Rothschild's Orthopedic Appliances, Inc., DAB CR5126 (2018)

Department of Health and Human Services
Civil Remedies Division

Docket No. C-16-593
Decision No. CR5126


Petitioner, Rothschild’s Orthopedic Appliances, Inc., is a supplier of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS), located in Salisbury, Maryland, 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.

I find that CMS properly revoked Petitioner’s supplier number.  As of January 4, 2016, the supplier was not operational to furnish Medicare-covered items or services; it was not staffed or accessible.


Until its Medicare supplier number was revoked, effective January 4, 2016, Petitioner participated in the Medicare program as a supplier of DMEPOS.  See 42 C.F.R. § 424.57.  In a letter dated January 20, 2016, 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National Supplier Clearinghouse (a division of Palmetto GBA), notified Petitioner that its Medicare supplier number was revoked retroactively, pursuant to 42 C.F.R. §§ 405.800, 424.57(e),

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424.535(a)(1), 424.535(a)(5), and 424.535(g).  The letter noted that, on December 28, 2015, and January 4, 2016, during the supplier’s posted hours of operation, the contractor attempted on-site reviews of the premises.  The business was closed and the contractor’s representative could not inspect.  In addition, the supplier had not, within 30 days, notified the contractor of any changes in the information it had provided to the contractor.  CMS Ex. 5.

Petitioner sought reconsideration.  CMS Ex. 2.  In a reconsidered determination, dated April 25, 2016, a Medicare hearing officer affirmed the revocation of Petitioner’s supplier number.  CMS Ex. 1.  Petitioner now appeals that determination pursuant to 42 C.F.R. § 424.545.

Although CMS has moved for summary judgment, I find that this matter may be decided on the written record, without considering whether the standards for summary judgment are satisfied.  In my initial order, I instructed the parties to list their proposed witnesses (if any) and to submit their written direct testimony.  Acknowledgment and Pre-hearing Order at 3, 4-5 (¶¶ 4, 8).  Neither party listed any witnesses.  Because there are no witnesses, an in-person hearing would serve no purpose.  See Pre-hearing Order at 5 (¶ 10).  I may therefore decide the case based on the written record without considering whether the standards for summary judgment are satisfied.

With its motion and brief (CMS Br.), CMS submits nine exhibits (CMS Exs. 1-9).  Petitioner responds (P. Br.) and submits ten exhibits (P. Exs. 1-10).

In the absence of any objections, I admit into evidence CMS Exs. 1-9 and P. Ex. 1-10.


CMS properly revoked the supplier’s billing privileges because the facility was not operational; it was not staffed or accessible during its posted hours of operation.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 be enrolled in the Medicare program and 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. § 424.535(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 posted 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 at 7 (2010); see 42 C.F.R. §§ 424.57(e); 424.535(a)(5) (authorizing CMS to revoke billing privileges if the supplier is no longer operational to furnish Medicare-covered services or otherwise fails to satisfy any Medicare enrollment requirements).

The supplier must also provide complete and accurate information on its enrollment application.  Within 30 days of any change, it must report that change to CMS.  42 C.F.R. § 424.57(c)(2).
Here, in the enrollment information Petitioner provided to the Medicare contractor, it listed its practice location as 1740 South Street, Suite 503, Philadelphia, Pennsylvania, and its hours of operation as 10:00 a.m. to 3:00 p.m. Monday and by appointment on Wednesday and Friday.  CMS Ex. 6 at 1, 3.  On Monday, December 28, 2015, at 11:52 a.m., the contractor’s site inspector, Angelina Paul, went to that address.  She found the business closed; no one was in the office.  She knocked on the door but no one answered.  The door was locked.  CMS Ex. 6 at 2, 7, 8.

On Monday, January 4, 2016, at 1:05 p.m., Inspector Paul returned to the practice location.  Again, the business was closed.  She knocked, but no one answered.  The door was locked, and no one was in the office.  CMS Ex. 6 at 2, 7, 9, 10.

Petitioner concedes that it was not open during its posted hours of operation but points out that orthotic and prosthetic personnel who provide custom fabricated orthotics or prosthetics in private practice are not subject to the location requirements of section 424.57(c)(7) so long as the personnel are licensed by the state or practice in a state that does not offer such licenses.  42 C.F.R. § 424.57(c)(7)(i)(A)(1) and (2).  Petitioner maintains that it meets those criteria.  But the exception set forth in section 424.57(c)(7)(i)(A) is much narrower than Petitioner suggests.  It exempts certain suppliers of orthotics and prosthetics from the requirement that their practice locations be at least 200 square feet in size.  It does not exempt them from any other requirements.  Ortho Rehab Designs Prosthetics and Orthotics, Inc., DAB No. 2591 at 6 (2014).

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Petitioner also cites 42 C.F.R. § 424.57(c)(30) for the proposition that it is exempt from the requirements of section 424.57(c)(7).  But, again, the provision is far narrower than Petitioner suggests.  It exempts certain suppliers of orthotics and prosthetics from the requirement that the business be open to the public for 30 hours per week.  Ortho Rehab Designs, DAB No. 2591 at 5-6.

Thus, notwithstanding its apparent status as a supplier of custom fabricated orthotics or prosthetics, Petitioner was required to post its hours of operation and to be staffed and accessible during those hours.  By its own admission, it was not staffed and accessible on December 28, 2015, nor on January 4, 2016.  It was therefore not in compliance with section 424.57(c)(7), and CMS justifiably revoked its billing privileges under section 424.57(e).  Ortho Rehab Designs, DAB No. 2591 at 6.

Finally, Petitioner contends that, in December 2015, it changed its hours of operation but concedes that it did not post its new hours or, within 30 days, report the change to CMS.  CMS Ex. 2 at 1.  It eventually did so on March 24, 2016, by submitting CMS application form 855S.  CMS Ex. 2 at 3-9.2   Because it did not report the change within 30 days, it was not in compliance with section 424.57(c)(2), which also justifies revoking its billing privileges under section 424.57(e).

Petitioner was not operational and did not meet all of the standards of section 424.57(c); CMS therefore properly revoked its billing privileges effective January 4, 2016, the date CMS determined it was no longer operational.  42 C.F.R. §§ 424.57(e), 424.535(a)(1), (a)(5), and (g).


Because the facility was not operational, accessible and staffed 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.
  • 2. Medicare contractors stamp paper applications with a “Julian date stamp,” which counts the days of the years consecutively.  Here, the two first digits stamped on the application indicate the year – 2016.  The next three digits indicate the date – the 84th day of 2016 or March 24, 2016.