Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Ali Vaziri, M.D.,
Centers for Medicare & Medicaid Services
Docket No. C-18-635
Decision No. CR5180
The Centers for Medicare & Medicaid Services (CMS), acting through its administrative contractor, Noridian Healthcare Solutions (Noridian), denied Ali Vaziri, M.D.’s (Petitioner’s or Dr. Vaziri’s) application for Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.530(a)(3). Noridian and CMS denied Dr. Vaziri’s enrollment application because, within the preceding ten years, Dr. Vaziri was convicted of a felony that CMS determined was detrimental to the interests of the Medicare program and its beneficiaries. Dr. Vaziri does not deny that he was convicted of a felony, but contends that, because CMS did not sufficiently consider the facts surrounding his conviction, CMS should not be permitted to deny his enrollment application. For the reasons explained below, I conclude that CMS had a legal basis to deny Dr. Vaziri’s application for Medicare enrollment and billing privileges.
Dr. Vaziri is a medical doctor specializing in gastroenterology and internal medicine who practices in Napa, California. See, e.g., CMS Exhibit (Ex.) 3 at 3, 5, 12. On June 12, 2014, the U.S. District Court for the Northern District of California (district court) entered judgment finding Dr. Vaziri guilty of four counts of willfully subscribing a false
income tax return in violation of 26 U.S.C. § 7206(1), pursuant to his guilty plea. CMS Ex. 2 at 1. The district court sentenced Dr. Vaziri to imprisonment for twelve months and one day and to pay a total of $127,103 in assessments, fines, and restitution. Id. at 2, 5-6.
By letter dated June 17, 2014, Noridian notified Dr. Vaziri that it was revoking his Medicare enrollment and billing privileges effective June 12, 2014, pursuant to 42 C.F.R. § 424.535(a)(3) (felony conviction). CMS Ex. 9 at 1. Noridian also imposed a three‑year reenrollment bar. Id. at 2. Petitioner did not contest the 2014 revocation of his enrollment and billing privileges.
On or about June 20, 2017, after the expiration of the reenrollment bar, Dr. Vaziri again applied to enroll in Medicare as a supplier by submitting an enrollment application, Form CMS‑855I. CMS Ex. 3 at 19. In Section 3 of the CMS-855I enrollment application, Dr. Vaziri truthfully disclosed his conviction for filing false tax returns. Id. at 10.
In an initial determination dated July 26, 2017, Noridian denied Dr. Vaziri’s Medicare enrollment application based on his felony conviction, pursuant to 42 C.F.R. § 424.530(a)(3). CMS Ex. 4. The initial determination invited Petitioner to submit a Corrective Action Plan (CAP). Id. The initial determination also informed Petitioner that he may request “reconsideration before a contractor hearing officer.” Id. Petitioner, through counsel, submitted a reconsideration request dated September 22, 2017. CMS Ex. 6.
By letter dated January 11, 2018, a hearing officer in CMS’s Provider Enrollment & Oversight Group1 issued a reconsidered determination finding that Noridian correctly denied Dr. Vaziri’s enrollment application:
Certain enumerated felony offenses have been determined by CMS to be per se detrimental to the Medicare program and its beneficiaries. CMS finds Dr. Vaziri’s felony offense to be severe in nature and akin to the enumerated financial crimes in 42 C.F.R. § 424.530(a)(3)(i)(B), specifically income tax evasion. Dr. Vaziri misrepresented the true state of his income to a Federal Agency for the years 2005 to 2008. Therefore, CMS appropriately exercised its authority in denying Dr. Vaziri’s enrollment due to his felony conviction.
Alternatively, in the unlikely event that Dr. Vaziri’s felony conviction of willfully subscribing a false income tax return is
not considered akin to the enumerated financial crimes, it is still a crime CMS finds to be detrimental to the Medicare program and its beneficiaries. Dr. Vaziri, under the penalty of perjury, did willfully make and subscribe a false income tax return for the years 2005 to 2008. Dr. Vaziri’s felony conviction demonstrates his lack of trustworthiness and dishonesty. Payment in the Medicare program is made for claims submitted in a manner that relies on the trustworthiness and honesty of our Medicare partners. Given the facts underlying Dr. Vaziri’s felony conviction, Trust Funds may be at risk if he is allowed to participate in the Medicare program. It necessarily follows that placing Trust Funds at risk is a detriment to Medicare beneficiaries.
CMS Ex. 7 at 4-5. The reconsidered determination further informed Petitioner that he had the right to request review by an administrative law judge if he “believe[s] this determination is not correct.” Id. at 5.
Petitioner timely requested a hearing before an administrative law judge, and the case was assigned to me. Pursuant to my Acknowledgment and Pre‑Hearing Order (Pre‑Hearing Order), CMS filed its Prehearing Brief and Motion for Summary Judgment (CMS Br.) and ten proposed exhibits (CMS Exs. 1‑10). Petitioner filed a response brief (P. Br.). Petitioner did not offer any proposed exhibits with his brief, but he did include ten proposed exhibits with his hearing request (P. Exs. 1-10). Neither party objected to the exhibits proposed by the opposing party. Therefore, in the absence of objection, I admit P. Exs. 1-10 and CMS Exs. 1‑10 into the record.
My Pre‑Hearing Order advised the parties that they must submit written direct testimony for any proposed witness and that an in-person hearing would only be necessary if the opposing party requested an opportunity to cross-examine a witness. Pre‑Hearing Order ¶¶ 8-10; Civil Remedies Division Procedures (CRDP) §§ 16(b), 19(b); Pac. Regency Arvin, DAB No. 1823 at 8 (2002) (holding that the use of written direct testimony for witnesses is permissible so long as the opposing party has the opportunity to cross‑examine those witnesses). Neither party offered the written direct testimony of any witness. Consequently, an in-person hearing is not required, and I issue this decision based on the written record, without regard to whether the standards for summary judgment are met. Pre‑Hearing Order ¶¶ 8-11; CRDP § 19(d).
The issue in this case is whether CMS had a legal basis to deny Petitioner’s enrollment application.
I have jurisdiction to decide this case. 42 C.F.R. §§ 498.3(b)(17), 498.5(l)(2); see also Social Security Act (Act) § 1866(j)(8) (codified at 42 U.S.C. § 1395cc(j)(8).
A. Statutory and Regulatory Framework
As a physician, Petitioner is a supplier of health care services for purposes of the Medicare program. See Act § 1861(d) (42 U.S.C. § 1395x(d)); 42 C.F.R. §§ 400.202 (definition of supplier), 410.20(b)(1). In order to participate in the Medicare program as a supplier, an individual must meet certain criteria to enroll and receive billing privileges. 42 C.F.R §§ 424.505, 424.510. CMS may deny a supplier’s enrollment for any reason stated in 42 C.F.R § 424.530.
CMS is authorized to deny a supplier’s application for Medicare enrollment and billing privileges if the supplier has been convicted of a felony offense, as described in 42 C.F.R § 424.530(a)(3):
(3) Felonies. The provider, supplier, or any owner or managing employee of the provider or supplier was, within the preceding 10 years, convicted (as that term is 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
(i) Offenses include, but are not limited in scope or severity to-
(B) Financial crimes, such as extortion, embezzlement, income tax evasion, insurance fraud and other similar crimes for which the individual was convicted, including guilty pleas and adjudicated pretrial diversions.
(C) Any felony that placed the Medicare program or its beneficiaries at immediate risk, such as a malpractice suit that results in a conviction of criminal neglect or misconduct.
(D) Any felonies that would result in mandatory exclusion under section 1128(a) of the Act.
(ii) Denials based on felony convictions are for a period to be determined by the Secretary, but not less than 10 years from the date of conviction if the individual has been convicted on one previous occasion for one or more offenses.
B. Findings of Fact, Conclusions of Law, and Analysis
1. CMS had a legal basis to deny Petitioner’s Medicare enrollment application pursuant to 42 C.F.R. § 424.530(a)(3) because, within the ten years prior to his application, Petitioner was convicted of a felony offense that CMS has determined to be detrimental to the best interests of the Medicare program and its beneficiaries.2
a. Dr. Vaziri was convicted of a felony offense; the conviction occurred within the ten years preceding the denial of his enrollment application.
Section 424.530(a)(3) defines a conviction for which enrollment may be denied by cross‑referencing the definition at 42 C.F.R. § 1001.2. In turn, section 1001.2 provides:
Convicted means that—
(a) A judgment of conviction has been entered against an individual or entity by a Federal, State or local court, regardless of whether:
(1) There is a post-trial motion or an appeal pending, or
(2) The judgment of conviction or other record relating to the criminal conduct has been
expunged or otherwise removed;
(b) A Federal, State or local court has made a finding of guilt against an individual or entity;
(c) A Federal, State or local court has accepted a plea of guilty or nolo contendere by an individual or entity; or
(d) An individual or entity has entered into participation in a first offender, deferred adjudication or other program or arrangement where judgment of conviction has been withheld.
Petitioner does not dispute that he pled guilty to willfully subscribing a false income tax return nor that the district court accepted the plea and adjudicated him guilty. P. Br. at 2 n.1. The crime of willfully subscribing a false income tax return is a felony. 26 U.S.C. § 7206. Accordingly, Dr. Vaziri was convicted of a felony offense. The
conviction occurred on or about June 12, 2014, which is within ten years of Noridian’s July 26, 2017 initial determination denying Dr. Vaziri’s application to enroll in Medicare.
b. Dr. Vaziri’s conviction was for a felony financial crime that CMS has determined is per se detrimental to the best interests of the Medicare program and its beneficiaries.
CMS may deny a supplier’s application to enroll in the Medicare program if, within the preceding ten years, the supplier was convicted of a felony offense that CMS “has determined to be detrimental to the best interests of the program and its beneficiaries.” 42 C.F.R. § 424.530(a)(3)(i); see also Act §§ 1842(h)(8) (authorizing the Secretary of Health and Human Services (Secretary) to deny enrollment to a supplier who has been convicted of a felony offense that the Secretary has determined is “detrimental to the best interests of the program or program beneficiaries”) and 1866(b)(2)(D) (authorizing the Secretary to deny or terminate enrollment after he ascertains that a supplier has been convicted of a felony that he “determines is detrimental to the best interests of the program or program beneficiaries”). Offenses for which CMS may deny enrollment include – but are not limited to – felony crimes against persons, such as murder, rape, assault, and similar crimes; financial crimes such as extortion, embezzlement, income tax evasion, insurance fraud, and similar crimes; felonies that place the Medicare program or its beneficiaries at immediate risk (such as convictions for criminal neglect or misconduct); and felonies that would result in mandatory exclusion under section 1128 of the Act. 42 C.F.R. § 424.530(a)(3)(i)(A)-(D).
By promulgating 42 C.F.R. § 424.530(a)(3), CMS determined that the enumerated crimes are detrimental per se to Medicare. See Letantia Bussell, M.D., DAB No. 2196 at 9 (2008).3 In the present case, CMS determined that Dr. Vaziri’s conviction for willfully subscribing a false income tax return is a financial crime similar to income tax evasion and, accordingly, is per se detrimental to Medicare and its beneficiaries. CMS Ex. 7 at 4. I agree that Petitioner’s conviction for violating 26 U.S.C. § 7206 by willfully subscribing a false income tax return is similar to income tax evasion. The Internal Revenue Code describes the felony of income tax evasion as “willfully attempt[ing] in any manner to evade or defeat any tax imposed by this title or the payment thereof.”
26 U.S.C. § 7201. Dr. Vaziri’s criminal conduct, as reflected in the indictment,4 consisted of filing tax returns that overstated his business expenses, although he “well knew and believed, [that] his business expenses were substantially less than the amount stated in the return[s].” See, e.g., CMS Ex. 1 at 4-5. I infer that Dr. Vaziri’s purpose in overstating his business expenses was to reduce the amount of federal taxes he was required to pay. Thus, the conduct for which he was convicted is similar to income tax evasion because Dr. Vaziri intended to evade his responsibility to pay the full amount of income tax due. But, as I explain in the following section of this decision, even if Dr. Vaziri’s conviction is not a financial crime similar to income tax evasion, CMS determined that the conviction is nevertheless detrimental to Medicare and its beneficiaries.
c. Even if the crime for which Dr. Vaziri was convicted is not per se detrimental to Medicare and its beneficiaries, CMS exercised its discretion to determine that the conviction was detrimental to Medicare.
Even if a conviction is for a crime not enumerated in 42 C.F.R. § 424.530(a)(3), CMS is authorized to determine, on a case-by-case basis, that a particular felony conviction is detrimental to Medicare and its beneficiaries and therefore supports denial. See, e.g., Saeed A. Bajwa, M.D., DAB No. 2799 at 5 n.4, 10-12 (2017) (42 C.F.R. § 424.535(a)(3)(i) authorizes CMS to determine what felony convictions are a basis for revocation; CMS is not limited to the felonies enumerated as examples).5 In addition to finding that Dr. Vaziri’s conviction was for a financial crime similar to income tax evasion, CMS also concluded that Dr. Vaziri’s conviction is detrimental to Medicare and its beneficiaries because the conviction demonstrates that Dr. Vaziri is not trustworthy and may put the Medicare Trust Fund at risk. CMS Ex. 7at 5. Thus, CMS exercised its discretion to determine that a felony conviction arguably not listed in 42 C.F.R. § 424.530(a)(3)(i) is detrimental to the Medicare program and its beneficiaries and, accordingly, warrants revocation. See Bajwa, DAB No.
2799 at 8, 10-11. If I am satisfied that CMS exercised its discretion, I may not substitute my own determination as to whether a given felony is detrimental to the Medicare program and its beneficiaries for that of CMS. See Brian K. Ellefsen, DO, DAB No. 2626 at 7 (2015).
The record before me demonstrates that CMS itself issued the reconsidered determination. CMS Ex. 7. In it, CMS expressly found that Dr. Vaziri’s conviction is detrimental to the Medicare program and its beneficiaries because the conviction calls into question whether Dr. Vaziri can be trusted to submit truthful claims to Medicare. Id. at 4. Because CMS exercised its discretion to determine that Petitioner’s conviction was for a crime that is detrimental to Medicare and its beneficiaries, I may not second-guess that determination. Furthermore, the fact that Noridian issued the initial determination denying Dr. Vaziri’s application for Medicare enrollment does not invalidate the exercise of discretion.
2. Noridian is authorized to exercise discretion on CMS’s behalf; and even if Noridian were not so authorized, the evidence shows that CMS itself determined that Dr. Vaziri’s Medicare enrollment application should be denied based on his conviction.
Petitioner argues that Noridian is not authorized to exercise CMS’s discretion to deny a supplier’s Medicare enrollment application pursuant to 42 C.F.R. § 424.530(a)(3). P. Br. at 5-7. I disagree. As the appellate panel explained in the Ellefsen decision, “[s]ection 1842 of the Act provides that the administration of Medicare Part B, the part of Medicare under which physicians receive payment, ‘shall be conducted through contracts with medicare administrative contractors under section 1874A.’” DAB No. 2626 at 5. Section 1874A(a) of the Act authorizes the Secretary to “enter into contracts with any eligible entity to serve as a medicare administrative contractor with respect to the performance of any or all of the functions described in” section 1874A(a)(4). Id. The Secretary in turn delegated this authority to CMS, which then contracted with Noridian on the Secretary’s behalf.
As the Ellefsen panel explained, screening and enrolling providers and suppliers in the Medicare program is a program function that is “necessary to carry out the purposes” of the Medicare program. Id. Without participating providers and suppliers, there would be no way for Medicare beneficiaries to receive health care services. In addition, the panel observed, a “‘primary purpose of Medicare is to promote beneficiary access to high quality medical care,’” and the degree to which beneficiaries enjoy such access depends in part on the “‘integrity and professional qualifications of health care practitioners and entities enrolled in the program.’” Id. quoting Fady Fayad, M.D., DAB No. 2266 at 19 (2009). The enrollment process administered by CMS’s contractors on behalf of the Secretary helps to ensure that providers and suppliers allowed into the program have the necessary integrity and qualifications. Id. at 5. Thus, in contracting with third parties like Noridian to make Medicare enrollment decisions, CMS, as the Secretary’s delegate, acts pursuant to the authority in section 1874A(a) of the Act. Id. at 6.
Moreover, the appellate panel elaborated that, even if the enrollment process is not necessary to carry out the purposes of the Medicare program (a conclusion the panel did not draw), CMS could still lawfully contract with Noridian and other Medicare Administrative Contractors to issue enrollment decisions because the Department of Health and Human Services retains final authority over such contractor-issued decisions by subjecting them to review, when challenged, by administrative law judges and appellate panels of the DAB. Id. at 6 n.3, citing Nat’l Park & Conservation Assoc. v. Stanton, 54 F. Supp. 2d 7, 19 (D.D.C. 1999) (holding that a delegation by a federal agency to a private entity is lawful if the agency exercises “final reviewing authority” over the private party’s policies or actions).
Accordingly, for the reasons explained in the Ellefsen decision, CMS properly delegated to Noridian authority to determine whether Dr. Vaziri’s application for Medicare enrollment should be denied pursuant to 42 C.F.R. § 424.530(a)(3). However, even if such delegation were improper, the record demonstrates that Noridian consulted with CMS before making the decision to deny Dr. Vaziri’s enrollment application. CMS Ex. 5. CMS advised Noridian to deny Dr. Vaziri’s application. Id. Therefore, if Noridian lacked authority to act independently, I conclude that Noridian simply implemented a decision taken by CMS itself. Furthermore, there is no support for Petitioner’s contention that CMS, through its own hearing officer, may not exercise its discretion by ratifying the denial issued by Noridian. See P. Br. at 5. To the contrary, as explained more fully in the following section of this decision, I may presume that Noridian and CMS appropriately exercised their discretion to consider and deny Petitioner’s Medicare enrollment application.
3. There is no evidence to support Petitioner’s contention that CMS subjected Dr. Vaziri to a ten-year reenrollment bar.
Apparently understanding that an administrative law judge may not review CMS’s exercise of discretion to deny enrollment on the basis of a felony conviction detrimental to Medicare and its beneficiaries, Petitioner argues that CMS failed to exercise any discretion, instead treating the denial of Petitioner’s enrollment application as mandatory until ten years have elapsed from the date of his conviction. P. Br. at 2. Petitioner’s argument is speculative at best, and I find it unconvincing.
I agree with Petitioner that the regulations do not impose an automatic ten-year bar on reenrollment following a covered felony conviction. Section 424.530(a)(3)(ii) provides that CMS may deny enrollment based on felony convictions “for a period to be determined by the Secretary[.]” 42 C.F.R. § 424.530(a)(3)(ii). The regulation only restricts CMS’s authority to admit a supplier after a felony conviction to a period of not less than ten years if the individual had one or more additional prior convictions. Id. Nothing in the record suggests that Dr. Vaziri has been convicted of other felonies, beyond those for subscribing false income tax returns, as discussed above. Therefore, the
regulation does not impose a mandatory ten-year bar to reenrollment, but rather authorizes CMS to deny enrollment applications within the ten-year period. In promulgating 42 C.F.R. § 424.530(a)(3)(ii), CMS could have precluded reapplication once a denial based on a felony was upheld until after the ten-year period expired but chose not to place any such restriction on the timing of reapplications. See Ronald Paul Belin, DPM, DAB No. 2629 at 5 (2015); see also 42 C.F.R. § 424.530(b)(2) (a supplier may reapply after a denial once the determination to deny has been upheld after any appeals). Thus, if CMS had in fact established a mandatory ten-year bar to Dr. Vaziri’s reenrollment, such action would be contrary to the regulations.6
However, Petitioner’s assertion that CMS has imposed a ten-year reenrollment bar on him is unsupported by the record. CMS’s reconsidered determination does not prohibit Dr. Vaziri from applying to reenroll in Medicare following the denial at issue in the instant case. See CMS Ex. 7. In fact, the reconsidered determination is silent on whether and when Petitioner may reapply for Medicare enrollment and billing privileges. Id. This is in contrast to the situation in Ellefsen. In that case, the contractor explicitly informed the applicant that he could not reapply until ten years had elapsed from the date of his conviction. See DAB No. 2626 at 7-8.
In the present case, unlike in Ellefsen, neither CMS nor its contractor has made any statement suggesting that either entity did not properly exercise its discretion under the regulations. Therefore, I presume that neither entity acted improperly. Id. at 7 (as a general rule, administrative law judges and appellate panels “may presume that CMS and its contractor actually exercised discretion when they denied enrollment under section 424.530(a)(3) – as opposed to taking what they thought was a mandatory action”). It is well-established that a presumption of regularity attaches to the actions of government agencies and their agents. See, e.g., U.S. Postal Serv. v. Gregory, 534 U.S. 1, 10 (2001) (noting that “a presumption of regularity attaches to the actions of Government agencies”); U.S. v. Chem. Found., Inc., 272 U.S. 1, 1415 (1926) (stating that the “presumption of regularity supports the official acts of public officers,” so “in the
absence of clear evidence to the contrary, courts presume that they have properly discharged their official duties”).
Because no reenrollment bar has been applied, Dr. Vaziri is free to submit a new application to enroll in Medicare as provided by regulation. CMS’s action on any such application is equally dictated by the regulations; i.e., CMS may exercise its discretion to approve or deny the application. See Belin, DAB No. 2629 at 5 (“each reapplication after a felony conviction is treated separately and . . . the contractor exercises discretion to consider the circumstances at the time, including the severity of the offense and the passage of time”).
For the reasons stated, I conclude that CMS had a legal basis to deny Petitioner’s Medicare enrollment application.
Leslie A. Weyn Administrative Law Judge
1. The Provider Enrollment & Oversight Group is a component of CMS itself, not an administrative contractor.
- back to note 1 2. My findings of fact and conclusions of law appear as headings in bold italic type.
- back to note 2 3. The Bussell decision considered 42 C.F.R. § 424.535(a)(3), which authorizes CMS to revoke a supplier’s Medicare enrollment based on conviction of a qualifying felony, rather than 42 C.F.R. § 424.530(a)(3), which authorizes CMS to deny an enrollment application based on such a conviction. However, appellate panels of the Departmental Appeals Board (DAB) have looked to prior decisions interpreting 42 C.F.R. § 424.535(a)(3) for guidance in interpreting the parallel provision at 42 C.F.R. § 424.530(a)(3). See, e.g., Brian K. Ellefsen, DO, DAB No. 2626 at 7 (2015). I therefore find it appropriate to do so here.
- back to note 3 4. The judgment of conviction references counts 10-13 of the superseding indictment. CMS Ex. 2 at 1. The superseding indictment is not part of the record in the present case. The indictment that is in evidence as CMS Ex. 1 includes only counts 1-6. However, the judgment of conviction references the dates on which Dr. Vaziri’s criminal conduct occurred. These dates are identical to those mentioned in CMS Ex. 1. Compare CMS Ex. 2 at 1 with CMS Ex. 1 at 4-6 (criminal acts occurred 4/14/2006, 4/7/2007, 10/10/2008, and 10/9/2009). I therefore infer that the original indictment (CMS Ex. 1) and the superseding indictment charge the same or substantially similar conduct.
- back to note 4 5. In Bajwa, the appellate panel noted that CMS made corresponding amendments to section 424.535(a)(3) and to section 424.530(a)(3). DAB No. 2799 at 5 n.4. I therefore presume that the panel’s reasoning in Bajwa may offer guidance in interpreting section 424.530(a)(3).
- back to note 5 6. I note that, even if CMS had imposed a ten-year reenrollment bar in contravention of the regulations, it is not clear I would be authorized to overturn the bar. An appellate panel of the DAB has held that, where a supplier concedes that there is a basis for administrative action against the supplier’s Medicare enrollment (in that case revocation), neither an administrative law judge nor an appellate panel may review the length of a reenrollment bar. Vijendra Dave, M.D., DAB No. 2672 at 8-12 (2016). Because the present case involves denial of enrollment, rather than revocation, it is not certain that the appellate panel’s reasoning in Dave would control. However, in my view, the panel’s explanation of why the length of a reenrollment bar is not an initial determination under 42 C.F.R. § 498.3(b) would seem to apply equally to denial of enrollment as to revocation.
- back to note 6