Spinal Health and Rehab of Punta Gorda, DAB CR6994 (2026)

DECISION

In this case, I consider whether, based solely on sub-regulatory authority, the Centers for Medicare & Medicaid Services (CMS) may revoke a supplier’s Medicare participation and impose a re-enrollment bar.

Petitioner, Spinal Health and Rehab of Punta Gorda, is a supplier of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS), located in Punta Gorda, Florida.  Until February 25, 2025, Petitioner participated in the Medicare program as a supplier of services.  CMS determined that the supplier’s certificate of liability insurance did not name the Medicare contractor as the policy holder or certificate holder.  For this reason, citing 42 C.F.R. § 424.57(c)(10), CMS has revoked its Medicare supplier number, Medicare enrollment, and Medicare billing privileges and imposed a two-year re-enrollment bar.

Petitioner appeals.

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For the reasons discussed below, I reverse the reconsidered determination.  I find that, when a supplier complies with all the requirements listed in 42 C.F.R. § 424.57(c)(10), CMS may not revoke its Medicare participation based on sub-regulatory authority.

Background

Petitioner participated in the Medicare program as a DMEPOS supplier.  See 42 C.F.R. § 424.57.

In a letter dated February 16, 2026, the Medicare contractor, Novitas Solutions, advised Petitioner that, pursuant to 42 C.F.R. §§ 424.800, 424.57(e), 424.535(a)(1), and 424.535(g), it was revoking the supplier’s Medicare supplier number, enrollment, and billing privileges, effective February 25, 2025.  The letter explained that the supplier did not meet two supplier standards:  42 C.F.R. § 424.57(c)(10), which requires suppliers to maintain a comprehensive liability insurance policy, and 42 C.F.R. § 424.57(c)(26), which requires them to meet certain surety bond requirements.  CMS Ex. 1.

The letter also advised Petitioner that, pursuant to 42 C.F.R. § 424.535(a)(1), the contractor was establishing a two-year re-enrollment bar, effective 30 days after the postmark date of the letter.  CMS Ex. 1 at 2.

Petitioner submitted a Corrective Action Plan (CAP) and requested reconsideration.  CMS Ex. 2.

In a reconsidered determination, dated April 23, 2026, a Project Manager for the Medicare Contractor, Chags Health Information Technology, LLC,1 partially accepted Petitioner’s CAP.  The contractor determined that the supplier had corrected the deficiencies cited under 42 C.F.R. § 424.57(c)(26) because it reinstated its surety bond (with a one-week gap in reimbursement).  CMS Ex. 4 at 4-5.

On the other hand, the contractor affirmed the revocation under section 424.57(c)(10) because, contrary to section 10.6.21(A)(2) of the Medicare Program Integrity Manual (MPIM), the supplier’s comprehensive liability insurance policy did not list the Medicare contractor as the policy holder.  CMS Ex. 4 at 3, 5.

Petitioner appeals the reconsidered determination.

Submissions.  With its motion and brief (CMS Br.), CMS submitted four exhibits (CMS Exs. 1-4).  In the absence of any objections, I admit into evidence CMS Exs. 1-4.

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Petitioner responded with its own cross-motion for summary judgment and brief (P. Br.), with no new exhibits.

CMS replied to Petitioner’s motion (CMS Reply).  Petitioner objected and asked that I strike CMS’s reply.  In an order dated September 9, 2026, I denied Petitioner’s Motion to Strike but allowed Petitioner to file a sur-reply if, in its reply, CMS had raised a new issue that the parties had not addressed.  Petitioner did not file a sur-reply.

Decision based on the written record.  The parties have filed cross-motions for summary judgment.  However, neither party proposes any witnesses.  Because there are no witnesses to be examined or cross-examined, an in-person hearing would serve no purpose.  See Acknowledgment and Pre-Hearing Order at 4, 5, 6 (¶¶ 4(c)(iv), 8, 9, 10) (June 18, 2026).  I may therefore decide this case based on the written record, without considering whether the standards for summary judgment are satisfied.  See CRDP ¶ 19b; Vandalia Park, DAB No. 1940 (2004).2 

Discussion

1. Because Petitioner’s comprehensive liability insurance policy met the explicit requirements of 42 C.F.R. § 424.57(c)(10), CMS may not revoke its Medicare enrollment based solely on sub-regulatory authority.3

To receive Medicare payments for items furnished to a Medicare-eligible beneficiary, a supplier of medical equipment and supplies must have a supplier number issued by the Secretary of Health and Human Services.  Social Security Act (Act) § 1834(j)(1)(A); 42 C.F.R, § 424.505.  To obtain and retain its supplier number, a Medicare supplier must meet the standards set forth in 42 C.F.R. § 424.57(c), and CMS may revoke its billing privileges if it fails to do so.  Act § 1834(j)(1)(B); 42 C.F.R. § 424.57(c)(1), (d), (e)(1); 42 C.F.R. § 424.535(a)(1).  So long as CMS establishes one regulatory basis, I must uphold the revocation.  Global MD Systems, Inc., DAB No. 3103 at 2 (2023); Wassim Younesm M.D. and Wassim Younes, M.D., P.L.C., DAB No. 2861 at 8 (2018), citing Patrick Brueggeman, D.P.M., DAB No. 2725 at 15 (2016).

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Section 424.57(c)(10).  Section 424.57(c)(10) mandates that the supplier have a comprehensive liability insurance policy in the amount of at least $300,000 that covers both the supplier’s place of business and all customers and employees.  42 C.F.R. § 424.57(c)(10); Act § 1834(j)(1)(B)(ii)(III)) (requiring that DMEPOS standards include the requirement that the supplier “have proof of appropriate liability insurance”).

Here, the supplier has established that, throughout the relevant time (February 25, 2025 through February 25, 2027), the supplier had in place a comprehensive liability insurance policy that far exceeded the $300,000 minimum.  The policy covered the supplier’s place of business and all customers and employees.  In all respects, it met the explicit requirements of the regulation.  CMS Ex. 3.

CMS does not question any of this.  Instead, CMS points to section 10.6.21(A)(2) of the MPIM, which directs its DMEPOS suppliers to list the Medicare contractor as the policy’s certificate holder.  CMS maintains that, because Petitioner’s liability insurance policy does not name the contractor as the certificate holder, it violates section 424.57(c)(10), and CMS may revoke its enrollment.  CMS also points out that it has the authority to revoke a supplier’s Medicare participation if it does not comply with a single standard.  P. Br. at 4.

I agree that CMS may revoke a supplier’s Medicare participation if it fails to meet any of the standards listed in section 424.57(c).  42 C.F.R. § 424.57(e)(1); 42 C.F.R. § 424.535(a)(1); Keller Orthotics, DAB No. 2588 at 7 (2014); 1866ICPayday.com, L.L.C., DAB No. 2289 (2009).  However, I do not agree that, in this case, Petitioner failed to meet any of the section 424.57(c) standards, including section 424.57(c)(10).

The Act provides that all rules, requirements, and statements of policy that establish or change a substantive legal standard governing (among other factors) an entity’s eligibility to furnish Medicare services must be promulgated through notice-and-comment rulemaking:

No rule, requirement, or other statement of policy (other than a national coverage determination) that establishes or changes a substantive legal standard governing the scope of benefits, the payment for services, or the eligibility of individuals, entities or organizations to furnish or receive services, or benefits under this title shall take effect unless it is promulgated by the Secretary by regulation.

Act § 1871(a)(2); see Azar v. Allina, 139 S. Ct. 1804, 1810-14 (2019) (rejecting agency efforts to change reimbursement rules through sub-regulatory guidance).

Moreover, the Departmental Appeals Board has, for more than twenty years, flatly refused to use the sub-regulatory guidance provided in program manuals to alter the plain language of the regulations.  Manual provisions may be “instructive,” but they are not

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binding.  Consulate Healthcare of Jacksonville, DAB No. 3119 at 17 (2023); Countryside Rehab. and Health Care, DAB No. 2853 at 25 (2018); Kindred Transitional Care and Rehab. – Greenfield, DAB No. 2792 at 20 (2017); Miss. Care Ctr. of Greenville, DAB No. 2450 at 15-16 (2012); Foxwood Springs Living Ctr., DAB No. 2294 at 9 (2009); Oakwood Community Ctr., DAB No. 2214 at 16 (2008); Aase Haugen Homes, Inc., DAB No. 2013 at 15 (2006); Alden-Princeton Rehab. & Health Care Ctr., DAB No. 1873; Beverly Health and Rehab. Ctr. – Williamsburg, DAB No. 1748 at 8 (2000), aff’d Beverly Health and Rehabilitation Services v. Thompson, 223 F. Supp. 2d 73, 99-106 (D.D.C. 2002); Martina Sheftic, DAB CR5563 at 6 (2020).

Significantly, in promulgating the regulations, CMS initially proposed requiring a DMEPOS supplier to list the contractor as the certificate holder on its liability insurance policy, making it easier for the contractor to verify coverage.  73 Fed. Reg. 4,503, 4,507, 4,513 (Jan. 25, 2008).  Had CMS done so, it could enforce the provision.  However, the final rule does not include that proposed revision (although the drafters indicated that they would consider adding it in future rulemaking).  75 Fed. Reg. 52,629,52 638 (August 27, 2010).  Because CMS declined to add the requirement to the regulation, it may not now rely on a manual provision as the basis for revoking a supplier’s Medicare participation.

Re-enrollment bar.  If a supplier’s billing privileges have been revoked, CMS must bar its re-enrollment for at least one year, but for no more than ten years.  42 C.F.R. § 424.535(c)(1)(i).  Here, because CMS may not revoke Petitioner’s billing privileges, it may not impose a re-enrollment bar.

Conclusion

I reverse CMS’s reconsidered determination.  Petitioner complied with the explicit requirements of section 424.57(c)(10), and CMS may not revoke its Medicare enrollment, supplier number, and billing privileges based solely on sub-regulatory authority.