Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
|IN THE CASE OF|
Palmetto Pharmacy & Diagnostics, Inc.,
|DATE: November 15, 2006|
- v -
Centers for Medicare & Medicaid Services.
| Docket No.C-05-180
Decision No. CR1529
I sustain the determination of National Supplier Clearinghouse (NSC) to revoke the supplier number of Petitioner, Palmetto Pharmacy & Diagnostics, Inc.
Petitioner is a pharmacy which, prior to March 2004, was enrolled as a supplier of items, including medications and durable medical equipment, to Medicare beneficiaries. Its enrollment was governed by federal statutes including sections 1834(j)(1) and 1866(j)(2) of the Social Security Act (Act). Pursuant to these statutes the Secretary of Health and Human Services (Secretary) published enrollment standards for suppliers at 42 C.F.R. § 424.57(c) and Petitioner's enrollment was governed by these standards. (1)
Petitioner submitted a supplier re-enrollment application on a date prior to January 23, 2004. A site inspection was attempted of Petitioner's facility, on January 23, 2004, in order to determine whether Petitioner complied with supplier enrollment standards. On March 11, 2004, NSC revoked Petitioner's supplier enrollment number because it determined that Petitioner failed to comply with enrollment standards #s 1, 2, 7, 8, 9, and 10, published at 42 C.F.R. § 424.57(c).
Petitioner requested a reopening of this determination. NSC ordered a reinspection of the facility. However, its inspectors evidently were unable to gain access to Petitioner's premises. On April 21, 2004, NSC upheld the original determination to revoke Petitioner's supplier enrollment number. It determined that Petitioner was noncompliant with all 21 regulatory standards.
On June 10, 2004, Petitioner filed another reopening request. Inspectors again were apparently unable to gain access to Petitioner's premises. On August 16, 2004, NSC upheld the April 21, 2004 revocation determination.
Petitioner then requested a fair hearing on October 12, 2004. A hearing was held on January 7, 2005. On January 14, 2005, the hearing officer issued her decision. She upheld the determination to revoke Petitioner's supplier enrollment number, finding that Petitioner had not complied with standards #s 4, 5, 6, 8, 9, 12, 13, 14, 16, 19, 20, and 21 published at 42 C.F.R. § 424.57(c).
On February 3, 2005, Petitioner requested a hearing before an administrative law judge of the Departmental Appeals Board. (2) The case was assigned to Administrative Law Judge Marion Silva. Pursuant to orders issued by her both NSC and Petitioner filed briefs and proposed exhibits. On October 3, 2006, Judge Silva retired. The case was then reassigned to me. I directed the parties to advise me by October 23, 2006, whether either of them requested that additional proceedings be held. I advised them of my intent to close the record on that date absent a showing of good cause that I hold additional proceedings in the case.
NSC responded to my directive by stating that it did not wish to file additional evidence or request an in-person hearing. Petitioner did not respond to my directive. Accordingly, I close the record and find the case to be ready for a decision. With its brief Petitioner filed exhibits which it designated P. Ex. 1 - P. Ex. 9. NSC filed proposed exhibits which it designated NSC Ex. 1 - NSC Ex. 6. Neither party objected to my receiving any of the proposed exhibits into evidence. I receive P. Ex. 1 - P. Ex. 9 and NSC Ex. 1 - NSC Ex. 6 into evidence.
II. Issue, findings of fact and conclusions of law
The issue in this case is whether Petitioner failed to prove that it had complied with all of the enrollment standards set forth at 42 C.F.R. § 424.57(c).
I make findings of fact and conclusions of law (Findings) to support my decision in this case. I set forth each Finding below as a separate heading. I discuss each Finding in detail.
Section 1834(j)(1)(B) of the Act provides that a supplier may not obtain a supplier number unless it meets regulatory standards established by the Secretary. As I have discussed above, those standards are published at 42 C.F.R. § 424.57(c). The clear intent of the regulation is that a supplier must comply with each, and not just some, of the enrollment standards in order to qualify for enrollment or re-enrollment. As a consequence, a supplier seeking re-enrollment that fails to demonstrate that it complies with even one of the regulatory standards will not qualify for re-enrollment.
Moreover, the standards do not allow a supplier to substitute its own approach to dealing with regulated subjects for the standards' explicit requirements. A supplier must comply with the letter of the standards if it wishes to enroll or be re-enrolled.
The hearing examiner
who conducted Petitioner's fair hearing found that Petitioner did not
prove that it complied with 12 of the regulatory standards. Petitioner
challenged these findings in its hearing request. It is unnecessary that
I address all of them here because the
undisputed facts of this case establish that Petitioner did not comply
with several of them. (3) Therefore, NSC
correctly found that Petitioner did not qualify for re-enrollment.
Standard # 5 states that a supplier must advise:
42 C.F.R. § 424.57(c)(5). The hearing examiner concluded that Petitioner did not establish that it met this standard. NSC Ex. 5, at 4. She found that the documentation concerning rental/purchase options that Petitioner supplied to beneficiaries conflicted with the standard because it told beneficiaries, incorrectly, that once the rental period for rented equipment is exhausted the beneficiaries would own the equipment. Moreover, Petitioner's documents stated that rental/purchase information would be provided to beneficiaries by a nursing home employee rather than by one of Petitioner's employees, as is required by the standard.
Petitioner admits that it failed to comply with this standard. In its brief, Petitioner states:
Petitioner's brief at 4.
Petitioner argues that its noncompliance "could easily have been remedied without any problem whatsoever." Petitioner's brief at 4. But, the issue here is not whether Petitioner could have corrected its deficiencies. The issue is, rather, whether Petitioner complied with regulatory standards at the time that it sought re-enrollment. Petitioner's admission makes it clear that it failed to comply with Standard # 5.
Standard # 6 mandates that a supplier honor:
42 C.F.R. § 424.57(c)(6). The hearing examiner found that Petitioner failed to establish compliance with this standard because it was not providing beneficiaries with warranty information. NSC Ex. 5, at 4. Rather, Petitioner left it to nursing home employees to explain warranty information to beneficiaries. Id. at 4 - 5.
Petitioner admits that this finding is factually correct. Petitioner's brief at 4 - 5. It asserts that it, in effect, delegated to nursing home staff the responsibility to explain warranty information to beneficiaries because it "appreciated the fact that most of the patients served would not be in a position to understand the sharing of this kind of information." Id. According to Petitioner: "[k]nowledge regarding warranties might best be known and understood by the care providers." Id. at 5.
However, the policy implications of Petitioner's approach to disclosing warranty information are not at issue here. The standard makes it clear what a supplier must do: it must provide warranty information directly to beneficiaries. Petitioner acknowledges that it failed to comply with this standard.
The hearing examiner concluded that Petitioner did not prove that it complied with Standards #s 8 and 9. NSC Ex. 5, at 5; see 42 C.F.R. § 424.57(c)(8), (9). Petitioner offered neither evidence nor argument to challenge these findings. See Petitioner's brief. Its failure to challenge them renders them administratively final. Consequently, I conclude that Petitioner failed to prove that it complied with Standards #s 8 and 9.
Standard # 13 states that a supplier must:
42 C.F.R. § 424.57(c)(13). The hearing examiner concluded that Petitioner failed to comply with this standard because Petitioner did not have a procedure by which it referred beneficiaries with complaints to the carrier. Rather, Petitioner's policy was to attempt to resolve these complaints in house. NSC Ex. 5, at 6 - 7.
Petitioner admits that this conclusion is factually correct. It argues that it understood its obligation as having the primary responsibility for resolving complaints by beneficiaries. Petitioner's brief at 6. According to Petitioner:
Id. For purposes of this decision I accept Petitioner's assertion that its intentions were good. But, that begs the question of Petitioner's compliance with the standard. The standard explicitly requires that a supplier refer complaining beneficiaries to the carrier. Petitioner's failure to do so - regardless of its intent - is an obvious violation of the standard.
Steven T. Kessel
Administrative Law Judge
1. Additional regulations governing supplier enrollment were published by the Secretary in June 2006. They do not apply in this case, however, because the facts of this case predate the publication date of the additional regulations.
2. This letter was mistakenly dated January 3, 2005.
3. I am not suggesting that Petitioner was, in fact, complying with any of the standards that I do not address in this decision. I conclude only that Petitioner failed to comply with some standards and that its noncompliance with the standards that I address (or any one of them) is sufficient to justify NSC's determination not to approve Petitioner's re-enrollment as a supplier.