Paul C. Drago, DAB CR6488 (2024)

DECISION

Petitioner, Paul C. Drago, is a physician, licensed to practice in South Carolina, who participated in the Medicare program as a supplier of services.  On July 19, 2016, he was convicted of first-degree domestic violence, a felony.  Based on this felony conviction, the Medicare contractor, Palmetto GBA, acting on behalf of the Centers for Medicare and Medicaid Services (CMS), revoked his Medicare billing privileges, imposed a reenrollment bar until July 20, 2026, and added his name to the Medicare preclusion list.

Petitioner now appeals.

I affirm CMS’s determinations.  I find that CMS is authorized to revoke Petitioner’s Medicare privileges and to add his name to the Medicare preclusion list because, within the ten years preceding this action, Petitioner Drago was convicted of a felony that CMS has determined is per se detrimental to the best interests of the Medicare program and its beneficiaries.

I have no authority to review the length of the reenrollment bar.

Statutory and Regulatory Background.  The Medicare program, Title XVIII of the Social Security Act (Act), is a federally-subsidized insurance program that provides health care

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benefits to the elderly, disabled, and those suffering from end stage renal disease.  Medicare is divided into four parts:

• Part A is the hospital insurance program.  It covers hospital services, post-hospital extended care, home health, and hospice care.  Act § 1811 (42 U.S.C. § 1395c);
• Part B, which is voluntary, is the supplementary medical insurance program, covering physician, outpatient rehabilitation, home health, and other services.  Act § 1832 (42 U.S.C. § 1395k);
• Part C is the Medicare Advantage program, which allows its participants to enroll in “Medicare + Choice” plans, managed by organizations, such as health maintenance organizations, that receive a fixed payment for each enrollee.  Act § 1851 (42 U.S.C. § 1395w-21); and
• Part D is the voluntary prescription drug benefit program.  Act § 1860D (42 U.S.C. § 1395w-101).

The Medicare program is administered by CMS, acting on behalf of the Secretary of Health and Human Services.  CMS contracts with Medicare administrative contractors, who process and pay reimbursement claims and perform other duties necessary to carry out program purposes.  Act § 1842 (42 U.S.C. § 1395u).  Contractors pay claims to “providers” (Part A) and “suppliers” (Part B).  Physicians and other practitioners who furnish healthcare services may participate in the program as “suppliers” of services; however, they must enroll in the program in order to receive Medicare payments.  Act § 1861(d), (q), (r) (42 U.S.C. § 1395x(d), (q), (r)); 42 C.F.R. §§ 400.202, 424.505.

Section 424.535(a) authorizes CMS to revoke a supplier’s Medicare enrollment and billing privileges on one or more of the grounds set forth under that subsection.  So long as CMS shows that one of the regulatory bases exists, I must uphold the revocation.  Tammy Dobbin, APN & Ebony Wellness, LLC, DAB No. 3136 at 2, 8 (2024); Wassim Younes, M.D. & Wassim Younes, M.D., P.L.C., DAB No. 2861 at 8 (2018) (citing Patrick Brueggeman, D.P.M., DAB No. 2725 at 15 (2016)).

Procedural Background.  Here, by letter dated June 27, 2023, the Medicare contractor, Palmetto GBA, advised Petitioner that his Medicare privileges were revoked, effective July 19, 2016.  The letter explained that the contractor revoked Petitioner’s Medicare privileges, pursuant to 42 C.F.R. § 424.535(a)(3), because Petitioner Drago was convicted of a felony, as defined in 42 C.F.R. § 1001.2 – domestic violence, first degree, in violation of S.C. Code § 16-25-20(A).  CMS Ex. 3 at 1.

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The contractor imposed a (roughly) three-year reenrollment bar (ending on July 20, 2026).  CMS Ex. 3 at 3; see 42 C.F.R. § 424.535(c).¹

The letter also advised Petitioner that the contractor added him to CMS’s preclusion list, as authorized by 42 C.F.R. §§ 422.2, 422.222, 423.100, and 423.120(c)(6).  It explained that, if Petitioner requested reconsideration, this action would become effective on the date the reconsidered determination was issued.  CMS Ex. 3 at 1.

Petitioner requested reconsideration.  CMS Ex. 2.  In a reconsidered determination, dated January 29, 2024, a CMS hearing officer upheld the revocation.  Specifically, she found that Petitioner Drago had been convicted of felony domestic violence, which is detrimental to the best interests of the Medicare program and its beneficiaries under section 424.535(a)(3).  CMS Ex. 1 at 6.

The hearing officer also upheld the determination to include Petitioner’s name on CMS’s preclusion list.  Id.

Decision based on the written record.  CMS has moved for summary judgment.  However, my standing order directed the parties to list all proposed witnesses and to submit, as a proposed exhibit, the complete, written direct testimony of any proposed witness.  Acknowledgment and Pre-hearing Order at 3-4, 5 (¶¶ 4(c)(iv), 8) (February 6, 2024).  The order pointed out that a hearing would be necessary only if a party files admissible, written direct testimony, and the opposing party asks to cross-examine.  Id. at 6 (¶ 10).

Neither party proposed any witnesses.  Because there are no witnesses to be examined or cross-examined, an in-person hearing would serve no purpose, and I may decide this case based on the written record, without considering whether the standards for summary judgment have been met.²

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Exhibits.  CMS submits its brief (CMS Br.) with seven exhibits (CMS Exs. 1-7).  Petitioner submits his own brief (P. Br.) with three exhibits (P. Exs. 1-3).  In the absence of any objections, I admit into evidence CMS Exs. 1-7 and P. Exs. 1-3.

Discussion

1. Because Petitioner Drago was, within ten-years preceding the revocation, convicted of a felony that, by regulation, CMS finds detrimental to the best interests of the Medicare program and its beneficiaries, CMS properly revoked his Medicare enrollment under 42 C.F.R. § 424.535(a)(3).³

Revocation of enrollment.  CMS may revoke a supplier’s Medicare enrollment and billing privileges if, within the preceding ten-years, the supplier was convicted of a “felony offense that CMS determines is detrimental to the best interests of the Medicare program and its beneficiaries.”  42 C.F.R. § 424.535(a)(3)(i); see also Act §§ 1842 (h)(8), 1866(b)(2)(D).  Offenses for which billing privileges may be terminated include – but are not limited to – felony crimes against persons, such as murder, rape, assault, and similar crimes.  42 C.F.R. § 424.535(a)(3)(ii)(A).

Petitioner Drago’s conviction.  In an indictment, issued on February 16, 2016, Petitioner Drago was charged with one count of domestic violence in the first degree, a felony, in violation of S.C. Code § 16-25-20.  CMS Ex. 4 at 5.  The indictment charged that Petitioner caused or attempted to cause physical harm or injury to a household member “with apparent present ability under circumstances reasonably creating fear of imminent peril and [g]reat bodily injury . . . .”  CMS Ex. 4 at 5.

On July 19, 2016, Petitioner Drago pleaded guilty to first-degree domestic violence.  The Court accepted his plea and, characterizing his crime as violent and serious, sentenced him to ten-years incarceration – which it suspended after one year of house arrest – followed by three years probation.  CMS Ex. 4 at 1, 6.

Legal basis for revocation.  The Departmental Appeals Board has consistently held that an administrative law judge’s review of CMS’s determination to revoke a supplier’s Medicare enrollment is limited to deciding whether CMS has established one or more of the grounds specified in section 424.535(a).  Dobbin & Ebony Wellness, DAB No. 3136 at 5; William Garner, M.D., DAB No. 3026 at 16 (2020); Norman Johnson, M.D., DAB No. 2779 at 11 (2017).  Although CMS itself has the discretion to consider “unique or mitigating circumstances in deciding whether, or how, to exercise its revocation authority,” I do not.  I may not substitute my discretion for that of CMS in determining whether the revocation is

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appropriate.  Johnson, DAB No. 2779 at 11 (citing Care Pro Home Health, Inc., DAB No. 2723 at 9 n.8 (2016)); Abdul Razzaque Ahmed, M.D., DAB No. 2261 at 19 (2009), aff’d, Ahmed v. Sebelius, 710 F. Supp. 2d 167 (D. Mass. 2010).

Here, within the last ten-years, Petitioner was unquestionably convicted of a violent crime against a person – assault – that, by regulation, CMS has determined is detrimental to the best interests of the Medicare program and its beneficiaries.  42 C.F.R. § 424.535(a)(3)(ii); see Dobbin & Ebony Wellness, DAB No. 3136 at 9 (“The categories of offenses set forth under 42 C.F.R. § 424.535(a)(3)(ii) are those that CMS has determined, by rule-making, to be detrimental to the Medicare program and its beneficiaries as a matter of law.”).

CMS has therefore established grounds for revoking Petitioner’s Medicare enrollment under section 424.535(a)(3).

Petitioner, however, asserts that his crime “is not in any way linked to the Medicare trust funds or the safety and well-being of its patients.”  P. Br. at 2.  Nothing in the regulation suggests that CMS’s revocation authority is limited to program-related crimes or the delivery of a healthcare item or service.  See Stephen C. White, M.D., DAB No. 3116 at 14 (2023) (pointing out that the regulations do not require CMS to show that Petitioner’s offense occurred in connection with the practice of medicine or resulted in harm to Medicare beneficiaries).  Because CMS has determined, by rule-making, that Petitioner’s crime is detrimental to the Medicare program and its beneficiaries, the issue is settled.  See Eva Orticio Villamor-Goubeaux, DAB No. 2997 at 9 (2020).⁴

Petitioner seems to have abandoned his claim, proffered at the reconsideration stage of review, that his conviction should not justify revocation because the South Carolina Board of Probation, Parole, and Pardon Services pardoned him, after he had completed his sentence.  P. Ex. 2 at 3.

In any event, notwithstanding the pardon, Petitioner is subject to revocation.  Federal, not state, law controls what constitutes a “conviction” for purposes of federal laws designed to protect the Medicare program and its beneficiaries.  Sunsites Pearce Fire Dist., DAB No. 2926 (2019); Stephen White, M.D., DAB No. 2912 (2018); Dennis McGinty, PT, DAB No. 2838 (2017); Kimberly Shipper, P.A., DAB No. 2804 at 5 (2017); Lorrie Laurel, PT, DAB No. 2524 (2013); Henry L. Gupton, DAB No. 2058 (2007), aff’d sub nom. Gupton v. Leavitt, 575 F. Supp. 2d 874 (E.D. Tenn. 2008).  Thus, under section 424.535(a)(3), “convicted” means that a judgment of conviction has been entered by a federal, state, or local court regardless of whether the judgment of conviction has been expunged or otherwise removed.

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42 C.F.R. § 1001.2; see 42 C.F.R. § 424.535(a)(3)(i); Kimberly Shipper, DAB No. 2804 at 5 (holding that Petitioner’s guilty plea constituted a conviction, even though the state court withheld adjudication of guilt).

Finally, Petitioner points to the “severe physician shortage” in the United States and, particularly, in the State of South Carolina to justify his continued participation in the Medicare program.  P. Br. at 3.  The purported need for medical services in a particular community may be a legitimate issue for CMS to consider when it determines whether to revoke a physician’s Medicare enrollment; however, it is not relevant to my determining whether CMS had the authority to revoke in the first place.  William Garner, M.D., DAB No. 3026 at 16 (2020) (finding no authority to reverse a lawful revocation based on “community needs”).

When, as here, a revocation is based on a felony conviction, its effective date is the date of the conviction.  42 C.F.R. § 424.535(g).  CMS determined that Petitioner Drago was convicted on July 19, 2016, the day he pleaded guilty, and the court accepted the plea.  See Michael Scott Edwards, OD, DAB No. 2975 at 2 (2019).

2. CMS acted within its authority when it added Petitioner to its preclusion list because, within the previous ten years, he was convicted of a felony that is per se detrimental to the best interests of the Medicare program and its beneficiaries.

The preclusion list.  Effective January 1, 2019, CMS implemented a “preclusion list” as part of its effort to “prevent fraud, waste, and abuse, and to protect Medicare enrollees,” particularly with respect to prescription drug abuse.⁵  Pursuant to 42 C.F.R. § 422.2 (Part C) and 42 C.F.R. § 423.100 (Part D), CMS’s “preclusion list” includes individuals and entities that:

• are currently revoked from Medicare enrollment, are under an active reenrollment bar, and CMS determines that the underlying conduct leading to the revocation is detrimental to the best interests of the Medicare program;
• have engaged in behavior for which CMS could have revoked the prescriber, individual, or entity had it been enrolled in the Medicare program, and CMS

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determines that the underlying conduct that would have led to the revocation is detrimental to the best interests of the Medicare program; or

• have been convicted of a felony within the previous ten-years that CMS deems detrimental to the best interests of the Medicare program.  In making such determination, CMS considers the severity of the offense, when the offense occurred, and any other information CMS deems relevant.

Review of Petitioner’s inclusion on the preclusion list.  My review here is limited to whether CMS had the authority to include Petitioner on the preclusion list.  42 C.F.R. § 498.3(b)(20); see 83 Fed. Reg. 16,642-16643 (Apr. 16, 2018) (explaining that appeals are limited to the individual’s inclusion on the preclusion list).

As discussed above, Petitioner Drago was convicted of a crime that is per se detrimental to the best interests of the Medicare program and its beneficiaries. 42 C.F.R. § 424.535(a)(3)(ii).  CMS considered the relevant factors in determining that the offense was detrimental (very serious harm inflicted, ten-year suspended sentence, etc.).   CMS Ex. 1 at 5.  Moreover, as the Board pointed out in Dobbin, because the offense is per se detrimental, “no legal basis” would “compel CMS to find the offense not detrimental to the Medicare program for the purposes of the preclusion list.”  Dobbin & Ebony Wellness, DAB No. 3136 at 17; 42 C.F.R. §§ 422.2, 423.100; see Wendell Foo, M.D., DAB No. 2904 at 3 (2018); Wassim Younes, M.D., P.L.C., DAB No. 2861 at 8 (2018) (citing Patrick Brueggeman, D.P.M., DAB No. 2725 at 15 (2016)).

Conclusion

Petitioner Drago was convicted of a felony that is per se detrimental to the best interests of the Medicare program and its beneficiaries.  CMS may therefore revoke his Medicare enrollment and billing privileges, impose a reenrollment bar, and include him on the preclusion list.

I have no authority to review the lengths of the reenrollment bar nor his time on the preclusion list.

For these reasons, I affirm CMS’s determinations. 

Endotes

¹  The re-enrollment bar begins 30 days after the contractor mails its notice letter (presumably July 27, 2023, in this case), so the re-enrollment bar was just shy of three-years.  42 C.F.R. § 424.535(c)(1).

²  That I decide this case based on the written record does not mean that Petitioner has not had a hearing.  Courts recognize that, although a case may be decided on summary judgment or based on the written record, the administrative law judge, by considering the evidence and applying the law, has granted the petitioner a hearing.  See CNG Transmission Corp. v. FERC, 40 F.3d 1289, 1293 (D.C. Cir. 1994) (holding that a “paper hearing” satisfies statutory requirements for “notice and opportunity for hearing”).

³  My findings of fact/conclusions of law are set forth, in italics and bold, in the discussion captions of this decision.

⁴  In Villamor-Goubeaux, Petitioner’s conviction – of felony interference with a child custody agreement – did not fall within a category listed in the regulation.  Nevertheless, the Departmental Appeals Board affirmed CMS’s case-specific determination the crime was detrimental to the Medicare program and its beneficiaries.  DAB No. 2997 at 9-10.

⁵  Apparently, CMS considered requiring Medicare enrollment for all providers and suppliers of Medicare Advantage services and subscribers of Part D drugs but, ultimately, opted for a preclusion list instead.  CMS concluded that the burden of requiring Medicare enrollment for hundreds of thousands of additional providers, suppliers, and prescribers would be too great and would threaten beneficiary access to prescriptions and services.  See 82 Fed. Reg. at 56442, 56448 (November 28, 2017); 83 Fed. Reg. 16646 (April 16, 2018).