Edward Albert Balbas, DAB CR5426 (2019)

DECISION

Petitioner, Edward Albert Balbas, is a physician, licensed to practice in California.  He recently applied for enrollment in the Medicare program, but the Centers for Medicare & Medicaid Services (CMS) denied his application.  Petitioner now appeals the denial. 

I find that CMS is authorized to deny Petitioner Balbas’s enrollment application because, within the ten years preceding his filing, he was convicted of felonies that CMS reasonably determined are detrimental to the best interests of the Medicare program and its beneficiaries.  I therefore affirm CMS’s determination.

Background

In an application, filed on October 5, 2018, Petitioner applied for enrollment in the Medicare program.  CMS Brief (Br.) at 3 (¶ 4); Petitioner (P.) Br. at 3 (¶ 4).  He submitted additional applications on November 20, 2018, in which he disclosed felony convictions.  CMS Exhibit (Ex.) 8 at 3-4.

By letter dated January 23, 2019, the Medicare contractor, Noridian Healthcare Solutions, denied Petitioner Balbas’s application.  CMS Ex. 3.  The contractor acted pursuant to

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42 C.F.R. § 424.530(a)(3) because Petitioner was convicted of felonies that CMS determined are detrimental to the best interests of the program and its beneficiaries.  CMS Ex. 3 at 1. 

Petitioner requested reconsideration.  In a reconsidered determination, dated April 23, 2019, a CMS hearing officer upheld the denial, citing Petitioner’s felony convictions for soliciting, accepting, or referring business to violate the California insurance code (Cal. Penal Code § 549).  Reconsidered Determination at 2.  Petitioner timely appealed and that appeal is now before me.

The parties have filed cross-motions for summary judgment. Because neither party proposes any witnesses, an in-person hearing would serve no purpose.  See Acknowledgment and Pre-hearing Order at 5-6 (¶¶ 8, 9, 10) (June 28, 2019).  The matter may therefore be decided based on the written record, without considering whether the standards for summary judgment are satisfied.

CMS has submitted its pre-hearing brief/motion for summary judgment (CMS Br.) and eight exhibits (CMS Exs. 1-8).CMS lists nine exhibits, but filed just eight. CMS describes the ninth exhibit as a print-out of Petitioner’s October 5, 2018 Medicare application and the contractor’s November 14, 2018 email request for additional information. Inasmuch as the parties agree on the relevant facts surrounding these documents, the missing exhibit is not critical to my resolving this case. CMS Br. at 3 (¶ 4); P. Br. at 3 (¶ 4). Petitioner submitted his pre-hearing brief/cross-motion for summary judgment (P. Br.).  In the absence of any other objections, I admit into evidence CMS Exs. 1-8.

Discussion

CMS may deny Petitioner enrollment in the Medicare program because, within the last ten years, he was convicted of felonies that CMS reasonably finds detrimental to the best interests of the Medicare program and its beneficiaries.I make this one finding of fact/conclusion of law to support my decision.

CMS may deny a provider’s or supplier’s enrollment in the Medicare program if, within the preceding ten years, he 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); see also Social Security Act (Act) §§ 1842(h)(8) (authorizing the Secretary to deny enrollment to a physician 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 enrollment

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after he ascertains that the provider has been convicted of a felony that he “determines is detrimental to the best interests of the program or program beneficiaries.”). 

Offenses for which billing privileges may be denied include – but are not limited to –financial crimes such as extortion, embezzlement, income tax evasion, insurance fraud, and similar crimes; a felony that places the Medicare program or its beneficiaries at immediate risk (such as malpractice); and felonies “under section 1128(a) of the Act.”  42 C.F.R. § 424.530(a)(3)(i)(B) - (D).  Section 1128(a) crimes include:  program-related crimes; crimes related to the neglect or abuse of patients in connection with the delivery of a healthcare item or service; crimes relating to health care fraud; and crimes relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.  See 42 C.F.R. § 1001.101.

Here, Petitioner Balbas was charged in California state court with eight felony counts of submitting “false and fraudulent” claims to private insurers for payment of healthcare benefits and for “willfully and unlawfully” charging for clinical laboratory services that were not performed.  CMS Ex. 4.  On May 5, 2017, he pled guilty to two felony counts under Cal. Penal Code § 549, admitting his role in submitting the false claims to health insurance companies.  CMS Ex. 5 at 3; see CMS Ex. 2 at 5; CMS Ex. 4 at 3.  At the same time, he pled guilty to Cal. Penal Code § 186.11(a)(2); that provision enhances the penalty where “the pattern of related felony conduct” involves more than $500,000.  He agreed to pay $657,367.81 in restitution.  CMS Ex. 5 at 3.    

Petitioner’s felony convictions involved both insurance fraud and healthcare fraud – crimes that are specifically listed in the regulation as detrimental to the Medicare program and its beneficiaries.  42 C.F.R. § 424.530(a)(3).  CMS therefore justifiably denied his program enrollment. 

Petitioner, however, suggests that his crimes are not among those enumerated in the regulations and complains that neither the initial nor reconsidered determination “sets forth the reasons” that his criminal actions were either per-se detrimental to the Medicare program or would be detrimental to program beneficiaries.  P. Br. at 8-9.  This is nonsense.  Both the initial and reconsidered determinations cite the appropriate regulatory provision, 42 C.F.R. § 424.530(a)(3).  Inasmuch as “insurance fraud and other similar crimes” are listed in the regulation, as is healthcare fraud by cross-reference to section 1128(a) of the Act, simply citing the regulation adequately explains why CMS considered his crimes detrimental.  Moreover, the reconsidered determination expounds on CMS’s reasoning:  Petitioner “was involved in a pattern of making false and fraudulent claims for payment of healthcare benefits . . . . [His] involvement in an insurance fraud scheme raises concerns that Medicare Trust Funds may be at risk if he is allowed to enroll in the Medicare program.  It necessarily follows that risk to the [t]rust [f]unds is detrimental to beneficiaries.”  Reconsidered Determination at 3.

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Conclusion

CMS justifiably determined that Petitioner Balbas was convicted of felonies detrimental to the best interests of the Medicare program and its beneficiaries and may therefore deny his Medicare enrollment application.  I therefore affirm CMS’s determination.