Pollock OPCO, L.L.C., DAB CR6588 (2024)

DECISION

Respondent, the Centers for Medicare & Medicaid Services (CMS), acting through its Medicare administrative contractor, Novitas Solutions Inc. (Novitas), denied the Medicare enrollment application of Petitioner, Pollock OPCO, L.L.C. (Petitioner), because Petitioner did not timely submit fingerprints for all its owners.

Petitioner requested a hearing before an administrative law judge to dispute the denial of its Medicare enrollment application.  As explained below, Novitas had a basis to determine Petitioner had not timely submitted fingerprints for the four individuals it identified to CMS as owners.  I must therefore affirm the denial of Petitioner’s Medicare enrollment application. 

I.     Background and Procedural History

Petitioner operates a skilled nursing facility located in Pollock, Louisiana.  CMS Exhibit (Ex.) 3 at 1; CMS Ex. 10 at 1-2.  On November 10, 2023, Petitioner sought to identify new owners to CMS by electronically submitting a change-of-ownership (CHOW) form.  CMS Ex. 3 at 1.  On December 27, 2023, Novitas issued a letter to Petitioner advising

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that “[a]ll 5 percent or greater owners of your organization must complete a fingerprint-based background check within 30 calendar days from the postmarked date of this letter.”  CMS Ex. 2 at 1; 42 C.F.R. § 424.518(d).  Novitas identified four individuals for whom Petitioner had to submit fingerprints:  John Gum, Victor Gum, Myles Holyfield, and Danielle Prejean.  Id. at 2.  Novitas directed Petitioner to submit the fingerprints to another CMS contractor, Accurate Biometrics, for verification.  Id.

On January 3, 2024, Petitioner submitted a revised CHOW application with corrections requested by Novitas on December 18, 2024.  CMS Ex. 1 at 1; CMS Ex. 3 at 1.  On February 7, 2024, Petitioner mailed what it asserts were the four sets of fingerprints requested by Novitas by overnight commercial delivery to Accurate Biometrics, which received them on February 8, 2024.  CMS Ex. 4 at 1-2.

On February 13, 2024, Novitas denied Petitioner’s enrollment application pursuant to 42 C.F.R. § 424.530(a)(1) because the contractor had not received the fingerprints it requested within 30 days.  CMS Ex. 5 at 1.  Novitas afforded Petitioner the opportunity to submit a Corrective Action Plan (CAP) within 35 days if it believed it could correct the identified deficiencies and demonstrate eligibility for enrollment.  Id. at 2. 

Petitioner submitted a CAP and a request for reconsideration on February 22, 2024.  CMS Ex. 6 at 1-5 (CAP), 6-10 (reconsideration request).  In both documents, Petitioner asserted to CMS that it timely corrected the identified deficiency in its enrollment application when it submitted fingerprints to Accurate Biometrics on February 8, 2024.  P. Br. at 3; CMS Ex. 6 at 2, 8. 

On May 22, 2024, CMS Hearing Officer Minisha Hicks issued a reconsidered determination finding Novitas properly denied Petitioner’s enrollment application because Petitioner did not timely submit fingerprints requested by the contractor.  CMS Ex. 8 at 4.  Hearing Officer Hicks also rejected Petitioner’s claim that it had in fact provided fingerprints for all four owners to Accurate Biometrics and concluded Petitioner’s CAP did not return it to compliance.  Id. at 2-4.  

On June 21, 2024, Petitioner filed a request for hearing challenging the denial of its enrollment application, resulting in my designation to hear and decide this case.  In its request, Petitioner contended Hearing Officer Hicks improperly applied 42 C.F.R. § 424.518 to determine its CHOW application was subject to the fingerprinting requirements for high-risk entities because that regulation had not gone into effect at the time of its enrollment application.  P. Req. for Hearing at 2.  Petitioner otherwise claimed the regulatory requirements for high-risk entities only applies to newly enrolling

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providers and suppliers, not those seeking to change ownership.1  Id. at 2-3.  Finally, Petitioner objected to Hearing Officer Hicks’s determination that the facility did not achieve compliance through its CAP, arguing the record demonstrates it submitted the fingerprints for all four owners requested by Novitas within the timeframe allotted.  Id. at 3-4. 

On June 24, 2024, I issued an Acknowledgment and Pre‑hearing Order (Pre‑hearing Order) that set forth a timeline for the submission of arguments and evidence.  CMS submitted a Motion for Summary Judgment (CMS Br.) and 10 proposed exhibits (CMS Exhibits 1 through 10) on July 29, 2024.  Petitioner filed its response and pre-hearing brief on August 30, 2024, along with three proposed exhibits (P. Exhibits 1 through 3) and one attachment (P. Att. 1). 

Neither party objected to the exhibits offered by the opposing party.  I therefore admit CMS Exhibits 1 through 10 and Petitioner Exhibits 1 through 3 into the record.  As Petitioner’s Att. 1 is an excerpt from the Federal Register, I need not enter it into the record as an exhibit.  See Civ. Remedies Div. P. § 14(a). 

II.   Decision on the Record

My Pre‑hearing Order required the parties to submit written direct testimony for each proposed witness and advised I would only hold an in-person hearing if a party requested the opportunity to cross-examine an opposing party witness.  Pre‑hearing Order at 7-8; Civ. Remedies Div. P. §§ 16(b), 19(b); Pac. Regency Arvin, DAB No. 1823 at 8 (2002). 

CMS identified no witnesses.  Petitioner proffered the written direct testimony of Kelly Ashworth, the Executive Vice President of its management company.  P. Ex. 1.  CMS did not seek to cross-examine her.  I therefore need not hold an in-person hearing in this matter and issue this decision based on the record before me.  Pre‑hearing Order at 7-8; Civ. Remedies Div. P. § 19(d).  CMS’s motion for summary judgment is denied as moot. 

III.   Issue

Whether CMS had a legitimate basis to deny Petitioner’s enrollment application under 42 C.F.R. § 424.530(a)(1) based on its failure to comply with enrollment requirements.

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IV.  Jurisdiction

I have jurisdiction to decide this case.  42 C.F.R. §§ 498.3(b)(17), 498.5(l)(2). 

V.    Findings of Fact, Conclusions of Law, and Analysis2

1. Applicable Law

Skilled nursing facilities are “providers” within the meaning of the Social Security Act (the Act).  42 U.S.C. § 1395x(u); see also 42 C.F.R. §§ 400.202, 498.2.  The Act authorizes the Secretary of Health and Human Services to promulgate regulations to establish criteria to qualify providers to enroll as billers to the Medicare program.  42 U.S.C. §§ 1302, 1395cc(j).  The Secretary’s regulations define enrollment, in relevant part, as “the process that Medicare uses to establish eligibility to submit claims for Medicare‑covered items and services.”  42 C.F.R. § 424.502.  To participate in the Medicare program, providers must meet certain criteria to enroll and receive billing privileges.  42 C.F.R §§ 424.505, 424.510.  

As part of the enrollment process, which includes initial, revalidation, and change-of-ownership applications, CMS’s administrative contractors must screen providers based on CMS’s assessment of risk (limited, moderate, or high) associated with the type of provider.  42 C.F.R. § 424.518.  CMS categorizes skilled nursing facilities, both newly enrolling and those applying to change ownership or report a new owner, as a “[h]igh categorical risk.”  42 C.F.R. § 424.518(c)(1)(v), (vii).  Providers deemed to be high-risk are subject to the screening requirements for limited and moderate risk categories as well as more stringent requirements, specifically the submission of fingerprints from any individual with a five percent or greater direct or indirect ownership interest in the provider.  42 C.F.R. § 424.518(c)(2)(i), (ii)(A).  The provider must provide fingerprints with its enrollment application or within 30 days of the contractor’s request.  42 C.F.R. § 424.518(d)(1). 

CMS has the authority to deny enrollment for any reason identified in 42 C.F.R. § 424.530(a), including where it determines a provider or supplier “to not be in compliance with the enrollment requirements in [ ] title 42 or in the enrollment application applicable for its provider or supplier type, and has not submitted a plan of corrective action as outlined in part 488 of this chapter.”  42 C.F.R. § 424.530(a)(1).  The Secretary’s regulations mandate denial of a high-risk provider’s enrollment application pursuant to 42 C.F.R. § 424.530(a)(1) where it fails to provide the fingerprints of an individual subject to fingerprint-based criminal history verification.  42 C.F.R. § 424.518(d)(2)(i).  

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2. Discussion
   1. CMS had a valid basis to deny Petitioner’s enrollment application.

CMS contends it properly denied Petitioner’s enrollment application because Petitioner failed to timely provide fingerprints for four owners it identified as part of that application.  CMS Br. at 5-6 (citing CMS Ex. 7) (printouts from CMS’s case management system purporting to show that even by February 28, 2024, CMS received fingerprints for only two out of four individuals).  Petitioner does not dispute it failed to timely submit these fingerprints but argues denial of its enrollment application is nevertheless improper because it corrected that omission during the period of time afforded it by Novitas to pursue a CAP.  P. Br. at 5-6.  Petitioner submitted an affidavit from one of its managers averring she contacted Accurate Biometrics and confirmed that contractor received all four sets of fingerprints on February 8, 2024, before the CAP period expired.  P. Ex. 1 at 2.  Therefore, by Petitioner’s reasoning, Novitas did not have a valid basis to deny Petitioner’s enrollment application on February 13, 2024.  P. Br. at 5-6. 

Petitioner’s argument is reasonable, but CMS nevertheless prevails because its regulations demanded denial of Petitioner’s enrollment application when Petitioner failed to timely provide the fingerprints requested by Novitas within 30 days.  42 C.F.R. § 424.518 details the level of screening necessary for a provider or supplier to enroll in the Medicare program.  CMS categorizes skilled nursing facilities like Petitioner as a “[h]igh categorical risk.”  42 C.F.R. § 424.518(c)(1)(v), (vii).  To enroll, high-risk providers must meet the screening requirements for limited and moderate risk categories as well as more stringent requirements, specifically the submission of fingerprints from any individual with a five percent or greater direct or indirect ownership interest in the provider.  42 C.F.R. § 424.518(c)(2)(i), (ii)(A).  For such owners, high-risk providers “[m]ust submit a set of fingerprints for a national background check . . . [w]ithin 30 days of a Medicare contractor request” if they did not include them with the initial application.  42 C.F.R. § 424.518(d)(1).  If they fail to do so, the regulations specify the provider “will have its billing privileges . . . [d]enied under § 424.530(a)(1).”  42 C.F.R. § 424.518(d)(2)(i).  

There is no dispute Petitioner identified four individuals in its November 10, 2023 CHOW application who met this definition of ownership and for whom Petitioner was thus obliged to provide fingerprints.  CMS Ex. 3 at 9-11; CMS Ex. 10 at 8-9.  There is equally no dispute that on December 27, 2023, Novitas issued a letter to Petitioner instructing it to submit fingerprints for those four individuals within 30 days, advising that “[f]ailure to submit fingerprints for all individuals listed within the designated time frame may result in denial of your Medicare billing privileges.”  CMS Ex. 2 at 2.  Finally, there is no dispute that even by Petitioner’s estimation, it did not submit fingerprints for

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these four individuals until February 8, 2024.  CMS Ex. 4 at 1-2; P. Br. at 5.  Novitas’ initial determination plainly states it denied Petitioner’s application because “CMS has not received the required fingerprints from [the four owners].”  CMS Ex. 5 at 1.  

Petitioner had 30 days, or until January 26, 2024,3 to submit the fingerprints requested by Novitas.  42 C.F.R. § 424.518(d)(1)(ii).  When it failed to do so, 42 C.F.R. § 424.518(d)(2)(i) required CMS to deny Petitioner’s enrollment application (“In the event the individual(s) under paragraph (c)(2) of this section fail to submit such fingerprints in accordance with paragraph (d)(1) of this section, the provider or supplier will have its billing privileges . . . [d]enied under § 424.530(a)(1)[.]) (emphasis added).  

Neither Novitas’ initial denial nor CMS’s reconsidered determination explicitly asserts denial of Petitioner’s enrollment to be required pursuant to 42 C.F.R. § 424.518(d)(2)(i).  CMS Ex. 5; CMS Ex. 8.4  At no point did Novitas ever warn Petitioner that failure to submit fingerprints within 30 days of its request would result in non-discretionary denial of its enrollment application.  In fact, Novitas actively misled Petitioner in its December 27, 2023 fingerprint request letter by warning that denial was only a possibility if Petitioner did not comply within 30 days.  CMS Ex. 2 at 2 (“Failure to submit fingerprints for all individuals listed within the designated time frame may result in denial of your Medicare billing privileges.”) (emphasis added).  Novitas further reinforced this inaccurate impression in its denial notice by offering Petitioner 35 days to submit a CAP showing it could “correct the deficiencies and establish [its] eligibility to participate in the Medicare program.”  CMS Ex. 5 at 2.5

The prejudice to Petitioner caused by Novitas’ unclear notices is not insignificant.  Petitioner could have acted with greater urgency had Novitas made clear in its initial

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request that it was obliged by regulation to deny Petitioner’s application if it did not submit the requested fingerprints within 30 days.  CMS Ex. 2 at 2.  Read in conjunction with that inaccurate warning, Novitas’ subsequent denial notice suggested to Petitioner that it had an additional 35 days to correct the omission.  CMS Ex. 5 at 2.  And Petitioner, believing it had in fact done so, pursued reconsideration by CMS to establish that Accurate Biometrics received all four sets of fingerprints on February 8, 2024 – a claim that even if established could not result in a favorable outcome. 6  In its reconsidered determination, CMS compounded the confusion by citing the correct regulatory basis for denial but failing to explain to Petitioner that this regulation precluded consideration of its efforts to submit the fingerprints under the purported auspices of a CAP.  CMS Ex. 8 at 2-4.  CMS instead sought to rebut Petitioner’s claim the fingerprints were received on February 8, 2024 – again, a claim that would not have resulted in a different outcome even if CMS had accepted it.  Id. 

CMS’s failure in articulation led Petitioner to challenge its reconsidered determination before me, and only now, approximately 10 months later, has Petitioner received the clear explanation for the denial of its application it should have received on February 13, 2024.  Had Novitas or CMS better explained to Petitioner the non-discretionary regulatory basis for the denial, it would perhaps have recognized the futility of challenging that denial and instead filed another application as soon as the regulations permitted, in this case March 15, 2024, 30 days after its right to appeal the initial denial expired.  See 42 C.F.R. §§ 424.530(b)(1) (permitting a provider or supplier denied enrollment to reapply after its appeal right have lapsed), 424.530(e) (denial becomes effective 30 days after date of initial denial). 

But whatever missteps Novitas and CMS made in their notices to Petitioner, the regulatory mandate is clear:  if a high-risk provider does not obtain and submit fingerprints within 30 days of a contractor’s request, CMS “will” deny its enrollment application.  42 C.F.R. § 424.518(d)(2)(i).  Once CMS establishes a basis for enrollment denial, I may not substitute my own judgment as to its propriety.  UpturnCare Co., DAB No. 2632 at 19 (2015) (stating neither the Board nor an ALJ may overturn denial of provider enrollment in the Medicare program on equitable grounds).  Instead, my role is to determine whether CMS established a legal basis to take action against Petitioner.  John A. Hartman, D.O., DAB No. 2911 at 21 (2018) (“The authority to balance equitable considerations with risks to the program and beneficiaries rests with CMS, while our role is to evaluate if CMS’s action is legally authorized.”).  It has done so here.

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2. I have no jurisdiction to consider whether CMS or its contractor should have accepted Petitioner’s CAP.

Petitioner asserts it was entitled to 35 days under a CAP to cure the deficiency and believes it did so.  P. Br. at 5-6; CMS Ex. 5 at 2.  Petitioner has submitted evidence before me to support that claim.  See P. Ex. 1 (sworn testimony of Executive Vice President Kelly Ashworth that Accurate Biometrics requested Social Security numbers for the two individuals for whom CMS claims to have no record, suggesting they had possession of their fingerprints and that Accurate directly confirmed to her its system showed it received the fingerprints of the two individuals at issue on February 8, 2024).  Petitioner also argues CMS’s own evidence supports its version of events.  P. Br. at 6 (citing CMS Ex. 7). 

CMS makes no effort to respond to this claim before me.  I must nevertheless rule in its favor because I have no jurisdiction over the denial of a CAP.  The regulations make plain that the outcome of a CAP is not an initial determination subject to appeal.  42 C.F.R. § 405.809(b)(2) (“The refusal of CMS or its contractor to reinstate a provider or supplier’s billing privileges based on a corrective action plan is not an initial determination under part 498 of this chapter.”); Conchita Jackson, M.D., DAB No. 2495 at 6 (2013); PDMS Imaging, Inc., DAB No. 2313 at 5 (2010).7

Moreover, as I have explained, in this case the regulations required denial of Petitioner’s enrollment application for failing to submit the fingerprints requested by Novitas within 30 days.  42 C.F.R. § 424.518(d)(2)(i).  Petitioner could have prevailed under a CAP only if it submitted evidence to establish eligibility for enrollment, meaning evidence it submitted the requested fingerprints within 30 days of receipt of the contractor’s request.  By its own admission, Petitioner had not met that timeframe.  P. Br. at 5. 

Therefore, even if I had the authority to consider this argument, Petitioner could not prevail.  Fully crediting the testimony of Petitioner’s witness that Accurate Biometrics received fingerprints for all necessary individuals on February 8, 2024, see P. Ex. 1 at 2, I must still affirm denial of Petitioner’s enrollment application because the regulations required Novitas to do so after January 26, 2024, when the 30-day period for Petitioner to submit fingerprints expired.  42 C.F.R. § 424.518(d)(1)(i), (2)(i); Ronald Paul Belin, DPM, DAB No. 2629 at 5 (2015) (“[W]here CMS is legally authorized to deny an

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enrollment application, neither an ALJ nor the Board itself is empowered to substitute for CMS or its contractor in determining how to exercise its discretion.”) 

VI.  Conclusion

For the foregoing reasons, I affirm CMS’s determination to deny Petitioner’s Medicare enrollment application.