)).  The ALJ therefore concluded they had “no regulatory authority to review the length of the reenrollment bar.”  Id.

3. The ALJ held that the evidence established CMS had a legitimate basis to include Petitioner on the preclusion list, pursuant to the provisions of 42 C.F.R. §§ 422.2 and 422.222.

Petitioner argued before the ALJ that CMS should have considered the factors identified in 42 C.F.R. § 1003.140 in deciding whether to include it on its preclusion list.  P. PH Br. at 4-5, 10-12.  The ALJ noted that the regulations cited by Petitioner applied to cases brought by the Office of the Inspector General, which did not apply in this case, but that 42 C.F.R. § 422.2 was applicable.  ALJ Decision at 10.  The ALJ analyzed the requirements in paragraph (1)(i)-(ii) of section 422.2’s definition of “Preclusion List,” as well as the factors for making a determination that the underlying conduct that led to the revocation is “detrimental to the best interests of the Medicare program” under paragraph (1)(iii).  Id.  The ALJ found that the first two regulatory requirements for placement on the preclusion list were met in light of the fact that the revocation was based on 42 C.F.R. § 424.535(a)(8)(i) and that Petitioner was subject to a 10-year reenrollment bar pursuant to section 424.535(c).  Id.  Additionally, the ALJ found that Petitioner’s conduct was based on the “undisputed fact that it received notice of the deaths of Medicare beneficiaries it was serving and yet did nothing to stop the ongoing billing for those individuals.”  Id. at 11.  The ALJ assessed that while Petitioner’s business, like all businesses, was negatively impacted by the pandemic, “to seek funds for itself during this time from the Medicare program on behalf of beneficiaries it knew were deceased would clearly have a negative impact on funds available for other living Medicare beneficiaries” which demonstrated “at least a negligent disregard for the integrity of the Medicare program.”  Id.  Accordingly, the ALJ concluded CMS was warranted in determining that Petitioner’s conduct was detrimental to the best interests of the Medicare program, and CMS had a legitimate basis for placing Petitioner on the preclusion list.  Id.

Proceedings before the Board

Petitioner’s request for Board review does not identify any particular issue with the ALJ’s conclusions that CMS had a legitimate basis to revoke Petitioner’s Medicare enrollment and billing privileges under 42 C.F.R. § 424.535(a)(8)(i), that the 10-year reenrollment bar was not subject to review under 42 C.F.R. Part 498, and that CMS lawfully placed Petitioner on the preclusion list pursuant to 42 C.F.R. §§ 422.2 and 422.222.  See Request for Review (RR).  Petitioner repeated its arguments that the “error in billing” during the pandemic was related to staffing shortage and was not a fraud and

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abuse case as CMS stated.  Id.  Petitioner also requested an opportunity to submit new evidence, including testimony from prior employees that they never received Explanations of Benefits (EOBs) with CO-13 denial codes because of post office delays during COVID-19.  Id.  Finally, Petitioner argued for the first time that no money was ever exchanged between CMS and Petitioner and that CMS never gave Petitioner an opportunity to fix the issue after being a provider for 20 years.  Id. 

In a letter acknowledging receipt of the request for review, the Board informed Petitioner that 42 C.F.R. § 498.86(a) precludes the Board from admitting or considering evidence in addition to the evidence presented to the ALJ.  See Dec. 21, 2023 Acknowledgment of RR at 1.  The Board therefore rejected Petitioner’s request for additional time to gather and submit new evidence.  Id. at 2.  The Board also established a deadline for the submission of a response brief by CMS and informed Petitioner it could submit a reply within 15 days after receiving CMS’s response.  Id.

CMS timely filed a response brief, asserting that Petitioner failed to make a proper request for review, that the ALJ correctly affirmed CMS’s revocation determination and placement of Petitioner on the preclusion list, and that the ALJ had no jurisdiction to review the 10-year reenrollment bar.  See Response Br. at 6-8, 9.  CMS further asserts that the ALJ considered and properly rejected Petitioner’s initial “staffing shortage” and “unintentional” billing arguments, and that any new evidence regarding these arguments would not change the ALJ’s Decision, which relied on clear regulatory language that “‘does not provide any exception for inadvertent and accidental billing’” or require CMS to prove that the supplier “intentionally” submitted claims for services that could not have been furnished on the date of service.  Id. at 8 (quoting ALJ Decision at 9, and noting the ALJ’s reliance on Gaefke and Bruggeman).  CMS argues that it is completely irrelevant whether Petitioner received reimbursements for the impossible claims it submitted, and challenges Petitioner’s “new” arguments that it never received notices of the 10 beneficiaries’ deaths and was given no opportunity to correct the billing issue.  Id. at 10-11.    

Petitioner was on notice of the opportunity to file a reply brief but did not file one.

Standard of Review

The standard of review on a disputed factual issue is whether the ALJ’s 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’s decision is erroneous.  See Duke Ahn, M.D., DAB No. 3093, at 7 (2023); Guidelines – Appellate Review of Decisions of Administrative Law Judges Affecting a Provider’s or Supplier’s Enrollment in the Medicare Program (Guidelines), “Completion of the Review Process,” ¶ (c), available at https://www.hhs.gov/about/agencies/dab/different-appeals-at-dab/appeals-to-board/guidelines/enrollment/index.html.

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Analysis

On review of a determination to revoke a supplier’s Medicare enrollment, an ALJ and the Board decide only whether CMS has established a lawful basis for the revocation.  Global MD Systems, Inc., DAB No. 3103, at 7 (2023).  The regulations are clear that a request for review of an ALJ decision must specify the issues, the findings of fact or conclusions of law with which the appealing party disagrees and the basis for contending that the findings and conclusions are incorrect.  42 C.F.R. § 498.82(b); see also Guidelines, “Starting the Review Process, ¶ (d).  Failure to articulate at least some disagreement with the bases for the ALJ decision permits the Board to summarily affirm the ALJ's findings of fact and conclusions of law.  See Arthur L. Jenkins III, M.D., et al., DAB No. 3070, at 7 (2022); Amber Mullins, N.P., DAB No. 2729, at 5 (2016).

We find the ALJ Decision is supported by substantial evidence and free of legal error.  Although Petitioner for the most part reiterates certain arguments and requests for relief before the Board, those arguments and requests were fully considered and properly rejected by the ALJ.  See ALJ Decision.  Petitioner identifies no error in the ALJ’s analysis of those issues, and we find no error.

While it is true that CMS has “discretion to consider unique or mitigating circumstances [or “notable circumstances,” as Petitioner described the COVID-19 pandemic] in deciding whether, or how, to exercise its revocation authority, ALJs and the Board may not substitute their discretion for that of CMS in determining whether revocation is appropriate under all the circumstances.”  Global MD Systems at 10-11 (internal quotation marks omitted).  When CMS establishes the regulatory elements necessary for the revocation, the ALJ and the Board must sustain the revocation and have no authority to substitute their own discretion for CMS’s in determining whether revocation is appropriate.  Id.; see also Ahn at 7.  Here, because CMS indisputably established the elements necessary to revoke Petitioner’s enrollment under section 424.535(a)(8)(i), the ALJ committed no error in upholding Petitioner’s revocation.  Correspondingly, the ALJ properly concluded that because (1) Petitioner’s enrollment was revoked on a basis other than section 424.535(a)(3), (2) Petitioner is under a reenrollment bar, and (3) CMS reasonably determined that the conduct underlying Petitioner’s revocation is detrimental to the Medicare program, CMS had a legitimate basis for placing Petitioner on the preclusion list.  ALJ Decision at 10-11.

With regard to the “new” evidence Petitioner sought to offer in this appeal – namely, employee testimony that it did not receive EOBs with CO-13 denial notices – no such evidence (or related argument) was presented on reconsideration or to the ALJ with regard to the 43 claims at issue on appeal.  Accordingly, this issue is not properly before the Board.  See 42 C.F.R. § 498.86(a); see also Michael B. Zafrani, M.D., DAB No. 3075, at 12-13 (2022); Heidi Woody, NP, DAB No. 3102, at 18-19 (2023) (Board may not admit or consider evidence that was not introduced before the ALJ in provider or

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supplier Medicare enrollment cases).  Moreover, not only did Petitioner fail to raise this issue on reconsideration, or before the ALJ, Petitioner made statements implying it had received such EOBs before the improper claims were submitted but failed to act on them – for example, stating that “daily tasks and procedures quickly fell behind and ‘stop billing’ faxes were not sent in a timely manner,” and that it reached out to the billing contractor for assistance “after noticing the backlog of paperwork.”  CMS Ex. 4, at 2; see also CMS Ex. 7, at 1-2 (letter from Petitioner’s billing contractor asserting that based on the volume of Medicare claims submitted on a daily basis, the DMEPOS rentals were “billed automatically on the anniversary date,” and that because it was “too time consuming to perform eligibility [verification] for this vast amount of patients at one time monthly,” the EOBs “got overlooked” and as a result, changes to the process were implemented effective September 1, 2020); CMS Ex. 2, at 2 (billing supplier letter listed as Exhibit 2, Attachment A to Petitioner’s request for reconsideration). 

Finally, the remaining “new” arguments may also not be considered for the reasons stated above.  Even if Petitioner’s contention that “[n]o monies were exchanged between CMS and [Petitioner] due to the [billing] error[s]” were properly before us, it is immaterial because section 424.535(a)(8)(i) does not require that a supplier receive Medicare payment based on an improper claim, only that the supplier submit a claim for services that could not have been provided on the claimed date of service.  See Arriva Medical, L.L.C., DAB No. 2934, at 14 (2019) (“reject[ing] the notion that a supplier must actually receive Medicare payment [based on an erroneous or improper claim] to be subject to revocation under” section 424.535(a)(8)).  

With regard to Petitioner’s additional “new” contention that CMS did not provide it “an opportunity to fix the issue after being a provider for 20 years,” Petitioner cites no authority for CMS requiring an opportunity to correct, and we are aware of none.  Even if this contention were properly before us, affording the supplier opportunity to correct would fall within the discretion of CMS, addressed above.  CMS stated in the 2008 preamble to the final rule that promulgated the original version of section 424.535(a)(8) that it “will not revoke billing privileges under [that section] unless there are multiple instances, at least three, where abusive billing practices have taken place.”  73 Fed. Reg. 36,448, 36,455 (June 27, 2008); see also Arriva at 11 (citing 73 Fed. Reg. at 36,455); and Sheetal Kumar M.D., P.A., DAB No. 2965, at 1-2 (2019) (“[CMS] will not revoke billing privileges unless there are multiple instances . . . where abusive billing practices have taken place. . . .  [P]roviders and suppliers are responsible for the claims they submit or the claims submitted on their behalf . . . [I]t is essential that providers and suppliers take the necessary steps to ensure they are billing appropriately for services furnished to Medicare beneficiaries” (quoting 73 Fed. Reg. at 36,455).).  Petitioner submitted seven claims for beneficiaries who were deceased between January 1, 2020 and March 19, 2020 (the date of the EO).  Each of those provided an opportunity to correct the billing process, but neither Petitioner nor its billing contractor took appropriate action to fix that process.

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Conclusion

The Board affirms the ALJ Decision upholding the revocation of Petitioner’s Medicare enrollment and billing privileges under 42 C.F.R. § 424.535(a)(8)(i), and Petitioner’s placement on the preclusion list under 42 C.F.R. §§ 422.2 and 422.222.

Endnotes

¹  Background information is drawn from the ALJ Decision and the record before the ALJ and is not intended to substitute for the ALJ’s findings.

²  The initial determination identified 64 claims for services for 13 beneficiaries who were deceased on the dates of the service as the basis for the revocation.  CMS Ex. 3, at 5-7.  Upon reconsideration, CMS considered additional evidence provided by Petitioner and concluded that only 43 of those claims, for 10 beneficiaries, sought payment for services that could not have been furnished on the dates of service because the beneficiaries were then deceased.  CMS Ex. 2, at 5.  Only these 43 claims were considered by the ALJ.  ALJ Decision at 2 n.1.

³  California’s governor issued Executive Order (EO) N-33-20 on March 19, 2020.  See P. Ex. 11.  This EO directed all individuals living in California “to stay home or at their place of residence except as needed to maintain continuity of operations of the federal critical infrastructure sectors” which included the supply chain, public health, and health care.  Id. at 1-2.  The EO further stated that individuals working in a critical infrastructure sector “may continue their work because of the importance of these sectors to Californians’ health and well-being.”  Id. at 2.