Stat Care Clinics, d/b/a Central Stat Care, DAB CR6677 (2025)

DECISION

The Medicare enrollment and billing privileges of Petitioner, Stat Care Clinics d/b/a Central Stat Care, are revoked pursuant to 42 C.F.R. § 424.535(a)(3) and (9).1  The effective date of revocation is February 29, 2024.  Petitioner is barred from reenrollment in Medicare through February 28, 2034.  Petitioner’s name will appear on the Centers for Medicare & Medicaid Services (CMS) preclusion list effective September 19, 2024 through February 28, 2034.

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I.     Background and Procedural History

On April 30, 2024, Novitas Solutions, a Medicare administrative contractor (MAC), notified Petitioner that its Medicare enrollment and billing privileges were revoked effective March 1, 2024, pursuant to 42 C.F.R. § 424.535(a)(3) and (9).  The MAC notified Petitioner that it was subject to a reenrollment bar and eligible to reenroll in Medicare on March 2, 2034.  The MAC also advised Petitioner that its name would be placed on the CMS preclusion list pursuant to 42 C.F.R. §§ 422.2, 422.222, 423.100, and 423.120(c)(6).  CMS Exhibit (Ex.) 1 at 16-17, 97-98, 101-02.

On May 8, 2024, Petitioner requested reconsideration.  CMS Ex. 1 at 12-15, 135-36.

On September 19, 2024, a CMS hearing officer issued a reconsidered determination upholding the revocation of Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(3) and (9).  The hearing officer approved a 10-year reenrollment bar running from March 1, 2024 (which the hearing officer determined was the date of conviction of Petitioner’s owner and managing employee), through March 1, 2034.  The hearing officer also approved adding Petitioner’s name to the CMS preclusion list.  CMS Ex. 1 at 1-11.

On October 4, 2024, Petitioner requested a hearing (RFH) before an administrative law judge (ALJ).  On October 8, 2024, the case was assigned to me for hearing and decision, and an Acknowledgment Letter and my Standing Order (Standing Order) were issued.

On November 5, 2024, CMS filed a motion for summary judgment (CMS Br.) with CMS Ex. 1.  On December 18, 2024, Petitioner filed a response in opposition to the CMS motion for summary judgment (P. Br.) and Petitioner’s exhibit (P. Ex.) 1.  On January 2, 2025, CMS filed a reply brief (CMS Reply) and objection to P. Ex. 1.

Petitioner did not object to my consideration of CMS Ex. 1, and it is admitted as evidence.  CMS objects to my consideration of P. Ex. 1 pursuant to 42 C.F.R. § 498.56(e) because the document was not presented to the hearing officer on reconsideration and Petitioner has not shown good cause for offering the document for the first time before me.  CMS also objects on grounds that P. Ex. 1 contains no evidence relevant to any issue I may decide.  CMS Reply at 2-3.  Pursuant to 42 C.F.R. § 498.60(b)(1), I am to receive any evidence that is relevant and material to the issues before me.  Relevant evidence is any evidence that tends to make a fact of consequence to the issue I may decide more or less probable than without the evidence.  Fed. R. Evid. 401.2  P. Ex. 1 includes

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documents related to the exclusion of Melissa R. Barrett, MD, d/b/a Stat Care Clinics from participation in the Louisiana Medicaid program.  Dr. Barrett’s exclusion from Louisiana Medicaid was not a basis for any adverse action against Petitioner approved by the CMS hearing officer on reconsideration.  I conclude, based on my review, that P. Ex. 1 includes no evidence that has any tendency to make a fact of consequences to the issues that I may decide more or less probable than without the evidence.  Therefore, P. Ex. 1 is not relevant and not admitted.  I accept as true for purposes of summary judgment Petitioner’s assertion that Louisiana Medicaid had determined that Petitioner’s continued participation in Medicaid posed no threat to Medicaid recipients.  P. Br. at 7.

II.     Discussion

1. Applicable Law

Section 1831 of the Social Security Act (the Act) (42 U.S.C. § 1395j) establishes the supplementary medical insurance benefits program for the aged and disabled known as Medicare Part B.  Payment under the program for services rendered to Medicare-eligible beneficiaries may only be made to eligible providers of services and suppliers.3  Act §§ 1835(a) (42 U.S.C. § 1395n(a)), 1842(h)(1) (42 U.S.C. § 1395u(h)(1)).

The Act requires the Secretary of Health and Human Services (the Secretary) to issue regulations that establish a process for the enrollment of providers and suppliers, including the right to a hearing and judicial review of certain enrollment determinations. Act § 1866(h), (j) (42 U.S.C. § 1395cc(h), (j)).  Pursuant to 42 C.F.R. § 424.505, a provider or supplier must be enrolled in the Medicare program and be issued a billing number to have billing privileges and to be eligible to receive payment for services rendered to a Medicare-eligible beneficiary.

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The Secretary has delegated the authority to revoke enrollment and billing privileges to CMS.  42 C.F.R. § 424.535.  CMS or its MAC may revoke an enrolled supplier’s Medicare enrollment and billing privileges and supplier agreement for any of the reasons listed in 42 C.F.R. § 424.535.  The effective date of the revocation is controlled by 42 C.F.R. § 424.535(g).  After a supplier’s Medicare enrollment and billing privileges are revoked, the supplier is generally barred from reenrolling in the Medicare program for a period of one to 10 years.  42 C.F.R. § 424.535(c)(1).

Effective June 15, 2018, CMS was required to establish a preclusion list as defined by 42 C.F.R. §§ 422.2 and 423.100.  There is only one preclusion list.  83 Fed. Reg. 16,440, 16,641-67 (Apr. 16, 2018).

CMS adds to the preclusion list individuals and entities as provided by the definition of the preclusion list:

Preclusion list means a CMS compiled list of individuals and entities that—

(1) Meet all of the following requirements:

(i) The individual or entity is currently revoked from Medicare for a reason other than that stated in § 424.535(a)(3) of this chapter.

(ii) The individual or entity is currently under a reenrollment bar under § 424.535(c).

(iii) CMS determines that the underlying conduct that led to the revocation is detrimental to the best interests of the Medicare program.  In making this determination under this paragraph (1)(iii), CMS considers the following factors:

(A) The seriousness of the conduct underlying the individual's or entity's revocation.

(B) The degree to which the individual’s or entity’s conduct could affect the integrity of the Medicare program.

(C) Any other evidence that CMS deems relevant to its determination; or

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(2) Meet both of the following requirements:

(i) The individual or entity has engaged in behavior, other than that described in § 424.535(a)(3) of this chapter, for which CMS could have revoked the individual or entity to the extent applicable had they been enrolled in Medicare.

(ii) CMS determines that the underlying conduct that would have led to the revocation is detrimental to the best interests of the Medicare program.  In making this determination under this paragraph (2)(ii), CMS considers the following factors:

(A) The seriousness of the conduct involved.

(B) The degree to which the individual’s or entity’s conduct could affect the integrity of the Medicare program; and

(C) Any other evidence that CMS deems relevant to its determination; or

(3) The individual or entity, regardless of whether they are or were enrolled in Medicare, has been convicted of a felony under Federal or State law within the previous 10 years that CMS deems detrimental to the best interests of the Medicare program.  Factors that CMS considers in making such a determination under this paragraph (3) are—

(i) The severity of the offense;

(ii) When the offense occurred; and

(iii) Any other information that CMS deems relevant to its determination.

42 C.F.R. § 422.2 (emphasis added).  This definition of the preclusion list is from the regulations applicable to the Medicare Part C (Medicare Advantage) program.  A similar definition applicable to the Medicare Part D program is found in 42 C.F.R. § 423.100.

No payment under Medicare Parts C and D may be made to anyone on the preclusion list.  42 C.F.R. §§ 422.222-.224, 422.504(h)(2)(i)(2)(v), 423.120(c)(6).  CMS must notify a

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supplier in writing that the supplier is being added to the preclusion list, include the basis for the action, and inform the supplier of the right to ALJ review and appeal pursuant to 42 C.F.R. Part 498.  42 C.F.R. §§ 422.222(a)(2), 423.120(c)(6)(v).

An individual or entity is placed on the preclusion list no sooner than 60 days from the date of the notice of the initial determination to place the individual’s or entity’s name on the preclusion list or when a reconsidered determination is issued.  42 C.F.R. §§ 422.222(a)(3)(i), 423.120(c)(6)(v)(C).  Generally, an individual or entity placed on the preclusion list due to a felony conviction remains on the preclusion list until the date 10 years from the date of the felony conviction.  42 C.F.R. §§ 422.222(a)(5)(iii), 423.120(c)(6)(vii)(C) as amended effective January 1, 2020, 84 Fed. Reg. 15,680, 15,832, 15,840-41 (Apr. 16, 2019).  However, CMS has discretion to determine that a shorter period on the preclusion list is warranted based on consideration of the severity of the offense, when the offense occurred, and any other information CMS deems relevant.  42 C.F.R. §§ 422.222(a)(5)(iii), 423.120(c)(6)(vii)(C).  CMS also has discretion to not place the name of an individual or entity on the preclusion list or remove the name from the preclusion list if CMS determines exceptional circumstances exist related to Medicare beneficiary access to items, services, or drugs considering the degree to which access is impaired and other evidence CMS determines is relevant.  42 C.F.R. §§ 422.222(a)(6), 423.102(c)(6)(vi).

A supplier whose enrollment and billing privileges have been revoked may request reconsideration and review as provided by 42 C.F.R. pt. 498.  42 C.F.R. §§ 424.545(a), 498.22(a).  A supplier who has been added to the preclusion list may request reconsideration and review.  42 C.F.R. §§ 422.222(a)(2), 423.120(c)(6)(v)(A), 498.5(n)(1)(i).  A supplier submits a written request for reconsideration to CMS or its contractor.  42 C.F.R. § 498.22(a).  CMS or its contractor must give notice of its reconsidered determination to the supplier, giving the reasons for its determination, and if the determination is adverse, specifying the conditions or requirements the supplier failed to meet, and advising the supplier of the right to an ALJ hearing.  42 C.F.R. § 498.25.  If the decision on reconsideration is unfavorable to the supplier, the supplier has the right to request a hearing by an ALJ and further review by the Departmental Appeals Board (the Board).  Act § 1866(j)(8) (42 U.S.C. § 1395cc(j)(8)); 42 C.F.R. §§ 424.545, 498.3(b)(17), (20), 498.5.  A hearing on the record, also known as an oral hearing, is required under the Act unless waived.  Crestview Parke Care Ctr. v. Thompson, 373 F.3d 743, 748-51 (6th Cir. 2004).  The supplier bears the burden to demonstrate that it meets enrollment requirements with documents and records.  42 C.F.R. § 424.545(c).  Preclusion list review is strictly limited to whether there is a basis for adding the individual or entity to the preclusion list.  83 Fed. Reg. at 16,642-43; 42 C.F.R. §§ 498.3(b)(20) (CMS determination to place an individual or entity on the preclusion list is reviewable), 498.5(n) (right to review of determination to add to preclusion list).

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2. Issues

The issues in this case are:

Whether there is a basis for the revocation of Petitioner’s Medicare enrollment and billing privileges; and

Whether there is a basis for adding Petitioner’s name to the CMS preclusion list.

3. Findings of Fact, Conclusions of Law, and Analysis

My conclusions of law are set forth in bold followed by the undisputed findings of fact and analysis.

1. Summary judgment is appropriate.

CMS filed a motion for summary judgment.  Petitioner opposes arguing that the fact Petitioner began severing its relationship with its sole owner and operator prior to receipt of the MAC’s initial determination satisfies the requirement of 42 C.F.R. § 424.535(e) and the revocation should be rescinded.  Petitioner also argues that Petitioner and its patients should not be punished for failure to notify CMS of the conviction of Petitioner’s owner and operator.

A supplier whose Medicare enrollment and billing privileges have been revoked or whose name is added to the CMS preclusion list is, after an unfavorable reconsidered determination, entitled to a hearing on the record before an ALJ under the Act.  Act §§ 205(b), 1866(h)(1), (j); Crestview Parke Care Ctr. v. Thompson, 373 F.3d 743, 748-51 (6th Cir. 2004).  However, when summary judgment is appropriate, no hearing is required.  The Board has long accepted that summary judgment is an acceptable procedural device in cases adjudicated pursuant to 42 C.F.R. Part 498.  See, e.g., Crestview Parke, 373 F.3d at 748-51; Ill. Knights Templar Home, DAB No. 2274 at 3-4 (2009); Garden City Med. Clinic, DAB No. 1763 (2001); Everett Rehab. & Med. Ctr., DAB No. 1628 at 3 (1997).  The Board has accepted that Fed. R. Civ. P. 56 and related cases provide useful guidance for determining whether summary judgment is appropriate.  I advised the parties in the Standing Order ¶¶ D and G that summary judgment is an available procedural device and that the law as it has developed related to Fed. R. Civ. P. 56 will be applied.

Summary judgment is appropriate when there is no genuine dispute as to any issue of material fact for adjudication and/or the moving party is entitled to judgment as a matter of law.  See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Mission Hosp. Reg’l Med. Ctr., DAB No. 2459 at 5 (2012) (and cases cited therein); Experts Are Us, Inc., DAB No. 2452 at 5 (2012) (and cases cited therein); Senior Rehab. & Skilled

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Nursing Ctr., DAB No. 2300 at 3 (2010) (and cases cited therein).  A test for whether an issue of fact is genuinely in dispute is whether “the evidence [as to that issue] is such that a reasonable jury could return a verdict for the nonmoving party.”  Anderson, 477 U.S. at 248.  In evaluating whether there is a genuine issue as to a material fact, an ALJ must view the facts and the inferences to be drawn from the facts in the light most favorable to the nonmoving party, which I have done.  See Pollock v. Am. Tel. & Tel. Long Lines, 794 F.2d 860, 864 (3rd Cir. 1986).

The undisputed facts are the facts necessary to resolve this case.  Petitioner does not deny the facts that were the basis for revocation under 42 C.F.R. § 424.535(a)(9).  P. Br. at 7-8.  The issue that Petitioner raises regarding revocation under 42 C.F.R. § 424.535(a)(3) (P. Br. at 5) is an issue of law that must be resolved against Petitioner even though I accept Petitioner’s allegations of fact as true for purposes of summary judgment and draw all reasonable inferences in Petitioner’s favor.  Petitioner’s equitable arguments must also be rejected as a matter of law as I have no authority to grant equitable relief.  I conclude that there is no genuine dispute of material fact that requires a trial.  CMS is entitled to judgment as a matter of law and summary judgment is appropriate.

2. Melissa R. Barrett, MD was convicted on February 29, 2024, of the felony offense of attempted tax evasion in violation of 26 U.S.C. § 7201, in the United States District Court for the Middle District of Louisiana (district court).
3. The Secretary has determined and provided by regulation that felony financial crimes such as extortion, embezzlement, income tax evasion, insurance fraud, and other similar crimes are detrimental to the Medicare program and its beneficiaries.  42 C.F.R. § 424.535(a)(3)(ii)(B).
4. Dr. Barrett’s conviction of attempted tax evasion is a felony crime that CMS also determined, based on a case-specific analysis, is detrimental to the best interests of the Medicare program and its beneficiaries.
5. Dr. Barrett was the sole owner and managing employee of Petitioner at the time of the initial determination to revoked Petitioner’s Medicare enrollment and billing privileges and to place Petitioner’s name on the CMS preclusion list.
6. Dr. Barrett’s conviction occurred within the 10 years preceding the initial determination to revoke Petitioner’s Medicare enrollment and billing privileges.  42 C.F.R. § 424.535(a)(3)(i).

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7. There is a basis for the revocation of Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(3)(i) based on Dr. Barrett’s conviction.
8. Petitioner did not report Dr. Barrett’s conviction, which was an adverse legal action, within 30 days as required by 42 C.F.R. § 424.516(d)(1)(ii).
9. There is a basis for the revocation of Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(9).
10. There is a basis for adding Petitioner’s name to the CMS preclusion list from September 19, 2024, the date of the reconsidered determination, through February 28, 2034, the end of the 10-year period following the date of Petitioner’s conviction on February 29, 2024.

a. Undisputed Facts

Petitioner operated two urgent care and walk-in clinics in Baton Rouge, Louisiana.  Petitioner provided health care services to patients who were Medicare-eligible beneficiaries or patients covered by Louisiana Medicaid.  Services were provided by nurse practitioners and physician assistants under physician supervision.  P. Br. at 1.

Petitioner does not dispute that Dr. Barrett was its sole owner and a managing employee when the MAC made its initial determination to revoke Petitioner’s Medicare enrollment and billing privileges and placed Petitioner’s name on the CMS preclusion list.  CMS Ex. 1 at 13; P. Br. at 2.

On September 8, 2022, Dr. Barrett was charged by a grand jury of one count of attempted evasion of payment of $1.6 million of income taxes to the United States for calendar years 2007 through 2017, in violation of 26 U.S.C. § 7201.  CMS Ex. 1 at 195-99, 216‑20.

On October 31, 2023, a jury found Dr. Barrett guilty of the charge of attempted tax evasion.  CMS Ex. 1 at 201-02, 234. 

On February 29, 2024, the district court imposed judgment based on the jury verdict.  Dr. Barrett was sentenced to 52 months in prison followed by one year of supervision, and a fine of $200,000.  The district court signed the judgment on March 1, 2024.  CMS Ex. 1 at 203-09, 236; P. Br. at 2.

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On April 30, 2024, the MAC issued the initial determination.  Petitioner’s Medicare enrollment and billing privileges were revoked effective March 1, 2024.  The MAC imposed a 10-year reenrollment bar ending March 1, 2034.  The MAC also determined to add Petitioner’s name to the CMS preclusion list.  CMS Ex. 1 at 16-17, 97-98, 101-102.

Petitioner requested reconsideration by letter dated May 8, 2024.  Petitioner admitted that Dr. Barrett was then listed in Medicare enrollment records as its sole owner and managing employee.  Petitioner specified it was not requesting reconsideration on behalf of Dr. Barrett.  Petitioner requested that its request for reconsideration also be considered a rebuttal to the deactivation of Medicare billing privileges of multiple suppliers who reassigned their right to file Medicare claims to Petitioner.  Petitioner asserted it was unaware that Dr. Barrett’s conviction was adverse legal action that it had to report pursuant to 42 C.F.R. § 424.516(d)(1).  Petitioner asserted, and I accept as true for purposes of summary judgment, that transfer of its ownership was imminent.  I also accept as true for purposes of summary judgment that Dr. Barrett’s was no longer performing any clinical role at Petitioner.  CMS Ex. 1 at 12-15, 135-36.

The CMS hearing officer issued a reconsidered determination dated September 19, 2024, and there is no dispute that was the date of mailing.  The hearing officer concluded that there was no deactivation of billing privileges of multiple suppliers as alleged by Petitioner in its reconsideration request.  Rather, the individual suppliers had been notified that their reassignment to Petitioner ended March 1, 2024, with the revocation of Petitioner’s enrollment.  CMS Ex. 1 at 1-11.  Because the hearing officer declined to consider the cases of individual suppliers and the termination of their reassignments, those matters are not before me for decision.  Neb Grp. of Ariz. LLC, DAB No. 2573 at 7.  Moreover, Petitioner raises no issue regarding the termination of individual supplier reassignments in its request for hearing.

In its request for hearing and prehearing brief, Petitioner makes the following assertions of fact that I accept as true for purposes of summary judgment:

Dr. Barrett appealed her criminal conviction, and the appeal was pending when the request for hearing was filed, and Petitioner filed its brief.  RFH at 2; P. Br. at 2.

Dr. Barrett appealed her exclusion from Louisiana Medicaid and that appeal was pending when the request for hearing was filed.  RFH at 2.  Dr. Barrett was allowed to participate in Medicaid while her appeal is pending.  P. Br. at 2.

Prior to her sentencing, Petitioner engaged a different doctor to assume Dr. Barrett’s clinical duties.  RFH at 2; P. Br. at 2-3.

Dr. Barrett voluntarily surrendered her medical license shortly after sentencing.  RFH at 2; P. Br. at 3.

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Dr. Barrett also began searching for a buyer for Petitioner after sentencing.  RFH at 2; P. Br. at 3.

On May 2, 2024, Dr. Barrett entered a letter of intent to sell Petitioner to another individual.  RFH at 2; P. Br. at 3.

On May 2, 2024, Dr. Barrett and the potential buyer of Petitioner did not know that the MAC revoked Petitioner’s Medicare enrollment and billing privileges.  RFH at 2; P. Br. at 3.

Dr. Barrett and Petitioner’s potential buyer entered a purchase agreement effective May 30, 2024, that is subject to the reinstatement of Petitioner’s Medicare enrollment and billing privilege and removal of Petitioner’s name from the CMS preclusion list.  RFH at 3; P. Br. at 4.

More than 90 days elapsed between CMS’s receipt of Petitioner’s reconsideration request and issuance of the reconsidered determination.  RFH at 3; P. Br. at 4.

Petitioner’s continued operation is not financially viable unless it is reinstated in Medicare and its name is removed from the preclusion list.  RFH at 3.

Dr. Barrett’s crime was not related to the delivery of health care services or the billing of Medicare or Medicaid for services by Petitioner or its staff.  P. Br. at 2.

2. Analysis

(i.) Petitioner’s request for stay is denied.

Petitioner requested an immediate stay of the implementation of the reconsidered determination pending ALJ review.  Petitioner sought the stay to maintain its financial viability during the pendency of this case.  RFH at 1, 3.  Unfortunately, I have no statutory or regulatory authority to stay the implementation of the revocation of Petitioner’s Medicare enrollment and billing privileges, which has been in effect since the initial determination, or the addition of Petitioner’s name to the CMS preclusion list, which was effective the date of the reconsidered determination.  Accordingly, the request for stay must be denied.

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(ii.) There is a basis for revocation of Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(3)(i).

Congress granted the Secretary authority to revoke the enrollment of a provider or supplier convicted under federal or state law of a felony offense that the Secretary determines is detrimental to the program or its beneficiaries.  Act § 1866(b)(2)(D).  The Secretary delegated to CMS the authority to revoke a supplier’s billing privileges if CMS determines that the “supplier or any owner, managing employee, managing organization, officer, or director of the . . . supplier was, within the preceding 10 years, convicted (as that term is defined in 42 [C.F.R. §] 1001.2) of a Federal or State 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).  Therefore, the elements necessary for revocation pursuant to 42 C.F.R. § 424.535(a)(3) in this case are:  (1) that Petitioner’s owner or managing employee was convicted, within the meaning of 42 C.F.R. § 1001.2, of a federal felony offense; (2) the conviction occurred within the 10 years preceding the revocation action; and (3) CMS has determined that the felony offense is detrimental to the best interests of the Medicare program and its beneficiaries.  42 C.F.R. § 424.535(a)(3); see Fady Fayad, M.D., DAB No. 2266 at 7 (2009) (describing elements under prior revision of the regulation), aff’d, Fayad v. Sebelius, 803 F. Supp. 2d 699 (E.D. Mich. 2011).

The first element for revocation under 42 C.F.R. § 424.535(a)(3) requires a showing that Petitioner’s owner and managing employee was convicted within the meaning of 42 C.F.R. § 1001.2.

There is no dispute that Dr. Barrett was Petitioner’s sole owner and managing employee at the time of her conviction and the initial and reconsidered determinations.  There is no dispute that on October 31, 2023, a jury found Dr. Barrett guilty of one felony count of attempted tax evasion, and based on that guilty verdict, the district court imposed judgment on February 29, 2024.  CMS Ex. 1 at 195-99, 201-09, 216-20, 234, 236; P. Br. at 2.

For revocation under 42 C.F.R. § 424.535(a)(3), the term conviction is defined in 42 C.F.R. § 1001.2.  One is convicted when a judgment of conviction has been entered against the individual by a federal, state, or local court, even though a post-trial motion or appeal may still be pending, or the judgment of conviction or other record has been expunged or removed.  One is also convicted when a guilty plea or no contest plea is accepted and/or the individual is found guilty of an offense by a court.  The evidence shows that the district court imposed judgment based on the jury verdict on February 29, 2024, even though the judge did not sign the judgment until March 1, 2024.  CMS Ex. 1 at 203; P. Br. at 2.  I conclude Dr. Barrett was convicted within the meaning of 42 C.F.R.

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§ 1001.2 for purposes of revocation pursuant to 42 C.F.R. § 424.535(a)(3), upon imposition of judgment by the district court on February 29, 2024.

There is no dispute that Dr. Barrett was convicted of attempted tax evasion in violation of 26 U.S.C. § 7201.  The statute provides:

Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 5 years, or both, together with the costs of prosecution.

26 U.S.C. § 7201 (emphasis added).  Therefore, I conclude Dr. Barrett was convicted of a felony.

The second element for revocation under 42 C.F.R. § 424.535(a)(3) is satisfied, as there is no dispute that the MAC revoked Petitioner’s Medicare enrollment and billing privileges on April 30, 2024, within 10 years of the date of Dr. Barrett’s conviction.  CMS Ex. 1 at 16-17, 97-98, 101-02.

The third element for revocation pursuant to 42 C.F.R. § 424.535(a)(3) requires a showing that the felony offense of which Petitioner was convicted was detrimental to the best interests of the program and its beneficiaries within the meaning of 42 C.F.R. § 424.535(a)(3)(ii).

CMS is authorized to revoke the Medicare enrollment and billing privileges of an individual or entity who, within the preceding 10 years, was convicted of a felony criminal offense if “CMS determines [the offense] is detrimental to the best interests of the Medicare program and its beneficiaries.”  42 C.F.R. § 424.535(a)(3)(i).  The Secretary has specified types of crimes that are presumptively or per se detrimental to the best interests of the program and its beneficiaries in 42 C.F.R. § 424.535(a)(3)(ii).  The listing of presumptively detrimental felonies in 42 C.F.R. § 424.535(a)(3)(ii) is not exhaustive but specifically permits revocation for detrimental felonies like the crimes listed.  Abdul Razzaque Ahmed, M.D., DAB No. 2261 at 10 (2009), aff’d, Ahmed v. Sebelius, 710 F. Supp. 2d 167 (D. Mass. 2010).  CMS’s authority to revoke under 42 C.F.R. § 424.535(a)(3)(i) is not, however, limited to felony offenses that fall within any of the four categories.  The Board has consistently determined that CMS may decide “on a case-by-case . . . basis whether a felony, even one that does not fall within” one of the categories of offenses listed in 42 C.F.R. § 424.535(a)(3)(ii), is detrimental to the best interests of Medicare and its beneficiaries.  Eva Orticio Villamor-Goubeaux, DAB No. 2997 at 8 (2020).  The Board has said that if an adjudicator determines that an offense is

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one that falls within one of the per se detrimental categories under 42 C.F.R. § 424.535(a)(3)(ii), there is no need to address a case-specific determination that an offense is detrimental.  Goubeaux, DAB No. 2997 at 9.

The Board has been clear that ALJ and Board review of the revocation determination of CMS or the MAC is limited to determining whether CMS had a legal basis for revocation, i.e., whether the elements for revocation established by the regulation are satisfied.  CMS has discretion to determine how to exercise its revocation authority and neither the ALJ nor the Board may substitute their discretion for that of CMS in determining that revocation is appropriate under all the circumstances.  Goubeaux, DAB No. 2997 at 13.

Pursuant to 42 C.F.R. § 424.535(a)(3)(ii)(B), the Secretary has provided public notice that felony financial crimes such as income tax evasion are per se detrimental to Medicare and its beneficiaries.  There is no dispute Dr. Barrett was convicted of felony attempted tax evasion and tax evasion is one of the per se detrimental offenses listed in 42 C.F.R. § 424.535(a)(3)(ii)(B).

The elements necessary for exclusion pursuant to 42 C.F.R. § 424.535(a)(3)(i) are, therefore, satisfied.  CMS had a basis to revoke Petitioner’s Medicare enrollment and billing privileges.

The hearing officer made a case-specific analysis permitted by 42 C.F.R. § 424.535(a)(3)(i) and concluded that Dr. Barrett’s felony offense was detrimental to the best interests of Medicare and its beneficiaries.  CMS Ex. 1 at 4-6.  If CMS relies upon a case-specific determination, my scope of review is limited to whether the evidence shows such a determination was made, and not whether in its exercise of discretion CMS considered all possible factors (urged by Petitioner or not), or how CMS weighed the factors.  Even though I may disagree with the case-specific determination of CMS, I am not permitted to substitute my discretion for that of CMS.  Goubeaux, DAB No. 2997 at 10, 13.  The CMS hearing officer performed the case-specific analysis and concluded Dr. Barrett’s offense was detrimental to Medicare and its beneficiaries.  Accordingly, even if one concluded that Dr. Barrett’s offense was not among those considered per se detrimental, the CMS hearing officer performed the case-specific analysis and concluded Petitioner’s felony offense was detrimental to the best interests of Medicare and its beneficiaries.

(iii.) There is a basis for the revocation of Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(9).

CMS needs only one basis for revocation under 42 C.F.R. § 424.535(a).  Goubeaux, DAB No. 2997 at 13.  Thus, even if one concluded that CMS had no basis for revocation under

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42 C.F.R. § 424.535(a)(3), there is a basis for revoking Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(9).  I conclude there is a basis for revocation under 42 C.F.R. § 424.535(a)(9) because Petitioner, a physician and nonphysician practitioner organization, failed to report Dr. Barrett’s federal felony conviction as an adverse action within 30 days as required by 42 C.F.R. § 424.516(d)(1)(ii).  Physicians and nonphysician practitioners are required to report to their MACs “[a]ny adverse legal action” within 30 days.  42 C.F.R. § 424.516(d)(1)(ii) (emphasis added).  Pursuant to 42 C.F.R. § 424.535(a)(9), CMS may revoke a supplier’s Medicare billing privileges if the supplier fails to comply with the reporting requirement of 42 C.F.R. § 424.516(d).

Petitioner concedes that it did not report Dr. Barrett’s conviction to CMS but argues that it was “simply an oversight.”  P. Br. at 7.  Petitioner’s argument it did not realize that it needed to report Dr. Barrett’s convictions has no merit as a defense as a matter of law.  The provisions of the regulations and the Act, including the reporting requirement of 42 C.F.R. § 424.516(d)(1)(ii), are published and Petitioner cannot deny at least constructive knowledge of the Act and regulations.  The Board has consistently found that persons and entities that enroll in Medicare are presumed to know Medicare requirements.  John Hartman, D.O., DAB 2564 at 3 (2014) (citing Heckler v. Cmty. Health Servs. of Crawford Cnty., Inc., 467 U.S. 51, 63 (1984) (“the general rule [is] those who deal with the Government are expected to know the law”)).  Moreover, providers and suppliers must, pursuant to 42 C.F.R. §§ 424.510(d)(3) and 424.516(a)(2), attest or certify that they meet all Medicare requirements, which is further evidence supporting the presumption of their knowledge of the requirements.  The Board has previously determined that the phrase “any adverse legal action” requires reporting of all actions adverse to a provider or supplier and not just final adverse action.  Thomas Falls, MD, DAB No. 3056 at 9-10 (2022); Akram A. Ismail, M.D., DAB No. 2429 at 10-11 (2011).  The Board has recognized that the goal of 42 C.F.R. § 424.516(d)(1)(ii) is “to provide CMS with information about adverse legal actions that CMS has determined are relevant to evaluating whether a supplier should continue to participate in Medicare.”  Gulf S. Med. & Surgical Inst., DAB No. 2400 at 8 (2011).

Dr. Barrett’s conviction for attempted tax evasion was an adverse legal action, even though I accept, for purposes of summary judgment, that the conviction is being appealed and may not be final.  Petitioner failed to report Dr. Barrett’s conviction.

Under 42 C.F.R. § 424.535(a)(9), CMS and the MAC must consider before revoking:  (1) whether the information was reported; (2) if reported, how late was it reported; (3) the materiality of the data; and (4) any other information CMS deems relevant to the determination.  42 C.F.R. § 424.535(a)(9).  There is no question that Petitioner did not report Dr. Barrett’s conviction, and the first factor requires no further discussion. 

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Regarding the second factor, Petitioner points out that it had 30 days to report Dr. Barrett’s conviction under 42 C.F.R. § 424.516(d)(1)(ii).  I have concluded the conviction occurred on February 29, 2024, one day earlier than the CMS hearing officer’s determination that the conviction occurred on March 1, 2024.  CMS Ex. 1 at 4-5.  Therefore, Petitioner should have timely reported Dr. Barrett’s conviction no later than March 30, 2024.  But Petitioner failed to do so.  The fact that the MAC issued the initial determination April 30, 2024, about 30 days after Petitioner’s reporting deadline expired, does not mitigate Petitioner’s failure to report.

The evidence shows that the CMS hearing officer considered the remaining factors including materiality and other information relevant to her determination upholding the revocation.  The hearing officer explained:

Regarding the third factor, CMS considers the untimely information to be plainly material to the [Petitioner’s] continued enrollment in the Medicare program.  This is clearly demonstrated because Dr. Barrett’s conviction, as the sole owner and managing employee, was a basis for revoking [Petitioner’s] enrollment under § 424.535(a)(3), as discussed above.  Furthermore, any untimely reporting of changed enrollment data is of concern to CMS.  CMS must have complete and accurate data on each supplier to help confirm that the supplier still meets all Medicare requirements and that Medicare payments are made correctly.  Inaccurate or outdated information puts the Medicare Trust Funds at risk (see 84 Fed. Reg. 47,794, 47,829).

CMS Ex. 1 at 7.

Petitioner argues that CMS should have also considered that Petitioner is a distinct entity that was not convicted of any crime; Dr. Barrett had notified other regulatory authorities; and Louisiana Medicaid had determined her continued participation in Louisiana Medicaid posed no threat to Medicaid beneficiaries.  Petitioner suggests it was justified in not reporting given the brief period during which reporting did not occur and the fact that there was no harm to any beneficiaries.  Petitioner asserts its staff and patients should not be punished by the revocation.  P. Br. at 7-8.

CMS had a basis for revocation pursuant to 42 C.F.R. § 424.535(a)(9).  Once I conclude that CMS had a basis for revocation, I am not authorized to substitute my discretion for that of CMS.  Goubeaux, DAB No. 2997 at 13.  The hearing officer addressed the arguments raised by Petitioner in its reconsideration request.  The hearing officer specifically addressed the factors required by 42 C.F.R. § 424.535(a)(9) considering the evidence and arguments presented to her.  I do not review how CMS weighed the factors

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listed in 42 C.F.R. § 424.535(a)(9) when determining to revoke Petitioner’s Medicare enrollment and billing privileges.  Goubeaux, DAB No. 2997 at 13; Douglas Bradley, M.D., DAB No. 2663 at 13 n.13 (2015); Dinesh Patel, M.D., DAB No. 2551 at 10 (2013); Fayad, DAB No. 2266 at 16; Ahmed, DAB No. 2261 at 16‑17, 19.  Even if I weighed the evidence or considered Petitioner’s arguments differently, I have no authority to substitute my discretion for that of CMS.  The facts establish a basis for revocation, and Petitioner presents no evidence disputing the fact that CMS considered the factors in 42 C.F.R. § 424.535(a)(9)(i-iv).

The elements necessary for exclusion pursuant to 42 C.F.R. § 424.535(a)(9) are satisfied.  CMS had a basis to revoke Petitioner’s Medicare enrollment and billing privileges under 42 C.F.R. § 424.535(a)(9).

(iv.) Petitioner’s arguments are meritless.

Petitioner argues that it timely terminated its business relationship with Dr. Barrett, satisfying the requirement of 42 C.F.R. § 424.535(e).  P. Br. at 5-7; RFH at 2-5.  The regulation provides:

Reversal of revocation.  If the revocation was due to adverse activity (sanction, exclusion, or felony) against the provider’s or supplier’s owner, managing employee, managing organization, officer, director, authorized or delegated official, medical director, supervising physician, or other health care or administrative or management services personnel furnishing services payable by a Federal health care program, the revocation may be reversed if the provider or supplier terminates and submits proof that it has terminated its business relationship with that party within 15 days of the revocation notification.

42 C.F.R. § 424.535(e).  It is important to recognize that this provision only applies to a revocation based on adverse activity, such as Dr. Barrett’s felony conviction.  The plain language of the regulation establishes that it does not apply to the revocation of Petitioner’s Medicare enrollment and billing privileges based on failure to report adverse action under 42 C.F.R. § 424.535(a)(9).

The MAC’s notice of its initial determination to revoke based on Dr. Barrett’s felony conviction was dated April 30, 2024.  CMS Ex. 1 at 16, 97, 101.  Therefore, Petitioner had until May 15, 2024, to terminate its business relationship with Dr. Barrett.  The regulation is very clear that CMS will reverse a revocation only if Petitioner submitted proof that it terminated its business relationship with Dr. Barret no later than May 15, 2024.  Contrary to Petitioner’s arguments, the regulation requires no action by CMS

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based on the fact Petitioner had started terminating it relationship with Dr. Barrett.  Petitioner admits that it had only begun to terminate its business relationship with Dr. Barrett, by retaining a new supervising physician and negotiating a contingent sale of Petitioner that was not yet consummated at the time of the request for hearing or briefing.  P. Br. at 6-7.  CMS may have the discretion to reverse a revocation on facts such as those asserted by Petitioner or to impose no revocation at all.  But as previously explained in this decision, my review authority does not extend to such an exercise of discretion by CMS.  Petitioner’s assertion that its evidence of actions to terminate its relationship with Dr. Barrett is sufficient to defeat summary judgment and require a hearing is also without merit.  I accept as true that all Petitioner’s assertions of its actions are true.  But as a matter of law those facts do not show termination of the relationship with Dr. Barrett sufficient to trigger 42 C.F.R. § 424.535(e).  Indeed, the facts asserted by Petitioner do not permit a reasonable inference that Petitioner had removed Dr. Barrett as Petitioner’s sole owner by May 15, 2024.

To the extent that Petitioner’s arguments may be construed to be that CMS should be estopped from revoking Petitioner’s Medicare enrollment and billing privileges, estoppel against the federal government, if available at all, is presumably unavailable absent “affirmative misconduct,” such as fraud.  See, e.g., Pac. Islander Council of Leaders, DAB No. 2091 at 12 (2007); Office of Pers. Mgmt. v. Richmond, 496 U.S. 414, 421-22 (1990).  Petitioner points to no evidence of affirmative misconduct such as fraud by the MAC or CMS.

Petitioner’s arguments may also be construed to be requests for equitable relief.  However, I have no authority to grant equitable relief.  US Ultrasound, DAB No. 2302 at 8 (2010).  I am bound to follow the Act and regulations, and I have no authority to declare statutes or regulations invalid or ultra vires.  1866ICPayday.com, L.L.C., DAB No. 2289 at 14 (2009) (noting that “[a]n ALJ is bound by applicable laws and regulations and may not invalidate either a law or regulation on any ground . . .”).

(v.) There is a basis for placing Petitioner’s name on the CMS preclusion list.

On February 29, 2024, Dr. Barrett, Petitioner’s owner and managing employee, was convicted of felony attempted federal income tax evasion.  The CMS hearing officer concluded that there was a basis for placing Petitioner’s name on the CMS preclusion because Petitioner failed to report Dr. Barrett’s conviction.  The hearing officer found that Petitioner was under a reenrollment bar and that the failure to report Dr. Barrett’s conviction was detrimental to the best interests of the Medicare program.  The hearing officer discussed the seriousness of the failure to timely report and the detriment to the program because Petitioner failed to fulfill its obligation as a supplier enrolled in Medicare.  CMS Ex. 1 at 8-9.

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The CMS hearing officer exercised the discretion granted to CMS under 42 C.F.R. §§ 422.2 and 423.100 and determined that Petitioner’s offense was detrimental to the best interests of the Medicare program.  In doing so, the hearing officer considered the factors required by the regulations, including the seriousness of the basis for the revocation and the impact upon program integrity.  CMS Ex. 1 at 8.

The hearing officer upheld the initial determination to place Petitioner’s name on the CMS preclusion list.  An individual’s, entity’s, or prescriber’s name is added to the preclusion list after the 60‑day period for requesting reconsideration of the initial determination has expired or the date of a reconsidered determination if reconsideration is requested.  42 C.F.R. §§ 422.222(a)(3)(i)(B), 423.120(c)(6)(v)(C).  Petitioner requested reconsideration.  The reconsidered determination was issued on September 19, 2024, and Petitioner’s name could be added to the CMS preclusion as of that date.

Generally, an individual’s or entity’s name is included on the preclusion list for the same period as the individual or entity is subject to a reenrollment bar.  42 C.F.R. §§ 422.222(a)(5)(i), 423.120(c)(6)(vii)(A).  However, if an individual or entity is added to the preclusion list due to a felony conviction, pursuant to 42 C.F.R. §§ 422.222(a)(5)(iii) and 423.120(c)(6)(vii)(C), the individual’s or entity’s name remains on the preclusion list for a period of ten years running from the date of the felony conviction, unless CMS determines that a shorter period is warranted.  The hearing officer did not find a shorter period to be warranted in this case.  CMS has also not exercised its discretion under to 42 C.F.R. §§ 422.222(a)(6) and 423.102(c)(6)(vi) to not list Petitioner’s name on the preclusion list or to remove its name from the list.

Petitioner does not challenge the CMS hearing officer’s preclusion list determination.  Preclusion list review is strictly limited to whether there is a basis for adding the supplier to the CMS preclusion list.  Bradley, DAB No. 2663 at 13; 83 Fed. Reg. at 16,642 (Apr. 16, 2018).  I have no authority to conduct review of the CMS exercise of discretion in determining that Petitioner’s underlying conduct was detrimental to Medicare, and in adding Petitioner to the preclusion list, including the duration of the listing where, as here, I determine that there is a basis for such action.  42 C.F.R. §§ 422.2, 423.100 (definition of preclusion list); 83 Fed. Reg. at 16,440, 16,641-67.

10. The effective date of revocation of Petitioner’s Medicare enrollment and billing privileges is the date of Petitioner’s conviction, February 29, 2024.  42 C.F.R. § 424.535(g).
11. I have no authority to review CMS’s determination to impose a bar to Petitioner’s reenrollment in Medicare.

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12. The bar to reenrollment began 30 days after the date on which the MAC mailed the notice of revocation, that was May 30, 2024, and continues through February 28, 2034.  42 C.F.R. § 424.535(c).

Petitioner was convicted of a felony on February 29, 2024.  The effective date of the revocation is controlled by 42 C.F.R. § 424.535(g).  The regulation provides that when revocation is based on a felony conviction, the effective date of revocation is the date of the conviction.  42 C.F.R. § 424.535(g).

(g) Effective date of revocation.  Revocation becomes effective 30 days after CMS or the CMS contractor mails notice of its determination to the provider or supplier, except if the revocation is based on Federal exclusion or debarment, felony conviction, license suspension or revocation, or the practice location is determined by CMS or its contractor not to be operational.  When a revocation is based on a Federal exclusion or debarment, felony conviction, license suspension or revocation, or the practice location is determined by CMS or its contractor not to be operational, the revocation is effective with the date of exclusion or debarment, felony conviction, license suspension or revocation or the date that CMS or its contractor determined that the provider or supplier was no longer operational.

42 C.F.R. § 424.535(g) (emphasis added).  This regulation grants CMS and its contractor no discretion to choose an effective date of revocation other than the date of the conviction.  The CMS hearing officer erred in concluding that Dr. Barrett’s conviction occurred on March 1, 2024, when the district court signed the judgment rather than February 29, 2024, when the district court accepted the jury verdict and imposed the judgment.  CMS Ex. 1 at 203.  The effective date of Petitioner’s revocation pursuant to 42 C.F.R. § 424.535(a)(3) was February 29, 2024, the date of her conviction.  Although failure to report the conviction is an independent basis for revocation under 42 C.F.R. § 424.535(a)(9) that would normally be effective 30 days after notice of the initial determination, the regulation does not grant CMS or its contractor discretion to choose the later effective date of revocation.

When a supplier’s Medicare enrollment and billing privileges are revoked, the supplier is generally barred from reenrolling in the Medicare program for one to 10 years.  42 C.F.R. § 424.535(c).  The bar to reenrollment may be one to 10 years and begins 30 days after CMS or the MAC notifies a provider or supplier of the revocation.  42 C.F.R. § 424.535(c)(1)(i).  The CMS hearing officer upheld a 10-year reenrollment bar.  CMS Ex. 1 at 7-8.  There is no statutory or regulatory language establishing a right to review of the duration of the reenrollment bar CMS imposes.  Act § 1866(j)(8) (42 U.S.C.

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§ 1395cc(j)(8)); 42 C.F.R. §§ 424.535(c), 424.545, 498.3(b), 498.5.  The Board has held that the duration of a revoked supplier’s reenrollment bar is not an appealable initial determination listed in 42 C.F.R. § 498.3(b) and, thus, is not subject to ALJ review.  Vijendra Dave, M.D., DAB No. 2672 at 11 (2016).

III.     Conclusion

For the foregoing reasons, I conclude that there is a basis to revoke Petitioner’s Medicare enrollment and billing privileges effective February 29, 2024, and to place Petitioner’s name on the CMS preclusion list effective September 19, 2024, through the duration of Petitioner’s 10-year reenrollment bar that runs through February 28, 2034.