Hossain Sahlolbei, M.D., DAB No. 3139 (2024)

FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE DECISION

Hossain Sahlolbei, M.D. (Petitioner) appeals the decision of an administrative law judge (ALJ) in Hossain Sahlolbei, M.D., DAB CR6365 (2023) (ALJ Decision). The ALJ sustained a determination by the Centers for Medicare & Medicaid Services (CMS) to deny Petitioner’s enrollment in the Medicare program under 42 C.F.R. § 424.530(a)(3) based on his felony grand theft conviction. For the reasons stated below, we affirm the ALJ Decision.

Legal Background

A supplier of Medicare services, such as a physician, must enroll in the Medicare program to receive payment for Medicare-covered items and services furnished to Medicare beneficiaries.  42 C.F.R. §§ 400.202 (defining “supplier”), 424.500, 424.505. The Medicare enrollment process includes identifying a supplier, validating a supplier’s eligibility to provide items or services to Medicare beneficiaries, identifying and confirming the supplier’s practice locations, and granting the supplier Medicare “billing privileges,” i.e., the right to claim and receive payment for health care services provided to program beneficiaries. Id. § 424.502 (defining “Enroll/Enrollment”), 424.505 (explaining billing privileges). To enroll in Medicare, a supplier must submit a complete and accurate enrollment application with supporting documentation, including documentation necessary to establish the supplier’s eligibility to furnish Medicare-covered items or services. Id. § 424.510(d).

CMS may deny a supplier’s enrollment in the Medicare program for any of the reasons enumerated in 42 C.F.R. § 424.530(a).¹ Section 424.530(a)(3) authorizes CMS to deny enrollment if the supplier “was, within the preceding 10 years, convicted (as that term is

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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. § 424.530(a)(3). An individual is “convicted” within the meaning of section 1001.2 when, among other things, a court enters a judgment of conviction, a court accepts an individual’s guilty plea, or when an individual has entered into a deferred adjudication or other arrangement where judgment of conviction has been withheld. Id. § 1001.2 (defining “Convicted”). CMS has determined that certain criminal offenses or categories of criminal offenses – those enumerated in section 424.530(a)(3)(i)(A)-(D) – are per se detrimental to the Medicare program and its beneficiaries. John A. Hartman, D.O., DAB No. 2911, at 15-17 (2018). One such per se detrimental offense category is “[f]inancial crimes, such as extortion, embezzlement, income tax evasion, insurance fraud and other similar crimes for which the individual was convicted.” 42 C.F.R. § 424.530(a)(3)(i)(B).

CMS’s decision to deny a supplier’s Medicare enrollment is an “initial determination” that may be appealed under 42 C.F.R. Part 498. See 42 C.F.R. § 498.3(a)(1), (b)(17). The supplier must first request “reconsideration” of the initial determination and, if dissatisfied with the reconsidered determination, may request a hearing before an ALJ. Id. §§ 498.5(l), 498.22, 498.40(a).  A party dissatisfied with an ALJ’s decision may request Board review of the ALJ decision. Id. §§ 498.5(l)(3), 498.80.

Case Background

Petitioner is a physician and surgeon who initially enrolled in Medicare in 2008. P. Ex. 1, at 1-2; CMS Ex. 12, at 1. Petitioner worked at Palo Verde Hospital (Hospital) located in Blythe, California. P. Ex. 1. In 2009, Petitioner served as codirector of surgical services at the Hospital and was a member of the Hospital’s medical executive committee. People v. Sahlolbei, No. E068099, 2019 WL 4302213, at *1 (Cal. Ct. App. Sept. 11, 2019).² Petitioner solicited and hired Dr. B., an anesthesiologist, to provide contract anesthesia services at the Hospital. Id. Petitioner made false and misleading representations that induced the Hospital to execute a separate contract with Dr. B. with terms that the Hospital would not have agreed to had Petitioner not made the false and misleading statements. Id. at *14. When Petitioner hired Dr. B., the two physicians secretly agreed that Dr. B. would pay Petitioner a portion of Dr. B.’s pay from the

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Hospital. Id. at *1.³ The Hospital’s chief executive officer, Dr. K, learned of Petitioner’s secret side-contract with Dr. B., and reported the matter to the district attorney’s office. Id. at *4.

By Information, filed on August 4, 2014, in the Superior Court of California, County of Riverside, Petitioner was charged with grand theft, a felony under California Penal Code, Section 487(a). CMS Ex. 5.⁴ The Information alleged that “on or about October 2009, . . . [Petitioner] did willfully and unlawfully steal and take and defraud money, labor, real and personal property of [Dr. B.], of a value exceeding Nine Hundred Fifty Dollars ($950.00) to wit: MONEY.” Id. In June 2016, the prosecutors amended the Information, over Petitioner’s objection, to substitute the Hospital as the victim of grand theft in place of Dr. B. See Sahlolbei, 2019 WL 4302213, at *6; see also CMS Ex. 4, at 10.

On October 6, 2016, a jury found Petitioner guilty of grand theft by false pretenses, a felony, under section 487(a) of the California Penal Code. See Sahlolbei, 2019 WL 4302213, at *1; see also CMS Ex. 6; CMS Ex. 11, at 21. Petitioner was “convicted of taking over $500,000 from the Hospital by false pretenses, by receiving secret kickbacks from Dr. B.” Sahlolbei, 2019 WL 4302213, at *1. The trial court initially sentenced Petitioner to three years of probation and ordered Petitioner to pay restitution to the Hospital in the amount of $508,150.  CMS Ex. 1, at 21-22 (initial sentencing); see also CMS Ex. 4, at 1, 8. The Court of Appeal, however, overturned the probation order and remanded the matter to the trial court for resentencing. See People v. Superior Ct., No. E068102, 2018 WL 773456 (Cal. Ct. App. Feb. 8, 2018).⁵ Upon remand, the trial court vacated its probation order, sentenced Petitioner to 16 months in jail, and further ordered Petitioner to pay restitution to the Hospital in the amount of $588,669. See Sahlolbei, 2019 WL 4302213, at **1, 16; see also CMS Exs. 7, 10.

Petitioner’s conviction and sentence were affirmed on appeal. See Sahlolbei, 2019 WL 4302213, at *13 (“[T]he evidence was more than sufficient to support defendant’s

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conviction for theft of money from the Hospital by false pretenses.”). A conviction for grand theft by false pretenses requires that the prosecution prove: “(1) the defendant made a false pretense or representation to the owner of property; (2) with the intent to defraud the owner of that property; and (3) the owner transferred the property to the defendant in reliance on the representation.” Id. at *12 (citing People v. Miller, 97 Cal. Rptr. 2d 684, 693 (Cal. Ct. App. 2000)). The Court of Appeal concluded that each of these elements were satisfied:

[T]here was substantial evidence supporting a reasonable inference that defendant intended that his false representations induce the Hospital to enter into the 2009 contract [with Dr. B.]; the representations were material to inducing the Hospital to agree to the terms of the contract; the Hospital relied on defendant’s false representations; the Hospital, as a result, executed the contract and paid money to Dr. B. for relocating and providing anesthesia services; and the Hospital reasonably presumed its funds would be paid entirely to Dr. B. and not be funneled in whole or in part through Dr. B. as secret kickback payments to defendant. There is also substantial evidence that, had the Hospital been aware of defendant’s side-contract with Dr. B., the Hospital would not have agreed to the terms of the Hospital’s 2009 contract with Dr. B.

Id. at *14. Moreover, in rejecting Petitioner’s contention that the trial court erred by denying probation and sentencing him to jail, the Court of Appeal wrote:

Defendant stole over $500,000 from the Hospital, a small, financially challenged public hospital, which served the Blythe community. Defendant abused a position of trust within the Hospital as chief of staff, as advisor to the board of directors of the Hospital district, and as a member of its [Medical Executive Committee]. Defendant’s crime was committed in a sophisticated, surreptitious manner. The crime was concealed from everyone except himself and Dr. B., who was the vessel through which defendant stole funds from the Hospital. Furthermore, the grand theft likely would not have been discovered but for Dr. B. ultimately disclosing the egregious scheme.

Id. at *18.

By letter dated August 14, 2018, Noridian Healthcare Solutions (Noridian), a CMS contractor, revoked Petitioner’s Medicare billing privileges, effective October 6, 2016, based on Petitioner’s felony conviction, subsequent Medicaid termination, and failure to report his felony conviction. CMS Ex. 8.  Noridian imposed a three-year re-enrollment bar and noted that to re-enroll in Medicare, Petitioner “must meet all requirements” for

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his provider or supplier type. Id. at 2.⁶ Petitioner initially challenged the revocation, but later withdrew his appeal, making the revocation determination administratively final. See CRD Docket No. C-19-635, #11.

In October 2022, after expiration of the re-enrollment bar, Petitioner applied to enroll in Medicare. CMS Ex. 3. By initial determination dated December 13, 2022, Noridian denied Petitioner’s enrollment under 42 C.F.R. § 424.530(a)(3) based on his felony grand theft conviction, which CMS determined “is detrimental to the best interests of the Medicare program and its beneficiaries.” CMS Ex. 2.

Petitioner requested reconsideration. CMS Ex. 1 (reconsideration request with attachments). CMS issued a reconsidered determination upholding the enrollment denial because Petitioner was, within the preceding 10 years, convicted of a felony offense that CMS determined is per se detrimental to the best interests of the Medicare program and its beneficiaries. See CRD Docket No. C-23-534, #1a (Reconsidered Determination) at 4-5 (explaining that Petitioner’s felony grand theft offense was a “financial crime” as described in section 424.530(a)(3)(i)(B) and among the enumerated offenses that “CMS has determined, through public notice-and-comment rulemaking, . . . are per se detrimental to the best interests of the Medicare program and its beneficiaries”).

CMS also separately found Petitioner’s offense to be detrimental to the Medicare program and its beneficiaries “based on the specific facts and circumstances underlying the felony conviction.” Id. at 5. CMS noted that the seriousness of Petitioner’s offense is demonstrated by the fact that Petitioner was sentenced to 16 months of incarceration. Id. CMS found Petitioner’s felony offense “displays dishonesty, untrustworthiness, a lack of integrity, and poor judgment” and “calls into question his trustworthiness and veracity.” Id. CMS explained that the program relies on the “trustworthiness and best judgment of our Medicare partners” and that it “stands to reason that his behavior could detrimentally impact the Medicare program through misrepresented claims for payment” that would negatively impact the Medicare Trust Funds and beneficiaries. Id. CMS further rejected Petitioner’s assertion that denying his enrollment would create an “undue hardship” for Medicare beneficiaries in his community, stating that CMS must “balance” such concerns against its “duty to protect Medicare beneficiaries and Trust Funds.” Id. CMS found that, “[i]n this case, . . . based on the facts underlying Dr. Sahlolbei’s felony conviction, enrollment denial is appropriate here.” Id.

CMS imposed no re-enrollment bar in connection with its reconsidered determination. Id. at 5-6. Consistent with 42 C.F.R. § 424.530(b), CMS advised Petitioner that he “may submit a new Medicare enrollment application after the date of this decision” or “choose to further appeal the current enrollment denial.” Id. at 5.

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ALJ Proceedings and Decision

Petitioner chose to further appeal the current enrollment denial by requesting an ALJ hearing. CRD Docket No. C-23-534, #1 (RFH). CMS submitted a prehearing brief and motion for summary judgment along with 12 exhibits (CMS Exs. 1-12). Petitioner submitted a prehearing brief and opposition to summary judgment along with Petitioner’s C.V. (P. Ex. 1), the declaration of S.A., current CEO of the Hospital (P. Ex. 2), and Petitioner’s declaration (P. Ex. 3). ALJ Decision at 1. The ALJ received the parties’ exhibits into the record, without objection, but found the two declarations offered by Petitioner to be irrelevant. Id. at 2. The ALJ did not decide the case on summary judgment, and instead issued a decision based on the written record. Id. at 1-2.

The ALJ determined CMS had a lawful basis to deny Petitioner’s enrollment because the “evidence unequivocally establishes that Petitioner was convicted of a felony falling within the reach of 42 C.F.R. § 424.530(a)(3).” ALJ Decision at 3. Describing Petitioner’s crime as a “scheme to systematically misappropriate funds,” the ALJ found Petitioner’s offense “had a substantial financial impact” as evidenced by the requirement that he pay more than $500,000 in restitution to the Hospital. Id. at 2. The ALJ further explained: “It is undisputed that Petitioner was convicted of a felony within the ten-year period prior to the determination to deny his enrollment application. That felony – Grand Theft – plainly is a ‘financial crime’ as the regulation utilizes that term. Stealing funds, or misappropriating them, is of a class of crimes that includes embezzlement, one of the examples cited by the regulation to describe a financial crime.” Id. at 3. The ALJ thus concluded that “Petitioner’s crime falls within the regulation’s ambit and denial of enrollment is amply justified by that crime.” Id.; see also id. at 4 (“[T]here is a clear regulatory basis to deny enrollment. Petitioner was convicted of a financial crime as is defined by 42 C.F.R. § 424.530(a)(3)(i)(B).”).

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. See 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-to-board/guidelines/enrollment/index.html.

Analysis

Petitioner filed a Request for Review (RR) challenging the ALJ’s factual findings and legal conclusion and asking that the Board direct CMS to “grant” his Medicare enrollment application. RR at 3. Petitioner argues that the ALJ: (1) “made incorrect factual findings regarding the manner of [his] compensation” and “incorrectly found that

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Petitioner was convicted of a financial crime”; (2) “incorrectly found that the ALJ could not review an abuse of discretion by CMS as to whether [his] crime was detrimental to the best interests of the Medicare program and its beneficiaries;” (3) “incorrectly failed to find that CMS/Noridian should be estopped from denying [his] enrollment;” (4) “incorrectly failed to consider the Declarations of Petitioner and [S.A.]”; and (5) erroneously failed to consider Petitioner’s argument concerning “the OIG Waiver of Exclusion provisions.” RR at 6. For the reasons explained below, we reject each of Petitioner’s arguments and affirm the ALJ’s conclusion that CMS had a lawful basis to deny Petitioner’s enrollment under 42 C.F.R. § 424.530(a)(3).⁷

I. CMS had a lawful basis to deny Petitioner’s enrollment because his felony conviction for grand theft by false pretenses was a financial crime within the meaning of section 424.530(a)(3)(i)(B).

Section 424.530(a)(3) authorizes CMS to deny a Medicare enrollment application if, within the preceding 10 years, the applicant was convicted of a felony offense “that CMS determines is detrimental to the best interests of the Medicare program and its beneficiaries.” 42 C.F.R. § 424.530(a)(3). The offenses or categories of offenses enumerated under section 424.530(a)(3)(i) are those that CMS deems per se detrimental to the Medicare program and its beneficiaries. See John A. Hartman, D.O., DAB No. 2911, at 15-17 (2018) (discussing Letantia Bussell, M.D., DAB No. 2196, at 9-10 (2008)). CMS need not make a case-specific determination about whether an offense is detrimental if the offense falls within one of the categories that CMS has determined, by rulemaking, to be per se detrimental to Medicare and its beneficiaries. See Anthony Del Piano, M.D., DAB No. 3096, at 13 (2023).

One such category of per se detrimental offenses is “[f]inancial crimes, such as extortion, embezzlement, income tax evasion, insurance fraud and other similar crimes for which the individual was convicted.” 42 C.F.R. § 424.530(a)(3)(i)(B); see also 71 Fed. Reg. 20,754, 20,760 (April 21, 2006) (“Felonies that we determine to be detrimental to the best interests of the Medicare program or its beneficiaries include . . . financial crimes, such as extortion, embezzlement, income tax evasion, making false statements, insurance fraud, and other similar crimes for which the individual was convicted.”). As the ALJ noted, the offenses listed in section 424.530(a)(3)(i)(B) are not exclusive but examples of the types of offenses that may constitute financial crimes. ALJ Decision at 3; see also Abdul Razzaque Ahmed, M.D., DAB No. 2261, at 10 (2008) (“The words ‘such as’ imply that the subsequent list of illustrative crimes, including crimes similar to those named in the

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list, are not the only set of crimes that may be considered ‘financial.’”); Stanley Beekman, D.P.M., DAB No. 2650, at 7 (2015) (“CMS may revoke Medicare billing privileges under . . . section 424.535(a)(3) based on any financial crime, regardless of whether the supplier’s particular crime is specified in the regulation’s illustrative list of financial crimes.”).

Petitioner does not dispute that he was convicted of felony grand theft within the 10 years preceding his application but denies that his offense is a “financial crime” within the meaning of section 424.530(a)(3)(i)(B). RR at 7.  Petitioner contends that he merely “arranged for” Dr. B. to contract with the Hospital to perform anesthesia services, with an agreement that Dr. B. pay Petitioner a portion of the funds from the Hospital as a “commission.” Id. Petitioner insists that the Hospital did not claim to be harmed and that he did not make any “actual misrepresentation.” Id. Petitioner further argues that he had “no intent to defraud anyone” and that his case appears to be “the first case of grand theft by misrepresentation prosecuted in the United States relating to a contract negotiation.” Id. at 8 (“[T]he nature of the grand theft alleged was an undisclosed commission being received by the defendant.”). For the reasons explained below, we reject each of Petitioner’s arguments.

As an initial matter, none of Petitioner’s contentions, even if true, demonstrates that his crime was not a financial one. Petitioner does not contend, nor could he, that his grand theft conviction did not relate to the taking of money. Moreover, Petitioner’s efforts to characterize his offense as something other than a financial crime have no merit; Petitioner was “convicted of taking over $500,000 from the Hospital by false pretenses, by receiving secret kickbacks from Dr. B.” Sahlolbei, 2019 WL 4302213, at *1; see also id. at *18 (holding that Petitioner “stole over $500,000 from the Hospital,” “abused a position of trust,” and “concealed” the crime “from everyone except himself and Dr. B., who was the vessel through which [Petitioner] stole funds from the Hospital”). As a result of this crime, the trial court sentenced Petitioner to 16 months in jail and ordered him to pay restitution to the Hospital in the amount of $588,669.  See id. at **1, 16. This is precisely the type of felony offense that CMS has deemed a “financial crime” warranting a Medicare revocation or enrollment denial. Cf. Lorrie Laurel, PT, DAB CR2724, 2013 WL 3439757 (Mar. 13, 2013) (upholding supplier’s revocation under section 424.535(a)(3) based on felony conviction for grand theft because the supplier, who stole more than $20,000 from her hospital employer, was convicted of a financial crime), aff’d, Lorrie Laurel, PT, DAB No. 2524 (2013).

Petitioner was not prosecuted and convicted of felony grand theft merely because he received an “undisclosed commission.” Nor is there any merit to Petitioner’s assertion that there was no “actual misrepresentation” or fraudulent intent. Petitioner cites no authority (and we are aware of none) suggesting that an “actual misrepresentation” and fraudulent intent are required to show that an offense is a “financial crime.” In any event, a conviction for grand theft by false pretenses necessarily requires proof that (1) the

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defendant made a false representation to the owner of property; (2) with the intent to defraud; and (3) the owner transferred property to the defendant in reliance on the false representation. Sahlolbei, 2019 WL 4302213, at *12. The Court of Appeal held that these elements were satisfied and affirmed Petitioner’s conviction. Id. at **13-14.

Similarly, remarks made by the trial court at the initial sentencing hearing about Petitioner making a material omission, rather than an actual misrepresentation, are beside the point. RR at 7 (citing CMS Ex. 1, at 24). Such remarks do not negate Petitioner’s conviction for grand theft or the superseding determination of the Court of Appeal concluding that the evidence at trial was more than sufficient to support that conviction.  Sahlolbei, 2019 WL 4302213, at **13-14, 16.⁸

Petitioner also argues that a restitution order does not necessarily mean his crime is a financial crime because some non-financial crimes, like battery, may result in restitution. RR at 9. Petitioner, however, was convicted of grand theft and ordered to pay restitution due to his “theft of over $500,000” from the victim Hospital. Sahlolbei, 2019 WL 4302213, at *16. The ALJ did not err in relying on the restitution order as further evidence that Petitioner was convicted of a “financial crime.”

Petitioner’s assertion that, according to his previous attorney, his particular grand theft conviction may be the first prosecution of its kind in the United States is not only an unsupported statement of law, but also irrelevant to the question of whether Petitioner’s offense is a “financial crime.” In this regard, we further note that the Court of Appeal twice rejected Petitioner’s argument that his offense was an “unusual case” that should qualify him for probation. See People v. Superior Ct., 2018 WL 773456, at *6 (“[A] finding of an unusual case, and hence, eligibility for probation, is not supported.”); Sahlolbei, 2019 WL 4302213, at *18 (“[T]he trial court thus appropriately found defendant did not establish, nor could he establish, that his case was an ‘unusual case’ qualifying him for probation.”).

Further, contrary to Petitioner’s assertion that the Hospital did not claim to be harmed, the record reflects that the CEO of the Hospital, Dr. K., reported Petitioner’s criminal violations to the district attorney and testified against Petitioner at his criminal trial.  Sahlolbei, 2019 WL 4302213, at **4, 5. The Hospital’s CEO testified, among other things, that Petitioner had “threatened him and the Board that if they did not approve [Dr. B.’s] contract, ‘you will see what happens,’ alluding to a Hospital shutdown.”  Id. at *14. Regardless of whether the Hospital’s current CEO believes the Hospital was defrauded by Petitioner, the immutable fact remains that Petitioner was convicted of felony grand theft for stealing, by false pretenses, more than $500,000 from the Hospital.

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Finally, to the extent Petitioner is suggesting that no crime was committed because there was purportedly no misrepresentation, no fraudulent intent, no similar prior prosecution, and no victim, these arguments amount to an impermissible collateral attack on the validity of his conviction. “[T]he regulations governing this proceeding authorize hearing and appeal rights only with respect to specific federal agency determinations. ”Douglas Bradley, M.D., DAB No. 2663, at 16 (2015) (citing 42 C.F.R. §§ 498.3, 498.5). “Nothing in those regulations, or in the Medicare statute, even remotely suggests that they were intended [to] provide a forum to collaterally challenge adverse decisions by federal or state courts or non-federal regulatory bodies.” Id.; see also Mark Koch, D.O., DAB No. 2610, at 2-4 (2014) (holding that allegations questioning the validity of a criminal conviction upon which the supplier’s revocation was based were immaterial because the revocation was based on the fact of the conviction, and because there was no evidence that the conviction had been vacated or overturned). Thus, to the extent Petitioner is arguing that no crime was committed, that argument amounts to a collateral attack on his conviction that cannot be raised in this forum.

In sum, we find no error in the ALJ’s finding that Petitioner’s felony grand theft offense “plainly is a ‘financial crime’” within the meaning of section 424.530(a)(3)(i)(B), and that Petitioner’s enrollment denial is “amply justified by that crime.” ALJ Decision at 3. Accordingly, we affirm the ALJ’s conclusion that CMS had a legal basis to deny Petitioner’s Medicare enrollment under section 424.530(a)(3)(i)(B).

II. The ALJ did not err in declining to review CMS’s exercise of discretion in determining that, under the circumstances, Petitioner’s enrollment denial was appropriate.

“The ALJ’s (and the Board’s) role in an appeal of CMS’s denial or revocation of enrollment in the Medicare program is to determine whether CMS had a legal basis for its action.” Dr. Robert Kanowitz, DAB No. 2942, at 4 (2019). “If it did, then we are bound to affirm the denial or revocation.” Id. “We do not review CMS’s exercise of discretion in determining to take the action under review.” Id. Thus, “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.” Brian K. Ellefsen, DO, DAB No. 2626, at 7 (2015).

Petitioner argues that the ALJ erred by concluding that he could not review “whether Petitioner’s crime was detrimental to the best interests of the Medicare program and its beneficiaries.” RR at 6, 11 (“There is no risk of any detriment to the Medicare program, or its beneficiaries, and the ALJ had discretion to review CMS’s determination.”). Petitioner contends that CMS’s reconsidered determination “relied on the existence of the conviction, and did not explore or analyze the circumstances and the mitigating factors that support” granting Petitioner enrollment. Reply at 2-3; see also RR at 13-14. According to Petitioner, “there was no exercise of discretion” by CMS and, therefore, the

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ALJ was authorized “to exercise his or her discretion in review.” Reply at 2-3 (citing Ellefsen at 5-7). We reject Petitioner’s arguments because they misconstrue Board authority, including Ellefsen, and fail to discern the distinction between CMS’s discretionary decision to deny enrollment and its separate determination (by rule-making) that certain offenses or categories of offenses, like financial crimes, are per se detrimental to the Medicare program and its beneficiaries.⁹

As noted above, the Board has long held that CMS need not make a case-specific determination about whether an offense is detrimental to Medicare and its beneficiaries if the offense falls within one of the categories that CMS has determined to be per se detrimental. See Del Piano at 13 (“Where, as here, the felony offense in question is one CMS identified by regulation as per se, or presumptively, detrimental to Medicare, CMS is not required to make a case-specific determination of whether it is detrimental to Medicare.”); Hartman, DAB No. 2912, at 14-15 (holding that no case-specific determination on whether the supplier’s offense is detrimental was required because the offense is one of the enumerated per se detrimental offenses under section 424.530(a)(3)). “Because the regulation establishes that Petitioner’s felony offense is detrimental to Medicare and its beneficiaries as a matter of law,” neither the Board (nor the ALJ) may “evaluate the circumstances of his 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 (as Petitioner is evidently asking the Board to do).” John Hartman, D.O., DAB No. 2564, at 5 (2014). Having concluded that Petitioner’s grand theft conviction was a “financial crime” within the meaning of section 424.530(a)(3)(i)(B), the ALJ correctly declined to look behind that conviction to make a conflicting determination about whether it is detrimental to Medicare and its beneficiaries.

Petitioner’s argument that CMS, in its reconsidered determination, improperly “relied on its per se analysis” and failed to conduct a “true discretionary analysis” is also without merit. RR at 13-14. Relying on Ellefsen, Petitioner contends that absent such a discretionary analysis in the reconsidered determination, “ALJ review is appropriate” to determine whether CMS properly exercised its discretion. Id. at 14. Petitioner’s reliance on Ellefsen is misplaced. In Ellefsen, the Board found it was unclear whether CMS’s contractor “recognized that it had the discretion to grant or deny [the supplier’s] application, despite his 2010 felony convictions for income tax evasion.” Ellefsen at 4.

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The Board was concerned about certain language in the contractor’s notice letters, including the reconsidered determination, making it unclear whether the contractor “actually recognized that it had discretion” to approve the supplier’s enrollment application despite his felony convictions. Id. at 7-8. The Board remanded the matter to the ALJ to “clarify whether [the contractor] actually exercised the discretion provided by section 424.530(a)(3) when it denied Petitioner’s enrollment application.” Id. at 9.

We have no such concern regarding CMS’s enrollment denial in this case. Nothing in the reconsidered determination indicates that CMS did not recognize its discretionary authority to grant or deny Petitioner’s enrollment application. To the contrary, CMS expressly considered the various mitigating factors Petitioner raised on reconsideration, including the needs of his community, but stated that CMS must “balance” such concerns against its “duty to protect Medicare beneficiaries and Trust Funds.” Reconsidered Determination at 5. CMS concluded that “[i]n this case, . . . based on the facts underlying Dr. Sahlolbei’s felony conviction, enrollment denial is appropriate here.” Id. (emphasis added). As further evidence that CMS recognized Petitioner’s enrollment denial was not mandated by section 424.530(a)(3), CMS advised Petitioner, consistent with section 424.530(b), that he “may submit a new Medicare enrollment application after the date of this decision.” Id. This language, along with the rest of CMS’s reconsidered determination discussing Petitioner’s conviction, sentencing, and Petitioner’s various arguments in support of granting enrollment, satisfies us that CMS considered Petitioner’s circumstances and mitigating factors but ultimately decided to deny enrollment. See Hartman, DAB No. 2911, at 17-18 (rejecting reliance on Ellefsen where language in reconsidered determination did not suggest CMS was unaware that it had discretionary authority to either allow or deny re-enrollment).

Petitioner further argues that CMS’s reconsidered determination did not sufficiently “explore or analyze the circumstances and the mitigating factors” that support his enrollment (Reply at 3-5); however, the applicable regulations impose no such requirement.  Ellefsen at 9. “The regulations governing this proceeding require only that an adverse reconsidered determination must specify the ‘reasons for the determination’ and the ‘conditions or requirements of law or regulations that the affected party fails to meet.’”  Id. (citing 42 C.F.R. § 498.25(a)(2), (3)). No regulation requires that CMS “explain its reasons for exercising its discretion to deny an application” based on a qualifying felony conviction. Id. If CMS exercises its discretion to deny an enrollment application, “CMS must identify the authority that gives it that discretion, i.e., in this case, the authority in section 424.530(a)(3) to deny an application based on a felony conviction within the 10 years preceding the application.” Id. Nothing more is required. Thus, as the Board made clear in Ellefsen, CMS or its contractor may choose to deny a supplier’s or provider’s enrollment application based solely on a qualifying felony conviction and is not required to explain in a reconsidered determination the reasoning behind its exercise of discretion or to discuss any mitigating factors that the supplier or provider might raise in support of granting enrollment.  Id. at 4, 9.

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Finally, Petitioner contends that various facts and circumstances support his Medicare enrollment, asserting, among other things, that: his conviction did not involve patient care, Medicare funds, or the Medicare program; the Hospital’s current CEO, S.A., supports his re-enrollment in Medicare; his medical services are needed in his rural community, where he is the only vascular and thoracic surgeon who regularly practices there; the trial court imposed only a 16-month sentence that purportedly reflected its view that the crime “did not merit imprisonment”; the trial court had a favorable view of Petitioner’s character based, in part, on his contributions to the community and background as an immigrant from a repressive country; and Petitioner successfully completed community service and other terms of probation imposed by the medical licensing boards in California and Arizona. RR at 11-13.

These allegedly mitigating factors, whatever their merit, are not relevant to any issue before the Board because they address only “CMS’s exercise of discretion, not its legal authority to act, a stratagem we have rejected.” Edward J.S. Picardi, DAB No. 3045, at 15-16 (2021). In enrollment appeals such as this, the role of the Board (and the ALJ) is limited to determining whether CMS’s denial of enrollment “was authorized by law, and does not extend to questioning CMS’s discretion or judgment in taking such action where permitted by the applicable legal provisions.” Kanowitz at 6. In other words, we do not review CMS’s exercise of discretion in determining whether to deny enrollment. The Board reviews only whether the regulatory elements necessary for CMS to exercise its enrollment authority were satisfied. Having determined that CMS had a legal basis for denying Petitioner’s enrollment under section 424.530(a)(3), we are bound to affirm it and do not review CMS’s exercise of discretion in determining that, under the circumstances, denial is appropriate. See Kanowitz at 4; Ellefsen at 7; see also Picardi at 16 (“‘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.’”) (quoting Robert J. Tomlinson, M.D., DAB No. 2916, at 8 (2018)).

For these same reasons, we find no error in the ALJ’s finding that Petitioner’s declaration (P. Ex. 3) and the declaration of the Hospital’s current CEO (P. Ex. 2) are irrelevant. See ALJ Decision at 4 (“I am without authority to” “substitute my judgment for that of the [CMS] contractor and decide de novo whether Petitioner’s crime merits denial of enrollment,” and “[f]or that reason, I find Petitioner’s arguments and his supporting evidence to be irrelevant.”) (citing P. Exs. 2, 3). “We defer to the ALJ’s evidentiary rulings in the absence of a compelling reason not to do so.” Shelia Ann Reed, DAB No. 3059, at 11 (2022). Petitioner asserts that the declarations explain “why his being allowed to be a Medicare provider would not be a detriment, but rather would confer great benefit to the Medicare program, and in particular to the residents of the geographic area he currently serves.” RR at 15. For the reasons explained above, such matters are not relevant to any issue before the ALJ or the Board and, therefore, the ALJ did not err in finding the declarations to be irrelevant.

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III. CMS did not extend the re-enrollment bar beyond three years and the ALJ correctly rejected Petitioner’s equitable estoppel argument.

Petitioner contends that the ALJ erred by not finding that CMS was estopped from imposing a 10-year re-enrollment bar. RR at 9-11. Petitioner asserts that he relied to his detriment on the three-year re-enrollment bar imposed in connection with his revocation by allegedly foregoing: a “lucrative” professional opportunity that did not involve Medicare, the sale of a home in West Hollywood, and negotiations relating to his criminal case. Id. at 9. Petitioner notes that three years was the maximum re-enrollment bar at the time of his wrongful conduct, conviction, and revocation. Id. at 10 (citing 42 C.F.R. § 424.535(c) (2015)). He asserts that by denying his enrollment application, “CMS is essentially retroactively applying a 10-year enrollment bar.” Id. at 10 (arguing that CMS imposed a “per se ten-year bar”); see also Reply at 9 (“[The ALJ] should have found that retroactive application of the 10-year bar regulation was improper, and that the 3-year bar, which was in effect at the time of revocation, is controlling.”). According to Petitioner, the issue is whether CMS “should have been estopped from applying a 10-year enrollment bar.” RR at 11. We reject Petitioner’s estoppel argument for several reasons.

As an initial matter, CMS did not impose any re-enrollment bar in connection with Petitioner’s enrollment denial and did not extend Petitioner’s re-enrollment bar beyond three years. As previously noted, CMS advised Petitioner that, consistent with 42 C.F.R. § 424.530(b), Petitioner “may submit a new Medicare enrollment application after the date of this decision” or “choose to further appeal the current enrollment denial.” Reconsidered Determination at 5; see also Ronald Paul Belin, DPM, DAB No. 2629, at 5 (2015) (“[T]he regulations expressly permit a supplier to reapply after a denial once the determination to deny has been upheld after any appeals.”). Except in cases not applicable here, section 424.530(a)(3) “does not impose a mandatory 10-year bar to re-enrollment but rather authorizes denials within the 10-year period.” Belin at 5 (emphasis added).¹⁰ The amended regulation at section 424.535(c), which applies to revocations and became effective November 4, 2019, was never applied to bar Petitioner’s enrollment application. See 84 Fed. Reg. 47,794, 47,855 (Sept. 10, 2019).

While section 424.535(c) formerly imposed a re-enrollment bar of one to three years following revocations, section 424.530(a)(3) authorized CMS to deny enrollment where the applicant has been convicted of a qualifying felony “within the preceding 10 years.”See Kanowitz at 6. As the Board previously explained:

Under the revocation regulation (§ 424.535), the end of the re-enrollment bar does not result in automatic re-enrollment and the revoked supplier or

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provider “must re-enroll in the Medicare program through the completion and submission of a new applicable enrollment application and applicable documentation, as a new provider or supplier, for validation by CMS.” 42 C.F.R. § 424.535(d)(l). At that point, the provisions of section 424.530 apply, and they authorize CMS, within its discretion, to deny enrollment based on convictions for covered felonies within the previous 10 years.

Id. (rejecting supplier’s argument that his enrollment denial under section 424.530(a)(3) effectively violated the maximum three-year re-enrollment bar under former section 424.535(c)).

Nothing in the plain language of sections 424.535 and 424.530, or even more broadly the language in Part 424, subpart P, precludes CMS from revoking and later denying re-enrollment based on the same underlying offense. Moreover, section 424.535 does not provide that where a supplier has been revoked for a three-year period that supplier may not later be denied re-enrollment if he or she already has been barred for three years.

Hartman, DAB No. 2911, at 22 (rejecting supplier’s argument that by denying his enrollment application after the expiration of the three-year re-enrollment bar, CMS effectively imposed a bar longer than the maximum allowed).

Further, insofar as Petitioner seeks to overturn the enrollment denial on equitable estoppel grounds, the Board has repeatedly held that ALJs and the Board are bound by the applicable regulations and are not authorized to overturn an enrollment denial based on equitable doctrines. See Amber Mullins, N.P., DAB No. 2729, at 5 (2016) (“The applicable regulations . . . do not provide for consideration of such equitable arguments in ALJ or Board appeals of CMS enrollment determinations.”); Kanowitz at 7 (“[T]he Board is not authorized to reverse CMS’s enrollment denial that, we conclude, was permitted by the applicable regulations, based on the equitable considerations Petitioner offers.”).  Thus, “[t]he merits of any estoppel claim by Petitioner are ultimately immaterial because . . . the Board is not empowered to grant relief based on equitable doctrines, theories, or reasons.” Linda Silva, P.A., DAB No. 2966, at 8 n.6 (2019) (citation omitted).

Even if equitable estoppel were available in this forum (which it is not), the record evidence does not support the elements of such a claim.  “It is well-established that ‘the government cannot be estopped absent, at a minimum, a showing that the traditional requirements for estoppel are present (i.e., a factual misrepresentation by the government, reasonable reliance on the misrepresentation by the party seeking estoppel, and harm or detriment to that party as a result of the reliance) and that the government’s employees or agents engaged in ‘affirmative misconduct.’” Gregory Frazer, Au.D., Ph.D., DAB No. 3038, at 12 (2021) (quoting Southlake Emergency Care Ctr., DAB No. 2402, at 8 (2011)); see also Schweiker v. Hansen, 450 U.S. 785, 788-90 (1981); Bright Beginnings

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for Kittitas County, DAB No. 2623, at 8 (2015) (rejecting estoppel argument where grantee made no showing of affirmative misconduct by federal agency or its employees).

Here, there is no evidence of any misrepresentation by CMS or its contractor, much less any affirmative misconduct. Petitioner points to Noridian’s August 2018 revocation notice asserting that the notice advised him of a three-year re-enrollment bar and “did not mention anything about a longer bar.” RR at 10. Petitioner expanded on this argument in his reply, stating: “Petitioner is contending only that he relied detrimentally on notice from CMS that he could reapply for re-enrollment after three years, where no notice was given that CMS considered his conviction to be per se detrimental to the Medicare program, and where the 10-year re-enrollment bar regulation was not in effect at the time of revocation, or prior thereto.” Reply at 7 (emphasis added).

As noted above, CMS did not extend the re-enrollment bar beyond three years. And, as Petitioner acknowledged, Noridian’s revocation notice accurately stated that Petitioner could apply for re-enrollment after three years. CMS Ex. 8, at 2 (“In order to re-enroll, you must meet all requirements for your provider or supplier type.”). Noridian’s representation that Petitioner could apply to re-enroll in Medicare after three years is not a representation that enrollment would be granted. See Hartman, DAB No. 2911, at 22 n.16 (noting that similar language in a revocation letter provided notice that a future enrollment application “could be denied” notwithstanding expiration of the re-enrollment bar). Indeed, nothing in the revocation notice suggested Petitioner would be automatically re-enrolled in Medicare at the end of three years, that any application he submitted would be approved, or that 42 C.F.R. § 424.530(a)(3) would somehow not apply to him. For these same reasons, Petitioner also failed to show that CMS or Noridian “engaged in ‘affirmative misconduct,’ which is something more than failing to provide accurate information or negligently dispensing erroneous advice.”  Silva at 8 n.6 (citing Wash. State Dep’t of Soc. & Health Servs., DAB No. 1561, at 10 (1996)). Petitioner has not shown that CMS or Noridian engaged in any misconduct.

Finally, none of the court cases cited by Petitioner changes this result. RR at 10 (citing Long Beach v. Mansell, 476 P.2d 423 (Cal. 1970), Office of Pers. Mgmt. v. Richmond, 496 U.S. 414 (1990)).¹¹ Petitioner’s contention that a federal agency, like CMS, may be equitably estopped from enforcing federal regulations based on an alleged failure to advise Petitioner (at the time of his revocation) about the potential future consequences of his felony conviction has no support in any of the cases Petitioner cites.

For all these reasons, we reject Petitioner’s equitable estoppel argument and sustain the ALJ’s decision declining to grant Petitioner equitable relief. ALJ Decision at 5.

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IV. The regulation at 42 C.F.R. § 1001.1801 regarding “waivers of exclusions” does not apply.

Petitioner argues CMS “failed to consider” 42 C.F.R. § 1001.1801 regarding waivers of exclusions when it denied his Medicare enrollment application. RR at 14-15. Section 1001.1801 provides that the Office of Inspector General (OIG) is authorized “to grant or deny a request from the administrator of a Federal health care program” to waive certain exclusions of an individual or entity “if the Federal health care program administrator determines that—(1) The individual or entity is the sole community physician or the sole source of essential specialized services in a community; and (2) The exclusion would impose a hardship on beneficiaries . . . of that program.” 42 C.F.R. § 1001.1801(a), (b).  Petitioner argues that he “should have qualified for that exemption,” and that the ALJ erred by omitting any consideration of this argument. RR at 14-15.

The ALJ did not err in omitting consideration of this argument. This case does not involve an OIG exclusion. Nor is there any evidence that such a waiver request was made to the OIG in accordance with section 1001.1801. CMS correctly rejected Petitioner’s reliance on section 1001.1801, noting that its authority to deny enrollment is separate and distinct from the OIG’s authority to impose exclusions. See Reconsidered Determination at 5; see also Del Piano at 24 n.17 (“CMS and the I.G. are separate decision-making bodies that derive their authority to make enrollment-related determinations (CMS) and to exclude individuals from participation in federal health care programs (I.G.) from different laws and regulations.”); Fady Fayad, M.D., DAB No. 2266, at 12 & n.9 (2009) (rejecting supplier’s reliance on a provision applicable to exclusions in a revocation case and explaining that exclusions imposed by the OIG and enrollment denials and revocations made by CMS “are separate and distinct enforcement tools, each with its own requirements and consequences”). An enrollment denial is not an exclusion. Thus, Petitioner’s contention that he “should have qualified” for an exclusion waiver under section 1001.1801 has no bearing on this matter.¹²

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Conclusion

We affirm the ALJ Decision upholding CMS’s denial of Petitioner’s Medicare enrollment application.

Endnotes

¹  We cite to and apply the enrollment regulations in effect in December 2022, when CMS’s contractor issued the initial determination (CMS Ex. 2) denying Petitioner’s enrollment application.  See Anthony Del Piano, M.D., DAB No. 3096, at 2 n.2 (2023).

² Petitioner failed to acknowledge this opinion of the California Court of Appeal in his request for hearing (RFH) and did not provide a copy of it to the ALJ. CRD Docket No. C-23-534, #1 (RFH with attachments) (submitting excerpts of trial court transcripts and other matters superseded by subsequent proceedings in the California Court of Appeal). We take notice of this California Court of Appeal opinion affirming Petitioner’s conviction and sentencing because it is relevant to this proceeding, it establishes the law of the case with regard to Petitioner’s criminal conviction, and it directly refutes arguments Petitioner is making before the Board. Moreover, while the Board is not bound by the California rules of court, we note that unpublished decisions of the California Court of Appeal may be cited or relied on in other actions when, as here, the opinion “states reasons for a decision” (i.e., a conviction) affecting the same defendant.  See Cal. R. Ct. 8.1115. We further note that CMS relied on this appeals court decision in its briefing before the Board without objection by Petitioner.

³ By way of further background, Dr. B. had previously worked for one of Petitioner’s companies, which contracted to provide anesthesia services at the Hospital in 2006 and 2007. See Sahlolbei, 2019 WL 4302213, at *2. That arrangement ended and Dr. B. left the Hospital when, in 2007, Petitioner “orchestrated shutting down the operating room and obstetrics by refusing to perform surgeries,” causing the Hospital to lose revenue and nearly close, after the Hospital rejected Petitioner’s request for certain exclusive contracts. Id. In 2009, Petitioner solicited Dr. B. to again perform anesthesia services at the Hospital. Id. The subsequent contract between Petitioner and Dr. B. required that Dr. B. deposit his paychecks from the Hospital directly into Petitioner’s company’s account and included a confidentiality clause that prohibited Dr. B. from disclosing this arrangement. Id. at **2-3.

⁴ Grand theft is committed “[w]hen the money, labor, real property, or personal property taken is of a value exceeding nine hundred fifty dollars ($950).” Cal. Pen. Code § 487(a).

⁵ Petitioner acknowledged this interlocutory proceeding in his request for hearing but did not provide a copy of this separate opinion to the ALJ.  RFH at 4 (“The People challenged that [probation order] by writ petition, and Dr. Sahlolbei was resentenced to a 16-month term of imprisonment . . .”).

⁶ At the time of Noridian’s revocation decision, a re-enrollment bar could be imposed for up to three years. See 42 C.F.R. § 424.535(c)(1) (2018). Although not applicable here, section 424.535(c) was later revised to authorize a re-enrollment bar for up to 10 years. See 84 Fed. Reg. 47,794, 47,855 (Sept. 10, 2019).

⁷ Petitioner requested oral argument on the grounds that it would “facilitate [the Board’s] decision-making” (RR at 3) and “provide clarity and explanation as may be requested by the Board” (Reply at 10). We deny Petitioner’s request for oral argument because the parties adequately presented the issues in their written materials, and we have determined that oral argument would not help our decision-making. See, e.g., Douglas Bradley, M.D., DAB No. 2663, at 4 n.4 (2015).

⁸ Additionally, the Court of Appeal reversed the trial court’s probation order following that initial sentencing hearing. People v. Superior Ct., 2018 WL 773456.

⁹ CMS’s determination that an offense is detrimental to the program and its beneficiaries is distinct from the decision to deny enrollment. Cf. Fady Fayad, M.D., DAB No. 2266, at 16 (2009) (“[The] determination [that the offense was detrimental] was distinct from the decision to revoke because CMS could have refrained from revoking Petitioner’s billing privileges despite its determination that the crime was detrimental to Medicare.”), aff’d, 803 F. Supp. 2d 699 (E.D. Mich. 2011). Thus, CMS’s determination “about whether to deny a particular supplier’s enrollment application under section 424.530(a)(3) is discretionary, not mandatory, even where the underlying conviction is for an offense within one of the categories that CMS has determined to be detrimental to the best interests of the program and its beneficiaries.” Ronald Paul Belin, DPM, DAB No. 2629, at 4 (2015).

¹⁰  While not applicable here, the regulation “restricts CMS’s authority to admit a supplier after a felony conviction to a period of ‘not less than 10 years’ if the individual had one or more additional prior convictions.” Belin at 5 (citing 42 C.F.R. § 424.530(a)(3)(ii)). 

¹¹ In Richmond, the Supreme Court held that erroneous advice given by a government employee to a benefits claimant cannot estop the government from denying benefit payments not otherwise permitted by law. Mansell is inapposite as it involves the application of equitable estoppel to a land dispute under California law and, in any event, the Board is not bound by state court decisions applying equitable doctrines under state law.

¹² Even if this case involved an exclusion, “[t]he decision to grant, deny or rescind a request for a waiver is not subject to administrative or judicial review.” 42 C.F.R. § 1001.1801(f).