Caleb Medical Supplies, Inc., DAB CR5095 (2018)

Department of Health and Human Services
Civil Remedies Division

Docket No. C-16-428
Decision No. CR5095


Petitioner, Caleb Medical Supplies, Inc., is a supplier of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS), located in Dorado, Puerto Rico, that, until recently, participated in the Medicare program.  The Centers for Medicare & Medicaid Services (CMS) has revoked its Medicare supplier number, and Petitioner appeals.  CMS now moves for summary judgment.

Neither party has any witnesses, so an in-person hearing would serve no purpose.  See Acknowledgment and Pre-hearing Order at 5 (¶¶ 8-11 (March 30, 2016)).  This matter may therefore be decided on the written record, without considering whether the standards for summary judgment are satisfied.

I find that CMS properly revoked Petitioner’s supplier number.  As of May 28, 2015 (and likely earlier), the supplier was not operational to furnish Medicare-covered items or services; it was not staffed nor accessible; and it was not open for inspection.

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Until its Medicare supplier number was revoked, effective May 28, 2015, Petitioner participated in the Medicare program as a supplier of DMEPOS.  See 42 C.F.R. § 424.57.  In a letter dated October 6, 2015, the Medicare contractor, National Supplier Clearinghouse (a division of Palmetto GBA), notified Petitioner that its Medicare supplier number was revoked retroactively, pursuant to 42 C.F.R. §§ 405.800, 424.57(e), 424.535(a)(1), 424.535(a)(5), and 424.535(g).  The letter noted that the contractor conducted on-site reviews on March 24, April 9, and May 28, 2015.  The doors were locked; the lights were off.  The contractor’s representative could not inspect the premises.  In addition, the supplier had not submitted any claims with dates of service within 90 days of the date of the notice.  CMS Exhibit (Ex.) 1.

Petitioner sought reconsideration.  CMS Ex. 2.  In a reconsidered determination, dated January 25, 2016, a Medicare hearing officer affirmed the revocation of Petitioner’s supplier number.  CMS Ex. 4.  Petitioner now appeals that determination pursuant to 42 C.F.R. § 424.545.

With its brief (CMS Br.), CMS submits five exhibits (CMS Exs. 1-5).  For its part, Petitioner mailed us copies of documents that were already in the record:  its hearing request; CRD procedures; the memo assigning the case to me; a page of my initial order; CMS’s list of exhibits; and CMS’s exhibits.  Rather than duplicate documents already in the record, we returned the submissions.  Correspondence dated July 18, 2016.  Petitioner did not submit a brief or otherwise comply with my March 30, 2016 order.

In the absence of any objections, I admit into evidence CMS Exs. 1-5.


CMS properly revoked the supplier’s billing privileges because the facility was not operational, accessible, staffed, nor open for inspection.1

Requirements for a DMEPOS supplier’s Medicare participation.  To receive Medicare payments for items furnished to a Medicare-eligible beneficiary, a supplier of medical equipment and supplies must have a supplier number issued by the Secretary of Health and Human Services.  Social Security Act § 1834(j)(1)(A); 42 C.F.R. § 424.505.  To keep that number, the supplier must be operational and must meet the standards set forth in 42 C.F.R. § 424.57(c).  CMS may revoke its billing privileges if it fails to do so.  42 C.F.R. § 424.57(c)(1) and (e); 42 C.F.R. § 424.535(a)(1), (5).

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To be operational, the supplier must, among other requirements, have a qualified physical practice location, be open to the public, and be properly staffed, equipped, and stocked to furnish items and services.  42 C.F.R. § 424.502.

The supplier’s location must be accessible during reasonable business hours.  The supplier must permit CMS or its agents to conduct on-site inspections to ascertain its compliance with governing regulations.  42 C.F.R. § 424.57(c)(7) and (8).  Where, as here, a contractor’s representative finds the facility closed during its hours of operation, the supplier does not meet the requirements of section 424.57(c), and CMS may appropriately revoke its billing privileges.  Ita Udeobong, d/b/a Midland Care Med. Supply and Equip., DAB No. 2324 (2010); see 42 C.F.R. § 424.535(a)(5)(ii) (authorizing CMS to revoke billing privileges if the supplier fails to satisfy any Medicare enrollment requirements).

Here, in the enrollment information Petitioner provided to the Medicare contractor, it listed its practice location as 261 Ave. Mendez Vigo, Dorado, Puerto Rico, and its hours of operation as 8:00 a.m. to 5:00 p.m. Monday through Friday and 8:00 a.m. to noon on Saturday.  CMS Ex. 5 at 10.  On Tuesday, March 24, 2015, at 10:30 a.m., the contractor’s investigator, Ferdinand Aponte, went to that address.  He found the business closed; the lights were off; the door was padlocked.  He saw no evidence of business activity.  In fact, it appeared that the business had been closed for days.  Old papers were on the floor in front of the business, and old newspapers were on the front door knob.  CMS Ex. 5 at 16-18.

On Thursday, April 9, 2015, at 10:34 a.m., Investigator Aponte returned to the practice location.  Again, the business was closed; the lights were off, and the door was padlocked.  He saw no evidence of business activity.  The newspapers he observed on March 24 were still there.  CMS Ex. 5 at 21-23.

On Thursday, May 28, 2015, at 10:34 a.m., Investigator Aponte visited the practice location for the third time.  Again, he saw no evidence of business activity.  Newspapers were on the front door knob.  Employees from adjacent businesses reported that the business was closed “most of the time” and that it had been closed for several weeks.  CMS Ex. 5 at 26-28, 31.

Petitioner concedes that its offices were closed when the investigator visited.  In his request for reconsideration, he offered various explanations (although no actual evidence in support).  He claimed that:  1) in March, his employee left because of a medical emergency involving a child; and 2) in April, the business was burgled and vandalized, so it had to be closed for several weeks, during which “we were working in the office and remodeling the company . . . .”  CMS Ex. 2.   He offered no explanation for why the office was closed in May.  He has not repeated these claims at this level.

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In fact, the investigator’s observations during his March visit are not compatible with Petitioner’s claim that the office was closed for the day because of a temporary emergency.  The investigator found the office had been closed for days, as evidenced by the accumulating newspapers.  When the investigator returned in April and May, no one was working there, and no one was remodeling.  Moreover, as CMS points out, if, in fact, the offices had to close for repairs, the supplier was required to report that change to the Medicare contractor within 30 days, which it did not do.

The regulation requires that staff be present physically and that individuals (including the investigator) be able to enter the premises.  Because no staff were present and the facility was padlocked, the supplier did not comply with 42 C.F.R. § 424.57(c)(7), and CMS appropriately revoked its suppler number.

Further, to sustain its supplier number, a DMEPOS supplier must permit CMS or its agents to conduct on-site inspections.  42 C.F.R. § 424.57(c)(8).  Here, Petitioner represented to the contractor that it would be open for inspection between 8:00 a.m. and 5:00 p.m. Monday through Friday.  By its own admission, the business was not reliably accessible during those hours and therefore did not permit the on-site inspection.

Petitioner was not operational and did not meet all of the standards of section 424.57(c); CMS therefore properly revoked its billing privileges.  42 C.F.R. §§ 424.57(e), 424.535(a)(1) and (5).


Because the facility was not operational, accessible and staffed, and was not open for inspection during its listed hours of operation, I sustain CMS’s revocation of Petitioner’s supplier number.

  • 1. I make this one finding of fact/conclusion of law.