St. Joseph Healthcare Agency, Inc., DAB CR6879 (2026)

DECISION

There is no basis for revoking the Medicare enrollment and billing privileges of Petitioner, St. Joseph Healthcare Agency, Inc., pursuant to 42 C.F.R. § 424.535(a)(19),1 effective December 19, 2024.  There is no basis for imposing a 10-year reenrollment bar.  There is no basis for listing Petitioner’s name on the Centers for Medicare & Medicaid Services (CMS) preclusion list effective May 13, 2025. 

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I. Background

On November 19, 2024, National Government Services, a Medicare administrative contractor (MAC), notified Petitioner of its initial determination to revoke Petitioner’s Medicare enrollment and billing privileges2 effective December 19, 2024, to impose a 10-year reenrollment bar, and to list Petitioner’s name on CMS’s preclusion list.  The MAC cited 42 C.F.R. § 424.535(a)(19) as authority for the revocation.  CMS Exhibit (Ex.) 1 at 40-43, 73-76, 133-36. 

Petitioner requested reconsideration by letters dated December 28, 2024, January 22, 2025, and April 18, 2025.  CMS Ex. 1 at 15-16, 20-21, 23-90. 

On May 13, 2025, a CMS hearing officer issued a reconsidered determination upholding revocation under 42 C.F.R. § 424.535(a)(19), Petitioner’s 10-year reenrollment bar, and listing Petitioner’s name on CMS’s preclusion list.  CMS Ex. 1 at 1-13. 

On July 10, 2025, Petitioner timely filed a request for hearing before an administrative law judge (ALJ).  The case was assigned to me on July 11, 2025, and my Standing Order was issued. 

On September 10, 2025, CMS filed a combined prehearing brief and motion for summary judgment (CMS Br.) and CMS Ex. 1.  No objections have been made to my consideration of CMS Ex. 1, which is admitted and considered as evidence.  On November 7, 2025, Petitioner filed its brief (P. Br.) in opposition to CMS’s motion for summary judgment with Petitioner’s exhibit (P. Ex.) 1 and the declaration of Lienio De Souza, DNP, Petitioner’s owner and chief executive officer.  DNP De Souza’s declaration was not marked as a Petitioner’s exhibit, but I treat it as if marked P. Ex. 2 for ease of citation with page cites to the document page counter.  On November 21, 2025, CMS filed a reply brief (CMS Reply).  CMS objected to my consideration of P. Ex. 1 because Petitioner has 

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not shown good cause for offering the document for the first time before me and it is not relevant.  CMS Reply at 10-12.  P. Ex. 1 is a November 21, 2024 MAC notice that the MAC rejected Petitioner’s Medicare enrollment application reporting a change of enrollment information because Petitioner’s enrollment had been revoked.  I note it is not disputed that Petitioner filed a change of information application and it was rejected because Petitioner’s enrollment was revoked.  But I conclude that P. Ex. 1 and the facts reflected are not relevant to the issue before me, i.e., whether CMS or the MAC had a basis to revoke Petitioner’s Medicare enrollment and billing privileges.  Fed. R. Evid. 401 (relevant evidence has some tendency to make a fact of consequence, that is, a material fact, more or less likely); 42 C.F.R. § 498.60(b)(1) (ALJ is limited to considering relevant and material evidence).  Therefore, P. Ex. 1 is not admitted as it is not relevant.  CMS did not object to my consideration or the declaration of DNP De Souza (P. Ex. 2), and P. Ex. 2 is admitted and considered as evidence. 

Petitioner waived an oral hearing and requested decision on the documentary evidence including the declaration of DNP De Souza (P. Ex. 2).  P. Br. at 17-18.  CMS did not object and I conclude no hearing is necessary.  42 C.F.R. § 498.66. 

II. Discussion

1. A. Applicable Law

Section 1831 of the Social Security Act (the Act) (42 U.S.C. § 1395j) establishes the supplementary medical insurance benefits program for the aged and disabled known as Medicare Part B.  Administration of the Part B program is through the MACs.  Act § 1842(a) (42 U.S.C. § 1395u(a)).  Payment under the program for services rendered to Medicare-eligible beneficiaries may only be made to eligible providers of services and suppliers.3  Act §§ 1835(a) (42 U.S.C. § 1395n(a)), 1842(h)(1) (42 U.S.C. § 1395u(h)(1)).  Petitioner is a hospice and a provider under the Act.  Act § 1861(d), (q), (r) (42 U.S.C. § 1395x(d), (q), (r)); 42 C.F.R. § 424.502. 

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The Act requires the Secretary of Health and Human Services (Secretary) to issue regulations that establish a process for enrolling providers and suppliers in Medicare, including the requirement to provide the right to a hearing and judicial review of certain enrollment determinations, such as revocation of enrollment and billing privileges.  Act § 1866(j) (42 U.S.C. § 1395cc(j)).  Pursuant to 42 C.F.R. § 424.505, a provider or supplier must be enrolled in the Medicare program and be granted billing privileges to be eligible to receive payment for care or services rendered to a Medicare-eligible beneficiary. 

The Secretary has delegated the authority to revoke enrollment and billing privileges to CMS.  42 C.F.R. § 424.535.  CMS or a MAC has discretion to revoke an enrolled provider’s or supplier’s Medicare enrollment and billing privileges and provider or supplier agreement for any of the reasons listed in 42 C.F.R. § 424.535. 

Pursuant to 42 C.F.R. § 424.535(a)(19), CMS may revoke if CMS determines a “provider or supplier has or has had an affiliation under [42 C.F.R.] § 424.519 that poses an undue risk of fraud, waste, or abuse to the Medicare program.”  42 C.F.R. § 424.535(a)(19).  Under 42 C.F.R. § 424.519, if CMS requests, an initially enrolling or revalidating4 provider or supplier must disclose certain affiliations it or its owning or managing employees or organizations has or in the previous five years had with another current or former Medicare provider or supplier that had a disclosable event.  The regulation provides CMS makes the request when it has determined that an initially enrolling or revalidating provider or supplier has at least one such affiliation.  42 C.F.R. § 424.519(b).  If CMS requests disclosure and CMS determines the disclosure is not a full and complete disclosure, CMS is authorized to deny initial enrollment or revoke an enrolled provider’s or supplier’s Medicare enrollment and billing privileges.  42 C.F.R. § 424.519(e).  Even if disclosure is full and complete, CMS may deny initial enrollment or revoke an existing enrollment if CMS determines that the affiliation poses an undue risk of fraud, waste, or abuse.  42 C.F.R. §§ 424.519(f)-(g), 424.535(a)(19).  Under 42 C.F.R. § 424.519(i), even if a provider or supplier has not yet reported or was not required at the time to report the affiliation, CMS may nevertheless deny or revoke enrollment and billing privileges if CMS discovers an affiliation that poses an undue risk of fraud, waste, or abuse.  The terms affiliation and disclosable event are defined in 42 C.F.R. § 424.502 subject to the additional definition provided in 42 C.F.R. § 424.519. 

Generally, when CMS revokes a supplier’s Medicare billing privileges for not complying with enrollment requirements, the revocation is effective 30 days after CMS or its 

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contractor mails notice of its determination to the supplier.  42 C.F.R. § 424.535(g).  After a supplier’s Medicare enrollment and billing privileges are revoked, the supplier is barred from reenrolling in the Medicare program for one to 10 years, except in limited circumstances that do not exist in this case.  42 C.F.R. § 424.535(c).  

Effective June 15, 2018, CMS was required to establish a preclusion list as defined by 42 C.F.R. §§ 422.2 and 423.100.  There is only one preclusion list.  83 Fed. Reg. 16,440, 16,641-67 (Apr. 16, 2018).  The preclusion list is defined in both the Medicare Part C regulations and the Medicare Part D regulations. 

• Preclusion list means a CMS compiled list of individuals and entities that—
• (1) Meet all of the following requirements:  
  • (i) The individual or entity is currently revoked from Medicare for a reason other than that stated in [42 C.F.R.] § 424.535(a)(3) of this chapter.  
  • (ii) The individual or entity is currently under a reenrollment bar under [42 C.F.R.] § 424.535(c).  
  • (iii) CMS determines that the underlying conduct that led to the revocation is detrimental to the best interests of the Medicare program.  In making this determination under this paragraph (1)(iii), CMS considers the following factors:  
    • (A) The seriousness of the conduct underlying the individual’s or entity’s revocation.  
    • (B) The degree to which the individual’s or entity’s conduct could affect the integrity of the Medicare program.  
    • (C) Any other evidence that CMS deems relevant to its determination; or
• (2) Meet both of the following requirements:  
  • (i) The individual or entity has engaged in behavior, other than that described in [42 C.F.R] § 424.535(a)(3) of this chapter, for which CMS could have revoked the 

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• individual or entity to the extent applicable had they been enrolled in Medicare.  
• (ii) CMS determines that the underlying conduct that would have led to the revocation is detrimental to the best interests of the Medicare program.  In making this determination under this paragraph (2)(ii), CMS considers the following factors:  
  • (A) The seriousness of the conduct involved.  
  • (B) The degree to which the individual’s or entity’s conduct could affect the integrity of the Medicare program; and
  • (C) Any other evidence that CMS deems relevant to its determination; or
• (3) The individual or entity, regardless of whether they are or were enrolled in Medicare, has been convicted of a felony under Federal or State law within the previous 10 years that CMS deems detrimental to the best interests of the Medicare program.  Factors that CMS considers in making such a determination under this paragraph (3) are—
  • (i) The severity of the offense;
  • (ii) When the offense occurred; and
  • (iii) Any other information that CMS deems relevant to its determination.  

42 C.F.R. § 422.2.  The definition applicable to Medicare Part D at 42 C.F.R. § 423.100 is virtually identical except that the regulation refers to “prescriber” rather than “individual or entity,” and “(3)” does not appear in the text.  No payment under Medicare Parts C and D may be made to anyone on the preclusion list.  42 C.F.R. §§ 422.222-.224, 422.504(i)(2)(v), 423.120(c)(6).  CMS must notify a supplier in writing that the supplier is being added to the preclusion list, the basis for the action, and inform the supplier of the right to ALJ review and appeal pursuant to 42 C.F.R. Part 498.  42 C.F.R. §§ 422.222(a)(2), 423.120(c)(6)(v). 

A supplier whose enrollment and billing privileges have been revoked or who has been placed on the preclusion list may request reconsideration and review as provided by 

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42 C.F.R. Part 498.  42 C.F.R. §§ 424.545(a), 422.222(a)(2), 423.120(c)(6)(v).  A supplier submits a written request for reconsideration to CMS or its contractor.  42 C.F.R. § 498.22(a).  CMS or its contractor must give notice of its reconsidered determination to the supplier, giving the reasons for its determination and specifying the conditions or requirements the supplier failed to meet, and the right to an ALJ hearing.  42 C.F.R. § 498.25.  If the decision on reconsideration is unfavorable to the supplier, the supplier has the right to request a hearing by an ALJ and further review by the Board.  Act § 1866(j)(8) (42 U.S.C. § 1395cc(j)(8)); 42 C.F.R. §§ 424.545, 498.3(b)(17), (20), 498.5.  A hearing on the record, also known as an oral hearing, is required under the Act, unless waived.  Crestview Parke Care Ctr. v. Thompson, 373 F.3d 743, 748-51 (6th Cir. 2004).  CMS is also granted the right to request ALJ review of a reconsidered determination with which it is dissatisfied.  42 C.F.R. § 498.5(l)(2).  The supplier bears the burden to demonstrate that it meets enrollment requirements with documents and records.  42 C.F.R. § 424.545(c). 

Revocation and preclusion list reviews are strictly limited to whether there is a basis for the revocation and for adding the supplier’s name to CMS’s preclusion list.  Douglas Bradley, M.D., DAB No. 2663 at 13 (2015); 83 Fed. Reg. at 16,642.  The Board has consistently held that ALJ review of the CMS revocation determination is limited to whether CMS had a legal basis for revocation.  Letantia Bussell, M.D., DAB No. 2196 at 10 (2008).  If CMS establishes the elements necessary for revocation, “revocation must be sustained, and neither the [ALJ] nor the Board may ‘substitute its discretion for that of CMS in determining whether revocation is appropriate under all the circumstances.’”  Douglas Bradley, M.D., DAB No. 2663 at 13 (quoting Abdul Razzaque Ahmed, M.D., DAB No. 2261 at 19 (2009), aff’d, Ahmed v. Sebelius, 710 F.Supp.2d 167 (D. Mass. 2010) (footnote omitted)). 

1. B. Issues

Whether there is a basis for the revocation of Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(19); and

Whether there is a basis to add Petitioner’s name to CMS’s preclusion list. 

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1. C. Findings of Fact, Conclusions of Law, and Analysis

My conclusions of law are set forth in bold followed by the undisputed facts and analysis. 

1. 1. Decision on the documents is appropriate.

Petitioner waived an oral hearing and requested decision on the documentary evidence including the declaration of DNP De Souza (P. Ex. 2).  P. Br. at 17-18.  CMS did not object and I conclude no hearing is necessary.  42 C.F.R. § 498.66. 

2. 2. Only the reconsidered determination is subject to appeal and review by an ALJ and the Board. Neb Grp. of Ariz. LLC, DAB No. 2573 at 7.
3. 3. At the time of the reconsidered determination, Petitioner had no affiliation that could be the basis for finding an undue risk for fraud, waste, or abuse against Medicare.
4. 4. Petitioner had no affiliation at the time of the reconsidered determination and CMS had no basis to revoke Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(19).
5. 5. No reenrollment bar is authorized if there is no basis for revocation. 42 C.F.R. § 424.535(c).
6. 6. If there is no basis for revocation and no reenrollment bar, adding Petitioner’s name to CMS’s preclusion list is not authorized. 42 C.F.R. §§ 422.2, 423.100. 

The reader should be aware of two legal interpretations limiting ALJ review that significantly impact the analysis and outcome in this case. 

First, it is often stated that an ALJ may not consider a Constitutional issue or challenge to a statute or regulations.  But that is not entirely accurate.  As the Board stated in Sentinel Medical Laboratories, Inc.,

• It is well established that administrative forums, such as this Board and the Department’s ALJs, do not have the authority to ignore unambiguous statutes or regulations on the basis that they are unconstitutional.  A legislative rule is binding on the agency that issues it.  1 Kenneth Culp Davis and Richard J. Pierce, Jr., Administrative Law Treatise, § 6.5 (3rd ed. 1994), citing U.S. v. Nixon, 418 U.S. 683 (1974) (where the 

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• court noted that the executive branch was bound by the terms of a regulation it had issued, even though it was within its power to change that regulation).  Federal courts have refused “to recognize in administrative officers any inherent power to nullify legislative [or executive] enactments because of personal belief that they contravene the [C]onstitution.” Gibas v. Saginaw Mining Co., 748 F.2d 1112, at 1117 (6th Cir. 1984) (citation omitted).  Thus, courts have noted that challenges to the constitutionality of an agency regulation lie outside the cognizance of that agency, and that generally, an ALJ is bound by the regulations promulgated by his administrative agency.  Howard v. FAA, 17 F.3d 1213, 1218 (9th Cir. 1994); Stieberger v. Heckler, 615 F.Supp. 1315, 1386 (S.D.N.Y. 1985), citing D’Amico v. Schweiker, 698 F.2d 903 (7th Cir. 1983).  

Sentinel Med. Labs., Inc., DAB No. 1762 at 9 (2001), aff’d sub nom., Teitelbaum v. Health Care Fin. Admin., 32 F. App’x 865 (9th Cir. 2002).  Generally, I am bound to follow the Act and regulations, and I have no authority to declare statutes or regulations invalid or ultra vires.  1866ICPayday.com, L.L.C., DAB No. 2289 at 14 (2009).  The foregoing authority does not, however, preclude interpretation of ambiguous statutes or regulations, to ensure their intended application in individual cases. 

The second legal interpretation of significance is that ALJs and the Board may not substitute their discretion for that of CMS, which is the primary argument of CMS in this case.  As of the issuance of this decision the Board has not addressed in a published decision revocation under 42 C.F.R. § 424.535(a)(19).  However, in Devine Solutions Group LLC, DAB No. 3159 (2024), the Board considered and upheld revocation of a supplier’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(8)(ii) for abuse of billing privileges based on pattern or practice of submitting claims not meeting Medicare requirements.  The Board commented upon the scope of review as follows: 

• We repeat that by governing regulation, CMS has discretionary authority to revoke or not revoke in a particular case, and the role of the ALJ and the Board “is limited to determining whether CMS’s action is legally authorized and does not extend to second-guessing whether CMS properly exercised its discretion.”  Acute Care Homenursing Servs., Inc., DAB No. 2837, at 9 (2017).  “ALJs and this Board may review only whether CMS had a valid legal basis to revoke billing privileges, and, if it did, may not address whether it properly exercised its discretion to do so.”  Wendell Foo, 

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• M.D., DAB No. 2904, at 25 (2018), aff’d, 420 F. Supp. 3d 1100 (D. Haw. 2019); see also George M. Young, M.D., DAB No. 2750, at 11 (2016) (“To the extent CMS exercised its discretion in ultimately deciding to go forward with revocation in Petitioner’s case, it is not for the ALJ and the Board to look behind that exercise of discretion to ask whether [the ALJ], or the Board, standing in CMS’s shoes, would reach the same decision to revoke.”).  In short, we determine whether CMS could revoke, not whether it should revoke, and in this case we conclude that CMS lawfully could revoke and had ample basis to do so. 

Devine DAB No. 3159 at 22.  The Devine decision supports that an ALJ may review whether CMS could find that the elements for revocation established by 42 C.F.R. § 424.535(a) under one of the 23 grounds permitting revocation are satisfied.  But if the ALJ determines that CMS could find that the elements for revocation are satisfied, the ALJ may not decide whether CMS properly exercised its discretion to revoke. 

The decision in this case turns on CMS’s failure to show the existence of both required elements necessary for revocation to be authorized under 42 C.F.R. § 424.535(a)(19), giving due consideration to a CMS statement of its intent about how the regulation was to be applied when the regulation was published. 

1. a. Findings of Fact

On April 6, 2022, Petitioner entered a professional services agreement with Amable Aguiluz, Jr., M.D., contracting for him to serve as Petitioner’s medical director.  CMS Ex. 1 at 48-57.  The contract provided that Dr. Aguiluz was an independent contractor and not an employee, agent, partner, or in a joint venture with Petitioner.  CMS Ex. 1 at 53.  The one-year contract provided it would continue year-to-year until terminated.  CMS Ex. 1 at 54.  

Pursuant to 42 C.F.R. § 424.502, a managing employee is

•  (1) A general manager, business manager, administrator, director, or other individual that exercises operational or managerial control over, or who directly or indirectly conducts, the day-to-day operation of the provider or supplier, either under contract or through some other arrangement, whether or not the individual is a W-2 employee of the provider or supplier. For purposes of this definition, this includes, but is not limited to, a hospice or skilled nursing 

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• facility administrator and a hospice or skilled nursing facility medical director. 

42 C.F.R. § 424.502 (emphasis added).  Therefore, Dr. Aguiluz was a managing employee of Petitioner within the meaning of 42 C.F.R. § 424.502 even though he was an independent contractor. 

On May 15, 2024, Petitioner’s authorized official Lienio De Souza, signed a Medicare enrollment application, which he certified was true and correct, that added Amable Aguiluz, Jr. as Petitioner’s medical director and contracted managing employee effective April 6, 2022.  CMS Ex. 1 at 93, 112-114, 120-122.  On July 5, 2024, the MAC approved Petitioner’s change of Medicare enrollment application that, among other things, added Amable Aguiluz as a contracted managing employee of Petitioner.  CMs Ex. 1 at 130. 

On July 29, 2024, the MAC notified Forever In Peace Hospice Care, Inc. (Forever Hospice) of its initial determination to revoke its Medicare enrollment and billing privileges for abuse of billing privileges.  CMS Ex. 1 at 138-141.  There is no evidence Forever Hospice challenged the initial determination to revoke and the revocation is final and binding upon Forever Hospice and CMS.  42 C.F.R. § 498.20(b).  The Medicare enrollment record for Forever Hospice dated May 2, 2025, listed Amable Aguiluz, MD, as Medical Director and W-2 managing employee.  CMS Ex. 1 at 156.  Forever Hospice’s Medicare enrollment and billing privileges were revoked for abuse of billing privileges effective August 28, 2024, and a 10-year bar to reenrollment was imposed.  CMS Ex. 1 at 154. 

Dr. Aguiluz resigned as Petitioner’s medical director effective December 13, 2024.  CMS Ex. 1 at 79. 

Dr. Aguiluz’s Medicare enrollment and billing privileges were revoked effective December 15, 2024, because CMS determined that he posed an undue risk of fraud, waste, or abuse to the Medicare program.  CMS Ex. 1 at 148, 156. 

“Disclosable event” for purposes of application of 42 C.F.R. § 424.519, as defined in 42 C.F.R. § 424.502, includes revocation of Medicare, Medicaid, or CHIP (Children’s Health Insurance Program) enrollment regardless of the reason for the revocation, whether the revocation is currently under appeal, or when the revocation occurred.  42 C.F.R. § 424.502.  Revocation of the Medicare enrollment and billing privileges for Forever Hospice July 29, 2024, was a disclosable event.  The revocation of Dr. Aguiluz’s Medicare enrollment and billing privileges effective December 15, 2024, was also a disclosable event.  

The Medicare enrollment record for Petitioner dated April 30, 2025, listed Amable Aguiluz, MD as Petitioner’s contracted managing employee and medical director first 

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associated with Petitioner April 6, 2022.  CMS Ex. 1 at 148.  Petitioner’s Medicare enrollment record showed Dr. Aguiluz’s Medicare enrollment and billing privileges were revoked effective December 15, 2024, because CMS determined that he posed an undue risk of fraud, waste or abuse to the Medicare program.  CMS Ex. 1 at 148.  Lienio De Souza was listed as one of Petitioner’s owners, president/CEO, authorized official, corporate director/officer, operational/ managerial control, and Petitioner’s W-2 managing employee.  CMS Ex. 1 at 148-149.  Aiyetiwa Martin was also listed as an owner, authorized official, W-2 managing employee, delegated official, and contracted managing employee.  CMS Ex. 1 at 149-150.  Petitioner’s Medicare enrollment record shows that its Medicare enrollment and billing privileges were revoked effective December 19, 2024, due to an affiliation that posed an undue risk of fraud, waste or abuse to the Medicare program.  The document shows that Petitioner is subject to a reenrollment bar of 10 years from December 19, 2024 through December 18, 2034.  CMS Ex. 1 at 146-147. 

On November 19, 2024, the MAC notified Petitioner that it revoked Petitioner’s Medicare enrollment and billing privileges effective December 19, 2024, pursuant to 42 C.F.R. § 424.535(a)(19).  The MAC cited as grounds that within the last five years Amable Aguiluz had managing control of Forever Hospice and Forever Hospice’s Medicare enrollment and billing privileges were revoked.  The MAC found that Amable Aguiluz was also listed in Petitioner’s Medicare enrollment record with a present or past affiliation with Petitioner.  The MAC revoked Petitioner’s enrollment and billing privileges because it determined that Amable Aguiluz’s affiliation with Petitioner posed an undue risk of fraud, waste, or abuse to the Medicare program.  The MAC imposed a 10-year bar to reenrollment and added Petitioner’s name to the CMS preclusion list.  CMS Ex. 1 at 40-43, 73-76, 133-134. 

On December 17, 2024, Petitioner executed a professional services agreement engaging Sameer Ohri, M.D., as Petitioner’s medical director effective December 17, 2024.  CMS Ex. 1 at 81-90. 

On May 13, 2025, a CMS hearing officer issued the reconsidered determination.  CMS Ex. 1 at 1-13.  The hearing officer concluded that Petitioner had an affiliation to Forever Hospice, Forever Hospice had a disclosable event, and the affiliation between Forever Hospice and Petitioner posed an undue risk of fraud, waste, or abuse.  The hearing office concluded that there was a basis for revocation of Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(19).  The hearing officer also upheld the 10-year reenrollment bar and listing Petitioner on the CMS preclusion list.  CMS Ex. 1 at 10.  The hearing office set forth an analysis of the factors upon which the hearing officer concluded the affiliation posed an undue risk of fraud, waste, or abuse.  CMS Ex. 1 at 4-9.  The hearing officer set forth an analysis of the factors for placing Petitioner’s name on the preclusion list. CMS Ex. 1 at 9-10.  

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DNP De Souza testified in his declaration that he is the owner and chief executive officer of Petitioner, a business he acquired in April 2022.  Dr. Aguiluz became Petitioner’s medical director April 6, 2022.  As medical director, Dr. Aguiluz was responsible for overseeing medical services including reviewing patient eligibility for hospice services, establishing plans of care with attending physicians, managing patient medications and treatments, and providing clinical guidance to Petitioner’s healthcare staff.  Dr. Aguiluz was not an owner of Petitioner, and he had no role in billing, which was handled by a third-party billing company.  Dr. Aguiluz never disclosed that he had a managerial role at Forever Hospice or that its Medicare enrollment had been revoked for billing related misconduct.  DNP De Souza testified he had no knowledge of Dr. Aguiluz’s relationship with Forever Hospice or the revocation of its enrollment.  Dr. Aguiluz submitted a written resignation on December 13, 2024.  Petitioner contracted a new medical director on December 17, 2024.  He testified that the MAC’s initial determination was not received by Petitioner until December 26, 2024, when a copy was provided to DNP De Souza by Petitioner’s former owner.  DNP De Souza testified that within two days of receiving the copy of the initial determination, he requested reconsideration and advised the MAC that Dr. Aguiluz’s relationship with Petitioner was terminated.  He testified that Petitioner was unable to update its enrollment record to reflect the deletion of Dr. Aguiluz and the addition of the new medical director because the MAC had already issued the revocation of Petitioner’s Medicare enrollment and billing privileges.  P. Ex. 2.  DNP De Souza’s testimony is credible despite his interests in Petitioner as its owner. 

1. b. Analysis

The Secretary has determined and provided by regulation that CMS may revoke the Medicare enrollment and billing privileges of a supplier if:  

• CMS determines that the provider or supplier has or has had an affiliation under [42 C.F.R.] § 424.519 that poses an undue risk of fraud, waste, or abuse to the Medicare program. 

42 C.F.R. § 424.535(a)(19).  Therefore, revocation under 42 C.F.R. § 424.535(a)(19) is authorized if two elements are satisfied: 

1. A provider or supplier has or had an affiliation under 42 C.F.R. § 424.519; and
2. The affiliation posed an undue risk for fraud, waste, or abuse to the Medicare program.

An affiliation for purposes of applying 42 C.F.R. § 424.519, includes: 

1. (1) A 5 percent or greater direct or indirect ownership interest that an individual or entity has in another organization. 

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2. (2) A general or limited partnership interest (regardless of the percentage) that an individual or entity has in another organization.
3. (3) An interest in which an individual or entity exercises operational or managerial control over, or directly or indirectly conducts, the day-to-day operations of another organization (including, for purposes of this paragraph (3), sole proprietorships), either under contract or through some other arrangement, regardless of whether or not the managing individual or entity is a W-2 employee of the organization.
4. (4) An interest in which an individual is acting as an officer or director of a corporation.
5. (5) Any reassignment relationship under § 424.80. 

42 C.F.R. § 424.502.  Applying this definition to the facts, I conclude that there was no affiliation between Petitioner and Forever Hospice.  There is no evidence that makes it more likely than not that Petitioner had any ownership, partnership, or controlling interest in Forever Hospice; any interest in which Petitioner exercised an operational or managerial control over Forever Hospice or vice versa; directly or indirect conducted the operations of Forever Hospice or vice versa; or that showed any reassignment relationship with Forever Hospice. 

The hearing officer states in the reconsidered determination that Petitioner’s affiliation with Forever Hospice is established by Dr. Aguiluz’s affiliation with Forever Hospice.  The hearing officer reasoned that Dr. Aguiluz was Forever Hospice’s medical director and managing employee as of August 1, 2022, while Dr. Aguiluz was also Petitioner’s medical director and contracting managing employee.  CMS Ex. 1 at 5.  I conclude that the hearing officer erred.  Dr. Aguiluz was medical director and a managing employee for both Freedom Hospice and Petitioner.  But the facts relied upon by the hearing officer do not show that there was a relationship between Freedom Hospice and Petitioner that met any of the criteria of the definition of affiliation under 42 C.F.R. § 424.502 at any time.  The hearing officer may be correct that Freedom Hospice had a disclosable event.  CMS Ex. 1 at 6.  But the fact that Freedom Hospice had a disclosable event, absent an affiliation within the meaning of 42 C.F.R. § 424.502 between Freedom Hospice and Petitioner, does not permit revocation pursuant to 42 C.F.R. § 424.535(a)(19), which requires an affiliation under 42 C.F.R. § 424.519.  Further, without an affiliation the element of 42 C.F.R. § 424.535(a)(19) that the affiliation must pose an undue risk of fraud, waste, or abuse of the Medicare program cannot be satisfied.  I conclude that there is no basis for revocation of Petitioner’s Medicare enrollment and billing privileges under 

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42 C.F.R. § 424.535(a)(19) based on an affiliation between Petitioner and Freedom Hospice. 

Petitioner had an affiliation with Dr. Aguiluz because he was Petitioner’s medical director making him a managing employee of Petitioner.  42 C.F.R. § 424.502 (affiliation definition paragraph 3 and managing employee definition paragraph 1).  But the affiliation ended when Dr. Aguiluz resigned as Petitioner’s medical director on December 13, 2024.  CMS Ex. 1 at 78-79.  It was not until December 15, 2024, two days after his resignation from Petitioner, that Dr. Aguiluz had a disclosable event because his Medicare, Medicaid, or CHIP enrollment was revoked.  CMS Ex. 1 at 148, 156.  There is no evidence Dr. Aguiluz had any other disclosable event during his affiliation with Petitioner.  42 C.F.R. §§ 424.502 (disclosable event definition paragraph 4), 424.519(a)(2). 

I conclude that there is no basis for revocation pursuant to 42 C.F.R. § 424.535(a)(19), because there is no evidence Dr. Aguiluz had a disclosable event within the meaning of 42 C.F.R. §§ 424.502 and 424.519, during his affiliation with Petitioner.  The plain language of 42 C.F.R. § 424.519(b) and (i) supports my construction of the regulation that it requires disclosures of affiliations with a provider or supplier who had, during the affiliation or previously, a disclosable event such as revocation of Medicare enrollment and billing privileges.  Only an affiliation with a provider of a supplier with a disclosable event during or prior to the affiliation permits and requires that CMS determine whether there is an undue risk for fraud, waste, or abuse under 42 C.F.R. § 424.519(f).  Only an affiliation with a provider or supplier with a disclosable event during or prior to the affiliation plus a determination that the affiliation poses an undue risk for fraud, waste, or abuse is a basis for revocation of enrollment and billing privileges under 42 C.F.R. § 424.535(a)(19). 

The regulatory history is consistent with my interpretation.  CMS promulgated 42 C.F.R. §§ 424.519 and 424.535(a)(19) on September 10, 2019, as a final rule but allowing for a comment period.  84 Fed. Reg. 47,794 (Sep. 10, 2019).  CMS received comments to which CMS responded.  One comment and response is particularly insightful. 

• Comment: A commenter posed a scenario where a provider (the first provider) is owned by five individuals, one of whom is associated with another provider (the second provider) that has an uncollected Medicare debt.  The commenter asked whether the first provider would be denied or revoked if the aforementioned individual’s ownership interests in the first provider are terminated prior to enrollment or revalidation.
• Response: The first provider or supplier could be denied or revoked if the scenario meets the requirements of 

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• § 424.519(i) regarding undisclosed affiliations.  In that case, if CMS learned of the first provider’s affiliation prior to the individual in question terminating his or her ownership interest, CMS could make an undue risk determination under § 424.519(g).  CMS could then elect to revoke the first provider under § 424.535(a)(19).  However, this could only occur if CMS identified the affiliation while the individual owner was still in an ownership role with the first provider.  In addition, if, when CMS evaluated the first provider, the individual owner was no longer in an ownership or other applicable role, with the second provider, no affiliation would be present; thus, no undue risk determination could be made.  From a disclosure perspective under § 424.519(b), CMS would not take action against the first provider at the time of an initial or revalidation application if the individual owner had already terminated his or her ownership interest with the first provider. Whether related to a disclosure or a CMS assessment, an owning or managing party must be in an ownership or managerial role with the provider in order for an affiliation to exist and an undue risk determination to be made. 

84 Fed. Reg. 47,794, 47,814-815 (emphasis added).  The comment and CMS response are found in the preamble to the final rule adopting 42 C.F.R. § 424.535(a)(19).  Each agency submitting a proposed or final rule for publication in the Federal Register must provide a preamble to inform the reader of the basis and purpose of the regulation or proposal.  1 C.F.R. § 18.12.  In promulgating regulations, the Secretary must publish the proposed regulation in the Federal Register and allow no fewer than 60 days for public comment.  Act § 1871.  Therefore, it is reasonable to conclude that when publishing the preamble language, CMS is aware of and intends that the preamble will provide regulated entities, and those of us required to enforce CMS regulations and the Act, insight as to how CMS intends to enforce the regulations published with the preamble language.  The most significant language from the foregoing text revealing how CMS intended to enforce 42 C.F.R. §§ 424.519 and 424.535(a)(19) is: 

• Whether related to a disclosure or a CMS assessment, an owning or managing party must be in an ownership or managerial role with the provider in order for an affiliation to exist and an undue risk determination to be made. 

84 Fed. Reg. 47,794, 47,815.  I conclude based on the plain language, that CMS advised regulated entities that when CMS assesses whether an affiliation poses an undue risk, the 

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affiliation must continue to exist or no determination that there is an undue risk may be made.5 

There is no dispute Dr. Aguiluz was Petitioner’s medical director until he resigned effective December 13, 2024.  CMS Ex. 1 at 79.  The MAC made the initial determination to revoke on November 19, 2024, while Dr. Aguiluz was still Petitioner’s medical director.  CMS Ex. 1 at 40.  But on November 19, 2024, Dr. Aguiluz’s Medicare enrollment and billing privileges had not been revoked and there was no disclosable event.  Dr. Aguiluz’s Medicare enrollment and billing privileges were not revoked until December 15, 2024.  CMS Ex. 1 at 148, 156.  Also, when the reconsidered determination was made on May 13, 2025, and the hearing officer made the undue risk determination, Dr. Aguiluz was no longer Petitioner’s medical director and that fact was known to the hearing officer.  CMS Ex. 1 at 2 (“Provider Exhibit 7: Email from Dr. Aguiluz to St. Joseph dated December 13, 2024, with letter of resignation attached, indicating that his resignation as Medical Director was effective immediately.”)  According to prior decision of the Board, only the reconsidered determination is subject to appeal and my review.  Neb Grp. of Ariz. LLC, DAB No. 2573 at 7.  The reconsidered determination was the last determination of CMS that there was an undue risk.  But according to the CMS statement to regulated entities through the preamble, the undue risk determination could not be made because the affiliation between Dr. Aguiluz and Petitioner ceased to exist on December 13, 2024, before Dr. Aguiluz’s Medicare enrollment and billing privileges were revoked.6 

Accordingly, I conclude that there is no basis for revocation of Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(19).  I also conclude, that absent a basis for revocation, there is no basis for a bar to reenrollment or for adding Petitioner’s name to CMS’s preclusion list.  

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III.  Conclusion

For the foregoing reasons, there is no basis for revocation of Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(19).  Because there is no basis for revocation, there is no basis for a bar to reenrollment or for listing Petitioner on CMS’s preclusion list.