Kiumars Arfai, M.D., Inc., DAB CR6822 (2026)

DECISION

The Centers for Medicare & Medicaid Services (CMS) revoked the Medicare enrollment and billing privileges of Kiumars Arfai, M.D., Inc (Petitioner).  CMS concluded that Petitioner had abused its billing privileges within the meaning of 42 C.F.R. § 424.535(a)(8)(ii).  As I explain in greater detail below, I find that CMS did not demonstrate that Petitioner engaged in a “pattern or practice of submitting claims that fail to meet Medicare requirements” within the meaning of this provision.  I therefore reverse CMS’s revocation of Petitioner’s Medicare enrollment and billing privileges, and CMS’s determination to include Petitioner on the preclusion list. 

I. Background and Procedural History

Petitioner is a clinic/group practice located in Van Nuys, California.  CMS. Ex. 10 at 1-3.  Petitioner also maintains a separate Medicare enrollment for Northridge Specialty Imaging Clinic, an independent testing facility.  CMS Ex. 9.  Petitioner challenges CMS’s revocation of the billing privileges of both its clinic/group practice and its 

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independent diagnostic testing facility enrollments, after CMS concluded that Petitioner had engaged in a pattern or practice of submitting claims that failed to meet Medicare requirements pursuant to 42 C.F.R. § 424.535(a)(8)(ii).  Petitioner also challenges its placement on the Preclusion List and 10-year re-enrollment bar. 

On January 6, 2022, CMS, through its administrative contractor Noridian Healthcare Solutions (Noridian), notified Petitioner that its billing privileges for any and all enrollments were revoked, effective February 5, 2022, pursuant to 42 C.F.R. § 424.535(a)(8)(ii).  CMS Ex. 5 at 1.  CMS later issued a notice letter dated February 18, 2022, notifying Petitioner that its Medicare privileges were revoked, effective March 20, 2022, pursuant to 42 C.F.R. § 424.535(a)(8)(ii), superseding the prior revocation notice dated January 6, 2022.  CMS Ex. 3 at 1.  CMS extended Petitioner’s revocation to any and all of its enrollments pursuant to 42 C.F.R. § 424.535(i).  Id.  According to the notice, data analysis of claims billed by Petitioner, which forms the basis of CMS’s decision to revoke Petitioner, found that: 

• E.H.’s license to practice as a registered nurse in California was voluntarily surrendered to the California Board of Registered Nursing on December 16, 2019, in lieu of further disciplinary action.
• 268 claims were submitted for 45 unique beneficiaries that listed E.H. as the rendering provider for dates of service between December 19, 2019 through December 9, 2021, during which time her license was voluntarily surrendered.

Id.  Petitioner timely requested reconsideration on April 19, 2022.  CMS Exs. 1-2.  In its reconsideration request decision, CMS issued an unfavorable decision, finding that there was no error made in the revocation, nor the placement of Petitioner on the CMS Preclusion List.  CMS Ex. 1 at 12. 

II. Decision on the Record

On October 28, 2022, Petitioner requested a hearing before an administrative law judge.  The hearing request was docketed as C-23-63, and I was designated to hear and decide the case.  On October 31, 2022, I issued an Acknowledgment and Pre-hearing Order (Pre-hearing Order) in which I instructed the parties to file pre-hearing exchanges.  CMS filed a motion for summary judgment and brief (CMS Br.) along with 10 proposed exhibits (CMS Exs. 1-10) on December 5, 2022.  Petitioner filed a brief opposing summary judgment (P. Br.) on December 20, 2022.  CMS filed a notice waiving its reply to Petitioner’s brief opposing summary judgment on January 28, 2023.  Petitioner did not object to CMS Exs. 1-10.  Therefore, in the absence of objection, I admit CMS Exhibits 1-10 into the record.  

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CMS has moved for summary judgment.  Petitioner has not indicated that it intends to call any witnesses at an oral hearing.  Consequently, an in-person hearing is not required, and I issue this decision based on the written record, without regard to whether the standards for summary judgment are met.  Civil Remedies Division Procedures (CRDP) § 19(d).  I deny CMS’s motion for summary judgment as moot.  

III.  Issue

The issues in this case are whether CMS had a legal basis to revoke Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(8)(ii), and whether CMS had a legitimate basis to place Petitioner on the preclusion list.  42 C.F.R. §§ 422.2 and 423.100. 

IV. Jurisdiction

I have jurisdiction to hear and decide this case.  42 C.F.R. §§ 498.3(b)(17), (20), 498.5(l)(2), (n)(2); see also Social Security Act (Act) § 1866(j)(8) (codified at 42 U.S.C. § 1395cc(j)(8)). 

V. Discussion

1. 1. Applicable Law

Petitioner’s clinic/group practice participates in the Medicare program as a “supplier.”  See 42 U.S.C. § 1395x(d); 42 C.F.R. § 400.202.  As a basic Medicare enrollment requirement, a provider or supplier must maintain appropriate state licensure based on the type of services the provider or supplier type will furnish and bill Medicare.  42 C.F.R. § 424.516(a)(2).  CMS is authorized to revoke the Medicare enrollment and billing privileges of a supplier if “CMS determines that the provider or supplier has a pattern or practice of submitting claims that fail to meet Medicare requirements.”  42 C.F.R. § 424.535(a)(8)(ii).  In making this determination, CMS considers the following: 

• (A) The percentage of submitted claims that were denied during the period under consideration.
• (B) Whether the provider or supplier has any history of final adverse actions and the nature of any such actions.
• (C) The type of billing non-compliance and the specific facts surrounding said non-compliance (to the extent this can be determined).
• (D) Any other information regarding the provider or supplier's specific circumstances that CMS deems relevant to its determination. 

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42 C.F.R. § 424.535(a)(8)(ii).1

The effect of a revocation is to terminate any provider agreement and to bar the provider or supplier “from participating in the Medicare program from the effective date of the revocation until the end of the re-enrollment bar.”  42 C.F.R. § 424.535(b), (c).  CMS may impose a re-enrollment bar anywhere from one to ten years.  42 C.F.R. § 424.535(c).  CMS also may place providers on the Preclusion List if the provider is revoked, under a re-enrollment bar, and CMS has determined the underlying conduct was detrimental to the best interests of the Medicare program.  42 C.F.R. § 422.2. 

2. 2. Findings of Fact, Conclusions of Law, and Analysis2
   1. i. Petitioner submitted 268 claims with dates of service between December 19, 2019 and December 9, 2021 seeking reimbursement for services provided to 45 unique Medicare beneficiaries, which listed an incorrect rendering provider and failed to meet the Medicare requirements.

Petitioner was enrolled in Medicare as a clinic/group practice, beginning in April 2007, as well as an Independent Diagnostic Testing Facility (IDTF), beginning in September 2015.  CMS Ex. 10 at 1; CMS Ex. 9 at 1.  E.H. was an associated provider for Petitioner’s clinic/group practice, who was licensed as a nurse anesthetist, registered nurse, and public health nurse.  CMS Ex. 6 at 1.  E.H. had reassigned her billing privileges to Petitioner’s IDTF facility, effective May 1, 2018.  CMS Ex. 10 at 8.  

E.H. voluntarily surrendered her registered nurse license, nurse anesthetist license, and public health nurse license effective December 16, 2019.  CMS Ex. 6 at 4, 8-9.  Consequently, E.H. lost “all rights and privileges” to practice as a registered nurse, nurse anesthetist, or public health nurse in the state of California as of the effective date of the surrender.  Id. at 8.  Petitioner removed E.H. as an associated provider and E.H. did not work as a provider for Petitioner after December 16, 2019.  P. Br. at 3-4.  Yet, E.H.’s reassignment of billing privileges remained intact until March 20, 2022, which was the effective date of Petitioner’s revocation.  CMS. Ex. 10 at 8; CMS Ex. 3. 

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During the time that E.H.’s licenses were surrendered, Petitioner’s billing company submitted claims for services indicating that the rendering provider was E.H.  CMS Ex. 5.  Specifically, data analysis of Petitioner’s claim submissions showed that 268 claims were submitted for 45 unique beneficiaries for dates of service between December 19, 2019 and December 9, 2021, all listing E.H. as the rendering provider.  CMS Ex. 8.  Petitioner does not dispute that the 268 claims filed listing E.H. as the rendering provider listed the incorrect provider number. 

1. ii. Although Petitioner filed claims that did not meet Medicare requirements, Petitioner did not engage in a pattern or practice of abusive billing within the meaning of 42 C.F.R. § 424.535(a)(8)(ii), and CMS therefore did not have a legal basis to revoke Petitioner’s Medicare enrollment and billing privileges.

CMS revoked Petitioner's Medicare enrollment and billing privileges based on 42 C.F.R. § 424.535(a)(8)(ii), which authorizes revocation when the supplier:  1) has filed claims that do not meet Medicare requirements, and 2) engaged in a “pattern or practice” of filing such claims.  As explained below, although I conclude that Petitioner filed claims that did not meet Medicare requirements, I also conclude that the record does not support that Petitioner engaged in a pattern or practice of filing such claims. 

In determining whether a provider has engaged in a pattern or practice of submitting claims that are not in compliance with Medicare requirements, CMS will consider the following factors “as appropriate or applicable”: 

• (A) The percentage of submitted claims that were denied during the period under consideration.
• (B) Whether the provider or supplier has any history of final adverse actions and the nature of any such actions.
• (C) The type of billing non-compliance and the specific facts surrounding said non-compliance (to the extent this can be determined).
• (D) Any other information regarding the provider or supplier’s specific circumstances that CMS deems relevant to its determination. 

42 C.F.R. § 424.535(a)(8)(ii). 

Regarding factor A – the percentage of submitted claims that were denied – Petitioner asserts, and CMS does not deny, that CMS failed to deny any of the 268 submitted claims listing E.H. as the rendering provider with dates of service between December 19, 2019 and December 9, 2021.  P. Br. at 3.  In its reconsidered decision, CMS states that this factor does not alone negate its determination that a provider or supplier has a pattern or practice of submitting claims that fail to meet Medicare requirements.  CMS Ex. 1 at 8. 

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Importantly though, CMS specifically included the following in the preamble regarding the scope of CMS’s discretionary authority to revoke billing privileges when submissions of denied claims rise to the level of an abusive pattern or practice:  “[u]nder [CMS’s] current rules and practices, by the time CMS would revoke a provider or supplier under § 424.535(a)(8)(ii), the provider would have received information and education about the reasons for the claim denials on multiple occasions.”  79 Fed. Reg. 72,500, 72,514 (December 5, 2014).  On this point, a commenter stated that a “provider often will not be aware of a pattern of alleged improper billing under § 424.535(a)(8)(ii) until after a contractor performs an audit,” and that under such circumstances “the provider should be given an opportunity to correct the allegedly improper billing via a plan of correction.”  Id. at 72,520. 

The preamble further contemplates that in order for a provider’s billing to rise to a pattern or practice of non-compliant, abusive billing subject to potential revocation, the provider would have received numerous claims denials from CMS and the opportunity to demonstrate reformed billing as a result of the feedback:  “[w]e believe that frequent claim denials should alert the provider that there may be an issue with its claim submissions and that remedial action may be required.”  Id. at 72,518; see also id. at 72,515 (“We agree that a claim denial can serve as an adequate remedy in many cases.  However a repeated pattern of submitting non-compliant claims indicates that the associated claim denials are not altering the provider’s behavior.  More serious remedial action—specifically, the revocation of billing privileges under § 424.535(a)(8)(ii)—may thus be necessary in some cases.”). 

Here, CMS denied none of the submitted claims before it issued its initial determination to revoke.  P Br. at 3.  Petitioner first received notice of the incorrectly billed claims on January 6, 2022, when it received CMS’s initial revocation notice.  CMS Ex. 1 at 6.  Until that time, Petitioner had relied on the billing company that it had hired to manage its billing and credentialing.  But once Petitioner was made aware of the erroneous claims, it terminated its relationship with the billing company and corrected the error.  P. Br. at 4.  CMS failed to consider the relevance of its failure to deny non-compliant claims.  It has, in effect, revoked Petitioner’s billing privileges without providing them an opportunity to correct the improper billing, contrary to CMS’s own interpretation of the law.  79 Fed. Reg. at 72,520.  CMS has failed to apply the regulations as they were articulated in the preamble to the final rule.  DRS Health Group LLC d/b/a A Wiser Mind, DAB No. CR5444 at 9 (2019).  

As to factor B, CMS’s reconsideration decision acknowledges that Petitioner has not been the subject of any final adverse actions.  CMS Ex. 1 at 8.  It again stated that this was not dispositive in negating CMS’s determination that a provider or supplier has a pattern or practice of submitting claims that fail to meet Medicare requirements.  CMS Ex. 1 at 8. 

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Under factor D, CMS further noted that the non-compliant claims were submitted over a period of nearly two years and concluded that Petitioner negligently submitted claims, stating that, even if unintentional, it is the ultimate responsibility of the practice to take the necessary steps to ensure that its claims are accurately submitted to Medicare.  CMS Ex. 1 at 9. 

However, a more complete consideration of the circumstances of this case shows that Petitioner did make efforts to ensure that its claims were submitted accurately.  Petitioner removed E.H. as an associated provider with its practice after December 16, 2019.  P. Br. at 3-4; CMS Ex. 6.  Petitioner also provided a copy of the medical record to the billing company to support each claim.  These records included information on the rendering provider of the service – none of which list E.H. as the rendering provider.  See, e.g., CMS Ex. 2 at 75-80, 121-27, 323-38.  I do not agree that Petitioner acted negligently.  While the 268 non-compliant claims were submitted over nearly two years, there was in fact, only one error made, albeit repeatedly.  And Petitioner had made efforts to prevent the error from being made.  

Moreover, Petitioner has been enrolled in the Medicare program for over 16 years without incident.  CMS Ex. 2 at 8; CMS Ex. 10 at 1; CMS Ex. 9 at 1.  CMS asserts that this is only persuasive if the erroneous claims submitted by petitioner were sporadic and did not “comprise a pattern of invalidity.”  CMS Br. at 14.  It claims that the evidence clearly shows that Petitioner had no process for ensuring the accuracy of their claims.  CMS Br. at 14-15.  I disagree. 

Petitioner’s lack of history of final adverse actions indicates that it does have systems in place to ensure that the claims it submits are accurate.  Even in this instance, Petitioner took actions to prevent the use of E.H.’s billing number.  It removed E.H. as a provider before the erroneous claims were submitted.  It also provided to the billing company, with each claim, a medical record that noted the rendering providers – none of which listed E.H. as the rendering provider.  It is hardly the case that Petitioner made no effort to ensure its claims were accurate when submitted. 

In its reconsidered determination, CMS relies primarily on factor C – the type of billing noncompliance.  CMS considered that Petitioner’s billing company unintentionally erred in submitting the claims at issue by using E.H.’s billing number for services rendered.  However, they concluded that that it is ultimately the responsibility of the practice, not the billing company, to ensure that its claims are accurately submitted.  CMS Ex. 1 at 8-9.  CMS also concluded that there need not be a showing of intent or motive to revoke billing privileges under section 424.535(a)(8)(ii).  CMS Ex. 1 at 8-9. 

In implementing the abuse of billing authority under 42 C.F.R. § 424.535(a)(8)(ii), CMS stated that it would not define the term “pattern or practice,” but would implement a revocation under this basis:  (1) in situations where the behavior could not be considered 

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sporadic, and (2) after the most careful and thorough consideration of the relevant factors.  79 Fed. Reg. at 72,514.  The preamble explained that “[t]he term ‘abusive,’ as used in the context of § 424.535(a)(8)(ii), is meant to capture a variety of situations in which a provider or supplier regularly and repeatedly submits non-compliant claims over a period of time.”  Id. at 72,515.  The expectation stated in the preamble is that “a repeated pattern of submitting non-compliant claims indicates that the associated claims denials are not altering the provider’s behavior . . . . this final rule is focused on providers who cannot or will not come into compliance with our payment requirements after repeated claims denials.”  Id.  The preamble additionally states that CMS will only apply 42 C.F.R. § 424.535(a)(8)(ii) “in situations where the behavior could not be considered sporadic,” instead focusing on “providers and suppliers that engage in a systemic, ongoing, and repetitive practice of improper billing.”  Id. at 72,514, 72,519. 

Here, Petitioner submitted 268 erroneous claims over a period of two years.  Notably though, each of these claims presents the same error – an incorrect billing number associated with a rendering provider who was no longer with the practice and did not render the services provided.  In light of the evidence before me, I conclude that Petitioner did not intend to use E.H.’s billing number.  In fact, it made efforts to prevent just that from happening.  Not only did it remove E.H. as a provider before any of these claims were submitted, it also provided to the billing company, with each claim, a medical record that noted the rendering providers – none of which were E.H.  See, e.g., CMS Ex. 2 at 75-80, 121-27, 323-38.  While intent is not a requirement for revocation, I do not find that this set of circumstances aligns with that which the regulations intend to prevent – providers who cannot or will not come into compliance with payment requirements. 

Moreover, CMS concludes that the Petitioner’s billing errors are obviously not sporadic.  I disagree.  In Petitioner’s 16 years of billing history with Medicare, CMS has never identified another instance of improper billing.  I think it could certainly be considered “sporadic” for Petitioner to submit incorrect billing claims in one situation over the course for 16 years, regardless of the number of claims submitted containing the same error.  

With respect to the final factor – any additional relevant information – Petitioner has also noted that the services connected to the claims at issue were actually issued by legitimate providers.  P. Br. at 3, 5.  Therefore, if the claims had been billed under the correct provider number, they would have all been payable.  P. Br. at 5.  Petitioner did make efforts to ensure that the claims were associated with the correct provider number, including information identifying the rendering providers in medical records submitted with each claim. 

Taken together in light of the above analysis of the factors, I find, by a preponderance of the evidence presented, that Petitioner did not engage in a pattern or practice of abusive 

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billing as articulated in 42 C.F.R. § 424.535(a)(8)(ii).  This finding applies to CMS’s revocation of both Petitioner’s clinic/group practice and IDTF facility.  The record before me does not demonstrate that Petitioner could not or would not come into compliance with Medicare payment requirements, despite repeated claims denials.  79 Fed. Reg. at 72,515 (“[T]his final rule is focused on providers who cannot or will not come into compliance with our payment requirements after repeated claim denials.”). 

1. iii.  CMS did not have a legitimate basis to impose a 10-year reenrollment bar and place Petitioner on the preclusion list. 

CMS imposed a 10-year reenrollment bar and added Petitioner to its preclusion list, because CMS revoked Petitioner’s Medicare billing privileges.  Because CMS did not prove that it had a legal basis to revoke Petitioner's Medicare billing privileges, CMS did not have a legitimate basis to impose a reenrollment bar and include Petitioner on the preclusion list. 

VI. Conclusion

Based on the record before me, I do not find that Petitioner engaged in a pattern or practice of abusive billing within the meaning of 42 C.F.R. § 424.535(a)(8)(ii).  For the reasons explained in this decision, I conclude that CMS did not have a legal basis to revoke Petitioner’s Medicare enrollment and billing privileges.  I therefore reverse CMS’s revocation of Petitioner’s Medicare enrollment and billing privileges, inclusion of Petitioner on the preclusion list, and imposition of a 10-year reenrollment bar.