Constellation Health Services NJ, LLC d/b/a Constellation Hospice, DAB CR6873 (2026)

DECISION

Here, we consider what it means for a provider of hospice services to be “operational.”

Petitioner, Constellation Health Services NJ, LLC, is a New Jersey provider of hospice services that applied for enrollment in the Medicare program.  Finding that the hospice was not “operational” within the meaning of 42 C.F.R. § 424.530(a)(5), the Centers for Medicare & Medicaid Services (CMS) denied its enrollment application, and Petitioner appealed.

I find that CMS properly denied Petitioner’s enrollment application because the provider was not “operational” within the meaning of 42 C.F.R. § 424.530(a)(5).

Background

On or about September 20, 2024, Petitioner applied for enrollment in the Medicare program.  CMS Ex. 1.  In a letter dated April 23, 2025, the Medicare contractor, National Government Services, advised Petitioner that its application was denied pursuant to

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42 C.F.R. § 424.530(a)(5) because site inspectors were unable to conduct an on-site inspection despite multiple attempts (made on February 19, March 10, April 8, and April 9, 2025).  The inspectors repeatedly found that the business was closed; no staff were present; no one responded to knocks on the door; and no one answered the phone.  CMS Ex. 8 at 1.

Petitioner sought reconsideration.  CMS Ex. 9.  In a reconsidered determination, dated November 21, 2025, a CMS hearing officer agreed that the provider was not operational and affirmed the enrollment denial, citing 42 C.F.R. § 424.530(a)(5).  CMS Ex. 10.

Petitioner now appeals that determination pursuant to 42 C.F.R. § 424.545.

Although CMS has moved 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.  In my initial order, I instructed the parties to list their proposed witnesses (if any) and to submit those witnesses’ written direct testimony.  Standing Order at 4, 5 (¶¶ 4(iv), 8) (December 17, 2025).  I also directed each party to state, affirmatively, whether it intended to cross-examine any proposed witness.  Order at 4-5 (¶ 9).  An in-person hearing is necessary “only if a party files admissible, written direct testimony, and the opposing party asks to cross-examine.”  Order at 5 (¶ 10).

CMS listed no witnesses.  Petitioner listed one witness and submitted his written direct testimony.  P. Ex. 1.  However, CMS has not asked to cross-examine him.  An in-person hearing would therefore serve no purpose, and I may decide the case based on the written record, without considering whether the standards for summary judgment are satisfied.  See CRD Procedures ¶ 19b.1

The parties’ submissions. With its motion and brief (CMS Br.), CMS submits ten exhibits (CMS Exs. 1-10).  Petitioner responds with its own brief and cross-motion for summary judgment (P. Br.) and six exhibits (P. Exs. 1-6).

Petitioner’s objections to CMS’s exhibits.  Petitioner objects to my admitting four of CMS’s exhibits:

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• CMS Exs. 5 and 7 – Site visit verification survey reports, dated February 19, March 10, April 8, and April 9, 2025;
• CMS Ex. 8 – the Medicare contractor’s letter denying Petitioner’s Medicare enrollment application; and
• CMS Ex. 10 – CMS’s reconsidered determination.

Petitioner complains that these documents include hearsay and that, because CMS called no witnesses, Petitioner has had no opportunity to challenge the accuracy of the reports’ contents through cross-examination.  Ironically, Petitioner has filed its own motion for summary judgment, arguing that no material facts are in dispute and that this case turns on a question of law, which seems to undercut its complaints about the purportedly unsupported facts included in the reports.  In any event, because Petitioner controls the business and presumably has full knowledge of when staff are present and who, if anyone, answers the telephone, it should be able to challenge the reports’ findings by establishing whether anyone was present when the site inspectors appeared.

CMS Exs. 8 and 10:  jurisdictional documents.  I have no authority to hear an appeal unless CMS has made an initial determination that Petitioner does not qualify as a provider (42 C.F.R. § 498.5(a)(1)) and a reconsidered determination with which Petitioner is dissatisfied.  42 C.F.R. § 498.5(a)(2).  Here, CMS Ex. 8 is the initial determination, and CMS Ex. 10 is the reconsidered determination.  Without these documents in the record, I would be compelled to dismiss this matter for lack of jurisdiction.  An administrative law judge has jurisdiction to hear an appeal only if CMS (or its contractor) has first issued a reconsidered determination.  Karthik Ramaswamy, M.D., DAB No. 2563 at 7 (2014); aff’d Ramaswamy v. Burwell, 83 F. Supp. 846, 854 (2015).  That Petitioner disagrees with the findings and conclusions contained in those documents (as petitioners inevitably do) does not make them inadmissible.

CMS Exs. 5 and 7:  relevant and material.  I am required to “inquire fully into all of the matters at issue” and to admit any documents that are relevant and material.  42 C.F.R. § 498.60(b)(1).  I have broad discretion to admit evidence, and I am not bound by the federal rules of evidence.  42 C.F.R. § 498.61.  I may admit hearsay “consistent with procedural ‘integrity and fundamental fairness.’”  Omni Manor Nursing Home, DAB No. 1920 (2004) (quoting Richardson v. Perales, 402 U.S. 389, 410 (1971)); Lifehouse of Riverside, DAB No. 2774 at 9 (2017); Britthaven, Inc., DAB No. 2018 at 3 (2006) (“In administrative proceedings generally, and in Chapter 498 proceedings expressly, hearsay is admissible and can be probative on the issue of the matter asserted, where sufficient indicia of reliability are present.”).  The parties are, of course, free to argue what, if any, weight I should give to hearsay statements.  See, e.g., Evergreene Nursing Care Ctr., DAB No. 2069 at 13-14 (2007).

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Survey reports set out the findings on which CMS bases its enforcement actions that are the subject of the appeal and, for that reason, are “unquestionably relevant and material evidence.”  See Avalon Place Trinity, DAB No. 2819 at 38 (2017); Oxford Manor, DAB No. 2167 at 2 (2008) (holding that a statement of deficiencies may function both as a notice document and as evidence of facts asserted therein); Magnolia Estates Skilled Care, DAB No. 2228 at 30 n.15 (2009); Jennifer Matthew Nursing & Rehab. Ctr., DAB No. 2192 at 47 n.22 (2008) (holding that CMS need not present evidence in support of a finding in a statement of deficiencies that is not disputed); Guardian Health Care Ctr., DAB No. 1943 at 12 (2004) (characterizing the statement of deficiencies as a “contemporaneous record of the survey agency’s observations and investigative findings.”).

I therefore admit into evidence CMS Exs. 1-10.

In the absence of any objections, I admit into evidence P. Exs. 1-6.

Discussion

1. CMS had the authority to deny Petitioner’s enrollment application because the provider was not operational within the meaning of 42 C.F.R. § 424.530(a)(5).2

Program requirements.  To receive Medicare payments for items furnished to a Medicare-eligible beneficiary, a provider, such as Petitioner, must be enrolled in the Medicare program.  Social Security Act § 1834(j)(1)(A); 42 C.F.R. § 424.505.  To enroll and maintain its enrollment, the provider must comply with Medicare program requirements, including the “enrollment requirements” set forth in 42 C.F.R. Part 24, subpart P (sections 424.500 through 424.575).  Among those requirements, the provider must be “operational.”  To be operational, the supplier must, among other requirements, have a qualified physical practice location, be open to the public, and be properly staffed, equipped, and stocked to furnish items and services.  42 C.F.R. §§ 424.502, 424.510(d)(6).  CMS may deny a provider’s enrollment if it determines, based on “on-site review or other reliable evidence, that the provider is not operational.”  42 C.F.R. § 424.530(a)(5); Mission Home Health, et al., DAB No. 2310 (2010).

Petitioner’s enrollment application and the site investigations.  Petitioner applied for enrollment in the Medicare program.  CMS Ex. 1.  In a letter dated November 26, 2024, the Medicare contractor updated Petitioner on the status of its application.  The letter explained that the application would go through “a muti-step review process.”  The contractor had assessed the enrollment application and forwarded it to the New Jersey Department of Health and Senior Services (state agency) “for the next step in the process . . . a review for further compliance with the applicable Federal, State, and Local

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requirements.”  CMS Ex. 2 at 1.  The letter further explained that, when the state agency completed its review, CMS would conduct a final review and issue a decision.  Id.

The state agency subsequently recommended that the application be approved.  CMS Ex. 3 at 1.

By letter dated February 13, 2025, the contractor advised Petitioner that, pursuant to 42 C.F.R, § 424.517, an unannounced site visit was required “to determine if the location(s) is operational.”  CMS Ex. 4.

• Shortly thereafter, on February 19, 2025, at 3:07 p.m., a site inspector went to Petitioner’s business location to conduct the required on-site inspection.  The business was closed; the inspector was not able to get in; the inspector called the telephone number listed, but no one answered.  CMS Ex. 5 at 11; see CMS Ex. 5 at 12-17 (photographs of the premise’s exterior, taken from 3:07 p.m. through 3:12 p.m. on February 19, 2025).
• On March 10, 2025, at 11:45 a.m., another site inspector went to the business location.  Again, the business was closed; no one answered the inspector’s knock; no staff were present; there were no signs of customer activity.  The hours of operation were not posted.  CMS Ex. 5 at 8-9.

In an email dated March 24, 2025, the contractor asked Petitioner to verify its address and its hours of operation and to provide a telephone number.  Petitioner responded with an address, telephone number, and its hours of operation (8:30 a.m. to 5:00 p.m., Monday through Friday.).  It indicated that its clinical team was available “24/7.”  CMS Ex. 6 at 1-2.

• On April 8, 2025, at 9:28 a.m. – during the supplier’s reported business hours – a site inspector attempted another visit.  Again, the business was not open; no employees were present; there were no signs of customer activity.  CMS Ex. 7 at 1; see CMS Ex. 7 at 2-5 (photographs of the premise’s exterior, taken from 9:28 a.m. through 9:32 a.m.).  A sign was posted on the door, which said:  “We have stepped away from the office for a brief period but will be returning.3  If you have any needs while we are away, please call [telephone number].”  CMS Ex. 7 at 10.  The inspector called the number provided but no one answered.  CMS Ex. 7 at 1.

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• Finally, on April 9, 2025, at 4:20 p.m., again during the supplier’s reported business hours, an inspector returned to the premises.  The door was locked.  The inspector observed no staff or customer activity.  CMS Ex. 7 at 7 (photograph showing empty and dark interior space); CMS Ex. 7 at 6, 8-9.

Thus, notwithstanding the contractor’s repeated efforts to inspect Petitioner’s premises, as well as its pre-inspection warning (sent less than a week before the first inspection), and its March 24 follow-up effort to verify the location information, the premises were consistently locked and empty, with no staff or customer activity.  Petitioner was not open to the public; it was not properly staffed.4  It was therefore not “operational” and CMS has properly denied its enrollment application.

Having determined that CMS had a legal basis for the denial of enrollment, I must uphold that determination.  Cardiac Imaging Associates A Medical Corporation, DAB No. 3133 at 16 (2024); Thomas Falls, M.D., DAB No. 3056 at 8 (2022); Vamet Consulting & Medical Services, DAB No. 2778 at 6 (2017).

Petitioner does not claim that its office was open during posted office hours nor that any customers or staff were present on the dates that the contractor attempted site inspections.  It does not argue that the absence of staffing was an aberration or that the practice location was regularly open to the public.  Petitioner does not even claim that staff were available to answer phones.  Petitioner concedes that, although an administrative staff member may occasionally have been performing “office-based administrative responsibilities,” this did not occur at any regular or predictable time.  See P. Ex. 1 at 5 (Dragna Decl. ¶ 35).  Instead, Petitioner argues that it should not be held to the same operational standard as other providers and suppliers because hospice services are not furnished in an office but the patients’ homes.  P. Br. at 2, 6-7.  The Departmental Appeals Board rejected similar arguments in AR Testing Co., DAB No. 2679 (2016) which involved a mobile independent diagnostic testing facility (IDTF) and Vamet Consulting, DAB No. 2778, which involved a home health agency.

In AR Testing, the petitioner there also argued that it was not required to have personnel at its “practice location” at the time of any site visit.

According to Petitioner, a determination of whether a mobile IDTF is in compliance with Medicare participation requirements should be made based on whether its mobile unit(s) or off-site location(s), not whether its practice location . . . is in compliance.

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DAB No. 2679 at 7.  There, the office was not open to the public on the one occasion (not four) that an inspector arrived.  Because it was not open, it “was not available for an unannounced inspection” that CMS (or its contractor) is authorized to conduct.  Id. at 8.  The Board concluded that the provider was not “operational” on the day the inspector attempted a site visit, and CMS therefore had a basis for revoking Petitioner’s billing privileges under section 424.535(a)(5).5  Id. at 7-11.

In Vamet, a home health agency made the same argument:  it should be exempt from the “operational” requirements that its office be staffed and open to the public because its work is performed in the field.  DAB No. 2778 at 9.  The Board found the argument “unpersuasive on its face,” agreeing that “there are reasons why members of the public would want to visit” the home health agency’s offices, including to talk to staff in person, to ask questions about the services, and to get instructions about the care provided.  They might also want to visit multiple offices before deciding which one to select.  Id.

Petitioner further justifies its position by claiming that its telephone answering service is its “primary communication mechanism . . . including for coordination with government agencies and Medicare.”  P. Ex. 1 at 4 (Dragna Decl. ¶ 28) (Emphasis added).6  Petitioner then describes the questionable means by which it had once arranged an inspection for another of its offices:  An inspector “contacted the office to advise [Petitioner] that a site visit was required.”  The inspector’s call was not answered but “Echo” captured the call and took a message.  The caller, “Blake,” identified him/herself as a CMS Medicare contractor.  P. Ex. 1 at 4 (Dragna Decl. ¶¶ 30, 31).  The inspector provided a callback number and left the following message:  “I have to do a site visit to make sure the company is still running so Medicare can accept your bills.”  P. Ex. 4.  Staff subsequently contacted the inspector and arranged to return to the office for the inspection.  P. Ex. 1 at 4 (Dragna Decl. ¶¶ 30, 31).

Calling a provider and setting up an appointment for the inspection defeats the purpose of an unannounced visit.  Hospice providers present a “moderate” risk to healthcare programs, and the drafters of the regulations considered “unscheduled or unannounced site visits” an appropriate method for protecting program integrity.  See 75 Fed. Reg.

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58205 (Sept. 23, 2010); AR Testing, DAB No. 2679 at 8 (noting that CMS is authorized to conduct an unannounced inspection).

Moreover, Petitioner concedes that its system has a serious flaw.  If no one answers, and the caller hangs up before the call is eventually transferred to Echo, the system creates no record of the call.  P. Ex. 1 at 4 (Dragna Decl. ¶ 32).

In any event, the Board has flatly rejected the argument that posting a telephone number is “sufficient to assure either customers or inspectors would be able to gain access during [the provider’s] listed business hours.”  Vamet, DAB No. 2778 at 7; see AR Testing at 9 n.10.

Finally, Petitioner mischaracterizes CMS’s position, arguing that requiring the offices to be staffed means that “any provider could be deemed ‘operational’ by simply paying an employee to remain at a front desk while actually lacking the substantive capability to furnish covered services . . . .”  P. Br. at 5.  This is obvious nonsense.  The inspector’s job does not stop when he or she determines that the office is open and staff are present; at that point, the inspector’s job begins.  The inspector must then determine whether the provider is properly staffed, equipped, and stocked to furnish items and services and whether it meets other enrollment requirements.  See, e.g., AR Testing Corp., DAB No. 2679 at 8 (noting that, because it was not open, the provider was not available for the authorized unannounced inspection).

Conclusion

By its own admission, Petitioner was not operational at its “practice location.”  CMS therefore justifiably denied its Medicare enrollment application pursuant to section 424.530(a)(5).