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From Health Law Daily, April 27, 2017

No-contest plea means revocation of doctor’s Medicare billing privileges

By Susan L. Smith, J.D., M.A.

The administrative law judge (ALJ) properly determined that CMS lawfully revoked a physician’s Medicare billing privileges based on his plea of no contest to three felony counts of failing to file a state income tax return, according to the Departmental Appeals Board (DAB). The DAB, however, modified the effective date of the revocation from February 17, 2015, the date the physician was notified of that his billing privileges were being revoked, to November 3, 2008, the date the physician entered his plea of no contest and was convicted. Based on the rules for revocation at 42 C.F.R. Sec. 424.535(g), when a revocation is based on a felony conviction, the revocation’s effective date is the date of the conviction (Johnson v. CMS, Docket No. A-16-62, Decision No. 2779, March 30, 2017).

The events. About two months after the Medicare administrative contractor (MAC) issued the initial letter of the revocation determination on February 17, 2015, the state court reduced the physician’s felony convictions to misdemeanors when the physician presented proof of restitution payments. The physician then filed a request for reconsideration with the MAC contending there was no longer a basis for revocation. The MAC rejected the motion for reconsideration stating that although the charges had been reduced to misdemeanors physician had pled no contest to the felony charges and there was no evidence to show the physician was in full compliance with the standards. The physician then requested an ALJ hearing and provided "new evidence" for the ALJ to consider.

ALJ’s decision. The ALJ granted summary judgment to CMS finding there were no disputes of material fact and CMS had appropriately revoked the physician’s Medicare enrollment and billing privileges under 42 C.F.R. Sec. 424.535(a)(3) as a result of the physician’s state felony conviction on November 3, 2008. The ALJ rejected the physician’s argument that the post-conviction relief he had received meant that he had not been convicted of a qualifying felony (see ALJs upheld CMS revocations, enrollment denials, and effective dates, March 21, 2016). The ALJ determined that because he could not find good cause for the physician’s failure to present new evidence at the reconsideration stage, he could not consider the new evidence presented under the requirements of 42 C.F.R. Sec. 498.56(e).

The ALJ also rejected the physician’s due process arguments, finding the physician had received adequate notice of his rights in the notice of initial determination and at the reconsideration and hearing stages of the case. The ALJ denied the physician’s request that the case be remanded to CMS because CMS opposed the remand, the physician had not identified any new issues that need to be addressed, and the physician did not point to any legal requirement that CMS has to consider mitigating evidence related to revocation.

Finally, the ALJ concluded that it did not have the authority to review the exercise of discretion by CMS or the MAC to revoke Medicare billing privileges where there is a basis for revocation.

DAB’s decision. The physician contended that the ALJ (1) incorrectly resolved whether the MAC exercised discretion in revoking his Medicare billing privileges; (2) overlooked a claim that the MAC improperly served the revocation letter; (3) should have remanded the case to CMS to consider the "new evidence"; and (4) erroneously determined the revocation effective date. The DAB agreed with the ALJ that it is CMS’ exercise of discretion that is at issue, not the MAC’s, and concluded that the ALJ was entitled to presume that CMS exercised that discretion based on the record of the case proceedings and nothing in the record rebuts that presumption. Further, the DAB agreed that the ALJ was not authorized to review CMS’ exercise of discretion.

The DAB also found that the ALJ had not committed an error in rejecting the physician’s claim that he was denied due process. The letter of notification of revocation had no defect of service and the physician made no showing of actual prejudice. Further, he was represented by a lawyer who could have made proper inquiries to ensure that he had received a complete copy of the letter. In addition, the DAB agreed with the ALJ’s conclusion that the physician had not pointed to any legal requirement that CMS or its contractors must consider mitigation evidence when determining whether to revoke. If CMS proves that the revocation was based on conviction of a qualifying felony, ALJs and the DAB must sustain the revocation.

The DAB affirmed the ALJ’s conclusion that CMS had a basis to revoke the physician’s Medicare billing privileges under 42 C.F.R. 424.535(a)(3), however, it modified the ALJ decision to leave the effective date of February 17, 2015, as set out by the MAC. The DAB determined that ALJ should have set the effective date in accordance with the rule that requires the revocation to be effective the date of the physician’s felony conviction. Therefore, the DAB changed the effective date to November 8, 2008.

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