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From Health Law Daily, October 10, 2018

Revocation of medical practitioner’s Medicare billing rights withstands scrutiny

By George Basharis, J.D.

The revocation of a medical practitioner’s Medicare billing rights met the regulatory criteria to authorize CMS to revoke those rights, the HHS Departmental Appeals Board (DAB) determined. The practitioner’s conviction for obstructing a federal audit took place within 10 years prior to the revocation, and the offense that was the basis of the conviction was similar to the financial crimes outlined in the regulations as detrimental to the Medicare program. The practitioner’s alternative argument that the revocation violated the constitutional prohibition against excessive fines was without merit (Donohue v. CMS, Docket No. A-18-33, Decision No. 2888, August 14, 2018).

Background. In June 2016, CMS revoked the Medicare billing rights of a medical practitioner based on his 2006 conviction by a federal court of obstructing a federal audit. Under the regulations governing Medicare enrollment, CMS is authorized to revoke a health care supplier’s Medicare billing privileges for the conviction of certain criminal offenses. Revocation is authorized if the supplier was convicted of a federal or state felony offense that CMS determines is detrimental to the best interests of the Medicare program and its beneficiaries. Actionable offenses include financial crimes, including extortion, embezzlement, income tax evasion, insurance fraud, and similar crimes.

Administrative law hearing. In response to the revocation by CMS, the medical supplier requested a hearing before an administrative law judge (ALJ). The ALJ granted CMS’s motion for summary judgment, finding that the practitioner had not disputed the fact, date, or nature of his felony conviction and had raised only legal issues properly addressed on summary judgment. The ALJ held that the practitioner was subject to revocation under the regulations because his conviction for obstructing a federal audit occurred within 10 years prior to revocation, and because his criminal offense was one that CMS had determined was "detrimental" to the Medicare program and its beneficiaries. Further, the practitioner’s illegal conduct was similar to insurance fraud, one of the financial crimes listed in the regulations.

Detrimental to Medicare. The DAB decided that CMS had established a lawful basis for the revocation of the practitioner’s billing rights. There was no dispute that the practitioner’s conviction took place within the regulatory time period of 10 years prior to revocation. The only issue for the DAB to determine was whether the ALJ was correct in finding that the conviction was one that CMS found to be detrimental to Medicare and its beneficiaries. The DAB held that the categories of offenses specified in the regulations as financial crimes were those that CMS determined by rulemaking to be detrimental to Medicare as a matter of law. CMS found that insurance fraud, one of the offenses named in the regulations, was detrimental to Medicare as a matter of law. The ALJ agreed, finding that the offense for which the practitioner was convicted was similar to insurance fraud.

The DAB concurred with the ALJ’s finding. According to the Board, CMS reviewed the specific circumstances of the practitioner’s offense and noted that the practitioner had created false medical records and submitted them to the Medicare contractor, which was a private insurance carrier, during a federal audit. CMS concluded that the practitioner’s creation and submission of false medical records were detrimental to Medicare because the actions eroded trust in the program’s providers and suppliers.

No constitutional prohibition. The practitioner also argued that revocation of his billing privileges violated the constitutional prohibition against "excessive fines." The practitioner contended that revocation was punitive and an improper expansion of the criminal fines and restitution imposed for the conviction. The DAB found that the practitioner’s contentions did not provide a basis to reverse the revocation. The practitioner waived any right to invoke the Excessive Fines Clause as a defense to a revocation when settling civil damage claims. Further, the DAB lacks the authority to overturn the revocation on constitutional grounds.

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