Health Law Daily Wrap Up, ADMINISTRATION OF MEDICARE/MEDICAID PROGRAMS—DAB DECISIONS: DAB rejects res judicata defense, ex post facto constitutional argument in preclusion list appeal, (May 19, 2025)

By Justin Marcus Smith, J.D.

The physician-petitioner either raised arguments for the first time or they did not apply where the evidence supported preclusion based on “severe” felony convictions per se detrimental to the best interests of the Medicare program.

The Departmental Appeals Board (DAB) of the U.S. Department of Health and Human Services affirmed an administrative law judge (ALJ) decision that upheld a convicted physician-petitioner’s second placement on the Medicare preclusion list, after an earlier removal. Substantial evidence supported the decision, and it was not legally erroneous. The DAB said the petitioner’s res judicata affirmative defense could not apply, even if it had been raised below, because the earlier of the two preclusion list determinations was “not adjudicated or settled by judicial decision.” Rather, the first preclusion list placement was an administrative action in a process that could involve multiple levels of administrative appeal. The DAB also said it had already considered and rejected the notion that preclusion list regulations are an unconstitutional ex post facto law. The DAB reasoned that placement on the preclusion list is meant to protect the Medicare program, it is not meant to be punitive, and, in any event, preclusion applies to prospective Medicare program participation. The petitioner also waived arguments about the date of his conviction, but regulations and evidence supported that it occurred in 2016, not 2015, based on entry of the judgment of conviction in 2016. The DAB said it was not authorized to consider equitable arguments; the equitable circumstances the petitioner described did not perfect exceptional circumstances pertinent to impairment of beneficiary access; and, the petitioner could not collaterally attack his conviction in the DAB forum (Bradner v. CMS, Docket No. A-22-86, Decision No. CR6058, Mar. 10, 2025).

Background. An Alaska federal district court jury convicted the petitioner, a physician, of four felony counts of wire fraud and three felony counts of tax evasion in connection with a scheme to defraud his wife in divorce proceedings. A Medicare administrative contractor (MAC) revoked the petitioner’s Medicare enrollment and billing privileges based on the felony convictions and imposed a three-year reenrollment bar. CMS added the petitioner to the preclusion list. The petitioner did not request reconsideration of these determinations. That made them administratively final.

On June 1, 2019, the petitioner’s three-year reenrollment bar expired and CMS removed the petitioner from the preclusion list; however, by notice dated January 24, 2020, CMS informed the petitioner that it was placing him on the preclusion list again because he had been convicted of felonies within the previous 10 years, circumstances CMS found detrimental to the best interests of the Medicare program.

CMS upheld the petitioner’s placement on the preclusion list based on the felony convictions because they were “per se detrimental to the best interests of the Medicare program and its beneficiaries.” CMS explained further that tax evasion was an enumerated per se detrimental crime, the wire fraud conviction was akin to the enumerated per se detrimental crime of insurance fraud, and the severity of the felonies implicated trustworthiness. CMS further noted the petitioner was imprisoned for 48 months because of his convictions.

On reconsideration, an administrative law judge (ALJ) sustained the petitioner’s placement on the preclusion list. At the outset, the ALJ found no authority to review the initial CMS determinations because the petitioner never requested reconsideration of them. As for the replacement on the preclusion list, the ALJ found CMS was authorized to do that based on his felony convictions within the preceding 10 years, as detrimental to the best interests of the Medicare program. The ALJ noted the 2016 date of the conviction(s) controlled.

The petitioner argued, for the first time on reconsideration, that the CMS revocation, reenrollment bar, and 2019 preclusion list determinations were upheld in error because he did not receive notice of the determinations. The petitioner also argued he was wrongly convicted and imprisoned; that he was convicted of crimes that took place over 10 years ago; and, that he served is prison sentence “with good behavior.” He also cited his status as an Army veteran and 34 years of unblemished patient care, but the ALJ explained that ALJs cannot overturn valid agency action on equitable grounds.

The petitioner then filed a Request for Review (RR) challenging the ALJ’s preclusion list determination. The petitioner did not dispute his convictions within the previous 10 years. He argued the ALJ erred in upholding the second placement on the preclusion list. The petitioner said the ALJ decision violated res judicata and involved an unconstitutional ex post facto law. The petitioner further asserted that he was convicted in early November 2015, not April 2016.

Preclusion list. The DAB affirmed CMS had a lawful basis to place the petitioner on the preclusion list. Substantial evidence supported it, and it was not legally erroneous. The DAB went into considerable detail about the “severe” circumstances of the petitioner’s felony wire fraud and tax evasion convictions stemming from his divorce proceedings. The DAB found no error in the CMS assessment that the “sophistication, complexity, severity, and length” of the predicate conduct of the felony convictions was “severe” and plainly detrimental to the best interests of the Medicare program. The record evidence plainly showed the crimes were financial in nature and involved financial misconduct. They were per se detrimental to the Medicare program for purposes of revocation and enrollment. As for whether the petitioner was “falsely convicted,” the petitioner could not collaterally attack his convictions in this forum, so there was no error in the ALJ conclusion that the collateral attack was impermissible. For all these reasons, the DAB found the preclusion list requirements were met and affirmed the ALJ conclusion that CMS had a lawful basis for placing the petitioner on it.

No res judicata. The DAB held that the petitioner’s res judicata argument had no merit. The petitioner also did not raise this affirmative defense earlier. The DAB related that it had considered and rejected a similar argument in Michael Scott Edwards, OD, and M. Scott Edwards, OD, PA, DAB No. 2975,at 11-13 (2019). Res judicata did not apply in that matter or this one because the earlier of the two preclusion list determinations was “not adjudicated or settled by judicial decision.” There was no lawsuit, and the petitioner did not even challenge the first preclusion list determination. The CMS initial decision to place an individual on the preclusion list is not a “final judgment,” it was the just first step in a process that can lead to multiple levels of administrative appeal. Nothing in the law or regulations allowed the ALJ or the DAB to disregard preclusion list placement for felony convictions merely because of a prior placement on it based on revocation of Medicare enrollment. Regulatory elements were satisfied. There was no basis to overturn.

No retroactive effect. The DAB said it had already considered and rejected the notion that preclusion list regulations are an unconstitutional ex post facto law in Anthony Del Piano, M.D., DAB No. 3096, at 28-29 (2023). Again, the petitioner did not raise this argument earlier. Preclusion is remedial to protect the Medicare program. It is not a punitive action, so it cannot have retroactive punitive effect, and it only applies to prospective participation in the Medicare program. The second preclusion list placement was lawful under the regulations, the DAB was bound to follow them, and the DAB had no authority to invalidate them on constitutional grounds.

Waiver. The petitioner waived any challenge to the date of his conviction. He did not challenge it earlier. The DAB rejected the argument for that reason alone. However, substantial evidence in the record supported the ALJ finding that the petitioner was convicted in 2016 when the court entered his judgment of conviction. The petitioner submitted no evidence to the contrary.

No exceptional circumstances. The DAB held the petitioner did not show any “exceptional circumstances” that would compel CMS to remove him from the preclusion list. Post-conviction conduct and related arguments about rehabilitation, veteran status, and long record of patient care did not show that preclusion list placement caused an impairment of beneficiary access to Part C items, services, and drugs, or Part D prescriptions. The petitioner did not show that any Medicare Advantage plan asked CMS to remove the petitioner from the preclusion list based on care access concerns. Letters from colleagues suggesting the petitioner was remorseful and not likely to re-offend did not show care access concerns, especially where the petitioner’s state medical licenses had been revoked, so he could not practice anyway. The petitioner made no showing of exceptional circumstances that would compel CMS to remove him from the preclusion list. Last, the DAB noted it is well-settled that it is not authorized to provide equitable relief.

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