Health Law Daily Wrap Up, ADMINISTRATION OF MEDICARE/MEDICAID PROGRAMS—DAB DECISIONS: Hearing Officer erred in finding improper affiliation between Petitioner and an unrelated hospice, (Jun 9, 2026)

By Jeffrey H. Brochin, J.D.

Although Petitioner’s Medical Director—who resigned—had also been the Medical Director of a hospice whose enrollment and billing privileges were revoked, that did not establish a relationship between the hospice and Petitioner that met the criteria for an “affiliation.”

The Department of Health and Human Services Departmental Appeals Board (DAB or Board) Civil Remedies Division has reversed the decision of Centers for Medicare & Medicaid Services’ (CMS) which revoked the Medicare enrollment and billing privileges of Petitioner, St. Joseph Healthcare Agency, Inc., and imposed a 10-year reenrollment bar, and further listed Petitioner on CMS’s preclusion list. CMS had no basis for any of those actions due to the fact that they were based on an erroneous reading of the regulation’s definition of an affiliation. The Petitioner had no knowledge when he hired his Medical Director, that the doctor was also serving as Medical Director of another hospice, one whose enrollment and billing privileges had been revoked. Accordingly, there was no risk of fraud, waste and abuse by the Petitioner which would mandate the revocation of his own privileges (St. Joseph Healthcare Agency, Inc., DAB No. CR67879, Doc. No. Docket No. C-25-792 (April 20, 2026)).

The hiring of a new Medical Director. On April 6, 2022, Petitioner entered a professional services agreement with Dr. Aguiluz, M.D., contracting for him to serve as Petitioner’s medical director. The contract provided that Dr. Aguiluz was an independent contractor and not an employee, agent, partner, or in a joint venture with Petitioner, and the one-year contract provided it would continue year-to-year until terminated. Dr. Aguiluz had no role in billing, which was handled by a third-party billing company. Dr. Aguiluz never disclosed that he had a managerial role at Forever Hospice (Forever) or that Forever’s Medicare enrollment had been revoked for billing related misconduct. Furthermore, the Petitioner’s owner and CEO testified that he had no knowledge of Dr. Aguiluz’s relationship with Forever Hospice or the revocation of its enrollment. Dr. Aguiluz submitted a written resignation on December 13, 2024, and Petitioner contracted a new medical director on December 17, 2024.

MAC notification of revocations. On November 19, 2024, the MAC notified Petitioner that it revoked Petitioner’s Medicare enrollment and billing privileges effective December 19, 2024, pursuant to 42 C.F.R. §424.535(a)(19). The MAC cited as grounds that within the last five years Dr. Aguiluz had managing control of Forever Hospice and that Forever Hospice’s Medicare enrollment and billing privileges had been revoked. The MAC also found that Dr. Aguiluz was also listed in Petitioner’s Medicare enrollment record with a present or past affiliation with Petitioner. The MAC revoked Petitioner’s enrollment and billing privileges because it determined that Dr. Aguiluz’s affiliation with Petitioner posed an undue risk of fraud, waste, or abuse to the Medicare program. The MAC also imposed a 10-year bar to reenrollment and added Petitioner’s name to the CMS preclusion list.

Petitioner requested reconsideration by letters dated December 28, 2024, January 22, 2025, and April 18, 2025, and on May 13, 2025, a CMS hearing officer issued a reconsidered determination upholding the aforesaid revocation, 10-year reenrollment bar, and the listing of Petitioner’s name on CMS’s preclusion list. Petitioner then filed a timely request for hearing before an administrative law judge (ALJ).

Law relied upon by ALJ. The Hearing Officer stated in the reconsidered determination that Petitioner’s affiliation with Forever Hospice was established by Dr. Aguiluz’s affiliation with Forever Hospice, reasoning that Dr. Aguiluz was Forever Hospice’s medical director and managing employee as of August 1, 2022, while Dr. Aguiluz was also Petitioner’s medical director and contracting managing employee.

The Board referenced 42 C.F.R. §424.502, which defines a managing employee as ‘a general manager, business manager, administrator, director, or other individual that exercises operational or managerial control over, or who directly or indirectly conducts, the day-to-day operation of the provider or supplier, either under contract or through some other arrangement, whether or not the individual is a W-2 employee of the provider or supplier.’ The definition apples to among other entities, a hospice or skilled nursing, and, to a hospice Medical Director.

Definition of ‘affiliation’ not met. The board fund that the hearing officer erred. It was true that Dr. Aguiluz was medical director and a managing employee for both Forever Hospice and Petitioner, however, the facts relied upon by the hearing officer did not show that there was a relationship between Forever Hospice and Petitioner that met any of the criteria of the definition of affiliation under 42 C.F.R. §424.502 at any time. The hearing officer may have been correct that Forever Hospice had a disclosable event, but the fact that Forever had a disclosable event—absent an affiliation within the meaning of 42 C.F.R. §424.502 between Forever and Petitioner—did not permit revocation pursuant to 42 C.F.R. §424.535(a)(19), which requires an affiliation under 42 C.F.R. §424.519.

Furthermore, without such an affiliation the element that the affiliation must pose an“undue risk of fraud, waste, or abuse” of the Medicare program could not be satisfied. Accordingly, the Board concluded that there was no basis for revoking the Medicare enrollment and billing privileges of Petitioner, no basis for imposing a 10-year reenrollment bar, and no basis for listing Petitioner’s name on CMS’s preclusion list.

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