Lilia Gorovits, MD PC, DAB CR5076 (2018)

Department of Health and Human Services
Civil Remedies Division

Docket No. C-18-379
Decision No. CR5076


I grant summary judgment sustaining the revised and reopened determination of a Medicare contractor, as affirmed on reconsideration, to revoke the Medicare participation of Petitioner, Lilia Gorovits, MD PC, effective March 11, 2016, and to impose a three-year bar on reenrollment effective July 6, 2017.

I. Background

CMS moved for summary judgment, filing six exhibits that it identified as CMS Ex. 1-CMS 6 in support of its motion.  Petitioner opposed the motion and filed seven supporting exhibits that it identified as P. Ex. 1-P. Ex. 7.

It is unnecessary that I rule on the admissibility of the parties’ exhibits.  There are no disputed material facts in this case.  I cite to some of the exhibits in this decision, but only to illustrate facts that are not in dispute.

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II. Issues, Findings of Fact and Conclusions of Law

A. Issue

The issue is whether a Medicare contractor, acting on behalf of CMS, may revoke Petitioner’s Medicare enrollment effective March 11, 2016, and impose a three-year reenrollment bar effective July 6, 2017.

B. Findings of Fact and Conclusions of Law

The undisputed facts establish that on March 11, 2016, a federal court accepted Petitioner’s owner’s guilty plea to a felony.  Petitioner’s owner pled guilty to obstructing a criminal investigation into health care offenses.  CMS Ex. 3 at 5.  She admitted that she falsely denied being offered and receiving money from a hospice to refer Medicare beneficiaries and recipients of Medicaid to that hospice.  Id. at 10.  Petitioner’s owner was sentenced to ten months of home confinement, three years of probation, and a $75,000 fine; a sentence that was somewhat reduced due to the cooperation she gave to prosecuting authorities.  Id. at 6-8.

On September 30, 2016, the Inspector General of the United States Department of Health and Human Services (I.G.) determined to exclude Petitioner from participating in Medicare and other federally funded health care programs, based on Petitioner’s owner’s conviction.  CMS Ex. 2 at 1-2.

Petitioner did not report its owner’s conviction or her exclusion to CMS.  Petitioner’s pre-hearing brief (Petitioner’s brief) at 3.

Based on these undisputed facts, a Medicare contractor determined to revoke Petitioner’s Medicare participation and to impose a bar on reenrollment.  The contractor found three bases in law for its determination, relying on the legal authority conferred by 42 C.F.R. § 424.535(a)(2), (3), and (9).  Specifically:

  • The I.G. excluded Petitioner’s owner based on her felony conviction.  42 C.F.R. § 424.535(a)(2)(i);
  • Petitioner’s owner was convicted of a felony that the contractor determined to be detrimental to the best interests of Medicare and its beneficiaries.  42 C.F.R. § 424.535(a)(3);
  • Petitioner did not report either its owner’s conviction or her exclusion to CMS.  42 C.F.R. § 424.535(a)(9).

CMS Ex. 1 at 23-24.

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The undisputed material facts unequivocally establish that the contractor was justified, both in revoking Petitioner’s Medicare participation and imposing a reenrollment bar against Petitioner.  These actions would be justified if only one of the grounds for the contractor’s action existed.  42 C.F.R. § 424.535(g).

Petitioner raises several arguments challenging the contractor’s determinations.  I find them to be without merit.

First, Petitioner moves that I stay this case.  Petitioner’s brief at 5-7.  It advises me that its owner presently is challenging a determination that she was overpaid by Medicare, and it contends that the overpayment hinges on findings that I may make concerning the propriety of the contractor’s determinations in this case.  Additionally, it asks that I consolidate any appeal that its owner may file challenging the contractor’s reconsidered determination of the overpayment issue with the present case, and it asks that, ultimately, I decide in a single decision both the issues of authority to revoke and bar reenrollment and that of the overpayment.  Id.

I have no authority to grant this relief.  I have no jurisdiction over the issue of overpayment.  See 42 C.F.R. §§ 498.3(b), 498.5(l)(2).  To the extent that an overpayment determination confers hearing rights on Petitioner’s owner, she must exercise those rights elsewhere.  Moreover, my decision in this case is not contingent on any finding of an overpayment.  A finding of an overpayment may ultimately be contingent on what I decide here about the contractor’s authority to revoke Petitioner’s Medicare participation and to bar its reenrollment in the program, but as I have stated, Petitioner’s owner will have to argue the impact of my decision in another forum, assuming that she has rights to challenge the overpayment determination.

Petitioner challenges the duration of the reenrollment bar.  Petitioner’s brief at 8-9.  It contends that, given that the contractor made the revocation of Petitioner’s billing privileges retroactive to March 11, 2016, the contractor should have established the start date of the reenrollment bar as of that date and not July 6, 2017, the date that the contractor opted to impose the bar.1   It argues that the regulations limit reenrollment bars to at most, a period of three years, and it contends that by imposing a three-year bar on July 6, 2017, the contractor effectively made that bar for a duration that is longer than three years.  Id.

In addressing Petitioner’s argument, it is important to distinguish what is appealable from what is not.  A contractor’s authority to impose an enrollment bar may be challenged on the ground that the facts and/or the law do not confer that authority on the contractor in a

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given case.  But, if that authority is present, then the contractor’s decision as to when the enrollment bar begins and its duration are not initial determinations that may be appealed.  See 42 C.F.R. § 498.3(b).

Thus, I have no authority to consider Petitioner’s duration argument.  It plainly is a challenge to the length of the enrollment bar.  A decision by a contractor as to duration of a reenrollment bar is not an initial determination that gives rise to hearing rights.  42 C.F.R. §§ 498.3(b)(17); 424.545(a); Mohammad Nawaz, M.D. & Mohammad Zaim, M.D., PA,DAB No. 2687 at 15 (2016).

Furthermore, nothing in the regulations governing hearings suggests that an individual or an entity has a right to challenge the start date of an enrollment bar.  42 C.F.R. § 498.3(b).  My authority to hold hearings is confined to issues that are specifically identified as appealable.  Patrick Brueggeman, D.P.M.,DAB No. 2725 at 15 (2016).  The start date of a reenrollment bar isn’t one of those appealable issues.

Moreover, the contractor’s determination as to the effective date of the enrollment bar is consistent with the plain meaning of the governing regulation.  The regulation provides that the effective date of a bar on reenrollment will be 30 days after the contractor mails its notice of its determination to revoke Medicare participation.  42 C.F.R. § 424.535(c)(1).  The contractor complied with regulatory requirements in establishing the start date of Petitioner’s enrollment bar.

Next, Petitioner asserts that the contractor had no authority to reopen and revise its initial determination in this case.  Petitioner’s brief at 10.  The contractor initially determined, on January 26, 2017, to revoke Petitioner’s Medicare participation effective October 20, 2016.  CMS Ex. 1 at 14-16.  The contractor based that determination on the I.G.’s exclusion of Petitioner’s owner and on Petitioner’s failure to report that exclusion.  However, on June 6, 2017, the contractor reopened and revised its initial determination to change the date of revocation to March 11, 2016, and to impose the reenrollment bar effective July 6, 2017.  CMS Ex. 1 at 23-25.  In doing so, the contractor added Petitioner’s owner’s felony conviction as a third basis for its determination.

Petitioner argues that there is nothing in the regulations that explicitly authorizes a contractor to change a revocation date via a reopened and revised initial determination.  It relies on the language of 42 C.F.R. § 498.30, which authorizes CMS or the I.G., on their own initiative, to reopen an initial determination.  It argues that the regulation’s silence on the contractor’s authority can mean only that the contractor lacks the authority granted to CMS.  Petitioner’s brief at 10.

This argument disregards Medicare’s statutory framework.  The Social Security Act (Act) explicitly confers on CMS the authority to administer Medicare through contractors.  42 U.S.C. § 1395u(a).  That authority includes granting authority to the Secretary to

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contract the performance of any or all of the functions described in section 1874 of the Act.  42 U.S.C. § 1395kk-1.  Those functions include determining the amount of payments owed to providers and suppliers and performing additional functions necessary to carry out the purposes of the Act.  Id.; Fayed v. Sebelius,803 F. Supp. 2d 699, 705 (E.D. Mich. 2011).2

Determining whether to revoke a supplier’s Medicare participation plainly is one of the functions that may be delegated to a contractor.  So also is the authority to reopen and revise a determination as may be appropriate.  The fact that the regulation enabling reopening and revision does not explicitly mention a contractor does not limit CMS’s ability to delegate the authority to reopen and revise a determination.  That delegated authority is implicit in the regulation.

Moreover, Petitioner’s argument blinks reality.  I take notice that CMS delegates most of its functions to contractors.  The scheme created by CMS for administration of the Medicare program depends almost entirely on contractors.  Given that, it would be absurd to nit-pick the specific functions performed by contractors and to isolate and exclude some narrow areas of jurisdiction based on the absence of specific delegating regulatory language.

Next, Petitioner argues that no basis exists to revoke Petitioner’s participation pursuant to 42 C.F.R. § 424.535(a)(3).  It asserts that its owner’s conviction for obstruction of justice does not fall within any of the four explicit categories of felony that the regulation identifies as grounds for revocation.  Petitioner’s brief at 10-12.

I disagree with Petitioner’s argument on two grounds.  First, Petitioner’s owner’s conviction was plainly for a financial crime and/or for a felony that placed Medicare beneficiaries at immediate risk, as is identified by 42 C.F.R. § 424.535(a)(3)(ii).  Second, the list of felonies stated at 42 C.F.R. § 424.535(a)(3) that justify revocation of participation is not an inclusive list.  Rather, it contains only examples of crimes that CMS may determine are detrimental to program interests.  CMS has the discretionary authority expand that list in individual cases.  Stanley Beekman, D.P.M., DAB No. 2650 at 7 (2015).

Petitioner’s argument that its owner was not convicted of a financial crime or a felony that placed beneficiaries at risk hinges on a very narrow reading of her guilty plea and

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one that disregards the reality of that plea.  Petitioner relies only on the explicit title of her statutory offense.  But, Petitioner’s owner actually pled guilty to lying to federal investigators about being offered and receiving unlawful kickbacks for referring business.  CMS Ex. 3 at 3-5.  The substance of her crime plainly was “financial” in nature.  Moreover, it directly affected Medicare beneficiaries, because the unlawful kickbacks and resulting referrals were for services provided to Medicare beneficiaries and Medicaid recipients.  Id.

But, the contractor had the authority to revoke Petitioner’s participation even if its owner’s conviction was not for an offense specifically enumerated by 42 C.F.R. § 424.535(a)(3).  As I have stated, the regulation confers on CMS the authority to determine what felony offenses may be detrimental to the interests of the program.  Nothing in the regulation’s language limits CMS’s authority.  The enumerated offenses are illustrations of the categories of felonies that CMS may find to be detrimental, but they are not a straitjacket that binds CMS in its exercise of discretion.

Petitioner’s owner was convicted of a crime that is akin to the examples cited in the regulation even if it does not match one of those examples perfectly.  The reality is – and Petitioner admitted – that she engaged in financial misconduct that would comprise a felony against Medicare.  Accepting kickbacks for referring beneficiaries is a crime.  Lying about accepting those kickbacks is not significantly different in character than accepting them.

Petitioner argues also that as a matter of fact there is no reason to conclude that its owner committed a felony that is detrimental to the interests of Medicare.  Petitioner’s brief at 12-14.  It asserts that in entering into a plea agreement with her, the United States Attorney’s office never told her that her conviction could lead to an adverse determination by CMS or one of its contractors.  It states:  “Accordingly, that Office did not believe that the felony was materially detrimental to the best interests of the Medicare program and its beneficiaries.”  Id. at 13.

Petitioner’s assertion that the United States Attorney did not believe that its owner’s felony was detrimental to the best interests of Medicare and its beneficiaries is purely speculative.  There are no facts to support that contention.  However, what the United States Attorney may or may not have believed is irrelevant.  The authority to make a determination as to what is detrimental rests exclusively with CMS and its contractors.  That authority does not hinge on anything that a United States Attorney might or might not think.  Furthermore, Petitioner has not identified any duty by the United States Attorney to warn its owner about the potential consequences of her plea.  But, even if such duty existed, the failure to warn Petitioner would not in any respect bind CMS or its contractors.

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Petitioner also argues that CMS’s first reconsidered determination dated June 16, 2017 – that did not rely on Petitioner’s felony conviction as grounds for revocation of participation – expressed an affirmative conclusion by CMS that the felony conviction was no basis for revocation.  Petitioner’s brief at 13-14.  The undisputed facts belie that contention.  In issuing the revised initial revocation determination, the contractor plainly gave additional consideration to the merits for revocation.  As I have explained, the contractor had the authority to do precisely that.

Petitioner contends that the fact that Petitioner’s owner received a reduced sentence for her crime based on the cooperation that she provided to prosecuting authorities is proof that her conviction was not for a felony that is detrimental to program interests.  Petitioner’s brief at 13-14.  Although her cooperation may have mitigated the sentence that the court imposed on her, it did not affect the nature of the crime to which she pled guilty.  The nature of her crime is unaffected by the cooperation that she subsequently provided.

Next, Petitioner argues that the remedies that the contractor ultimately determined to impose against it are arbitrary, capricious, and otherwise legally impermissible.  Petitioner’s brief at 14-18.  Essentially, it argues that the cooperation that its owner gave to prosecuting authorities should serve as mitigation of the remedies that the contractor determined to impose.

However, nothing that Petitioner argues gainsays the contractor’s authority to impose the remedies that it determined to impose.  In addition, I may not consider Petitioner’s contention that its owner mitigated her crime via subsequent cooperation as a ground to reduce the length or change the start date of her reenrollment bar.  CMS and its contractors are authorized by law to impose the remedies that the contractor imposed here.  Deciding whether or not to do so constitutes a discretionary act that I have no jurisdiction to question.  My authority is limited only to deciding whether the authority to impose the remedies exists, as it plainly does in this case.  Norman Johnson, M.D.,DAB No. 2779 at 11 (2017).

Petitioner’s arguments have an equitable quality.  It essentially contends that it would be unfair to revoke its participation and bar its reenrollment given its owner’s cooperation with prosecuting authorities.  I may not consider these arguments.  US Ultrasound,DAB No. 2302 at 8 (2010).

Finally, Petitioner contends that the contractor and CMS violated its constitutional due process rights.  Petitioner’s brief at 18-20.  I have found that the contractor’s actions were consistent with applicable law and regulations, so Petitioner’s argument reduces to an assertion that the regulatory framework that governs this case or its application by the contractor to the facts are unconstitutional.  I have no authority to consider that argument.  I am delegated authority to act on behalf of the Secretary to hear and decide this case.

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Nothing in my delegated authority suggests that, in acting on the Secretary’s behalf, I am enabled to decide that the Secretary’s policies as expressed in regulations are unconstitutional.3

  • 1. Petitioner also challenges the contractor’s authority to reopen and revise its determination to make the revocation effective on March 11, 2016. I address that argument, below.
  • 2. Fayed holds that the Secretary reasonably concluded that revocation is a delegable program function necessary to carry out the Medicare program. 803 F. Supp. 2d at 705. Petitioner attempts to distinguish Fayed, asserting that the case did not apply specifically to reopened determinations. Petitioner’s brief at 10. I find this distinction to be meaningless. As I discuss, the delegated authority to reopen is implicit, even as all of the other delegated authorities under 42 C.F.R. Part 424 are implicit.
  • 3. CMS argues that Petitioner lacks standing to make a due process claim because it has no property right to Medicare reimbursement. I do not address this assertion because I have no authority to consider Petitioner’s due process claim.