Isaak Vaysberg, DAB CR6444 (2024)

DECISION

I sustain the determination of a Medicare contractor, as affirmed on reconsideration, to revoke the Medicare enrollment of Petitioner, Isaak Vaysberg, to impose a re-enrollment bar against him, and to place him on the CMS Preclusion List.

I. Background

This case was very recently transferred to my docket from that of another administrative law judge.

CMS moved for summary judgment, filing a brief and eight exhibits that are identified as CMS Ex. 1 – CMS Ex. 8.  Petitioner opposed the motion.  He incorporated CMS’s exhibits as his own and added a ninth exhibit, identified as P. Ex. 9.  This exhibit consists of several character references signed by various individuals.

CMS offered no testimony in support of its case.  Petitioner provided a list of several individuals whom he intends to call as witnesses if I hold an in-person hearing.  He did not provide the written direct testimony of any of his proposed witnesses, contravening Paragraph 10 of the initial Standing Order issued by the administrative law judge who originally oversaw this case, which required all testimony to be submitted as an affidavit or written declaration issued under penalty for perjury.

Page 2

Petitioner did not object to my receiving CMS Ex. 1 – CMS 8.  I receive these exhibits into evidence.  CMS objected to Petitioner’s exhibits, especially P. Ex. 9.  It asserted that the character references contained in these exhibits were irrelevant because I do not have authority to grant leniency to Petitioner, as he requests.  It objected also to Petitioner’s witnesses on the ground that Petitioner contravened the Standing Order by failing to offer their testimony in affidavit or declaration form.

I sustain CMS’s objection to P. Ex. 9 and to Petitioner’s proposed witness testimony.  As I explain below, the character references offered by Petitioner are not relevant to the issues that I may hear and decide.  The proposed witnesses’ testimony is also irrelevant.  Moreover, Petitioner failed to comply with the Standing Order.

It is unnecessary that I decide whether grounds exist for issuing summary judgment.  There is nothing that I may accomplish at an in-person hearing because there are no witnesses whose testimony would be heard on the record.  This case is ripe for adjudication based on the parties’ written exchanges.

II. Issues, Findings of Fact and Conclusions of Law

A. Issues

The issues are whether CMS is authorized to revoke Petitioner’s Medicare enrollment and billing privileges, whether it is authorized to impose a re-enrollment bar against Petitioner, and whether it is authorized to place Petitioner on the CMS Preclusion List.

B. Findings of Fact and Conclusions of Law

A supplier of Medicare items and services does not have a right to participate in the Medicare program.  Regulations establish the criteria for enrollment and participation.  They provide CMS with authority to revoke a supplier’s enrollment under defined circumstances.  42 C.F.R. § 424.535.

A Medicare contractor acting on behalf of CMS determined to revoke Petitioner’s Medicare enrollment, citing three grounds for revocation:  Petitioner’s conviction within the previous 10 years of a felony offense that CMS determined was detrimental to the best interests of the Medicare program and its beneficiaries; his failure to report his conviction to CMS; and revocation by a State agency of Petitioner’s participation in a Medicaid program.  42 C.F.R. §§ 424.535(a)(3); 424.535(a)(9); 424.535(a)(12).  The determination was affirmed on reconsideration.

I note initially that any one of the three grounds for revocation, if supported by the evidence, is sufficient to authorize CMS to revoke Petitioner’s Medicare enrollment and billing privileges.  It is unnecessary that more than one basis exist.

Page 3

The evidence substantiates all three grounds for revocation.

First, Petitioner was convicted of a felony that CMS justifiably determined was detrimental to the best interests of the Medicare program.  42 C.F.R. § 424.535(a)(3).  On May 23, 2019, Petitioner pled guilty in the United States District Court to a felony charge of conspiracy to engage in the wholesale distribution of drugs in violation of federal law.  CMS Ex. 4 at 10-11, 23-26; CMS Ex. 5.

The regulations provide that some felony convictions establish a per se basis for revocation of Medicare participation and billing privileges without further evaluation by CMS.  These include but are not limited to financial crimes such as extortion, embezzlement, income tax evasion, insurance fraud and other similar crimes.  42 C.F.R. § 424.535(a)(3)(ii)(B).  CMS argues that Petitioner’s conviction of an unlawful conspiracy to distribute prescription drugs is a “financial crime” within the meaning of this subsection and therefore a per se basis for revocation.  CMS’s Prehearing Brief and Motion for Summary Judgment (CMS’s brief) at 6-7; CMS Ex. 4 at 20-24.

I find that Petitioner’s conviction met the regulatory definition of a “financial crime.”  All crimes described in the subsection involve using unlawful means to obtain money.  That is what Petitioner was convicted of doing.  His conviction therefore establishes a per se basis for revocation of his Medicare enrollment and billing privileges.

Petitioner’s conviction was not for tax evasion, extortion, or embezzlement, but it was for fraud.  It involved acquisition of money by Petitioner and his co-conspirators through unlawful means.  Specifically, Petitioner was convicted of conspiring to obtain prescription drugs from illicit sources and to resell those drugs wholesale, as if they had been obtained legitimately.  CMS Ex. 4 at 20-24.  In doing so, Petitioner violated federal statutes that regulate the way drugs may be marketed.  He defrauded the federal government, because he circumvented law and regulations that intend to assure that only approved drugs be distributed.

Petitioner’s felony conviction establishes grounds for revocation of his Medicare participation and billing privileges even if it is not a financial crime within the meaning of 42 C.F.R. § 424.535(a)(3)(ii)(B).  CMS reasonably concluded that Petitioner’s felony conviction was detrimental to the best interests of the Medicare program.  The fact that he conspired to evade federal law that regulates the sale of drugs – for reasons that include the safety of those drugs – is ample basis to conclude that Petitioner is untrustworthy to provide care to Medicare beneficiaries.

Second, a basis for revocation results from Petitioner’s failure to report his conviction to CMS.  Medicare participation regulations require a supplier to report an adverse action such as a conviction to CMS within 30 days of its occurrence.  42 C.F.R.

Page 4

§ 424.516(d)(1)(ii).  Failure to do so is grounds for revocation pursuant to 42 C.F.R. § 424.535(a)(9).  It is undisputed that Petitioner failed to report his felony conviction.

Third, CMS is authorized to revoke Petitioner’s Medicare enrollment and billing privileges because California’s Medicaid agency revoked Petitioner’s State Medicaid billing privileges and Petitioner exhausted his State appeal rights.  42 C.F.R. § 424.535(a)(12).  There is no dispute that the California Medicaid program retroactively suspended Petitioner’s participation in that program, effective March 12, 2020.  CMS Ex. 7.

Petitioner argues that CMS lacks authority to revoke his Medicare enrollment and billing privileges because his conviction is not for a crime that mandates exclusion pursuant to section 1128(a) of the Social Security Act (Act).  Petitioner’s Prehearing Brief and Opposition to Respondent’s Prehearing Brief and Motion for Summary Judgment (Petitioner’s brief) at 4-5.  While that it is true, it does not vitiate CMS’s authority to revoke Petitioner’s Medicare enrollment and billing privileges.  CMS may revoke a supplier’s enrollment and billing privileges if that supplier is convicted of one of the felonies described at section 1128(a).  42 C.F.R. § 424.535(a)(3)(ii)(D).  But that is only one category of felony conviction among several types of felony convictions for which revocation is authorized.  Nothing in the regulation suggests that it is the only category of felony conviction that authorizes revocation.  Indeed, the remainder of the section makes it clear that a section 1128(a) felony conviction is just one of several categories of convictions that authorize revocation.

Petitioner asserts that CMS should have shown him leniency and not revoked his enrollment and billing privileges.  Petitioner’s brief at 5-6.  He contends that he deserves leniency because, he contends, he was not committed of perpetrating fraud.  Id.  That assertion is incorrect, but it is also irrelevant.

In fact, Petitioner was convicted of conspiring to defraud the United States.  Count 1 of the indictment, to which he pled guilty, explicitly alleges that the conspiracy that he engaged in involved fraud.  CMS Ex. 4 at 20-24.

But the argument is irrelevant as well because I have no authority to grant leniency to Petitioner.  CMS acted within its discretion to revoke Petitioner’s Medicare enrollment and billing privileges.  I may not question CMS’s exercise of discretion just so long as it has the authority to act.  It plainly has that authority in this case, and on multiple grounds, for reasons that I have enumerated above.

Petitioner argues also that he is not an untrustworthy individual and that I should consider the statements of those individuals who attest to his character.  See P. Ex. 9.  In addition to being inadmissible due to Petitioner’s failure to provide them in proper form, those

Page 5

statements are irrelevant.  That is because they amount to an attack on CMS’s exercise of discretion.

CMS imposed two other remedies against Petitioner in addition to revoking his Medicare enrollment and billing privileges.  It imposed a bar against Petitioner re-enrolling in Medicare and placed him on the CMS Preclusion List.  CMS’s authority to impose a bar against re-enrollment emanates from its authority to revoke Petitioner’s Medicare enrollment and billing privileges.  42 C.F.R. § 424.535(c)(1)(i), (ii).  The authority to place Petitioner on the CMS Preclusion List results from a conviction that justifies revocation of enrollment and billing privileges.  42 C.F.R. § 422.2.

Petitioner did not offer argument or evidence to directly challenge CMS’s determinations to impose a re-enrollment bar against Petitioner or to place him on the CMS Preclusion List, but limited his argument to challenging CMS’s revocation authority.  I need not reiterate why CMS has the authority to revoke Petitioner’s enrollment and billing privileges.