Amara Medical Center, LLC, DAB CR6696 (2025)

DECISION

I affirm the exclusion of Petitioner, Amara Medical Center, LLC, from participation in all federal health programs. 

I. Background

In an August 30, 2024 notice, the Inspector General (IG) of the Department of Health and Human Services excluded Petitioner from participation in all federal health care programs under section 1128(b)(8) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(b)(8)) for 99 years due to its “relationship with a sanctioned individual who has (or formerly had) a direct or indirect ownership or control interest” in Petitioner.  The notice stated that the exclusion would take effect 20 days after the date on the notice.  IG Ex. 1. 

On October 29, 2024, Petitioner requested a hearing to dispute the exclusion.  On October 31, 2024, the Civil Remedies Division acknowledged receipt of the hearing request, gave notice of a prehearing conference on November 20, 2024, and issued my Standing Order.  On November 20, 2024, Petitioner’s counsel requested a continuance of the prehearing conference.  I granted the request and rescheduled the conference.  

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On December 6, 2024, I held a telephonic prehearing conference with the parties, the substance of which is summarized in my December 9, 2024 Order Following Prehearing Conference and Setting Schedule for Prehearing Submissions.  At the conference, the parties indicated that they had discussed settlement and would try to resolve this case.  The parties also agreed to a schedule for the submission of prehearing exchanges. 

On February 7, 2025, the IG issued an amended exclusion notice that identified Carmen Lazo-Gomez as the sanctioned individual with whom Petitioner allegedly had a relationship.  The notice specified that the IG excluded Ms. Lazo-Gomez from federal health care programs because she was suspended, excluded, or otherwise sanctioned by the Nevada Medicaid program.  The IG stated that Ms. Lazo-Gomez’s exclusion from federal health programs would last until she is reinstated by the Nevada Medicaid program.  In addition, the IG amended the length of exclusion for Petitioner to the same period of time that Ms. Lazo-Gomez remains excluded.  IG Ex. 2. 

On February 18, 2025, I granted an unopposed motion from the IG for a 30-day extension to file prehearing exchanges because the IG wanted to determine if Petitioner intended to proceed with the present appeal given the amended exclusion notice.  The IG’s exchange was now due on March 19, 2025, and Petitioner’s exchange was due on April 30, 2025. 

On March 19, 2025, the IG submitted a prehearing exchange consisting of a brief (IG Br.) and six proposed exhibits (IG Exs. 1-6).  Petitioner did not file an exchange. 

II. Admission of Exhibits

I admit IG Exhibits 1 through 6 into the records, without objection.  Standing Order ¶ 13; see 42 C.F.R. § 1005.8(c). 

III. Decision on the Written Record

I directed the parties to submit written direct testimony from all witnesses that the parties wanted to present in this case and stated that the opposing party could request to cross-examine the witnesses.  Standing Order ¶¶ 11-12; see also 42 C.F.R. § 1005.16(b); Civil Remedies Division Procedures (CRDP) § 16(b).  I also advised the following: 

I will not conduct a hearing in this case unless a party files admissible, written direct testimony, and the opposing party asks to cross-examine one or more witnesses.  If I do not conduct a hearing, then I will issue [a decision] based on the written record. 

Standing Order ¶ 12; see also CRDP § 19(b).  Consistent with my Standing Order, the CRDP states the following:  

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The ALJ may determine that an oral hearing is unnecessary and not in the overall interest of judicial economy if the parties do not identify any proposed witnesses, do not offer the written direct testimony of any witnesses when ordered to do so, or do not request an opportunity to cross-examine a witness whose written direct testimony has been offered.  Under these circumstances, the ALJ may decide the case based on the written record. 

CRDP § 19(d). 

In the present case, all deadlines for prehearing exchanges have passed and neither party filed written direct testimony.  Therefore, I do not need to hold an in-person hearing and may issue a decision based on the written record.  EI Medical, Inc., DAB No. 3117 at 15 (2023); Vandalia Park, DAB No. 1940 (2004).  Petitioner’s failure to file a prehearing exchange does not preclude me from issuing a decision based on the written record.  Anil Hanuman, D.O., DAB No. 3080 at 12 (2022). 

IV. Issues

1. Whether the IG had a legitimate basis to exclude Petitioner under 42 U.S.C. § 1320a-7(b)(8).
2. Whether the length of exclusion is unreasonable. 

V. Jurisdiction

I have jurisdiction to adjudicate this case.  42 U.S.C. § 1320a-7(f)(1); 42 C.F.R. §§ 1001.2007, 1005.2. 

VI. Findings of Fact

1. On September 17, 2020, Articles of Organization were filed with the Nevada Secretary of State to form Petitioner as a domestic limited liability company.  IG Ex. 3 at 1-2.
2. On September 17, 2020, Petitioner’s “Manager” was Carmen Lazo.  IG Ex. 3 at 2.
3. In July 2021, Petitioner enrolled in the Medicare program as a supplier, i.e., a Clinic/Group Practice.  Petitioner’s National Provider Identifier was 1881298065.  IG Ex. 4 at 1, 3. 

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4. As of September 20, 2021, Petitioner’s “Manager” was still Carmen Lazo.  IG Ex. 3 at 2.  
5. Ms. Lazo-Gomez was the sole owner of another health care entity called Clever Health Center LLC.  The Nevada Department of Health and Human Services sanctioned Clever Health Center.  On March 21, 2022, the Nevada Department of Health and Human Services informed Ms. Lazo-Gomez that she was being terminated from the Medicaid program and sanctioned for ten years.  This sanction was imposed because Ms. Lazo-Gomez owned Clever Health Center LLC and because of “inappropriate and/or fraudulent billing practices as identified as a result of an investigation, audit, review or survey.”  IG Ex. 5 at 1.
6. As of February 24, 2024, Petitioner’s “Manager” was still Carmen Lazo.  IG Ex. 3 at 4.
7. On March 18, 2024, an amendment to Petitioner’s Articles of Organization was filed with the Nevada Secretary of State.  The amendment was a “Manager Change.”  IG Ex. 3 at 2.
8. As of March 25, 2024, “Carmen Lazo” was still Petitioner’s “Manager.”  IG Ex. 3 at 6.  
9. In a May 31, 2024 notice, the IG informed Ms. Lazo-Gomez, A.K.A. Carmen Lazo, that she was excluded under 42 U.S.C. § 1320a-7(b)(5) from participating in federal health care programs until Ms. Lazo-Gomez was reinstated by the Medicaid program.  IG Ex. 6 at 1.  
10. As of August 19, 2024, Petitioner’s Medicare enrollment records showed that Carmen Lazo was:  Petitioner’s owner or partial owner; Petitioner’s “Managing Employee”; Petitioner’s “Authorized Official”; and Petitioner’s “Contact Person.”  IG Ex. 4 at 6-7.
11. As of November 9, 2024, Yurit Madrigal was listed as Petitioner’s “Manager.”  IG Ex. 3 at 8. 

VII. Conclusions of Law and Analysis

1. Petitioner is subject to exclusion under 42 U.S.C. § 1320a‑7(b)(8) because one of its owners and managers was excluded from participation in federal health care programs. 

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The Act authorizes the Secretary of Health and Human Services (Secretary) to exclude an entity from participation in all federally funded health care programs if a person, who has been excluded from participation in the Medicare or Medicaid programs,1 has a direct or indirect ownership or control interest of five percent or more in the entity or is a managing employee of the entity.  42 U.S.C. § 1320a-7(b)(8); 42 C.F.R. § 1001.1001(a)(1). 

The statutory definition of a “person with ownership or control interest” is one who: 

(A)(i) has directly or indirectly (as determined by the Secretary in regulations) an ownership interest of 5 per centum or more in the entity; or
(ii) is the owner of a whole or part interest in any mortgage, deed of trust, note, or other obligation secured (in whole or in part) by the entity or any of the property or assets thereof, which whole or part interest is equal to or exceeds 5 per centum of the total property and assets of the entity; or
(B) is an officer or director of the entity, if the entity is organized as a corporation; or
(C) is a partner in the entity, if the entity is organized as a partnership. 

42 U.S.C. § 1320a-3(a)(3).  The Secretary’s regulations define “ownership or control interest” in the same way as the statute; however, it adds to the definition persons who are agents or managing employees of the entity.  42 C.F.R. § 1001.2. 

The Act defines a “managing employee” as “an individual, including a general manager, business manager, administrator, and director, who exercises operational or managerial control over the entity, or who directly or indirectly conducts the day-to-day operations of the entity.”  42 U.S.C. § 1320a-5(b); see also 42 C.F.R. § 1001.2. 

In the present case, there is no dispute that the IG excluded Ms. Lazo-Gomez from federal health care programs, which include the Medicare and Medicaid programs.  However, Petitioner asserted that the IG “does not have a basis for its finding that [Petitioner] had a relationship with a sanctioned individual who has (or formerly had) a direct or indirect ownership or control interest (as defined in 42 C.F.R. 1001.2) in [Petitioner].  No such ownership or control existed.”  Hearing Req.  

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As outlined in the Findings of Fact, Nevada state records and Medicare enrollment records show that Ms. Lazo-Gomez had an ownership interest in Petitioner of more than five percent and held positions as a managing employee and Petitioner’s agent.  Therefore, I reject Petitioner’s position that Ms. Lazo-Gomez never had ownership or control over Petitioner.  Further, while the record shows that Petitioner informed the Nevada Secretary of State that there was a change in Petitioner’s manager (IG Ex. 3 at 2), a change in Ms. Lazo-Gomez’s ownership of Petitioner was not reflected in Medicare enrollment records as late as August 2024.  IG Ex. 4 at 6-7.  As a supplier enrolled in the Medicare program, Petitioner was obligated to report to the Medicare program a change in ownership within 30 days of the change.  42 C.F.R. § 424.516(d)(1), (e)(1).  There being no contrary evidence, I conclude that Ms. Lazo-Gomez had an ownership interest, of five or more percent, at the time that the IG issued the notice of exclusion in August 2024, and was still a manager.  Therefore, the IG had a legitimate basis to exclude Petitioner from federal health care programs under 42 U.S.C. § 1320a-7(b)(8). 

2. Petitioner must be excluded from participation in all federal health care programs for the same length of time that the excluded person with an ownership or control interest in Petitioner is excluded. 

The length of exclusion for an entity, which has been excluded due to the exclusion of one of its owners, is for the duration of the owner’s exclusion.  42 C.F.R. § 1001.1001(b)(1).  The IG amended the length of exclusion imposed in this case so that it conforms to this regulatory standard.  IG Ex. 2. 

Petitioner may seek early reinstatement from the IG if it can show that Ms. Lazo-Gomez’s ownership interest is now less than five percent of Petitioner.  42 C.F.R. § 1001.3002(c).

VIII. Conclusion

I affirm the IG’s determination to exclude Petitioner for the same duration of time as Ms. Lazo-Gomez is excluded from participation in federal health care programs.