Teche Drugs, Inc., ALJ Ruling 2025-14 (HHS-CRD April 18, 2025)

ORDER DISMISSING CASE

In a reconsidered determination dated December 7, 2023, Palmetto GBA (Palmetto), an administrative contractor for the Centers for Medicare & Medicaid Services (CMS), notified Petitioner, Teche Drugs, Inc., that it was upholding the revocation of its Medicare enrollment and billing privileges.  On May 21, 2024, Petitioner, through counsel, requested a hearing before an administrative law judge (ALJ).  In its request for hearing, Petitioner proffered good cause for the untimely filing.

This matter was initially assigned to ALJ Tannisha Bell.  In accordance with ALJ Bell’s Acknowledgment Order, CMS filed a Motion to Dismiss (MTD) on June 7, 2024.  Petitioner submitted a response and supporting documents on June 17, 2024.  Response and Opposition to Respondent’s Motion to Dismiss (P. Response).  This matter was reassigned to me on April 8, 2025.

I have carefully considered the parties’ arguments and evidence.  I conclude Petitioner has not shown good cause to file its hearing request out of time.  I therefore order this case be dismissed.

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Petitioner’s hearing request was untimely filed, and Petitioner has not established good cause to extend the time for filing.

Petitioner is a pharmacy Durable Medical Equipment, Prosthetics, Orthotics and Supplies supplier located in Louisiana.  On August 16, 2023, Palmetto informed Petitioner that its Medicare supplier number was being revoked pursuant to 42 C.F.R. § 424.57(c)(1) (failure to have a comprehensive liability insurance policy) and 42 C.F.R. § 424.57(c)(26) (failure to maintain a valid surety bond).  P. Exhibit (Ex.) 1.  CMS also imposed a two-year reenrollment bar.  Id. at 2.  On September 15, 2023, Palmetto acknowledged receipt of Petitioner’s submission of a corrective action plan (CAP).  P. Ex. 3.

On November 8, 2023, Palmetto issued its determination upholding the initial revocation.  P. Ex. 5.  Palmetto explained that although Petitioner submitted evidence of a current surety bond, it failed to provide a “verifiable explanation for their noncompliance with 42 C.F.R. § 424.57(c)(10), as a valid certificate of comprehensive liability insurance was not submitted.”  Id. at 4.  Thereafter, Petitioner submitted a copy of its comprehensive liability insurance.

On December 7, 2023, Palmetto issued an unfavorable reconsidered determination.  P. Ex. 6.1  Palmetto upheld the revocation, again on the basis that a valid certificate of comprehensive liability insurance was not submitted.  Id. at 5.  Appeal rights were provided using standard language, including instructions that appeals must be filed with the Civil Remedies Division of the Departmental Appeals Board within 60 calendar days after the date of receipt.  Id.

Petitioner filed its Request for Hearing (RFH) on May 21, 2024, well after the deadline, but proffered good cause for the untimely filing.  RFH.  CMS moves to dismiss.  MTD.  Petitioner does not dispute that it timely received the reconsidered determination, nor that its request for hearing was untimely filed.  RFH at 2-3; P. Response.  Instead, Petitioner requests CMS’s motion be denied because good cause exists for the delayed hearing request.  P. Response at 1.

Applicable here, if a request for hearing is not filed within 60 days, the supplier, its legal representative, or other authorized official may file with the ALJ a request for extension of time with a showing of good cause for failure to timely file the hearing request.  42 C.F.R. § 498.40(c)(1).  Only when there is good cause shown may an ALJ extend the time for filing the hearing request.  42 C.F.R. § 498.40(c)(2).

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The regulations do not define what constitutes “good cause” to extend the filing deadline for a hearing request.  The Departmental Appeals Board (Board) also “has never attempted to provide an authoritative or complete definition of the term ‘good cause’ in section 498.40(c)(2).”  Brookside Rehab. & Care Ctr., DAB No. 2094 at 7 n.7 (2007) (citing Glen Rose Med. Ctr. Nursing Home, DAB No. 1852 at 7 n.5 (2002)).  “It is a decision that is committed to the ALJ’s broad discretion on a case-by-case basis.”  Christina Paylan, M.D., DAB No. 3112 at 8 (2023) (internal citations omitted).

CMS proffers that, “[a]lthough not specifically defined, good cause has been interpreted to mean circumstances beyond the ability of the provider to control which prevented it from making a timely request for hearing.”  MTD at 3 (citations omitted).  I agree.  ALJs who handle Part 498 appeals have been guided by the Social Security Administration’s (SSA’s) regulatory definition of good cause:  circumstances beyond a party’s ability to control.2  See, e.g., Oak Park Healthcare Center, DAB CR1917 (2009); The Heritage Center, DAB CR1219 (2004); Hillcrest Healthcare, L.L.C., DAB CR976 (2002), aff’d, DAB No. 1879 (2003).

Petitioner does not disagree with these guideposts.  However, Petitioner suggests that “[a]n ALJ may accept an untimely filing if a party merely provides a statement of good cause.”  P. Response at 2 (citing Yevgeny Tsyrulnikov, M.D., DAB CR6107 at 3 (2022)).

Petitioner mischaracterizes the ALJ’s decision in Yevgeny Tsyrulnikov.  In that case, the Inspector General submitted an untimely prehearing exchange but provided a statement of cause.  Yevgeny Tsyrulnikov, DAB CR6107 at 3.  Rather than merely accepting the untimely filing, however, the ALJ “[found] good cause to accept the untimely filing . . . .”  Id.  To the extent Petitioner argues that its mere proffer of good cause is sufficient for me to extend the filing deadline in this case, there is no authority cited by Petitioner or of which I am aware that supports such a broad proposition.  In fact, a basic definition of “good cause” means “[a] legally sufficient reason.”  Black’s Law Dictionary 11th ed.

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(2019) (defined under the second definition of the word “cause”).  Therefore, good cause is more than just explaining why a request for hearing is late.  See Brookside, DAB No. 2094, at 7 n.7 (“Here, we need not decide exactly the scope of the ALJ’s discretion under [42 C.F.R. § 498.40(c)] since (under any reasonable definition of that term) the ALJ reasonably determined that [the provider] did not show ‘good cause.’”).

Instead, I consider all the facts and circumstances based on the information before me.  Turning to Petitioner’s proffer, Petitioner states that in the summer of 2023, its owner “began experiencing severe symptoms of fatigue, brain fog, chronic pain, extreme dizziness, and other neurological and cardiovascular symptoms.”  P. Response at 1.  Petitioner submits an affidavit from the owner stating that he had COVID-19 in 2020 and his health problems began thereafter.  P. Response, Ex. 1 at 1, ¶ 3.  The owner explains his condition worsened in June and July of 2023, leaving him “effectively disabled” and “incapacitated for nearly eleven months.”  Id.  Petitioner’s owner provides specific detail of his symptoms and conditions and provides medical documentation to support the same.  Id. at 1-3, ¶¶ 4-8; 7-49.

The owner’s health condition, Petitioner states, caused the document omissions that led to the unfavorable reconsidered determination as well the hiring of “a lawyer to handle the hearing request in December of 2023.”  Id. at 3, ¶ 9.  In its request for hearing, Petitioner explained that the owner’s assistant was instructed to contact the attorney “to assist with preparing and submitting the request for hearing” and that, in January 2024, the assistant provided information to the attorney as he worked to prepare the request for hearing.  RFH at 3.  Petitioner stated that both the owner and assistant “were under the impression all was in order and the request for hearing had been filed by the deadline.”  Id.  However, Petitioner learned in the middle of April 2024 that the request for hearing was not filed when the state Medicaid agency issued a notice of termination.  Id.  Petitioner’s owner further explains that due to worsening symptoms throughout the early part of 2024, he was unable to follow up with the attorney . . . .”  P. Response Ex. 1 at 1, ¶ 9.

Petitioner explains that the attorney had his own extenuating circumstances that prevented him from submitting the request for hearing before the deadline.  Id.  The attorney explained that his disabled son required around-the-clock care following a severe leg injury.  Id.  Petitioner submits a letter from the attorney confirming that he was asked by Petitioner in January/February 2024 to assist with its appeal request.  P. Ex. 7.  The attorney then explains:

This occurred at a point in time when my mentally and physically handicapped son, for who I am his sole 24/7 care giver, required orthopedic surgery for a second time for [a] broken left femur, and I was required to be with him and by his side at all times while a patient in the surgical hospital, the inpatient rehabilitation hospital, and at home for home rehabilitation

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and physical therapy, all of which caused me to be unable to complete the task for [Petitioner].

Id.

CMS argues that Petitioner’s situation falls “within the realm of avoidable human error.”  MTD at 4.  According to CMS, the owner’s health situation was known and it had ample time from the initial revocation to the filing deadline to manage the appeals process, which, according to CMS, it did prior to the issuance of the reconsidered determination.  Id.  Similarly, regarding Petitioner’s attorney, CMS proffers that attorney negligence does not constitute good cause for late filings.  Id. (quoting Hilltop Haven Nursing Home, Ruling on Motion to Dismiss, App. Dkt. No. A-08-117 (Mar. 3, 2009) (“Where, as here, a party requesting review has chosen to be represented by counsel, it is bound by the actions of counsel, and counsel is required to timely file the request for review.”)).

Petitioner distinguishes its situation from those cited by CMS.  Petitioner explains that the combination of extenuating circumstances suffered by Petitioner’s owner and his attorney differs from the simple negligence described in the decisions cited by CMS.  P. Response at 3.  Petitioner also proffers that good cause can exist when cumulative circumstances, including medical conditions, cause a late request for hearing.  Id. (citing Robert L. Alexander, DAB CR244 at 10-12 (1992)).

I have carefully considered Petitioner’s arguments as well as the evidence, including the owner’s Affidavit, medical records, and letter from Petitioner’s former attorney who failed to file the request for hearing.  While I find Petitioner’s contentions regarding the health condition of its owner is supported by the record, I find it insufficient, either alone or in combination with the attorney’s failure to file due to his personal circumstances, to establish good cause because these are not forces beyond Petitioner’s control.

On the contrary, the evidence establishes that Petitioner was very much in control of events.  As CMS points out, notwithstanding the owner’s health condition, Petitioner was able to effectively and timely manage the appeals process.  MTD at 4.  The evidence shows Petitioner timely submitted its reconsideration request and, upon receipt of an unfavorable reconsideration decision, quickly filed additional documentation to support its request.  P. Ex. 3; CRD Dkt. Entry No. 1f at 1.  Petitioner was fully aware of its appeal rights when it received the unfavorable reconsidered determination dated December 7, 2023, and sought the assistance of counsel to file its request for hearing due to the owner’s inability to manage the appeals process himself.  P. Response Ex. 1 at 3-4, ¶ 9.

Moreover, based on Petitioner’s narrative, there was at least one other staff member involved in this appeals process.  In its request for hearing, Petitioner states that the owner’s assistant worked with the attorney to prepare the request for hearing in January 2024.  RFH at 3.  In addition, the evidence shows the same assistant filed Petitioner’s

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request for reconsideration and other documentation with CMS, demonstrating her ability to at least manage the procedural aspects of the appeals process.  CRD Dkt. Entry No. 1f at 1.  Petitioner provides no explanation as to what circumstances prevented the assistant, again someone who was working on the request for hearing with the attorney in January 2024 and familiar with the procedural aspects of the appeal, from following up with the attorney other than to state that she and the owner were “under the impression that all was in order . . . .”  Id.  While Petitioner’s owner may have been unable to oversee the appeals process due to his medical condition, without any explanation or evidence to the contrary, I find the evidence shows that Petitioner’s staff simply failed to track its appeal.  Staff oversight does not constitute good cause.

Regarding Petitioner’s attorney, I am sympathetic to his circumstances and have no reason to doubt the truthfulness of his letter.  However, as CMS points out, the attorney’s statement is not sworn or notarized, which adversely impacts the weight I afford the letter.  More importantly, however, the letter lacks specificity to support Petitioner’s claims that the attorney’s personal circumstances amounted to more than negligence.

I do not disagree with Petitioner that good cause may exist when forces outside an attorney’s control causes the attorney to miss a deadline.  Petitioner, for example, cites to the ALJ’s decision in Oberry Community Mental Health Center, DAB CR986 (2002).  In Oberry, the ALJ found Petitioner established good cause to extend the filing deadline because the attorney’s medical condition prevented her from timely filing Petitioner’s hearing request.  Petitioner submitted an affidavit from the attorney and medical documentation that showed the attorney was physically incapacitated because of an automobile accident and thus unable to actively pursue Petitioner’s appeal.  The affidavit specified the attorney was in an automobile accident on March 15, 1999, and under the care of a medical doctor from March 15, 1999, to April 10, 1999, dates that encompassed the filing deadline.  The attorney further attested that no other staff in her office had knowledge to file the papers for the appeal.

In this case, the attorney states that in “January/February” of 2024, he was asked to assist Petitioner file its hearing request, and it was at this time his son required around-the-clock care due to medical conditions, including multiple surgeries.  P. Ex. 7.  Again, I do not challenge the veracity of the attorney, but I cannot tell from this statement at what point in January or February the attorney was unable to fulfill or resume his professional obligations to provide care for his son.  As stated, the record demonstrates Petitioner’s staff was working with the attorney in January to prepare the hearing request, therefore showing the attorney was working during some portion of January and not completely unavailable.  RFH at 3.

Moreover, the attorney does not explain whether his son’s surgery was planned or unplanned.  If planned, the attorney should have informed Petitioner (as well as his other clients) that he would be unable to fulfill his professional obligations while taking care of

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his son.  And while an unplanned surgery may have not afforded the attorney time to immediately inform Petitioner of his inability to file its hearing request, the attorney does not explain why he failed to reach out to Petitioner for months regarding the unfiled hearing request.  I note the attorney does not discuss if there was anyone in his office that could have filed Petitioner’s hearing request or at least inform Petitioner of the circumstances.  Therefore, based on the attorney’s letter alone, I agree with CMS that the attorney’s circumstances while sympathetic, are insufficient to demonstrate forces beyond his ability to control that effected his ability to timely file Petitioner’s request for hearing.

I have also considered whether the two circumstances together are sufficient to establish good cause but find that they do not.  Petitioner cites to the ALJ’s decision in Robert L. Alexander, DAB CR244 at 10-12 (1992).  In that case, Petitioner was incarcerated and being treated for manic-depressive bipolar mental illness and depression at the time his hearing request was due.  Id. at 10-11.  In addition, Petitioner was indigent, making the cost of postage a major expense, and he was proceeding pro se.  Id. at 12.  “While none of these circumstances may have been persuasive standing alone,” taken together, the ALJ found it was not unreasonable to find that Petitioner was “prevented from timely filing by a combination of forces beyond his control.”  Id.

However, the facts in this case are not comparable.  Petitioner is a pharmacy with at least two employees who were involved in this appeals process and with sufficient resources to obtain counsel.  See, e.g., RFH at 2-3 (Petitioner stating prior submissions to Palmetto were handled by the owner and “his staff”); CRD Dkt. Entry No. 1f at 1 (email from Petitioner’s employee to CMS submitting documentation on Petitioner’s behalf).  Despite the available resources, Petitioner failed to follow up with the attorney regarding its hearing request for months.  Similarly, even considering the personal circumstances the attorney describes, the attorney failed to, at any point, simply take the time to inform Petitioner that he would be unable to file its hearing request.  A simple phone call or email from either Petitioner or the attorney would have been sufficient to ensure the timely filing of Petitioner’s hearing request or at the very least request an extension.  Failure to properly manage business affairs is simply not a force beyond Petitioner’s or its attorney’s control.

For the foregoing reasons, I conclude that Petitioner did not file a timely hearing request as required by 42 C.F.R. § 498.40(a)(2) and has not established good cause to file its hearing request out of time.  I therefore dismiss this case.  See 42 C.F.R. §§ 498.40(c)(2), 498.70(c).