Chaque Femme Boutique LLC D/B/A Every Woman Boutique, DAB CR6527 (2024)

DECISION

The Centers for Medicare & Medicaid Services (CMS) revoked the enrollment and billing privileges of Chaque Femme Boutique LLC D/B/A Every Woman Boutique (Petitioner), a supplier of Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS), pursuant to 42 C.F.R. § 424.535(a)(1), based on its failure to meet conditions of enrollment found at 42 C.F.R. § 424.57(c).  This decision affirms CMS’s revocation of Petitioner’s enrollment and billing privileges because Petitioner did not meet the conditions of enrollment.

I.      Background and Procedural History

On April 3, 2024, Petitioner timely requested a hearing before an Administrative Law Judge (ALJ) to contest the revocation of its Medicare enrollment and billing privileges.  On April 4, 2024, at my direction, the Civil Remedies Division (CRD) issued an acknowledgment letter and my standing prehearing order (Standing Order), which set forth a schedule for briefing and submitting supporting evidence, and other procedural requirements.

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On May 9, 2024, CMS filed a Motion for Summary Judgment and supporting memorandum (CMS Br.) along with four exhibits (CMS Exs. 1-4).  CMS did not propose any witnesses.

On June 14, 2024, Petitioner filed a brief and response in opposition to CMS’s Motion for Summary Judgment (P. Br.).  Petitioner did not submit exhibits or propose witnesses.  Petitioner did not object to CMS’s proposed exhibits.

Absent objection, CMS Exhibits 1-4 are admitted into evidence.

II.      Jurisdiction

I have the authority to hear and decide this matter.  42 U.S.C. § 1395cc(j)(8); 42 C.F.R. §§ 424.545(a), 498.1(g), 498.3(b)(17), 498.5(l)(2).

III.      Issue

The issue to be decided is whether CMS had a legitimate basis to revoke Petitioner’s Medicare enrollment and billing privileges under 42 C.F.R. § 424.535(a)(1).

IV.      Findings of Fact

The following facts are undisputed.

Petitioner was enrolled in the Medicare program as a supplier of DMEPOS.  On July 18, 2023, Palmetto GBA, a contractor acting on behalf of CMS, received a letter from Old Republic Insurance Company, stating that the surety bond for Petitioner was cancelled effective September 8, 2023.  CMS Ex. 2 at 3.  By letter dated October 4, 2023, Palmetto notified Petitioner that its Medicare billing privileges were being revoked pursuant to 42 C.F.R. § 424.535(a)(1), and that a two-year reenrollment bar was imposed pursuant to 42 C.F.R. § 424.535(c), beginning 30 days from the date on the letter.  CMS Ex. 3 at 1-2.  The notice letter also specified that Petitioner’s revocation was retroactively dated back to September 8, 2023, the date that Petitioner’s surety bond was cancelled.  Id. at 1.

Petitioner submitted a Corrective Action Plan (CAP) dated December 6, 2023, and a reconsideration request to Chags Health Information Technology, LLC (C-HIT)¹ to appeal the revocation of its billing privileges.  CMS Ex. 4.  In the reconsideration request, Petitioner alleged that it had a surety bond with a different company.  Id.  C-HIT issued an unfavorable reconsideration determination on February 26, 2024, upholding the revocation of Petitioner’s Medicare billing privileges.  CMS Ex. 1 at 3.  Petitioner timely

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filed a request for hearing on April 3, 2024, and the case was assigned to me for hearing and decision.

V.      Legal Authorities

The Social Security Act (the Act) establishes the enrollment process for providers and suppliers participating in Medicare or Medicare-related programs.  42 U.S.C. §§ 1302(a), 1395cc(j).  Under the Act, “suppliers” are physicians or other practitioners, a facility or other entity (other than a provider of services) that furnishes items or services under the Medicare provisions of the Act.  42 U.S.C. § 1395x(d).  Providers include hospitals, skilled nursing facilities, and home health agencies.  42 U.S.C. § 1395x(u).  Any physician who participates in the Medicare program is considered a “supplier.”  42 U.S.C. § 1395x(d); 42 C.F.R. § 400.202 (definition of “supplier”).  In this case, Petitioner is considered a “supplier.”

A provider or supplier must be enrolled in the Medicare program in order to receive payment for covered items or services from either Medicare (in the case of an assigned claim) or a Medicare beneficiary.  42 C.F.R. §§ 424.502 (definition of “enroll/enrollment”), 424.505.  Once enrolled, the provider or supplier receives billing privileges and is issued a valid billing number effective for the date a claim was submitted for an item that was furnished or a service that was rendered.  42 C.F.R. § 424.505.

The regulations provide that CMS may revoke the enrollment of suppliers for several reasons, including when a supplier is found to be in violation of the regulations set forth in 42 C.F.R. § 424.57(c).  42 C.F.R. §§ 424.57(e)(1), 424.535(a)(1), 424.535(g).

VI.      Analysis and Conclusions of Law²

1. Petitioner was noncompliant with 42 C.F.R. § 424.57(c)(26).

Pursuant to 42 C.F.R. § 424.57(c)(26), a DMEPOS supplier must “meet the surety bond requirements specified in [42 C.F.R. § 424.57(d)].”

42 C.F.R. § 424.57(d)(4) states that:

(4) Type and terms of the surety bond —

(i) Type of bond. A DMEPOS supplier must submit a bond that is continuous.

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(ii) Minimum requirements of liability coverage.

(A) The terms of the bond submitted by a DMEPOS supplier for the purpose of complying with this section must meet the minimum requirements of liability coverage ($50,000) and surety and DMEPOS supplier responsibility as set forth in this section.

(B) CMS requires a DMEPOS supplier to submit a bond that on its face reflects the requirements of this section. CMS revokes or denies a DMEPOS supplier’s billing privileges based upon the submission of a bond that does not reflect the requirements of paragraph (d) of this section.

The regulation also discusses the cancellation of a surety bond and lapse of bond coverage, stating that “[c]ancellation of a surety bond is grounds for revocation of the DMEPOS supplier’s Medicare billing privileges unless the DMEPOS supplier provides a new bond before the effective date of the cancellation.”  42 C.F.R. § 424.57(d)(6)(ii) (emphasis added).

Petitioner claims to have provided proof that there was no lapse in coverage and argues that C-HIT erred in upholding the initial determination that Petitioner was not in compliance with the regulation  P. Br. at 3.  Petitioner contends that it submitted with its request for reconsideration a copy of a “current and updated surety bond,” that the effective date on the updated surety bond is September 8, 2023, and that it processed claims and received payments in October 2023.  Id. at 3-4.

It is undisputed that Petitioner’s surety bond initially lapsed on September 8, 2023, and CMS received notice of the surety bond cancellation via letter.  CMS Ex. 2.  Petitioner does not contend that it purchased a surety bond prior to September 8, 2023, nor has it provided any evidence that it obtained new surety coverage prior to the date of the revocation notice.  Rather, Petitioner argues that the purchase of a surety bond with retroactive coverage to September 8, 2023, proves no lapse in coverage.  The copy of the surety bond that Petitioner submits with its request for hearing as proof of coverage is dated December 19, 2023.  DAB E-file Dkt. No. C-24-370, Doc. No. 1b, at 4.

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The Board has held that a subsequent execution of a surety bond with a retroactive effective date does not demonstrate compliance with sections 424.57(c)(26) and 424.57(d) at the time of revocation.  Pepper Hill Nursing & Rehab. Ctr., DAB No. 2395 at 7 (2011).  In Pepper Hill, the Board upheld an ALJ’s determination that Petitioner’s surety bond, executed months after the date it was required to have a surety bond in place, with a retroactive effective date, did not prove compliance, stating, “[T]he applicable regulations clearly required Petitioner to have in place a compliant surety bond by October 2, 2009.”  Id.  While the record shows that Petitioner attempted to correct its prior noncompliance by obtaining a surety bond with a retroactive date effective September 8, 2023, such corrections cannot undo past noncompliance on the date of the revocation.  Id. at 5-6.  On October 4, 2023, when the revocation notice was issued, Petitioner did not demonstrate that it had a surety bond in place prior to the lapse on September 8, 2023.

Accordingly, I find that Petitioner was in violation of 42 C.F.R. § 424.57(c)(26) and that CMS had a legitimate basis to revoke Petitioner’s Medicare enrollment pursuant to 42 C.F.R. §§ 424.57(e)(1) and 424.535(a)(1).

2. The regulations do not permit equitable relief.

Petitioner argues that it “did not receive fair and due process by C-HIT” due to a delay in processing and because all its exhibits were not included or acknowledged in the reconsidered determination letter.  P. Br. at 4-5.  Petitioner claims that it was denied equal protection of the law and due process pursuant to the 14th Amendment because it was not provided the opportunity to an adequate review of all documents submitted to C-HIT.  Id. at 5.  However, the evidence in the record supports the reconsideration determination.  The evidence shows that while Petitioner has a new surety bond, signed on December 19, 2023, and retroactively dated to September 8, 2023, a retroactive date does not meet the qualifications for continuous coverage as required by the regulations.  To the extent that Petitioner is requesting equitable relief, the regulations do not provide ALJs with the authority to grant equitable relief.  See, e.g., US Ultrasound, DAB No. 2302 at 8 (2010) (“Neither the ALJ nor the Board is authorized to provide equitable relief by reimbursing or enrolling a supplier who does not meet statutory or regulatory requirements.”); Foot Specialists of Northridge, DAB No. 2773 at 17-18 (2017) (“Neither the Board nor the ALJs have the authority to “overturn a legally valid agency action on equitable grounds or otherwise grant equitable relief.”); Neb Grp. of Ariz. LLC, DAB No. 2573 at 6 (2014) (“The Board has consistently held that it (and the ALJs) lack the authority to restore a supplier’s billing privileges on equitable grounds.”).  The Board has repeatedly held that ALJs and the Board cannot overturn a legally valid revocation on constitutional grounds.  Blair Allen Nelson, M.D., DAB No. 3034 at 9 (2020); see, e.g., Lilia Gorovits, M.D., P.C., DAB No. 2985 at 18-19 (2020) (declining to consider substantive and procedural due process arguments as grounds for reversing or modifying revocation); Michael Scott Edwards, OD, and M. Scott Edwards, OD, PA, DAB No. 2975

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at 17 (2019) (“The Board and the ALJ must follow the applicable enrollment law and regulations and have no authority to refuse to apply those authorities based on constitutional challenges.”), appeal dismissed, No. 2:29-cv-00048 (E.D.N.C. Feb. 26, 2020); Cornelius M. Donohue, DPM, DAB No. 2888 at 8 (2018) (“[W]e lack the authority to overturn, on constitutional grounds, a revocation that was imposed in accordance with the applicable law and regulations.”); Horace Bledsoe, M.D. & Bledsoe Family Med., DAB No. 2753 at 11 (2016).

VII.      Conclusion

Based on the evidence set forth, I find that CMS was authorized to revoke Petitioner’s Medicare enrollment and billing privileges based on Petitioner’s violation of 42 C.F.R. § 424.57(c)(26).  Therefore, I affirm the revocation of Petitioner’s Medicare enrollment and billing privileges under 42 C.F.R. §§ 424.57(e)(1) and 424.535(a)(1).

Endnotes

¹  C-HIT is a contractor acting on behalf of CMS that handles provider enrollment appeals and rebuttals.  CMS Ex. 1.

²  My findings of fact and conclusions of law are set forth in bold and italicized headings below.