DOUGLAS P. WOODLOCK, District Judge.
Plaintiff-Petitioner Abdul Razzaque Ahmed, M.D. filed this action against Defendant-Respondent Kathleen Sebelius, the Secretary of the United States Department of Health and Human Services (the "Secretary"), seeking judicial review of a final decision by the Department of Health and Human Services ("HHS") revoking his Medicare billing privileges. See 42 U.S.C. § 405(g). The decision, rendered by the Appellate Division of the Departmental Appeals Board ("DAB"), was based on Ahmed's felony conviction for obstruction of a criminal investigation into health care offenses in violation of 18 U.S.C. § 1518. The Secretary, in support of this final decision, has filed a motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c), or in the alternative, for summary judgment under Rule 56. Ahmed, seeking to have the final decision reversed, has filed a cross-motion for judgment on the pleadings or for summary judgment. I will grant the Secretary's motion.
Ahmed is a Massachusetts dermatologist who specializes in the diagnosis and treatment of autoimmune skin blistering diseases.
The Medicare program provides health insurance benefits to individuals over age sixty-five and to certain disabled persons. Social Security Act § 1811, 42 U.S.C. § 1395c. Medicare is administered by the Centers for Medicare and Medicaid Services ("CMS"), an agency of HHS. Congress has granted the Secretary broad authority to issue regulations relating to the administration of Medicare pursuant to Sections 1102 and 1871 of the Social Security Act. See 42 U.S.C. § 1302(a) (authorizing the Secretary to "make and publish such rules and regulations ... as may be necessary to the efficient administration of the functions" of Medicare); id. at § 1395hh(a)(1) ("The Secretary shall prescribe such regulations as may be necessary to carry out the administration of the [Medicare] insurance programs...."). A physician wishing to participate in Medicare must first enroll in the program to receive Medicare billing privileges and a billing number. 42 C.F.R. §§ 424.500.505.
To maintain billing privileges, physicians must complete the applicable enrollment application and revalidate their Medicare enrollment information every five years. 42 C.F.R. § 424.515. The application requires the physician to list any "final adverse actions" including any felony convictions.
In addition, CMS has regulatory authority to revoke a physician's Medicare enrollment and billing privileges in certain instances. 42 C.F.R. § 424.535(a). Relevant to this case is the regulation permitting revocation if, "within the 10 years preceding enrollment or revalidation of enrollment," the physician "was convicted of a Federal or State felony offense that CMS has determined to be detrimental to the best interests of the [Medicare] program and its beneficiaries." § 424.535(a)(3).
From 1997 through 2001, Ahmed's medical practice focused on the treatment of pemphigus and pemphigoid, two autoimmune skin blistering diseases, using intravenous immunoglobulin ("IVIg"). This
In June 2000, Ahmed was served with a subpoena for medical records of the patients whom he had treated with IVIg. In response, Ahmed produced ninety-four patient files, some of which he improperly supplemented with backdated documents, including correspondence and immunopathology reports that falsely diagnosed the patients with both diseases. Ultimately, Ahmed was charged criminally in a fifteen count superceding indictment, including charges of mail fraud, health care fraud, obstruction of a criminal investigation of health care offenses, and money laundering. On November 5, 2007, Ahmed entered into a plea agreement with the United States pursuant to which he pled guilty to Count 12, which charged obstruction of a criminal investigation of a health care offense under 18 U.S.C. § 1518;
During the plea colloquy, the prosecutor recited certain evidence that would have been adduced had the case gone to trial:
Judge Lindsay, to whom the criminal case was then assigned, inquired whether Ahmed "disagree[d] with anything [the prosecutor] said." Ahmed replied, "No, your Honor."
On January 8, 2009, during Judge Lindsay's prolonged illness, Ahmed was sentenced by Judge Tauro to two years of probation of which six months were to be in home confinement, and he was ordered to provide 400 hours of free medical service as a condition of probation.
On November 8, 2007, three days after his guilty plea, Ahmed received a letter from the National Heritage Insurance Co. ("NHIC"), a Medicare contractor, stating that Ahmed's Medicare Provider Transaction Access Numbers and billing privileges were being revoked on December 9, 2007 with an effective date of November 5, 2007, based on his conviction. The letter cited 42 C.F.R. § 424.535(a)(3)(i)(B), which permits revocation of a physician's Medicare enrollment and billing privileges if the physician "within the 10 years preceding enrollment or revalidation of enrollment, was convicted of a Federal or State felony offense that CMS has determined to be detrimental to the best interests of the program and its beneficiaries" under a specific subsection applicable to "[f]inancial crimes, such as extortion, embezzlement, income tax evasion, insurance fraud and other similar crimes for which the individual was convicted, including guilty pleas and adjudicated pretrial diversion."
On December 13, 2007, Ahmed requested reconsideration of the revocation of his Medicare billing privileges by a NHIC hearing officer who issued a decision sustaining the revocation on March 12, 2008. On May 9, 2008, Ahmed requested a hearing before an HHS administrative law judge ("ALJ"), who issued a decision on November 14, 2008 affirming the revocation. Ahmed then appealed the ALJ's decision to the DAB, and on July 2, 2009, the DAB issued its Final Decision, affirming the ALJ decision to uphold the revocation of Ahmed's Medicare billing privileges. The DAB's decision effectively became the
On August 31, 2009, Ahmed filed the complaint now before me, alleging that the Secretary's revocation of his Medicare enrollment violated the Administrative Procedure Act ("APA"), the Medicare Act, and due process. He seeks the following relief: that the DAB decision be set aside, that his enrollment in the Medicare program be reinstated, and that he be reimbursed for Medicare services provided during the revocation period.
Any Medicare provider or supplier whose billing privileges are revoked may have a hearing and judicial review under Section 1866(j) of the Social Security Act, codified in 42 U.S.C. § 1395cc(j). See 42 C.F.R. § 498.1(g). Judicial review of the Secretary's final decision proceeds pursuant to 42 U.S.C. § 405(g). See 42 U.S.C. §§ 1395cc(h)(1)(A), (j)(2).
Under the review provision, the district court has the "power to enter, upon the pleadings and transcript of the record, a judgment affirming, modifying, or reversing the decision of the [Secretary], with or without remanding the cause for a rehearing." § 405(g).
In order for the Secretary to revoke Ahmed's billing privileges properly under § 424.535(a)(3), two conditions must be satisfied: first, the supplier must have been convicted of a designated federal or state felony offense that CMS has determined to be detrimental to the best interests of the Medicare program and its beneficiaries, and second, the conviction must have occurred within the ten years preceding enrollment or revalidation of enrollment. Ahmed challenges the Secretary's decision to revoke his Medicare billing privileges on the grounds that neither condition was met, and that the decision violated his due process rights. I review the Secretary's decision against this challenge and assess whether it is supported by substantial evidence and is legally correct.
Ahmed argues that CMS improperly revoked his Medicare enrollment and billing privileges based on the "erroneous conclusion" that his conviction for obstruction constituted a "financial crime" under 42 C.F.R. § 424.535(a)(3)(i)(B).
Ahmed attempts to distinguish his felony conviction for obstruction of the criminal investigation of a health care offense from the four financial crimes listed in the regulation, each of which purportedly require a showing of actual or intended financial harm to another. I agree with the Secretary, however, that the regulation should not be interpreted so narrowly.
The obstruction charge for which Ahmed was convicted is a criminal offense that bears the DNA of insurance fraud in the health care setting. Ahmed created and submitted false documents that could support claims for Medicare coverage of his patients' IVIg treatments. The DAB properly concluded that this conduct, as does insurance fraud, "involves a false statement or misrepresentation in connection with a claim or application for insurance or insurance benefits." Moreover, as recited in the DAB decision, Ahmed stated in briefing to the ALJ that he had "placed false letters and immunopathology reports into his patients' files to bolster the reimbursements he received from Medicare." The offense involves the cover up dimension of criminal conduct striking at the essential financial integrity of the Medicare insurance program.
Ahmed also relies on the separate Medicare participation exclusion statute to distinguish
I reject Ahmed's argument because, as the DAB correctly explained, the regulatory revocation under § 424.535 and the statutory exclusion under § 1320a-7 are "distinct remedial tools, each with its own set of prerequisites and consequences."
Under the revocation provision, the physician is barred from participating in Medicare from the effective date of the revocation until the end of the re-enrollment bar, which ranges between one and three years depending on the severity of the basis for revocation. § 424.535(c). To re-enroll after revocation, the physician must complete and submit a new enrollment application and applicable documentation as a new supplier for validation by CMS. § 424.535(d)(1).
The exclusion of a physician from participation in Medicare also has a finite time period, but the duration of exclusion differs depending on the crime committed. For mandatory exclusion under § 1320a-7(a)(3) based on a felony conviction relating to health care fraud, the minimum period of exclusion is not less than five years.
Although there are a variety of differences in details, a primary difference between revocation and exclusion appears to be in the collateral consequences. Revocation bars a supplier from participation in the Medicare program. 42 C.F.R. § 424.535. Exclusion extends beyond Medicare to Medicaid and all other federal health care programs. 42 U.S.C. § 1320a-7. "Federal health care program" is defined as "any plan or program providing health care benefits, whether directly through insurance or otherwise, that is funded directly, in whole or part, by the United States Government ... or any State health care program...." 42 C.F.R. § 1001.2.
In the final analysis, even if Ahmed's felony conviction is somehow conceived as not expressly financial in nature, I am persuaded that his admitted obstruction of a criminal investigation of a health care offense here is the type of similar felony that CMS would properly consider "to be detrimental to the best interests" of Medicare and its beneficiaries because of its financial implications. See § 424.535(a)(3). Significantly, as the DAB noted, Ahmed pled guilty to obstruction of a health care fraud investigation, not a generic obstruction charge, and his offense was "inextricably linked to Medicare's finances," as evidenced by Ahmed's forfeiture of $2.9 million to the federal government. In his plea agreement, Ahmed specifically admitted that $2.9 million was "subject to forfeiture on the grounds that it constitutes, or was derived, directly or indirectly, from gross proceeds traceable to the commission of the [obstruction] offense...." (emphasis added). Indeed, in his Sentencing Memorandum, to which his counsel has directed reference, see Note 1 supra, Ahmed agreed "that Medicare paid $5,418,601.07 for the IVIg treatment of patients for whom Dr. Ahmed created false letters and immunopathology reports." Although Ahmed now contends that forfeiture "does not transform his conviction for obstruction into a financial crime," the specific circumstances of the underlying criminal proceeding, as underscored by his admissions in that proceeding, prove otherwise.
I therefore conclude, as a substantive matter, that substantial evidence supports the Secretary's determination that Ahmed's conviction under § 1518 fell within the scope of relevant financial crimes detrimental to the best interests of Medicare and that the Secretary applied the correct construction of her regulations in reaching this conclusion.
Ahmed next argues that even if the Secretary properly determined that he committed a relevant crime, she should not have revoked his Medicare privileges without first engaging in some sort of revalidation process. To revoke Ahmed's Medicare billing privileges, his felony conviction must have occurred "within the 10 years preceding enrollment or revalidation of enrollment." § 424.535(a)(3). Neither party disputes that Ahmed's initial enrollment in Medicare occurred over ten years before his felony conviction. Therefore, the issue is whether revalidation occurred.
Section 424.515 outlines two types of revalidations. First, a provider or supplier "must resubmit and recertify the accuracy of its enrollment information every 5 years," and they "are required to complete the applicable enrollment application."
Ahmed contends that, in the three days between his guilty plea on November 5, 2007 and the revocation of his billing privileges on November 8, no event occurred "that would qualify as an `enrollment' or `revalidation' proceeding." However, he erroneously imports a "proceeding" requirement into the regulation where no such language exists. As the DAB correctly noted, "section 424.535(a)(3) does not require CMS (or its contractor) to notify a supplier that revocation is being contemplated, nor does it require CMS to allow the supplier an opportunity to petition against a proposed or contemplated revocation." Rather, the DAB has consistently interpreted revalidation as "a process that involves not only the submission of information by the participant, but CMS verification of continued eligibility for enrollment." Robert F. Tzeng, M.D., DAB No. 2169, at 11 (Apr. 3, 2008) (emphasis in original). Revalidation has occurred, for example, when the CMS contractor obtains information that the physician was convicted of a felony offense, at which point the contractor is "authorized to make the determination to revoke [the physician's] enrollment and billing privileges." Mikhail Strutsovskiy, M.D., DAB No. CR2109, at 8 (Apr. 9, 2010); see also Tzeng, DAB No. 2169, at 11 ("Because the acquisition and review of information about a prior conviction was undertaken to verify Dr. Tzeng's continued eligibility for enrollment in Medicare, that exercise was an attempt to revalidate his enrollment.").
Moreover, the DAB has rejected the suggestion that "revalidation does not occur unless or until CMS requests revalidation" because "section 424.535(a)(3) does not require that the disqualifying conviction occur within 10 years preceding a request for revalidation. It merely provides that the conviction must have occurred within 10 years preceding `revalidation.'" Id. at 11-12 (emphasis in original). Ahmed disputes the Secretary's interpretation "because the regulations do not flesh out what is required for a `revalidation,' [and] that gives CMS the ability to call any act a revalidation." Specifically, Ahmed objects to the conclusion that "even the passive act of receiving information that a physician was convicted of a felony can constitute revalidation" because that "nonsensical" reading would render the revalidation requirement meaningless. I find, to the contrary, that § 424.515 expressly provides for event-triggered revalidation: "[o]ff cycle revalidations may be triggered as a result of random checks, information indicating local health care fraud problems, national initiatives, complaints, or other reasons that cause CMS to question the compliance of the provider or supplier with Medicare enrollment requirements." § 424.515(d)(1). That is precisely what happened here and it made a great deal of sense.
Ahmed's conviction triggered an off-cycle revalidation in November 2007, when CMS and/or NHIC acquired or reviewed information that Ahmed had pled guilty to a felony related to health care reimbursement. The deliberative process did not end there because the felony conviction did
More broadly, Ahmed contends that his due process rights were violated because a revalidation process did not occur before CMS and/or NHIC made the revocation decision. He insists that revalidation is "an important procedural safeguard that provides Medicare participants and their patients with notice and an opportunity to be heard before a provider's billing privileges are revoked." Ahmed claims that if given that opportunity, he would have clarified "the true circumstances of his crime" and demonstrated "that his Medicare patients had access to few, if any, comparable treatment sources."
The constitutional right to due process requires notice and a meaningful opportunity to respond. Chmielinski v. Massachusetts, 513 F.3d 309, 316 (1st Cir. 2008). Both of these requirements were met in this case.
With respect to notice, Ahmed received a letter from NHIC on November 8, 2007 before his billing privileges were revoked on December 9, 2007. That letter also detailed an opportunity for Ahmed to obtain "an independent review" by requesting "an on-the-record reconsideration."
With respect to a meaningful opportunity to respond, the Supreme Court "has recognized, on many occasions, that... where it would be impractical to provide predeprivation process, postdeprivation process satisfies the requirements of the Due Process Clause." Gilbert v. Homar, 520 U.S. 924, 930, 117 S.Ct. 1807, 138 L.Ed.2d 120 (1997) (unanimous). "An important government interest, accompanied by a substantial assurance that the deprivation is not baseless or unwarranted, may in limited cases demanding prompt action justify postponing the opportunity to be heard until after the initial deprivation." FDIC v. Mallen, 486 U.S. 230, 240, 108 S.Ct. 1780, 100 L.Ed.2d 265 (1988) (unanimous). Substantial assurance that the deprivation was warranted may occur when "an independent third party has determined that there is probable cause to believe the [individual] committed a serious crime." Gilbert, 520 U.S. at 934, 117 S.Ct. 1807; cf. Guillemard-Ginorio v. Contreras Gomez, 161 Fed.Appx. 24, 29 (1st Cir.2005) (per curiam). Once Ahmed was convicted of a crime manifesting an intent to manipulate the Medicare reimbursement system and to obstruct the criminal justice system which polices it, there was more than adequate need for prompt action to revoke his privileges to participate in the system.
An elaborate pre-revocation process before the initiation of a felony-based revocation is not required for those convicted, as Ahmed was, of any felony within the terms of § 424.535(a)(3). The regulation specifically recognizes such circumstances are exceptional by providing that when a "provider
For the reasons set forth more fully above, I GRANT the Defendant's motion (Doc. No. 11) for judgment on the pleadings, or in the alternative, for summary judgment. I DENY the Plaintiff's cross-motion (Doc. No. 14) for judgment on the pleadings.
