Stat Rx Pharmacy, Inc., ALJ Ruling 2026-6 (HHS CRD January 26, 2026)

DISMISSAL

The Centers for Medicare & Medicaid Services (CMS), through an administrative contractor, revoked the Medicare billing privileges of Stat RX Pharmacy, Inc. (Petitioner).  On requested reconsideration of the revocation, the CMS administrative contractor dismissed the reconsideration request as untimely.  Petitioner requested a hearing before an administrative law judge (ALJ) to further dispute the revocation.  Because the initial revocation determination is now binding and Petitioner has no right to ALJ review of the dismissal of its reconsideration request, I dismiss the request for hearing.

I.  Background

Petitioner is a pharmacy and supplier of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) located in Bronx, NY and initially enrolled in Medicare in 2016.  CMS Ex. 3.  On November 20, 2019, Petitioner submitted a CMS-855 form which indicated that its comprehensive liability insurance policy and surety bond number 10076212, issued by Hudson Insurance Company, would expire on August 6, 2020.  CMS Ex. 4 at 7.

Page 2

In May 2023, Hudson Insurance Company notified Novitas Solutions (Novitas)1 that Petitioner’s surety bond number 10076212, would be cancelled effective June 22, 2023.  CMS Ex. 5.

On August 3, 2023, Novitas informed Petitioner that its Medicare supplier number for DMEPOS was revoked, effective June 22, 2023.  CMS Ex. 1 (citing 42 C.F.R. §§ 405.800, 424.57(d)(11), 424.57(e), 424.535(a)(1), 424.535(g)).  As the basis for the revocation, Novitas advised Petitioner that it was not in compliance with Supplier Standard 10, 42 C.F.R. § 424.57(c)(10), because its general liability insurance policy on file had expired, and Supplier Standard 26, 42 C.F.R. § 424.57(c)(26), because it received notice of cancellation of Petitioner’s surety bond.  CMS Ex. 1.  The notice further advised Petitioner of its right to submit a corrective action plan (CAP) and/or reconsideration request.  Id. at 2-4.  With respect to seeking reconsideration, the notice letter stated that the request “must [b]e received within 65 calendar days of the date” of the notice.  Id. at 3.  The notice provided that “if a reconsideration is not requested, CMS deems this a waiver of all rights to further administrative review.”  Id. at 4.

On August 8, 2024, more than a year after the initial revocation notice was issued, Petitioner submitted a request for reconsideration.  CMS Exs. 6, 7.  In support of its request, Petitioner stated that it did not receive the initial revocation notice, that it had another surety bond issued by different company and that its general liability insurance had remained active.  Id.

On December 19, 2024, Chags Health Information Technology, LLC (C-HIT) informed Petitioner that it “is unable to accept your reconsideration request . . . as it was not submitted in a timely manner.”  CMS Ex. 8.  The letter specifically advised that:

A reconsideration request must be received within 65 calendar days of the date of the initial determination letter.  Your reconsideration request was not received by C-HIT until August 8, 2024, which is beyond the applicable submission time frame.  You have failed to show good cause for [Petitioner’s] late request.  Therefore, C-HIT is unable to render a decision in this matter.

Id.

Page 3

On March 20, 2025, Petitioner filed a request for an Administrative Law Judge (ALJ) hearing.  CRD Dkt. No. 1.  The case was previously assigned to another ALJ and reassigned on December 29, 2025.

II.  Discussion

As explained below, in supplier enrollment and revocation matters, an ALJ may only review the reconsidered determination.  Therefore, unless and until the CMS administrative contractor issues such a determination, a supplier has no right to an ALJ hearing.

When CMS revokes the Medicare billing privileges of a supplier, it is an appealable initial determination.  42 C.F.R. § 498.3(b)(17).  In order to revoke a supplier’s Medicare billing privileges, CMS or one of its administrative contractors must issue a notice to the supplier providing the reasons for the revocation and that the supplier has the right to appeal the revocation.  42 C.F.R. §§ 405.800(b), 498.20(a).  The supplier has appeal rights as stated in 42 C.F.R. Part 498.  42 C.F.R. §§ 405.803(a), 424.545(a).  For revocation cases, the first level of appeal is for the supplier to request reconsideration 60 days after receipt of the initial determination to revoke.  42 C.F.R. §§ 498.5(l)(1), 498.22.  CMS may accept an untimely reconsideration request if the supplier shows good cause.  42 C.F.R. § 498.22(d)(2).  The initial determination to revoke becomes binding unless timely appealed.  42 C.F.R. § 498.20(b).  If a supplier requests reconsideration and CMS or its administrative contractor issues a reconsidered determination, then the supplier may request a hearing before an ALJ.  42 C.F.R. §§ 498.5(l)(2), 498.25(a)(3), 498.40(a).

Here, Novitas issued its initial determination on August 3, 2023.  The presumptive date of receipt is August 8, 2023, five days after the initial determination.  See 42 C.F.R. § 498.22(b)(3).  Petitioner did not request reconsideration until August 8, 2024, 366 days after the presumptive date of receipt.  On December 19, 2024, C-HIT dismissed the request for reconsideration because Petitioner did not establish good cause for the untimely filing.

In its pre-hearing brief, Petitioner disputes the presumptive date of receipt.  CRD Dkt. No. 9 at 4-5.  Petitioner asserts that it did become aware of the initial determination until May 8, 2024, when it was advised by OptumRx that there were issues with its Medicare billing privileges.  Id. at 4-5.  In an attempt to establish good cause for the untimely filing, Petitioner states that “this was completely out of the control of the Pharmacy because it never timely received the Revocation Letter.”  Id. at 5.

While I am sympathetic to Petitioner and the circumstances surrounding this revocation, I do not have the jurisdiction to hear this appeal.  C-HIT’s denial of Petitioner’s reconsideration request as untimely is not a “reconsidered determination” as described by the regulations.  Without a reconsidered determination by the contractor, the initial

Page 4

determination is “binding” and, therefore, administratively final.  42 C.F.R. § 498.20(b); Denise A. Hardy, D.P.M., DAB No. 2464 at 4-5 (2012); Hiva Vakil, M.D., DAB No. 2460 at 4-5 (2012).

Moreover, the DAB has specifically found that ALJs may not review whether CMS or a CMS administrative contractor correctly determined whether there was good cause for a supplier to file an untimely reconsideration request.  David Plitt, M.D., DAB No. 3129 at 6 (2024); Better Health Ambulance, DAB No. 2475 at 4 (2012).  As is the case here, the DAB has concluded that CMS’s decision to dismiss or reject an untimely reconsideration request is not a reconsidered determination and thus, is not subject to ALJ review.  David Plitt, M.D., DAB No. 3129 at 6; Karthik Ramaswamy, M.D., DAB No. 2563 at 7 (2014) (en banc), aff’d, Ramaswamy v. Burwell, 83 F. Supp. 3d 846 (E.D. MO 2015).  This is true even where a party contends that the timeliness determination was factually or legally erroneous.  Ramaswamy, DAB No. 2563 at 7-8.

In the present case, although Petitioner asserts that it did not receive the CMS administrative contractor’s initial determination to revoke its billing privileges, I have no authority to review the decision to dismiss the reconsideration request as untimely.  Because the dismissal itself is not a reconsidered determination, Petitioner does not have a right to an ALJ hearing.  Therefore, I dismiss Petitioner’s hearing request.  42 C.F.R. § 498.70(b).

Finally, under the regulations, an ALJ does not have the authority to consider the merits of this matter, nor is there authority to grant equitable relief.  ALJs and the DAB are bound by and may not ignore properly promulgated and applicable regulatory requirements.  US Ultrasound, DAB No. 2302 at 8 (2010) (“[n]either the ALJ nor the Board is authorized to provide equitable relief by reimbursing or enrolling a supplier who does not meet statutory or regulatory requirements.”).  An ALJ is bound to follow the Act and regulations and has no authority to declare statutes or regulations invalid.  1866ICPayday.com, L.L.C., DAB No. 2289 at 14 (2009) (“[a]n ALJ is bound by applicable laws and regulations and may not invalidate either a law or regulation on any ground.”).

Page 5

III.  Conclusion

Petitioner does not have a right to a hearing before an ALJ in this matter.  Without a reconsidered determination, Novitas’ initial determination revoking Petitioner’s Medicare enrollment and billing privileges, effective June 22, 2023, is final and not subject to review.  Therefore, the hearing request is DISMISSED pursuant to 42 C.F.R. § 498.70(b).