Wuis Value Drugs Inc. d/b/a Moore Family Pharmacy, DAB CR6781 (2025)

DECISION

Petitioner, Wuis Value Drugs Inc. d/b/a Moore Family Pharmacy, is a Michigan based supplier of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS).  It applied to revalidate its enrollment in the Medicare program, but the Centers for Medicare & Medicaid Services (CMS) has denied its application.1  Petitioner appeals that denial. 

I find that CMS properly denied Petitioner’s enrollment because the supplier did not comply with DMEPOS supplier standards:  it did not accept returns from beneficiaries of substandard or unsuitable items.  

Background

On February 29, 2024, the Medicare contractor, Novitas Solutions (Novitas) informed Petitioner that it needed to revalidate its Medicare enrollment record.  CMS Ex. 1 at 1.  

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On March 27, 2024, Petitioner timely submitted a revalidation application.  CMS Ex. 2.  Novitas requested some additional information from Petitioner and informed Petitioner that an unannounced site visit would be conducted.  CMS Ex. 4.  On July 31, 2024, an inspector conducted the unannounced site visit.  CMS Ex. 3.  The inspector’s report noted that Petitioner was in compliance with all the requirements for a DMEPOS supplier except for the requirement that Petitioner advise beneficiaries that they may rent or purchase DME; that Petitioner did not keep a space for records; and that Petitioner did not provide documentation or evidence that it accepted returns of substandard or unsuitable items.  CMS Ex. 3 at 3, 5.  The inspector’s report noted that Petitioner’s returns or exchanges were handled by suppliers.  Id. at 5. 

In a letter dated October 14, 2024, Novitas advised Petitioner that its revalidation application to the Medicare program was denied because it did not meet the requirements to qualify as a Medicare DMEPOS supplier set forth in 42 C.F.R. § 424.530(a)(1).  Specifically, it did not comply with three supplier standards:  

• it did not keep records proving it advised beneficiaries that they may either rent or purchase inexpensive or routinely purchased durable medical equipment, and of the purchase option for capped rental durable medical equipment, as required by supplier standard # 5 (42 C.F.R. § 424.57(c)(5));
• it did not keep a location that had space for storing business records including the supplier’s delivery, maintenance, and beneficiary communication records, as required by supplier standard # 7 (42 C.F.R. § 424.57(c)(7)(i)(E)); and
• it did not accept returns of substandard or unsuitable items from beneficiaries, as required by supplier standard # 15 (42 C.F.R. § 424.57(c)(15)).   

CMS Ex. 6. 

Petitioner sought reconsideration.  CMS Ex. 7.  In a reconsidered determination, dated April 22, 2025, the contractor, Chags Health Information Technology, LLC, upheld the denial as to 42 C.F.R. § 424.57(c)(15) and reversed on the remaining two grounds.  CMS Ex. 8.  Petitioner then requested review by an administrative law judge.2 

Although CMS filed a motion for summary judgment, I find that this matter may be decided on the written record, without considering whether the standards for summary judgment are satisfied.  Neither party lists any witnesses.  An in-person hearing would therefore serve no purpose, and I may decide this case based on the written record without considering whether the standards for summary judgment are met. 

With its motion and brief (CMS Br.), CMS submits eight exhibits (CMS Exs. 1-8).  In the absence of any objections, I admit into evidence CMS’s Exhibits 1-8. 

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With its response to CMS’s motion for summary judgment and brief (P. Br.), Petitioner submits four exhibits (P. Exs. 1-4).  The fourth exhibit is accompanied by a request to admit new evidence.  The exhibit is Petitioner’s DME Return Policy.  P. Ex. 4.  Petitioner argues that the exhibit is relevant and that it could not have been submitted at the reconsideration level because the evidence did not yet exist.  Pursuant to 42 C.F.R. § 498.56(e), an administrative law judge must examine “any new documentary evidence submitted to the [administrative law judge] by a provider or supplier to determine whether the provider or supplier has good cause for submitting the evidence for the first time at the [administrative law judge] level.”  If the administrative law judge does not find good cause for the failure to submit the evidence earlier, the evidence must be excluded and may not be considered in reaching a decision.  42 C.F.R. § 498.56(e)(2)(ii). 

There is no debate that Petitioner’s Exhibit 4 did not exist at the time of the reconsidered determination and, therefore, could not have been submitted as an exhibit at that time.  Petitioner readily admits that it did not have a written policy in place prior to the creation of the DME Return Policy (Exhibit 4) and that the DME Return Policy was created after the inspector conducted the unannounced visit.  As a result, I find that there is good cause to admit Petitioner’s Exhibit 4 into evidence.  Petitioner’s Exhibits 1-3 are not admitted as they are duplicates of filings already made by CMS (CMS Exs. 6-8). 

Discussion

1. 1. CMS properly denied Petitioner’s revalidation enrollment application because it did not meet the Medicare standards for DMEPOS suppliers: it did not accept returns from beneficiaries of substandard items.3

Program requirements.  To receive Medicare payments for items furnished to a Medicare-eligible beneficiary, a supplier, such as Petitioner, must be enrolled in the Medicare program and must have a supplier number issued by the Secretary of Health and Human Services.  Social Security Act § 1834(j)(1)(A); 42 C.F.R. § 424.505.  To obtain and keep that number, the supplier must be operational and must meet the standards set forth in 42 C.F.R. § 424.57(c).  CMS may deny the DMEPOS supplier billing privileges if it fails to do so.  42 C.F.R. § 424.57(c)(1) and (d); 42 C.F.R. § 424.530(a)(1), (5). 

Supplier standard # 15.  A supplier must accept returns from beneficiaries of substandard (less than full quality for the particular item or unsuitable items, inappropriate for the beneficiary at the time it was fitted and rented or sold).  42 C.F.R. § 424.57(c)(15).  

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Petitioner’s revalidation enrollment application and the site investigation.  On March 27, 2024, Petitioner submitted, via PECOS, its Medicare revalidation application.  CMS Ex. 2.  On July 31, 2024, an inspector conducted the unannounced site visit.  CMS Ex. 3.  The inspector’s report found that Petitioner did not provide documentation or evidence that it accepted returns of substandard or unsuitable items.4  CMS Ex. 3 at 5.  The inspector’s report noted that Petitioner’s returns or exchanges were handled by suppliers.  Id. 

At the time of the reconsidered determination, the only evidence Petitioner submitted to show that returns were accepted was a copy of its warranty document.  CMS Ex. 8 at 4.  The hearing officer found that this document did not show that Petitioner accepted returns of substandard items.  Id.  The hearing officer also found that Petitioner did not produce any evidence that its patient records included proof that it advised beneficiaries that Petitioner accepted returns of substandard items.  Id.  As a result, the hearing officer found that there was no error in denying Petitioner’s revalidation application based on 42 C.F.R. § 424.57(c)(15).  I agree. 

Petitioner concedes that it did not have a written policy regarding returns of substandard items in place at the time of the inspection.  P. Br. at 5.  Petitioner also admits that its DME Return Policy now outlined in Petitioner’s Exhibit 4 was created after the reconsidered determination.5  P. Br. at 5.  Petitioner does not argue that it advised its patients that it accepted returns.  Instead, Petitioner argues that although the policy was not memorialized anywhere it was Petitioner’s practice to “accept returns when legally possible.”  P. Br. at 5.  Similarly, Petitioner also argues that it accepted returns as required and that the new DME Return Policy only reduces to writing what was already its practice.  Id. at 4-5. 

Ultimately, Petitioner’s argument is that it was not required to have a return policy in writing based on the language in 42 C.F.R. § 424.57(c)(15).  However, 42 C.F.R. § 424.57(c) is an enumerated list that compromises the DMEPOS supplier standards and must be read as a whole for a consistent and sensible interpretation of those standards.  When 42 C.F.R. § 424.57(c)(15) is read in conjunction with 42 C.F.R. § 424.57(c)(16) it is clear that Petitioner must disclose the return policy to each beneficiary to whom it supplies a Medicare covered item.  Petitioner provided no evidence at the time of the 

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reconsidered determination that such a disclosure was made.  CMS has therefore appropriately denied Petitioner’s revalidation application. 

Last, Petitioner argues that CMS has targeted it and wasted resources.  However, CMS may deny enrollment if the supplier fails to comply with even one supplier standard.  ProMedical Equipment Supplies, LLC, DAB No. 2786 at 2 (2017); 1866ICPayDay, DAB No. 2289 at 13 (2009).  

Conclusion

I find that CMS properly denied Petitioner’s enrollment because the supplier did not comply with DMEPOS supplier standards:  it did not accept returns from beneficiaries of substandard or unsuitable items.