Michael D. Brandner, M.D., DAB No. 3175 (2025)

FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE DECISION

Michael D. Brandner, M.D. (Petitioner) appeals the decision of an administrative law judge (ALJ) in Michael D. Brandner, M.D., DAB CR6058 (2022) (ALJ Decision), upholding a determination by the Centers for Medicare & Medicaid Services (CMS) to place Petitioner on the preclusion list based on his felony convictions for tax evasion and wire fraud.  Specifically, the ALJ found that, within the previous ten years, Petitioner was convicted of financial crimes under federal law that CMS deems detrimental to the best interests of the Medicare program.  We affirm the ALJ Decision because it is supported by substantial evidence and not legally erroneous.

Legal Background

Effective January 1, 2019, CMS implemented a “preclusion list” applicable to the Medicare Advantage (MA) program (Part C) and Voluntary Medicare Prescription Drug Benefit program (Part D) as part of its effort to “prevent fraud, waste, and abuse, and to protect Medicare enrollees.”  See 82 Fed. Reg. 56,336, 56,448 (Nov. 28, 2017); 83 Fed. Reg. 16,440, 16,643 (Apr. 16, 2018).  The intent of the preclusion list is to create an “effective alternative” to Medicare enrollment for Medicare Parts C and D.  84 Fed. Reg. 15,680, 15,786 (Apr. 16, 2019).  When CMS places an individual on the preclusion list, CMS must notify the individual in writing of the decision, the basis for the decision, and the right to appeal.  42 C.F.R. §§ 422.222(a)(2)(i), 423.120(c)(6)(v)(A).¹  After receiving proper notice, an individual placed on the preclusion list is prohibited from receiving reimbursement for health care items, services, or drugs provided under Medicare Part C (42 C.F.R. § 422.222) and from receiving reimbursement for drugs prescribed under Medicare Part D (42 C.F.R. § 423.120(c)(6)).

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CMS may place an individual² on the preclusion list for any of the following three reasons:

(1) the individual is currently revoked from Medicare for reasons other than that stated in 42 C.F.R. § 424.535(a)(3) [i.e., revocation based on certain felony convictions], the individual or entity is under a reenrollment bar, and CMS determines that the conduct that led to the revocation is detrimental to the best interests of the Medicare program;

(2) the individual has engaged in behavior, other than that described in section 424.535(a)(3), for which CMS could have revoked the individual or entity had they been enrolled in Medicare, and CMS determines that the conduct that would have led to the revocation is detrimental to the best interests of the Medicare program; or

(3) the individual, 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.

Id. §§ 422.2 (Part C), 423.100 (Part D).

In determining whether a felony conviction is detrimental to the best interests of the Medicare program, CMS considers the severity of the offense, when the offense occurred, and any other information CMS deems relevant to its determination.  Id.  An individual placed on the preclusion list based on a felony conviction will remain on the preclusion list for 10 years, beginning on the date of the felony conviction, unless CMS determines a shorter period is warranted.  Id. §§ 422.222(a)(5)(iii), 423.120(c)(6)(vii)(C).  CMS has discretion not to include a particular individual on (or if warranted, remove the individual from) the preclusion list if CMS determines that “exceptional circumstances” exist regarding beneficiary access to Part C (MA) items, services, or drugs, or Part D prescriptions.  Id. §§ 422.222(a)(6), 423.120(c)(6)(vi).

An individual may appeal their placement on the preclusion list in accordance with the administrative appeal procedures in 42 C.F.R. Part 498.  Id. §§ 422.222(a)(2)(i), 423.120(c)(6)(v)(A).  CMS’s decision to place an individual on the preclusion list is an “initial determination” under Part 498.  Id. § 498.3(b)(20).  The individual must first request “reconsideration” of the initial determination and, if dissatisfied with the reconsidered determination, may request a hearing before an ALJ.  Id. §§ 498.5(n),

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498.22, 498.40.  A party dissatisfied with an ALJ’s decision may request Board review of the ALJ decision.  Id. §§ 498.5(n)(3), 498.80.

Case Background and Procedural History

A. Petitioner was convicted of felony wire fraud and tax evasion.

Petitioner is a physician who was convicted by a jury in the United States District Court for the District of Alaska (District Court) of four felony counts of wire fraud and three felony counts of tax evasion.  CMS Ex. 6, at 1-4; CMS Ex. 7, at 1.  Petitioner’s offense involved a scheme to defraud his wife as part of divorce proceedings and to conceal assets from his wife and the Superior Court for the State of Alaska (State Court), which had jurisdiction over the divorce proceedings.  CMS Ex. 5, at 3.  Petitioner attempted to conceal millions of dollars of assets in foreign accounts and, in doing so, engaged in tax evasion against the United States by underreporting his taxable income by more than $1.5 million and making other false and misleading statements to special agents of the Internal Revenue Service (IRS).  Id. at 5, 7-11; CMS Ex. 7, at 1.  Petitioner was found guilty by a jury and an amended criminal judgment was entered against Petitioner on April 25, 2016.  CMS Ex. 7, at 1.  Petitioner was sentenced to 48 months in prison followed by two years of supervised release.  Id. at 2-3.

B. Petitioner’s Medicare enrollment was revoked and CMS placed him on the preclusion list.

By letter dated May 3, 2016, a Medicare administrative contractor revoked Petitioner’s Medicare enrollment and billing privileges under 42 C.F.R. § 424.535(a)(3) based on his April 25, 2016, felony convictions, and imposed a three-year reenrollment bar.  CMS Ex. 8, at 1-2.  By notice dated August 1, 2018, CMS added Petitioner to the preclusion list, effective January 1, 2019, due to Petitioner’s revocation and re-enrollment bar.  CMS Ex. 1, at 1 (“You are being added to the CMS preclusion list . . . because your Medicare billing privileges have previously been revoked and you are currently under a reenrollment bar.”).  Petitioner did not request reconsideration of these determinations, making them administratively final.  See ALJ Decision at 2; Docket No. C-21-27, Doc. #1a (Reconsidered Determination), at 2.  On June 1, 2019, Petitioner’s three-year reenrollment bar expired and, as a result, CMS removed Petitioner from the preclusion list.  Reconsidered Determination at 2.

C. CMS placed Petitioner on the preclusion list a second time.

By notice dated January 24, 2020, CMS informed Petitioner that he was being placed on the preclusion list because he had been convicted of felonies within the previous 10 years that “CMS deems detrimental to the best interests of the Medicare program.”  CMS Ex. 2, at 1.  In accordance with sections 422.222(a)(5)(iii) and 423.120(c)(6)(vii)(C), CMS

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stated that Petitioner would remain on the preclusion list for 10 years from his April 25, 2016, conviction date.  Id.  Petitioner requested reconsideration.  See CMS Ex. 3.

D. CMS upheld on reconsideration Petitioner’s placement on the preclusion list.

On May 27, 2020, CMS upheld Petitioner’s placement on the preclusion list based on his felony convictions, stating that the convictions were “per se detrimental to the best interests of the Medicare program and its beneficiaries.”  Reconsidered Determination at 3 (citing 42 C.F.R. § 424.535(a)(3)(ii)(B)).  CMS explained that Petitioner was convicted of the “enumerated per se detrimental crime” of tax evasion and that Petitioner’s wire fraud conviction was “akin to the enumerated per se detrimental crime” of insurance fraud.  Id.

Considering the relevant regulatory factors, CMS deemed Petitioner’s offenses detrimental to the best interests of the Medicare program “based on the facts and circumstances surrounding his convictions.”  Id. at 3-4.  CMS found that Petitioner engaged in a scheme to conceal millions of dollars of assets “from his wife of 28 years and the [IRS]” and that such conduct was “severe and reveal[ed] dishonest behavior and a disregard for the rules and regulations of the federal government.”  Id.  CMS reasoned that, while Petitioner’s convictions occurred in 2016,³ “the severity of it, the fact that it implicates his trustworthiness, and the lengths he went to in conducting the [underlying crimes] are all indications to CMS that [Petitioner’s] inclusion on the Preclusion List is appropriate.”  Id. at 4.  CMS further noted that Petitioner was imprisoned for 48 months because of his convictions.  Id.

E. The ALJ sustained Petitioner’s placement on the preclusion list.

Petitioner appealed the reconsidered determination by requesting an ALJ hearing.  ALJ Decision at 2; Docket No. C-21-27, Doc. #1 (Request for Hearing).  Petitioner argued, for the first time, that CMS’s revocation, reenrollment bar, and 2019 preclusion list determinations were upheld in error because he did not receive notice of those determinations.  Request for Hearing at 1.  Petitioner also argued that he should be removed from the preclusion list because he was wrongly convicted and imprisoned.  Id. at 1-2.  Petitioner reasoned that the crimes for which he was convicted took place over 10 years ago and that he “faithfully” served his 48-month prison sentence “with good behavior.”  Id. at 2.  Finally, Petitioner pointed to his status as a United States Army veteran and noted that he has “cared for Medicare patients for approximately 34 years without irregularities or untoward incidents.”  Id. at 2-3.

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CMS filed a combined prehearing brief and motion for summary judgment, along with nine proposed exhibits (CMS Exs. 1-9).  Petitioner subsequently filed a combined pre-hearing brief and cross-motion motion for summary judgment, along with nine proposed exhibits (P. Exs. A-I), including letters requesting pardons, and letters from colleagues addressed to the District Court in relation to Petitioner’s sentencing.  The ALJ admitted the parties’ respective exhibits without objection.  ALJ Decision at 3.  Neither party requested cross-examination of witnesses and, therefore, the ALJ decided the case based on the written record having found that an in-person hearing would serve no purpose.  Id. at 2-3 (“[The ALJ] may decide this case based on the written record without considering whether the standards for summary judgment are met.”).

The ALJ upheld CMS’s decision to place Petitioner on the preclusion list based on his felony convictions.  Id. at 4-6.  At the outset, the ALJ found no authority to review Petitioner’s initial revocation and reenrollment bar, or initial placement on the prelusion list, because Petitioner never requested reconsideration of those initial determinations.  Id. at 2.⁴  Regarding Petitioner’s subsequent placement on the preclusion list, effective May 27, 2020, the ALJ found that CMS was authorized to place Petitioner on the preclusion list because he was convicted, within the preceding 10 years, of felonies that CMS deems detrimental to the best interests of the Medicare program.  Id. at 6.  The ALJ noted that the date of Petitioner’s conviction, not the date of his criminal conduct, is determinative for purposes of his placement on the preclusion list.  Id. at 5.  The ALJ further explained that there was a jury verdict on November 4, 2015, and an entry of judgment on April 25, 2016.  Id. at 4 (citing CMS Exs. 6, 7).  Regarding Petitioner’s contention that he is a conscientious physician and of good character, and that Medicare patients will suffer if he is unable to participate in the Medicare program, the ALJ explained that ALJs are not authorized to overturn a legally valid agency action based on equitable grounds or otherwise grant equitable relief.  Id. at 5-6 (citing Wendell Foo, M.D., DAB No. 2904, at 25 (2018), aff’d, 420 F.Supp.3d 1100 (D. Haw. 2019)).

Standard of Review

In appeals under 42 C.F.R. Part 498, the Board reviews disputed factual issues to determine whether the ALJ’s decision is supported by substantial evidence in the record as a whole, and reviews disputed issues of law to determine whether the ALJ decision is erroneous.  See Guidelines – Appellate Review of Decisions of Administrative Law Judges Affecting a Provider’s or Supplier’s Enrollment in the Medicare Program (Guidelines), “Completion of the Review Process,” ¶ (c), available at https://www.hhs.gov/about/agencies/dab/different-appeals-at-dab/appeals-to-board/guidelines/enrollment/index.html?language=en.

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Analysis

Petitioner filed a Request for Review (RR) challenging the preclusion list determination upheld by the ALJ.⁵  Petitioner does not dispute that he was convicted of felony wire fraud and tax evasion within the previous 10 years but argues that the ALJ erred in upholding his placement on the preclusion list for a second time based on the same felony convictions.  RR at 2-3 (arguing that his placement on the preclusion list for a second time violates res judicata and involves an unconstitutional ex post facto law).  Petitioner further asserts that he was convicted “in early November, 2015,” not on April 25, 2016, as the ALJ found.  Id. at 1.  Additionally, Petitioner argues he should not be on the preclusion list because it has been ten or more years since he committed the crimes for which he was “falsely convicted”; he “faithfully served” his 48-month prison sentence; he “successfully completed” two years of probation and was “rehabilitated.”  Id. at 3-4.  Petitioner further states that he cared for Medicare patients for 34 years “without irregularities or untoward incidents” and is a United States Army veteran having served in the Korean War.  Id. at 4.  Petitioner also notes that he is pursuing reinstatement of his California medical license and submitted, for the first time before the Board, five “letters of reference” written by colleagues supporting the reinstatement of his California medical license.  Id. at 4, 6-15.⁶  Finally, Petitioner contends that the decision to place him on the preclusion list should be overturned “based on equitable grounds.”  Id. at 5.

I. The ALJ’s conclusion that CMS had a lawful basis to place Petitioner on the preclusion list based on his felony convictions for tax evasion and wire fraud is supported by substantial evidence and not legally erroneous.

An individual may be placed on the preclusion list if they were “convicted of a felony . . . within the previous 10 years that CMS deems detrimental to the best interests of the Medicare program.”  42 C.F.R. §§ 422.2, 423.100.  In determining whether a felony conviction is detrimental to the program, CMS considers (i) the severity of the offense, (ii) when the offense occurred, and (iii) any other information CMS deems relevant to its determination.  Id.  There is no dispute that Petitioner was convicted of felony wire fraud and tax evasion within the previous 10 years.  And, as the ALJ found, CMS considered the relevant regulatory factors in determining that Petitioner’s convictions are detrimental to the best interests of the Medicare program.  ALJ Decision at 4-5.

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Regarding the first factor (severity of the offense), CMS determined that wire fraud and tax evasion are “severe” and demonstrate “dishonest behavior and a disregard for the rules and regulations of the federal government.”  Reconsidered Determination at 4.  CMS explained that the “integrity of the Medicare program is dependent on the trustworthiness of its partners,” and that Petitioner’s participation in the program could “significantly affect” its integrity.  Id.  The record shows that shortly after his spouse filed for divorce, Petitioner surreptitiously left Alaska and drove to Central America with more than $3 million in cashier’s checks.  CMS Ex. 5 (Superseding Indictment), at 4.  Petitioner transferred this money to an entity he controlled in Panama.  Id. at 2, 4.  Petitioner also transferred more than $1 million to a California financial institution and then used that money to create a sham investment in a different entity he controlled in Colorado.  Id.  Petitioner then transferred that money to the entity he controlled in Panama to conceal it.  Id. at 4.  As part of the scheme, Petitioner misled his own attorney and the State Court by representing that the over $3 million he had moved to the entity in Panama was a loan in an arms-length transaction, illiquid, and could not be disbursed as part of any divorce decree.  Id.  In fact, the Panama entity was Petitioner’s alter ego, and the money was under his complete control.  Id. at 4-5.  Petitioner further caused false documents to be created to deceive his spouse and the State Court into believing the sham investments in the Panama entity were lost, even though the money remained under Petitioner’s control.  Id. at 5.  In all, Petitioner removed from the United States and attempted to conceal over $4 million from his attorney, his spouse, and the State Court in order to preclude his spouse from obtaining money and property in a divorce.  Id. at 3, 5.

Additionally, Petitioner willfully attempted to evade and defeat a large part of the income taxes he owed to the United States.  Id. at 7-11.  Petitioner failed to report more than $1.5 million in taxable income on his federal tax returns over a three-year period (2008-2010).  Id.  Moreover, Petitioner made false and misleading statements to IRS special agents about his ownership and control of offshore funds that he repatriated to the United States.  Id. at 8, 9, 11.  In all, through Petitioner’s schemes and deception, Petitioner evaded the payment of more than $610,000 in federal income taxes due and owing from 2008 through 2010.  Id. at 8-11.  Based on the record evidence, we find no error in CMS’s assessment that Petitioner’s felony convictions, for which he was sentenced to 48 months in prison and two years of probation, were “severe” and plainly detrimental to the best interests of the Medicare program.  Reconsidered Determination at 4.

As for the second factor (when the offenses occurred), Petitioner points out that it has “been ten (10) years or more” since he committed the crimes.  RR at 3.  The record reflects that Petitioner engaged in a criminal scheme from 2007 to 2011.  CMS Ex. 5, at 3; CMS Ex. 7, at 1.  CMS found that, although the offenses occurred several years ago, the severity of the offenses, the fact that the offenses implicate Petitioner’s trustworthiness, and the lengths Petitioner went to in conducting the crimes are “all indications … that [Petitioner]’s inclusion on the Preclusion List is appropriate.”  Reconsidered Determination at 4.  As explained above, Petitioner concealed millions of

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dollars of assets from his spouse, the State Court, his own attorney, and the IRS over the course of several years through deception and lies.  Thus, while CMS considered the second factor, we find no error in its assessment that the sophistication, complexity, severity, and length of Petitioner’s criminal conduct support CMS’s determination that the felony wire fraud and tax evasion offenses are detrimental to the best interests of the Medicare program.

Regarding the third factor (other information CMS deems relevant), CMS explained that in the revocation and enrollment context, certain felony offenses are deemed per se detrimental to the best interests of the Medicare program and its beneficiaries, including but not limited to, financial crimes, such as extortion, embezzlement, income tax evasion, insurance fraud, and other similar crimes.  Reconsidered Determination at 3 (citing 42 C.F.R. § 424.535(a)(3)(ii)(B)).⁷  CMS found it relevant that Petitioner was convicted of financial crimes, which are deemed per se detrimental to the Medicare program.  Id.  The ALJ agreed, concluding that Petitioner’s felony tax evasion and wire fraud offenses are “financial crimes” within the meaning of the regulations and, therefore, per se detrimental to the best interests of the Medicare program.  ALJ Decision at 4-5; see also Edward J.S. Picardi, M.D., DAB No. 3045, at 13-14 (2021) (upholding Medicare enrollment denial based on felony tax evasion offense); Stanley Beekman, D.P.M., DAB No. 2650, at 8 (2015) (upholding Medicare revocation based on felony conviction for conspiring to commit bank fraud, mail fraud, wire fraud, and making false statements to obtain a loan); Letantia Bussell, M.D., DAB No. 2196, at 9 (2008) (upholding Medicare revocation based on felony tax evasion offense).

Here, the record evidence plainly demonstrates that these crimes were financial in nature and involved financial misconduct.  Given that financial crimes are per se detrimental to the Medicare program for purposes of revocation and enrollment, we can discern no legal basis that would compel CMS to find Petitioner’s convictions are not detrimental to the Medicare program for purposes of the preclusion list.  See Tammy Dobbin, APN and Ebony Wellness, LLC, DAB No. 3136, at 17 (2024) (upholding preclusion list determination where felony bank fraud offense was deemed per se detrimental for purposes of revocation).

Finally, regarding Petitioner’s assertion that he was “falsely convicted” of tax evasion and wire fraud (RR at 4), Petitioner cannot collaterally attack his convictions in this forum.  See Hossain Sahlolbei, M.D., DAB No. 3139, at 10 (2024) (rejecting collateral attack on physician’s felony conviction in appeal challenging Medicare enrollment denial).  “[T]he regulations governing this proceeding authorize hearing and appeal rights only with respect to specific federal agency determinations.”  Id. (quoting Douglas

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Bradley, M.D., DAB No. 2663, at 16 (2015) (citing 42 C.F.R. §§ 498.3, 498.5)).  “Nothing in [the Part 498] regulations, or in the Medicare statute, even remotely suggests that they were intended [to] provide a forum to collaterally challenge adverse decisions by federal or state courts or non-federal regulatory bodies.”  Id. (quoting Bradley at 16).  Thus, we find no error in the ALJ’s conclusion that Petitioner’s collateral attack on his conviction is impermissible.  ALJ Decision at 5.

For all these reasons, we find the requirements for placing Petitioner on the preclusion list were met and, therefore, affirm the ALJ’s conclusion that CMS had a lawful basis to place Petitioner on the preclusion list based on his felony convictions for tax evasion and wire fraud within the previous ten years.

A. Petitioner’s assertion that his placement on the preclusion list for a second time violates principles of res judicata has no merit.

Petitioner argues that his placement on the preclusion list in 2020, after he “completed” a preclusion list placement in 2019 for the same reason (i.e., his felony convictions), violates principles of res judicata and must be overturned.  RR at 2-3.  Petitioner did not raise this affirmative defense before the ALJ and, in any event, it has no merit.⁸

The Board considered and rejected a similar argument in Michael Scott Edwards, OD, and M. Scott Edwards, OD, PA, DAB No. 2975,at 11-13 (2019), where a physician argued that res judicata barred CMS from revoking his Medicare enrollment based on a felony conviction when CMS had previously approved two prior enrollment revalidation applications that disclosed the same felony conviction.  The Board explained:

Under the res judicata doctrine, commonly referred to as claim preclusion, a judgment on the merits in a prior suit bars a second suit involving the same parties or their privies based on the same cause of action.  Accordingly, where there has been a final judgment on the merits, res judicata forecloses successive litigation of the very same claim, whether or not relitigation of the claim raises the same issues as the earlier suit.  The purpose of the doctrine is to avoid multiple suits on identical entitlements or obligations between the same parties.

Edwards at 12 (citations, quotation marks, and brackets omitted).  The Board further recognized that res judicata involves an “issue that has been definitively settled by judicial decision” and is an affirmative defense with “three essential elements comprising (1) an earlier decision on the issue, (2) a final judgment on the merits, and (3) the involvement of the same parties, or parties in privity with the original parties.”  Id.

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(emphasis added) (quotation marks omitted) (quoting Gregory J. Salko, M.D., DAB No. 2437, at 6 (2012), aff’d, No. 3:12cv515, 2013 WL 618779 (M.D. Pa. Feb. 19, 2013)).

Res judicata does not apply here because CMS’s earlier preclusion list determination was not adjudicated or settled by judicial decision.  There was no lawsuit, litigation, cause of action, or final judgment.  Indeed, Petitioner did not challenge the earlier preclusion list determination based on his revocation and re-enrollment bar.  Thus, with respect to Petitioner’s initial placement on the preclusion list in 2019, there was no adjudication by an administrative agency acting in a judicial capacity, much less a final judgment on the merits by a court.  We further note that CMS’s initial decision to place an individual on the preclusion list is not a “final judgment” but the first step in a process that may involve multiple levels of appeal at the administrative level.  See supra pp. 2-3.   

Moreover, Petitioner points to no provision, and we are aware of none, that would allow the ALJ or the Board to disregard the regulations authorizing CMS to place Petitioner on the preclusion list based on qualifying felony convictions merely because CMS had previously placed Petitioner on the preclusion list based on the revocation of his Medicare enrollment (which was based on the same felony convictions).  The Board is bound by applicable law and regulations and nothing in the law or regulations prohibits CMS from placing Petitioner on the preclusion list a second time, provided the regulatory elements are met.  Having determined that the regulatory elements for Petitioner’s placement on the preclusion list in 2020 were satisfied, we find no basis to overturn that determination.  Cf. Salko at 6 (concluding that prior revocation of petitioner by CMS did not bar petitioner’s subsequent exclusion by the Inspector General).⁹

B. The Board rejects Petitioner’s “ex post facto law” argument.

Petitioner further argues that his placement on the preclusion list in 2020 should be overturned because it “involves an ex post facto law” that purportedly increased the length of his time on the preclusion list due to “a new law having been passed while/after” he completed a previous preclusion list placement for an “identical reason.”  RR at 3 (emphasis omitted).  Petitioner did not raise this argument before the ALJ and, in any event, it has previously been rejected by the Board.  To the extent Petitioner contends the Board should invalidate the preclusion list regulations on constitutional grounds, the Board is not a court and has no authority to do so.  See Syed M. Aziz, M.D., DAB No. 3124, at 13-14 (2023).  The Board is bound by applicable laws and regulations and is not empowered “to invalidate or refuse to follow Federal statutes or regulations on constitutional grounds.”  Id. at 14 (internal quotation marks omitted) (quoting Zahid Imran, M.D., DAB No. 2680, at 9 (2016)).

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Moreover, the Board has considered and rejected the notion that the preclusion list regulations are an unconstitutional ex post facto law.  In Anthony Del Piano, M.D., DAB No. 3096, at 28-29 (2023), the Board explained that “the Ex Post Facto Clause ‘protects individuals only from retroactive application of punishments or penal statutes’” and “does not protect against the retroactive application of remedial or civil sanctions.’”  Id. (quoting Dr. Darren James, D.P.M., DAB No. 1828, at 13 (2002), aff ’d, No. 02-3021 (AET) (D.N.J. July 7, 2003)).  The Board explained that when CMS decides to keep an individual out of the Medicare program, as the preclusion list regulations authorize, that action is “a remedial measure whose purpose is not to punish [the individual] for past misconduct but to protect the program and its beneficiaries from fraud, abuse, and other harm that might arise in the future.”  Id. at 18 (citations omitted).  Accordingly, the Board concluded that the decision to place an individual on the preclusion list is a remedial or civil sanction and not a “punitive action.”  Id. at 18, 28-29.

The Board further rejected the argument that placing a supplier on the preclusion list based on regulations adopted after the events that culminated in the supplier’s felony conviction amounts to an impermissible retroactive application of the law.  Id. at 26-28.  The Board pointed out that CMS’s application of the preclusion list rules to a supplier that was convicted of a felony before the promulgation of those rules does not “result in retroactive consequences.”  Id. at 27.  This is because the supplier’s “inclusion on the preclusion list affected only [his] prospective participation in Medicare Parts C and D” and had no effect on any reimbursement claims under Parts C and D between the date of the supplier’s conviction and the date he was placed on the preclusion list (after the effective date of the preclusion list).  Id. at 27-28.  As the Board explained, suppliers have “no vested right to continued reimbursement for any services provided or drugs prescribed . . . under Medicare Parts C and D” nor a right “to continuing eligibility for Medicare participation or reimbursement.”  Id. at 28 (citing Mission Home Health, et al., DAB No. 2310, at 9 (2010); Robert F. Tzeng, M.D., DAB No. 2169, at 13-14 n.16 (2008)).

The decision to include Petitioner on the preclusion list was lawful under the applicable regulations.  The Board is bound by the preclusion list regulations and has no authority to invalidate them on constitutional grounds.

C. Petitioner waived any challenge to the date of his conviction.

The only factual finding challenged by Petitioner is the ALJ’s finding that Petitioner was convicted on April 25, 2016.  RR at 1.  Petitioner asserts, for the first time before the Board, that he was convicted “in early November, 2015—some 8 days after the start of trial on October 26, 2015.”  Id.  Although CMS found Petitioner was convicted on April 25, 2016, see Reconsidered Determination at 2, Petitioner did not challenge the date of his conviction before the ALJ.  “A party appearing before the Board is not permitted to

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raise on appeal issues that could have been raised before the ALJ but were not.”  Meadowmere Emergency Physicians, PLLC, DAB No. 2881, at 15 (2018) (citing Guidelines, “Completion of the Review Process,” ¶ (a)).  Petitioner is making a new argument that cannot be raised for the first time before the Board and, therefore, we reject the argument for that reason alone.  See id.

Moreover, substantial evidence in the record supports the ALJ’s finding that Petitioner was convicted on April 25, 2016.  ALJ Decision at 1-2, 5 (citing Social Security Act § 1128(i) and 42 C.F.R. § 1001.2, which provide that an individual is “convicted” when, among other things, a “judgment of conviction has been entered”); see also Fed. R. Crim P. 32(k)(1) (“In the judgment of conviction, the court must set forth the plea, the jury verdict or the court’s findings, the adjudication, and the sentence. . . .  The judge must sign the judgment, and the clerk must enter it.”).  In this case, the amended judgment of conviction – the only judgment in the record – set forth Petitioner’s not guilty plea, the jury’s verdict, the adjudication, and Petitioner’s sentence, and was signed by the judge and entered by the clerk on April 25, 2016.  CMS Ex. 7.  Petitioner submitted no evidence from which we could find an earlier judgment of conviction.  Thus, substantial evidence in the record supports the ALJ’s finding that Petitioner was convicted on April 25, 2016.

II. Petitioner made no showing of “exceptional circumstances” that would compel CMS to remove him from the preclusion list.

Under the applicable regulations, CMS has discretion not to include a particular individual on (or if warranted, remove the individual from) the preclusion list if CMS determines that “exceptional circumstances” exist regarding beneficiary access to Part C (MA) items, services, or drugs, or Part D prescriptions.  42 C.F.R. §§ 422.222(a)(6), 423.120(c)(6)(vi).  In making the determination as to whether such exceptional circumstances exist, CMS considers:  (i) the degree to which beneficiary access would be impaired by the individual’s placement on the preclusion list, and (ii) any other evidence CMS deems relevant to its determination.  Id.  “[O]nly CMS has the discretion not to place a provider on the preclusion list due to access to care concerns.”  84 Fed. Reg. at 15,794.  However, Medicare Advantage (MA) plans “can notify CMS if they believe there will be access to care issues by removing a particular provider from their network, and CMS will notify the plan of its determination regarding the preclusion.”  Id.  We turn now to Petitioner’s specific arguments concerning his contention that he should be removed from the preclusion list.  RR at 3-5.

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A. Petitioner’s post-conviction conduct and related arguments do not establish “exceptional circumstances” that would warrant his removal from the preclusion list.

Petitioner argues that he should be removed from the preclusion list because he “faithfully served” his 48-month prison sentence with “good behavior,” “successfully completed” two years of probation “without issue,” and was “rehabilitated.”  RR at 3-4.  Petitioner further asserts that he cared for Medicare patients for 34 years “without irregularities or untoward incidents” and is a United States Army veteran having served in the Korean War and received an honorable discharge.  Id. at 4.  None of these circumstances, even if true, demonstrate that beneficiary access to Part C (MA) items, services, and drugs, or Part D prescriptions have been impaired due to Petitioner’s placement on the preclusion list.  Moreover, Petitioner made no showing that any MA plan requested that CMS not include or remove Petitioner from the preclusion list based on access to care concerns.  Thus, Petitioner made no showing of “exceptional circumstances” that would compel CMS to remove him from the preclusion list under sections 422.222(a)(6) or 423.120(c)(6)(vi).

As explained above, CMS had a lawful basis to include Petitioner on the preclusion list based on his felony convictions for tax evasion and wire fraud – financial crimes that CMS deems per se detrimental to the Medicare program.  Such felony convictions within the required ten-year timeframe adequately support Petitioner’s placement on the preclusion list, regardless of Petitioner’s contention that he now poses little risk to Medicare.  Cf. Pennsylvania Physicians, P.C., DAB No. 2980, at 6 (2019) (rejecting argument that supplier’s good behavior during post-conviction period precludes CMS from relying on felony financial crime to support revocation decision).  Similarly, Petitioner’s good behavior following his conviction, history of treating Medicare patients, and veteran status do not establish a basis for CMS to remove Petitioner from the preclusion list under the applicable regulations.  See 42 C.F.R. §§ 422.222(a)(6), 423.120(c)(6)(vi).  Absent a finding of “exceptional circumstances” regarding beneficiary access to Part C items, services, or drugs, or Part D prescriptions, CMS had no basis to remove Petitioner from the preclusion list.  See id.

B. The “letters of reference” supporting Petitioner’s efforts to have his state medical license reinstated do not demonstrate “exceptional circumstances” regarding beneficiary access to care or services.

Petitioner’s further contention that he is pursuing reinstatement of his California medical license, as evidenced by five “letters of reference” from former colleagues, also fails to show exceptional circumstances warranting his removal from the preclusion list.  RR at 4, 6-15.  Petitioner argues that the letters show he is “remorseful for the mistakes” he made and “strongly predict” that he will not “re-offend.”  Id. at 4.  One letter, Petitioner

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points out, states that Petitioner is “an excellent physician and surgeon,” that he “has been missed,” and is “seriously needed in the Anchorage Medical Community.”  Id. at 4-5, 9.

The letters, however, do not demonstrate “exceptional circumstances” regarding beneficiary access to items, services, or drugs under Medicare Parts C or D due to Petitioner’s placement on the preclusion list.  Rather, the letters show that Petitioner’s state medical licenses were revoked, and that he is not authorized to practice medicine in either California or Alaska.  RR at 6 (“[Petitioner] has been gone from [the Anchorage] medical community since mid-2016….”); 7 (“My understanding is that activation of his California Medical License would expedite activation of his Alaska Medical License.”); 8 (“He unfortunately was forced to leave our medical community in mid-2016.”); 8-9 (“[Petitioner] worked … to get his Alaska Medical License reactivated from having lapsed in 2017, but … he was not qualified to apply for his Alaska Medical License because his California License was revoked in 2018.”).  No evidence in the record demonstrates that Petitioner holds any medical license that would lawfully allow him to provide medical care to any patients, much less beneficiaries of Medicare Parts C and D.  See, e.g.,Alaska Stat. Ann. § 08.64.170 (West 2022) (“A person may not practice medicine . . . in [Alaska] unless the person is licensed . . . .”).

Petitioner did not show that he can participate in Medicare Parts C and D without a medical license.  Nor did he show that his placement on the preclusion list impaired beneficiary access to Part C items, services, or drugs, or Part D prescriptions.  Thus, none of the “letters of reference” demonstrate “exceptional circumstances” that would compel CMS to remove Petitioner from the preclusion list.  Again, absent evidence of “exceptional circumstances” as described in the regulations, CMS had no basis to remove Petitioner from the preclusion list.  See 42 C.F.R. §§ 422.222(a)(6), 423.120(c)(6)(vi).

C. The Board has no authority to overturn CMS’s preclusion list determination based on “equitable grounds.”

Finally, Petitioner contends that the decision to place him on the preclusion list should be overturned based on unspecified “equitable grounds.”  RR at 5.  It is well-settled that the Board and ALJs are bound by applicable statutes and regulations and are not authorized to provide equitable relief.  See Aziz at 14; see also Dobbin at 19 (“[T]he Board has long held that ALJs and the Board are not authorized to restore billing privileges on equitable grounds.”); US Ultrasound, DAB No. 2302, at 8 (2010) (“Neither 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.”).  The ALJ did not err in declining to overturn CMS’s preclusion list determination on equitable grounds.  ALJ Decision at 5-6 (“So long as CMS establishes a basis for placing Petitioner on the preclusion list, I must uphold its doing so.”).

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Conclusion

We affirm the ALJ Decision upholding Petitioner’s placement on the preclusion list because it is supported by substantial evidence and not legally erroneous.

Endnotes

¹ We cite to and apply the regulations in effect on January 24, 2020, the date of the preclusion list determination at issue here (CMS Ex. 2).  See Anthony Del Piano, M.D., DAB No. 3096, at 2 n.2 (2023); see also 84 Fed. Reg. at 15,680 (amending preclusion list regulations effective January 1, 2020).

² The definition of preclusion list under Part D uses the term “prescriber” in place of the phrase “individual or entity.”  Compare 42 C.F.R. § 422.2 (Part C), with id. § 423.100 (Part D).  For purposes of this decision, we use the phrase “individual” to include the term “prescriber.”

³ CMS indicates that Petitioner’s “offense” occurred “several years ago” in 2016.  Reconsidered Determination at 4.  We clarify that Petitioner committed crimes from 2007 to 2011, while Petitioner’s judgment of conviction is dated April 25, 2016.  CMS Ex. 5, at 3; CMS Ex. 7, at 1.

⁴ Absent a reconsidered determination, CMS’s (or its contractor’s) initial determination becomes binding, administratively final, and not subject to ALJ review. David Plitt, M.D., DAB No. 3129, at 6 (2024);42 C.F.R. §§ 498.20(b), 498.82(a)(2).

⁵ Petitioner filed his request for review by mail.  A complete copy of the request for review was uploaded to DAB E-File on November 9, 2022.  Dkt. 6.  The copy previously uploaded to DAB E-File (Dkt. 4) is missing one page due to a scanning error.

⁶ The “letters of reference” attached to Petitioner’s request for review are not numbered or marked as exhibits.  We cite to the PDF page numbers of the request for review when referring to the letters.  While each of the letters are dated months before the date of the ALJ Decision, Petitioner offered no explanation for his failure to submit the letters to the ALJ.

⁷ CMS may revoke Medicare billing privileges or deny enrollment “based on any financial crime, regardless of whether the supplier’s particular financial crime is specified in the regulation’s illustrative list of financial crimes.”  See Stanley Beekman, D.P.M., DAB No. 2650, at 7 (2015) (explaining that the list of financial crimes under section 424.535(a)(3) is non-exhaustive).

⁸ Res judicata is an affirmative defense, making it incumbent on the petitioner to plead and prove such a defense.  See Michael Scott Edwards, OD, and M. Scott Edwards, OD, PA, DAB No. 2975,at 12 (2019).

⁹ Apart from the requirement in sections 422.2 and 423.100 that the individual be convicted “within the previous 10 years,” no other provision in the regulations requires CMS to place an individual on the preclusion list within a certain timeframe.  Cf. Blair Allen Nelson, M.D., DAB No. 3024, at 12 (2020) (explaining that CMS may revoke a supplier’s billing privileges at any time if the regulatory elements are satisfied).