Sunshine Home Health II Inc., DAB CR6723 (2025)

DECISION

National Government Services (NGS), an administrative contractor for Respondent, the Centers for Medicare and Medicaid Services (CMS), revoked Petitioner’s Medicare enrollment pursuant to 42 C.F.R. § 424.535(a)(3) (felony conviction), effective May 5, 2022.  Petitioner was also barred from re-enrolling in Medicare for a period of 10 years, through May 5, 2032.  For the reasons set forth below, I affirm CMS’s decision to revoke Petitioner’s Medicare enrollment.

I. Background and Procedural History

Petitioner, Sunshine Home Health II Inc. (“Sunshine” or “Petitioner”), is a home health agency doing business in Pleasanton, California.  Petitioner participated in the Medicare program as a provider of services.  Due to Mr. Javed Wahab’s, Petitioner’s owner’s, felony conviction, CMS revoked Petitioner’s Medicare enrollment, and established a 10-year re-enrollment bar, pursuant to 42 C.F.R. § 424.535(a)(3).  CMS Ex. 3.

Mr. Wahab was charged with five counts of felony Theft of Government Property under 18 U.S.C. § 641 and one count of Criminal Forfeiture in violation of 18 U.S.C. § 982(a)(7) on September 1, 2021.  CMS Ex. 5.  Mr. Wahab’s guilty plea was accepted

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by the United States District Court for the Northern District of California (District Court) on May 5, 2022.  CMS Ex. 6.

On July 11, 2022, NGS, a Medicare Administrative Contractor (MAC), issued a notice letter revoking Petitioner’s enrollment pursuant to 42 C.F.R. § 424.535(a)(3) because Petitioner’s sole owner and managing employee, Mr. Wahab, was convicted of one felony count of Theft of Government Property in violation of 18 U.S.C. § 641.  CMS Ex. 3 at 1.  NGS also barred Petitioner from reenrolling in the Medicare program for 10 years from the date of Mr. Wahab’s conviction.  CMS Ex. 3 at 3.  The re-enrollment bar expires on May 5, 2032.  Id.

On September 30, 20221, Petitioner requested reconsideration of NGS’s decision to revoke its Medicare billing privileges.  CMS Ex. 2.  The reconsideration request was submitted by Mr. Ajaz Nizam and explained that Mr. Wahab sold Sunshine to Mr. Nizam in September 2019 and that the two had not contacted each other since.  Id. at 1.  According to Mr. Nizam, he and Mr. Wahab attempted to submit change of ownership (CHOW) applications on September 20, 2019 to NGS.  CMS Ex. 2 at 1; see CMS Ex. 4.  NGS informed Mr. Nizam that it had no record of ever having received Petitioner’s CHOW applications.  CMS Ex. 2 at 1.

A CMS hearing officer issued a reconsidered determination on December 9, 2022, upholding the revocation of Petitioner’s enrollment and billing privileges as well as the corresponding 10-year re-enrollment bar.  CMS Ex. 1.  The hearing officer stated:

On May 5, 2022, Sunshine’s sole owner, authorized officer, and managing employee, Mr. Wahab, was convicted, as that term is defined in § 1001.2, of the felony offense of Theft of Government Property, in violation of 18 U.S.C. § 641. CMS finds that Mr. Wahab’s felony conviction is detrimental to the best interests of the Medicare program and its beneficiaries. Therefore, CMS upholds the revocation of Sunshine’s Medicare enrollment pursuant to § 424.535(a)(3), as well as the corresponding re-enrollment bar.

CMS Ex. 1 at 4.

On February 6, 2023, Petitioner timely filed a request for hearing (RFH) before an administrative law judge (ALJ).  Petitioner argued in its RFH that the revocation should be overturned because Mr. Nizam provided NGS and CMS with proof that he purchased Sunshine in 2019, making him the sole owner, and thus, he should not be punished for the wrongdoings of the prior owner.  RFH.

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On February 9, 2023, the Civil Remedies Division (CRD) issued a letter acknowledging Petitioner’s RFH and issued ALJ Bill Thomas’s Standing Prehearing Order.2  In compliance with the Standing Prehearing Order, CMS timely filed a prehearing brief and motion for summary judgment (CMS Br.) along with 10 exhibits (CMS Exs. 1-10).  Petitioner failed to timely file its prehearing exchange, and Judge Thomas issued an Order to Show Cause.  Docket Number (Dkt No.) 17.  Petitioner requested an extension of its deadline to file its prehearing exchange, which Judge Thomas granted.  Dkt No. 19.  Petitioner then timely filed a letter response (P. Br.) without any exhibits on June 27, 2023, and the Show Cause Order was discharged.  Dkt Nos. 20 and 21.

II. Admission of Evidence and Decision on the Record

Petitioner did not object to any of CMS’s proposed exhibits.  I therefore admit CMS Exs. 1-10 into the record.  Standing Prehearing Order ¶ 10; CRD Procedures § 14(e).

The Standing Prehearing Order advised the parties that an in-person hearing would only be held if a party submitted the written direct testimony of a proposed witness and the opposing party requested an opportunity to cross-examine a witness.  Standing Prehearing Order ¶¶ 11-14; CRD Procedures §§ 16(b), 19(b); see Vandalia Park, DAB No. 1940 (2004); Pac. Regency Arvin, DAB No. 1823 at 8 (2002) (holding that the use of written direct testimony for witnesses is permissible so long as the opposing party has the opportunity to cross-examine those witnesses).

CMS submitted the written direct testimony of Ms. Connie Arszman, an NGS employee responsible for handling CMS inquiries regarding provider and supplier enrollments.  CMS Ex. 10.  However, Petitioner did not request to cross-examine Ms. Arszman, nor object to her written direct testimony.  Therefore, an in-person hearing is not required. Standing Prehearing Order ¶ 14; CRD Procedures § 19(d).  There is also no need for me to address the legal criteria for summary judgment; I find that this case is ripe for adjudication based on the written record.

III. Issue

Whether there is a legitimate basis for revoking Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(3).

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IV. Jurisdiction

I have jurisdiction to decide the issue in this case. 42 C.F.R. § 424.535(a)(3); see also 42 U.S.C. §§ 1395cc(j)(8); 42 C.F.R. §§ 424.545(a), 498.1(g).

V. Legal Framework

The Social Security Act (Act) authorizes the Secretary of Health and Human Services (Secretary) to promulgate regulations governing the enrollment of providers and suppliers in the Medicare program.3  42 U.S.C. § 1395cc(j).  Providers must enroll in the Medicare program and receive a billing number to obtain payment for services rendered to Medicare beneficiaries. 42 C.F.R. § 424.505.

The Secretary has delegated the authority to revoke Medicare enrollment and billing privileges to CMS.  42 C.F.R. § 424.535.  CMS may revoke an enrolled provider’s Medicare billing privileges for any of the reasons specified in section 424.535(a).  Under paragraph (3) of section 424.535(a), CMS can revoke a provider’s billing privileges if its “owner or managing employee . . . was within the preceding 10 years, convicted (as that term is defined in 42 CFR 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)(i).  Paragraph (3) specifies general categories of offenses that CMS has determined by rulemaking to be detrimental per se to Medicare and its beneficiaries.  Id. at § 424.535(a)(3)(ii)(A-D).

To summarize, the elements necessary for revocation pursuant to 42 C.F.R. § 424.535(a)(3) are:  (1) the owner, manager, or officer was convicted of a federal or state felony offense; (2) the conviction occurred within the 10 years preceding the revocation action; and (3) the Secretary has specified that the conviction is per se detrimental in 42 C.F.R. § 424.535(a)(3)(ii) or CMS has determined on a case-by-case basis under 42 C.F.R. § 424.535(a)(3)(i) that the felony offense is detrimental to the best

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interests of the Medicare program and its beneficiaries.  See Fady Fayad, M.D., DAB No. 2266 at 7-8 (2009).

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

In the instant case, CMS has satisfied all the required elements to revoke Petitioner’s Medicare enrollment.

1. Petitioner was enrolled in the Medicare program as a provider and, at the time of revocation, Petitioner’s Medicare enrollment record identified Mr. Wahab as the owner and managing employee.

It is undisputed that, at the time of the revocation, Mr. Wahab was still listed on Sunshine’s Medicare enrollment record “as Sunshine’s president with a 100% direct ownership effective July 1, 2015; as a W-2 managing employee; as having operational managerial control; as an officer; and as an authorized official.”  CMS Ex. 9 at 5-6; CMS Ex. 10 at ¶ 5.

Petitioner, through Mr. Nizam, argues that Mr. Wahab has not been associated with the company since he sold the company in September 2019, almost two years prior to the revocation in May 2022.  RFH at 1.  Mr. Nizam adds that he has been “wholly responsible for the running of Sunshine” as the administrator since September 2019.  RFH at 1; see also CMS Ex. 2 at 1.

With its reconsideration request, Petitioner submitted a “Purchase of Business Agreement,” dated September 1, 2019, which shows that Mr. Wahab sold his ownership interest in Sunshine to Mr. Nizam.  CMS Ex. 4 at 52, 59-72.  Petitioner also submitted  CHOW applications that Mr. Nizam and Mr. Wahab purportedly sent to NGS on September 20, 2019 to report the ownership change.4  CMS Ex. 4 at 1, 36-39, 52, 56.  However, it is undisputed that the CHOW applications were never received by the Medicare contractor.  CMS Ex. 2 at 1.  In addition, the December 7, 2022, Enrollment Record Summary, provided by CMS, identifies Javed Wahab as the president, W-2 managing employee, and authorized official.  CMS Ex. 9 at 5-6.  Moreover, Ms. Arszman, a representative of NGS, declared that “according to the records that [she] reviewed, NGS has no record of a change of ownership for Sunshine in 2019 or any time thereafter.  Similarly, NGS has no record of receiving a Sunshine change of ownership application in September 2019 or thereafter.”  CMS Ex. 10 at 3.  Petitioner has not presented any evidence to show that NGS received its applications.

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Because the CHOW applications were not received by NGS, there was no change in ownership in Petitioner’s Medicare record.5  Thus, at the time of revocation, Mr. Wahab was the sole owner of Sunshine for purposes of its Medicare enrollment.   Accordingly, Petitioner was subject to revocation based on Mr. Wahab’s felony conviction.

Moreover, even if the CHOW applications had removed Mr. Wahab as the owner, the evidence in the record does not show that Mr. Wahab also ceased to be Sunshine’s managing employee, officer, and authorized official.6  The CHOW applications indicated that Mr. Wahab was no longer the sole owner, but did not show that he was also removed from his other roles as a managing employee, officer, and authorized official.  See CMS Ex. 4.  Thus, although the evidence in the record shows that Mr. Wahab sold his ownership stake to Mr. Nizam, the evidence does not show that Mr. Wahab’s other positions within Sunshine were changed following the sale.7  I recognize Mr. Nizam’s claim that he has been running the business since September 2019 and that CMS is “punish[ing]” him for the prior owner’s “wrong doings,” but unfortunately there is no evidence in the record to show that Mr. Wahab had been removed from his managerial and official roles.  As such, CMS had a basis to revoke Petitioner’s enrollment based on Mr. Wahab’s qualifying conviction, even if the CHOW applications had removed Mr. Wahab as the owner.  Whether NGS received the change in ownership applications is immaterial as they do not support that Mr. Wahab was removed from his roles as a managing employee, officer, and authorized official.  RFH at 2.

The evidence shows that at the time of revocation, Mr. Wahab was listed as the owner on Sunshine’s Medicare enrollment record.  CMS Ex. 9 at 5-6.  Therefore, because Sunshine’s Medicare records reflected that Mr. Wahab was Sunshine’s sole owner, Sunshine’s enrollment and billing privileges were subject to revocation based on his conduct that violated the standards for Medicare providers.

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2. Mr. Wahab was convicted of the felony offense of theft of government property.

Section 424.535(a)(3) adopts the definition of “convicted” found at 42 C.F.R. § 1001.2.  That section and the statute itself provide that a person is “convicted” when:  1) “a judgment of conviction has been entered” regardless of whether that judgment has been (or could be) expunged; 2) there has been a finding of guilt; 3) a plea of guilty or nolo contendere has been accepted by the court; or 4) the individual has entered into participation in a first offender, deferred adjudication, or other arrangement or program where the judgment of conviction has been withheld.  Act § 1128(i); 42 C.F.R. § 1001.2(a) (emphasis added).

On May 5, 2022, the District Court accepted Mr. Wahab’s guilty plea to one felony count of Theft of Government Property, in violation of 18 U.S.C. § 641.  CMS Ex. 6; CMS Ex. 8 at 1.  Consequently, it is undisputed that, on May 5, 2022, within 10 years of the revocation action, Mr. Wahab was convicted of a felony, as defined by 42 C.F.R. § 1001.2.  CMS Ex. 6.  On September 2, 2022, the court sentenced Mr. Wahab to three-years of supervised probation and ordered him to pay $186,516.72 in restitution.  CMS Ex. 8 at 2, 5.

Mr. Wahab’s felony conviction arises from his conduct on April 17, 2020.  CMS Ex. 5 at 6.  In pleading guilty, Mr. Wahab admitted that he “knowingly and willfully stole and purloined, and converted to his own use, money of HHS . . . from the HHS Provider Relief Fund . . . with the intent to deprive HHS of the use and benefit of that property.”  Id.  Mr. Wahab stole $50,000.00 from the HHS Provider Relief Fund.  Id.  This fund was established to help compensate health care providers that were financially impacted by the COVID-19 pandemic and to compensate providers that were treating COVID-19 patients.  Id. at 2-3.  Mr. Wahab wired the funds received from the Relief Fund from his Carelink Hospice Services, Inc. bank account to a casino in Las Vegas.  Id. at 6.  Carelink had “discharged all patients and ceased operations in or around March 2020.” Id. at 4.

3. CMS had a legitimate basis to revoke Petitioner’s enrollment in the Medicare program because Petitioner’s owner was convicted within the last ten years of a financial crime that CMS reasonably determined to be intrinsically detrimental to the bests interest of the Medicare program and its beneficiaries.

CMS determined that Mr. Wahab’s conviction was detrimental to the best interests of the   Medicare program because Mr. Wahab was convicted of a financial crime.  CMS Ex. 1 at 3-7.  Financial crimes, as enumerated in § 424.535(a)(3)(ii)(B), are intrinsically detrimental to the best interests of the Medicare program and its beneficiaries.  CMS properly concluded that Mr. Wahab’s crime of stealing government funds for his own personal gain constituted a financial crime.  CMS’s finding that Mr. Wahab’s felony

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conviction is per se detrimental, or inherently detrimental, to the Medicare program as a financial crime is reasonable.

4. CMS’s case-specific determination that Mr. Wahab’s felony conviction is detrimental to the best interests of the Medicare program and its beneficiaries is reasonable.

In addition to the analysis above, CMS also made a case-specific determination that Mr. Wahab’s conviction is detrimental to the best interests of the Medicare program and its beneficiaries.8  While the Secretary has authorized CMS to make the determination as to whether a felony conviction is detrimental, CMS still must “explain[] why the offense is detrimental to the Medicare program and its beneficiaries.”  Michael Scott Edwards, OD, & M. Scott Edwards, OD, PA, DAB No. 2975 at 11 (2019).  Additionally, CMS’s determination must be reasonable.  Eva Oriticio Villamor-Goubeaux, DAB No. 2997 at 10 (2020)

In the reconsidered determination, CMS found that Mr. Wahab’s conduct was “incredibly concerning” because he “engaged in this scheme to enrich himself at the expense of [HHS] by exploiting the HHS Provider Relief fund, which was intended to assist medical providers that need financial assistance during the COVID-19 PHE.”  CMS Ex. 1 at 3.  CMS explained that Mr. Wahab’s actions displayed “dishonesty and a complete disregard for Federal rules and regulations.”  Id. at 3-4.  Furthermore, CMS found that because the Medicare program “relies upon the trustworthiness of our Medicare partners,” Mr. Wahab’s conduct of “materially misrepresenting information for self-enrichment” and his role as the sole owner, authorized official and managing employee of Sunshine casts doubt on Sunshine’s “ability to be a trustworthy and reliable partner in the Medicare program.”  Id. at 4.  CMS’s analysis of the specific facts and circumstances is apt and reasonable.  Therefore, CMS has established that Mr. Wahab’s felony conviction is detrimental to the best interests of the Medicare program.

5. I cannot overturn the revocation for equitable reasons.

Mr. Nizam asserts that the revocation has resulted in “financial difficulties” and is “unfair” given the services he continued to provide during the COVID-19 pandemic.  RFH at 1-2.  Mr. Nizam explains that he has had to “put his house for sale” to cover the payroll taxes that the previous owner did not pay and that he is in a “very bad situation”

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with no other jobs available due to his age.  P. Br. at 1.  Unfortunately, these arguments amount to a request for equitable relief, which I do not have the authority to grant.  US Ultrasound, DAB No. 2302 at 8 (2010).  I do not have the authority to set aside CMS’s revocation based on the adverse financial impact it may have on Mr. Nizam and Sunshine.  Blair Allen Nelson, M.D., DAB No. 3024 at 12 (2020).  Because CMS has demonstrated that one of the regulatory bases for revocation exists, I must uphold the revocation.  Wassim Younes, M.D., DAB No. 2861 at 8 (2018).

6. I do not have the authority to review the length of the re-enrollment bar and Petitioner has not raised this issue at any stage in this case.

When CMS revokes the enrollment of a provider, CMS must also impose a re-enrollment bar that is between one and ten years in length.  42 C.F.R. § 424.535(c)(1)(i).  In this case, CMS imposed a ten-year enrollment bar.  CMS Ex. 3 at 3.  Petitioner has not challenged the imposition of this re-enrollment bar and, ultimately, I do not have the authority to review the length of the re-enrollment bar imposed.  Vijendra Dave, M.D., DAB No. 2672 at 9-12 (2016); see also 42 C.F.R. § 424.535(c)(2)(ii)(B).

VII. Conclusion

Based on the foregoing findings of fact and conclusions of law, I conclude that CMS had a legitimate basis to revoke Petitioner’s Medicare enrollment and billing privileges under 42 C.F.R. § 424.535(a)(3).  I affirm CMS’s revocation.