Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Jeanette Torrella,
Petitioner,
v.
The Inspector General.
Docket No. C-12-1293
Decision No. CR2937

Date: September 30, 2013

DECISION

The Inspector General (I.G.) of the U.S. Department of Health and Human Services
(HHS) notified Petitioner, Jeanette Torrella, that she was being excluded from
participation in Medicare, Medicaid, and all other federal health care programs for a
minimum period of five years under 42 U.S.C. § 1320a-7(a)(1). For the reasons stated
below, I conclude that the I.G. has a basis for excluding Petitioner from program
participation and that the five-year exclusion is mandated by law.

I. Background

By letter dated August 31, 2012, the I.G. notified Petitioner that she was being excluded
from Medicare, Medicaid, and all federal health care programs for a minimum period of
five years pursuant to section 1320a-7(a)(1). The I.G. advised Petitioner that the
exclusion was based on her conviction in the Eleventh Judicial Circuit Court in and for
Miami-Dade County, Florida, of a criminal offense related to the delivery of an item or
service under the Medicare or a state healthcare program, including the performance of
management or administrative services relating to the delivery of items or services, under
any such program. Request for Hearing (RFH), Exhibit (Ex.) A at 1.
Petitioner timely filed her RFH and this case was assigned to me for hearing and
decision. On October 24, 2012, I convened a prehearing conference by telephone, the
substance of which is summarized in my Order and Schedule for Filing Briefs and
Documentary Evidence (Order) of that same date. See 42 C.F.R. § 1005.6. Pursuant to
the Order, the I.G. submitted its brief (I.G. Br.) together with five exhibits (I.G. Exs. 1-5).
Petitioner submitted a response brief (P. Br.) together with two exhibits (P. Exs. 1-2).
The L.G. submitted its reply brief together with I.G. Ex. 6. On February 28, 2013, I
afforded Petitioner an opportunity to provide her written direct testimony; Petitioner
submitted that testimony as P. Ex. 3. See 42 C.F.R. § 1005.16(b). On April 8, 2013, the
1.G. indicated it did not wish to cross-examine Petitioner. On May 31, 2013, I issued an
order directing the parties to provide me with supplemental briefing on whether
Petitioner’s conviction for compounding a felony (a crime under Florida law that is
related to the obstruction of justice) has a sufficient nexus to the delivery of an item or
service under Medicare, Medicaid or another state health care program. The I.G.
submitted its brief along with LG. Ex. 7. Petitioner filed her supplemental brief. In the
absence of an objection, I admit into evidence I.G. Exs. 1-7 and P. Exs. 1-3. Because I
have admitted Petitioner’s written testimony into the record and the LG. declined to
cross-examine Petitioner, an in-person hearing is unnecessary. Therefore, I issue this
decision on the basis of the written record.

II. Issue

The sole issue before me is whether the I.G. has a basis for excluding Petitioner from
participating in Medicare, Medicaid, and all other federal health care programs pursuant
to 42 U.S.C. § 1320a-7(a)(1). See 42 C.F.R. § 1001.2007(a)(1)-(2).

III. Findings of Fact, Conclusions of Law, and Analysis!

HHS must exclude an individual from participation in Medicare, Medicaid or all other
federally-funded health care programs if the individual was convicted under federal or
state law of a criminal offense related to the delivery of an item or service under
Medicare or a state health care program. 42 U.S.C. § 1320a-7(a)(1).

The essential elements necessary to support an exclusion based on 42 U.S.C. § 1320a-
7(a)(1) are: (1) the individual to be excluded must have been convicted of a criminal
offense; and (2) the criminal offense must have been related to the delivery of an item or
service under Title XVIII of the Social Security Act (Medicare) or any state health care
program. A state health care program includes Medicaid. 42 U.S.C. § 1320a-7(h)(1);
42 C.F.R. § 1001.2 (definition of State health care program).

' My findings of fact and conclusions of law are set forth in italics and bold font.
A, Petitioner pled guilty to two counts of compounding a felony and was
ordered to pay restitution of $13,929.86 to the Florida Medicaid Fraud Control
Unit.

In 2010, Petitioner, a speech language pathologist licensed in the state of Florida, was
charged in the state of Florida with Medicaid Fraud/Filing a False Claim (Count 13),
Grand Theft over $300 (Count 14), and Conspiracy to Commit Medicaid Fraud/Filing
False Claim (Count 15). I.G. Exhibit (Ex.) 6, at 9. Petitioner is also named in Count 24
as a confederate of Miriam Gonzalez, who was charged with Conspiracy to Commit
Medicaid Fraud/Filing False Claims. I.G. Ex. 6, at 7-8. In her written testimony,
Petitioner denied knowledge or direct involvement in the fraudulent billing of Medicaid.
Petitioner’s (P.) Ex. 3.

In 2012, the charges were amended and Petitioner pled guilty to two counts of
compounding a felony pursuant to Florida Statute (F.S.), section 843.14. LG. Exs. 1, at
2; 2, at 4. Under the terms of the plea agreement, Petitioner agreed to cooperate with
prosecutors, which included providing a statement to investigators, and paying restitution
of $13,929.86 to the Florida Medicaid Fraud Control Unit. I.G. Ex. 1, at 2-3. The state
court ratified the plea agreement, indicated an intention to sentence Petitioner
consistently with that agreement, and ordered her to pay $13,929.86 to the Medicaid
Fraud Control Unit as restitution. I.G. Exs. 3; 4.

B. Petitioner was convicted of a criminal offense for the purposes of 42 U.S.C.
§ 1320a-7(a)(1).

Under section 1320a-7(a)(1), Petitioner must be “convicted of a criminal offense.” For
the purposes of a violation under section 1320a-7(a)(1), the term “convicted” includes
“when a plea of guilty or nolo contendere by the individual . . . has been accepted by a
Federal, State, or local court” and “when the individual . . . has entered into participation
in a first offender, deferred adjudication . . . where judgment of conviction has been
withheld.” 42 U.S.C. § 1320a-7(i); see also 42 C.F.R. § 1001.2. In the present matter,
Petitioner pled guilty to two violations of F.S. section 843.14 and, as part of that
agreement, received “a withhold of adjudication as to each count... .” IG. Ex. 1, at 1, 3.
Further, the state court ratified the terms of the plea agreement. I. G. Ex. 3. Petitioner
does not dispute that she was convicted of a criminal offense. P. Br. at 1. Therefore, I
conclude that Petitioner was convicted of a criminal offense within the meaning of
section 1320a-7(a)(1).

C. Petitioner’s conviction requires exclusion under section 42 U.S.C. § 1320a-
7(a)(1) because her criminal conduct related to the delivery of an item or service
under a state health care program (i.e., Medicaid).
In order for Petitioner to be excluded under section 1320a-7(a)(1), Petitioner’s criminal
conviction must be “related to” the delivery of an item or service under Medicaid.
Although the term “related to” is not defined in the statute, it is well established “that an
offense is ‘related to’ the delivery of an item or service under a covered program if there
isa... nexus between the offense and the delivery of an item or service under the
program.” James Randall Benham, DAB No. 2042 (2006) (internal citations omitted);
Cf. Friedman v. Sebelius, 686 F.3d 813, 820 (D.C. Cir. 2012) (describing the phrase
“related to” in another part of section 1320a-7 as “deliberately expansive words,” “the
ordinary meaning of [which] is a broad one,” and one that is not subject to “crabbed and
formalistic interpretation”) (internal quotes omitted). Therefore, to determine whether
Petitioner’s offense is related to the delivery of an item or service under Medicaid, it is
necessary to examine the underlying conviction.

Although Petitioner does not dispute that she was convicted of a criminal offense, she
argues that her conviction was not related to the delivery of an item or service under
Medicaid. P. Br. at 1-3. Petitioner explains that the Florida Medicaid Fraud Control Unit
conducted an investigation into whether claims for reimbursement were properly
submitted for services provided by speech language pathology assistants (SLPAs) who
Petitioner was supervising and for whom services were claimed under her Medicaid
provider number. Petitioner does not dispute that the investigation by the Florida
Medicaid Fraud Control Unit involved whether she billed the Medicaid program under

er Medicaid provider number for unsupervised services of the SLPAs. Petitioner claims
first that she was unaware that under Florida law, services provided by SLPAs may be
billed, at a lower rate, but only if the services provided by the SLPAs were directly
supervised by a licensed speech language pathologist. Petitioner contends that she was
not aware that the claims were being submitted using her Medicaid provider number for
the services of SLPAs, much less that the claims were submitted at the wrong rate. P. Br.
at 2. She states that as part of her plea agreement, the initial allegations of Medicai
Fraud were dismissed and the charges against her were amended to violations of
compounding a felony. P. Br. at 2. Petitioner argues that the offense to which she agreed
to plead guilty “‘is not related to the delivery of an item or service under Medicaid, but
was related to the investigation [of Medicaid fraud and improper billing] conducted in
this case.” P. Br. at 2; see also P. Ex. 1, at 3. She does not dispute that as part of her
negotiated plea agreement, she was ordered to pay restitution to the Florida Medicaid
Fraud Control Unit of $13,929.86. P. Br. at 2.

I agree with Petitioner that she was convicted of a crime that is in the nature of
obstructing an investigation. Further, the only direct statement as to what the criminal
offense involved indicates that she was convicted of a failure to cooperate with the
Florida Medicaid Fraud Control Unit. P. Ex. 1, at 3. In my order for supplemental
briefing, I raised the concern that interpreting section 1320a-7(a)(1) to apply in this case
might have the effect of rendering section 1320a-7(b)(2) (exclusion for a conviction
related to the obstruction of an investigation) superfluous. Therefore, I directed the LG.
to explain how the present case is different from all cases that might only arise under
section 1320a-7(b)(2). The I.G.’s response appeared to primarily focus on the fact that
Petitioner was ordered to pay restitution to the Florida Medicaid Fraud Control Unit in an
amount consistent with the amount of money that Petitioner had been originally charged
with stealing from the Medicaid program. As explained below, I accept the I.G.’s
argument and agree that the order of restitution in this matter serves to meet the “nexus”
requirement for exclusion and to distinguish the current case from other cases that could
only be brought under section 1320a-7(b)(2).”

Although Petitioner was convicted of compounding a felony, “[i]n determining whether
an offense is related to the delivery of an item or service under a covered program such as
Medicaid, ‘[i]t is not the labeling of the offense under the state statute which determines
whether the offense is program-related.”” Lyle Kai, R.Ph., DAB No. 1979 (2005) quoting
Berton Siegel, D.O., DAB No. 1467, at 7 (1994). Therefore, I must look to more than
just the conviction documents to determine if there is a nexus between the criminal
offense and the Medicaid program.

As noted by the I.G., Petitioner was ordered to pay “RESTITUTION in the amount of
$13,929.86 at no less than $500.00 per month to: Office of the Attorney General,
Medicaid Fraud Control Unit.” I.G. Exs. 3; 4. The amount of restitution is consistent
with the amount of money for which Petitioner was charged with Grand Theft from the
Medicaid program.’ I.G. Ex. 6, at 5. This is significant because the order of restitution to
a state Medicaid fraud control unit alone can serve as sufficient evidence of nexus

> In my order for supplemental briefing, I noted that previous exclusions brought under
section 1320a-7(a)(1) that involved a conviction for an obstruction of justice also
included a conviction for another offense on which the exclusion was primarily based.
See Pamela Gail Hill DAB CR347 (1994); William F. Middleton, DAB CR297 (1993).
The present case appeared to be the same as previous exclusions imposed under section
320a-7(b)(2), where the excluded individuals were only convicted of an obstruction of
justice related offense. See Katherine Elaine Turner, DAB CR2030 (2009); Philip J.
Bisig, DAB CR1288 (2005); Nazirul Quayum, D.D.S., DAB CR408 (1995). However, I
find that the present case differs from previous section 1320a-7(b)(2) exclusion cases
because none of those decisions indicate that the excluded individuals were ordered to
pay restitution.

3 In my order for supplemental briefing, I noted that I could not consider, for purposes of
finding a nexus, that Petitioner had been previously charged with Medicaid theft or fraud
because she was not convicted of those charges. In this decision I am not relying on the
previous unproven charges against Petitioner to conclude there is a nexus. However, this
does not mean that I cannot conclude that the basis for an order of restitution is related to
the original charges, thus providing evidence of a nexus between Petitioner’s criminal
conviction and the Medicaid program.

between Petitioner’s conviction and the Medicaid program. Blessing Okuji, DAB
CR2343, at 5 (2011); see also Craig Richard Wilder, DAB No. 2416, at 8 (2011)
(holding that the amount of restitution a petitioner agreed to pay is considered a
reasonable measure of program loss). If an individual has been convicted of a criminal
offense, then proof that any sentence based on that conviction included the payment of
restitution to a protected program or the agency in charge of that program requires that I
find a nexus between the conviction and the delivery of an item or service under the
program. /d.; Alexander Nepomuceno Jamias, DAB CR1480 (2006). Thus, the I.G. has
proven that there is nexus between Petitioner’s conviction and the delivery of items or
services under the Medicaid program.

D. Petitioner must be excluded for the statutory minimum of five years under
42 U.S.C. § 1320a-7(c)(3)(B).

Petitioner informed me that she voluntarily relinquished her Medicaid number and that
she is not a Medicare provider and does not foresee becoming one. She is only
contesting her exclusion because under a new Florida law she will lose her license to
practice as a SLP if she is on the I.G.’s exclusion list. While I sympathize with Petitioner
that Florida law has changed since she pled guilty in her criminal case, I am bound by
applicable federal law. Because I have concluded that a basis exists to exclude Petitioner
pursuant to 42 U.S.C. § 1320a-7(a)(1), Petitioner must be excluded for a minimum period
of five years. 42 U.S.C. § 1320a-7(c)(3)(B); 42 C.F.R. § 1001.2007(a)(2). The statute
does not give me discretion to reduce the length of exclusion below the minimum period
of five years and I conclude that the five-year exclusion imposed by the I.G. is mandated
by statute.

IV. Conclusion
For the foregoing reasons, I sustain the I.G.’s determination to exclude Petitioner from

participating in Medicare, Medicaid, and all federal health care programs for the statutory
five-year minimum period pursuant to 42 U.S.C. § 1320a-7(a)(1), (c)(3)(B).

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Patricia McCowen,
Petitioner,
v.
The Inspector General.
Docket No. C-12-1292
Decision No. CR2936

Date: September 30, 2013

DECISION

The Inspector General (I.G.) of the U.S. Department of Health and Human Services
(HHS) notified Petitioner, Patricia McCowen, that she was being excluded from
participation in Medicare, Medicaid, and all other federal health care programs for a
minimum period of five years under 42 U.S.C. § 1320a-7(a)(1). For the reasons stated
below, I conclude that the I.G. has a basis for excluding Petitioner from program
participation and that the five-year exclusion is mandated by law.

I. Background

By letter dated August 31, 2012, the I.G. notified Petitioner that she was being excluded
from Medicare, Medicaid, and all federal health care programs for a minimum period of
five years pursuant to section 1320a-7(a)(1). The I.G. advised Petitioner that the
exclusion was based on her conviction in the Eleventh Judicial Circuit Court in and for
Miami-Dade County, Florida, of a criminal offense related to the delivery of an item or
service under the Medicare or a state healthcare program, including the performance of
management or administrative services relating to the delivery of items or services, under
any such program. Request for Hearing (RFH), Exhibit (Ex.) A at 1.
Petitioner timely filed her RFH and this case was assigned to me for hearing and
decision. On October 24, 2012, I convened a prehearing conference by telephone, the
substance of which is summarized in my Order and Schedule for Filing Briefs and
Documentary Evidence (Order), of that same date. See 42 C.F.R. § 1005.6. Pursuant to
the Order, the I.G. submitted its brief (I.G. Br.) together with five exhibits (I.G. Exs. 1-5).
Petitioner submitted a response brief (P. Br.) together with two exhibits (P. Exs. 1-2).
The L.G. submitted its reply brief together with I.G. Ex. 6. On February 28, 2013, I
afforded Petitioner an opportunity to provide her written direct testimony; Petitioner
submitted that testimony as P. Ex. 3. See 42 C.F.R. § 1005.16(b). On March 29, 2013,
the I.G. indicated it did not wish to cross-examine Petitioner. On May 31, 2013, I issued
an order directing the parties to provide me with supplemental briefing on whether
Petitioner’s conviction for compounding a felony (a crime under Florida law that is
related to the obstruction of justice) has a sufficient nexus to the delivery of item or
service under Medicare, Medicaid or another state health care program. The I.G. and
Petitioner each submitted briefs. In the absence of an objection, I admit into evidence
1G. Exs. 1-6 and P. Exs. 1-3. Because I have admitted Petitioner’s written testimony into
the record and the I.G. declined to cross-examine Petitioner, an in-person hearing was
unnecessary. Therefore, I issue this decision on the basis of the written record.

II. Issue

The sole issue before me is whether the I.G. has a basis for excluding Petitioner from
participating in Medicare, Medicaid, and all other federal health care programs pursuant
to 42 U.S.C. § 1320a-7(a)(1). See 42 C.F.R. § 1001.2007(a)(1)-(2).

III. Findings of Fact, Conclusions of Law, and Analysis!

HHS must exclude an individual from participation in Medicare, Medicaid or all other
federally-funded health care programs if the individual was convicted under federal or
state law of a criminal offense related to the delivery of an item or service under
Medicare or a state health care program. 42 U.S.C. § 1320a-7(a)(1).

The essential elements necessary to support an exclusion based on 42 U.S.C. § 1320a-
7(a)(1) are: (1) the individual to be excluded must have been convicted of a criminal
offense; and (2) the criminal offense must have been related to the delivery of an item or
service under Title XVIII of the Social Security Act (Medicare) or any state health care
program. A state health care program includes Medicaid. 42 U.S.C. § 1320a-7(h)(1);
42 C.F.R. § 1001.2 (definition of State health care program).

' My findings of fact and conclusions of law are set forth in italics and bold font.
A, Petitioner pled guilty to two counts of compounding a felony and was
ordered to pay restitution of $101,092.80 to the Florida Medicaid Fraud Control
Unit.

In 2010, the state of Florida initially charged Petitioner McCowen with Medicaid
Fraud/Filing a False Claim (Count 18), Grand Theft over $100,000 (Count 19), and
Conspiracy to Commit Medicaid Fraud/Filing False Claim (Count 20). I.G. Ex. 6, at 9.
Petitioner is also named in Count 24 as a confederate of Miriam Gonzalez, who was
charged with Conspiracy to Commit Medicaid Fraud/Filing False Claims. I.G. Ex. 6, at
10-11. The basis for these charges is summarized in an affidavit for Petitioner’s arrest
that appears to have been made contemporaneously with the Information charging
Petitioner. 1.G. Ex. 5. In the affidavit, the investigator alleged that Petitioner, a
contracted speech and language pathologist, participated in the fraudulent billing of
Medicaid by her employer, the Center for Bilingual Speech and Language Disorders,
Inc., by allowing her Medicaid provider number to be used to bill for services provided
by individuals who were not licensed language speech pathologists. I.G. Ex. 5, at 7-12.
In her written testimony, Petitioner denied knowledge or direct involvement in the
fraudulent billing of Medicaid. P. Ex. 3.

Pursuant to a plea agreement, the charges against Petitioner were amended and Petitioner
pled guilty to two misdemeanor charges of Compounding a Felony (Counts 18 and 19).
1G. Exs. 1, at 1; 2, at 5. Significantly, the amended information removed Count 20 and
amended Count 24 so that Petitioner was no longer named as a confederate in a
conspiracy. I.G. Ex. 2, at 6. Under the terms of the plea agreement, Petitioner agreed to
cooperate with prosecutors, which included providing a statement to investigators, and
paying restitution of $101,092.80 to the Florida Medicaid Fraud Control Unit. I.G. Ex. 1,
at 2-3. The state trial court ratified the plea agreement, indicated an intention to sentence
Petitioner consistently with that agreement, and ordered her to pay $101,092.80 to the
Florida Medicaid Fraud Control Unit as restitution. I.G. Exs. 3; 4.

B. Petitioner was convicted of a criminal offense for the purposes of 42 U.S.C.
§ 1320a-7(a)(1).

Under section 1320a-7(a)(1), Petitioner must be “convicted of a criminal offense.” For
the purposes of a violation under section 1320a-7(a)(1), the term “convicted” includes
“when a plea of guilty or nolo contendere by the individual . . . has been accepted by a
Federal, State, or local court” and “when the individual . . . has entered into participation
in a first offender, deferred adjudication . . . where judgment of conviction has been
withheld.” 42 U.S.C. § 1320a-7(i); see also 42 C.F.R. § 1001.2. In the present matter,
Petitioner pled guilty to two violations of Florida Statute (F.S.) section 843.14 and, as
part of that agreement, received “a withhold of adjudication as to each count... .” I.G.
Ex. 1, at 1, 3. Further, the state court ratified the terms of the plea agreement. I. G. Ex.
3. Petitioner does not dispute that she was convicted of a criminal offense. P. Br. at 1.
Therefore, I conclude that Petitioner was convicted of a criminal offense within the
meaning of section 1320a-7(a)(1).

C. Petitioner’s conviction requires exclusion under section 42 U.S.C. § 1320a-
7(a)(1) because her criminal conduct related to the delivery of an item or service
under a state health care program (i.e., Medicaid).

In order for Petitioner to be excluded under section 1320a-7(a)(1), Petitioner’s criminal
conviction must be “related to” the delivery of an item or service under Medicaid.
Although the term “related to” is not defined in the statute, it is well established “that an
offense is ‘related to’ the delivery of an item or service under a covered program if there
isa... nexus between the offense and the delivery of an item or service under the
program.” James Randall Benham, DAB No. 2042 (2006) (internal citations omitted);
Cf. Friedman v. Sebelius, 686 F.3d 813, 820 (D.C. Cir. 2012) (describing the phrase
“related to” in another part of section 1320a-7 as “deliberately expansive words,” “the
ordinary meaning of [which] is a broad one,” and one that is not subject to “crabbed and
formalistic interpretation”) (internal quotes omitted). Therefore, to determine whether
Petitioner’s offense is related to the delivery of an item or service under Medicaid, it is
necessary to examine the underlying conviction.

Although Petitioner does not dispute that she was convicted of a criminal offense, she
argues that her conviction was not related to the delivery of an item or service under
Medicaid. Petitioner explains that the Florida Medicaid Fraud Control Unit conducted an
investigation into whether claims for reimbursement were properly submitted for services
provided by speech language pathology assistants (SLPAs) who Petitioner was
supervising and for whom services were claimed under her Medicaid provider number.
Petitioner does not dispute that the investigation by the Florida Medicaid Fraud Control
Unit involved whether she billed the Medicaid program under her Medicaid provider
number for unsupervised services of the SLPAs. Petitioner claims first that she was
unaware that under Florida law, services provided by SLPAs may be billed, at a lower
rate, but only if the services provided by the SLPAs were directly supervised by a
licensed Speech Language Pathologist. Petitioner contends that she was not aware that
the claims were being submitted using her Medicaid provider number for the services of
SLPAs, much less that the claims were submitted at the wrong rate. P. Br. at 2. She
states that as part of her plea agreement, the initial allegations of Medicaid Fraud were
dismissed and the charges against her were amended to violations of compounding a
felony. P. Br. at 2. Petitioner argues that the offense to which she agreed to plead guilty
“is not related to the delivery of an item or service under Medicaid, but was related to the
investigation [of Medicaid fraud and improper billing] conducted in this case.” Pet. Br.
at 2; see also P. Ex. 1, at 3. She does not dispute that as part of her negotiated plea
agreement, she was ordered to pay restitution to the Florida Medicaid Fraud Control Unit
of $101,092.80. P. Br. at 2.

I agree with Petitioner that she was convicted of a crime that is in the nature of
obstructing an investigation. Further, the only direct statement as to what the criminal
offense involved indicates that she was convicted of a failure to cooperate with the
Florida Medicaid Fraud Control Unit. P. Ex. 1, at 3. In my order for supplemental
briefing, I raised the concern that interpreting section 1320a-7(a)(1) to apply in this case
might have the effect of rendering section 1320a-7(b)(2) (exclusion for a conviction
related to the obstruction of an investigation) superfluous. Therefore, I directed the LG.
to explain how the present case is different from all cases that might only arise under
section 1320a-7(b)(2). The I.G.’s response appeared to primarily focus on the fact that
Petitioner was ordered to pay restitution to the Florida Medicaid Fraud Control Unit in an
amount consistent with the amount of money that Petitioner had been originally charged
with stealing from the Medicaid program. As explained below, I accept the I.G.’s
argument and agree that the order of restitution in this matter serves to meet the “nexus”
requirement for exclusion and to distinguish the current case from other cases that could
only be brought under section 1320a-7(b)(2).”

Although Petitioner was convicted of compounding a felony, “[i]n determining whether
an offense is related to the delivery of an item or service under a covered program such as
Medicaid, ‘[i]t is not the labeling of the offense under the state statute which determines
whether the offense is program-related.”” Lyle Kai, R.Ph., DAB No. 1979 (2005) quoting
Berton Siegel, D.O., DAB No. 1467, at 7 (1994). Therefore, I must look to more than
just the conviction documents to determine if there is a nexus between the criminal
offense and the Medicaid program.

As noted by the I.G., Petitioner was ordered to pay “RESTITUTION in the amount of
$101,092.80 at no less than $500.00 per month to: Office of the Attorney General,
Medicaid Fraud Control Unit.” I.G. Exs. 3; 4. The amount of restitution is consistent
with the amount of money for which Petitioner was charged with Grand Theft from the

> In my order for supplemental briefing, I noted that previous exclusions brought under
section 1320a-7(a)(1) that involved a conviction for an obstruction of justice also
included a conviction for another offense on which the exclusion was primarily based.
See Pamela Gail Hill DAB CR347 (1994); William F. Middleton, DAB CR297 (1993).
The present case appeared to be the same as previous exclusions imposed under section
1320a-7(b)(2), where the excluded individuals were only convicted of an obstruction of
justice related offense. See Katherine Elaine Turner, DAB CR2030 (2009); Philip J.
Bisig, DAB CR1288 (2005); Nazirul Quayum, D.D.S., DAB CR408 (1995). However, I
find that the present case differs from previous section 1320a-7(b)(2) exclusion cases
because none of those decisions indicate that the excluded individuals were ordered to
pay restitution.
Medicaid program.’ I.G. Ex. 6, at 9. This is significant because the order of restitution
to a state Medicaid fraud control unit alone can serve as sufficient evidence of nexus
between Petitioner’s conviction and the Medicaid program. Blessing Okuji, DAB
CR2343, at 5 (2011); see also Craig Richard Wilder, DAB No. 2416, at 8 (2011)
(holding that the amount of restitution a petitioner agreed to pay is considered a
reasonable measure of program loss). If an individual has been convicted of a criminal
offense, then proof that any sentence based on that conviction included the payment of
restitution to a protected program or the agency in charge of that program requires that I
find a nexus between the conviction and the delivery of an item or service under the
program. /d.; Alexander Nepomuceno Jamias, DAB CR1480 (2006). Thus, the I.G. has
proven that there is nexus between Petitioner’s conviction and the delivery of items or
services under the Medicaid program.

D. Petitioner must be excluded for the statutory minimum of five years under
42 U.S.C. § 1320a-7(c)(3)(B).

Petitioner informed me that she voluntarily relinquished her Medicaid number and that
she is not a Medicare provider and does not foresee becoming one. She is only
contesting her exclusion because under a new Florida law she will lose her license to
practice as a speech pathologist if she is on the I.G.’s exclusion list. While I sympathize
with Petitioner that Florida law has changed since she pled guilty in her criminal case, I
am bound by applicable federal law. Because I have concluded that a basis exists to
exclude Petitioner pursuant to 42 U.S.C. § 1320a-7(a)(1), Petitioner must be excluded for
a minimum period of five years. 42 U.S.C. § 1320a-7(c)(3)(B); 42 C.F.R.

§ 1001.2007(a)(2). The statute does not give me discretion to reduce the length of
exclusion below the minimum period of five years and I conclude that the five-year
exclusion imposed by the I.G. is mandated by statute.

> In my order for supplemental briefing, I noted that I could not consider, for purposes of
finding a nexus, that Petitioner had been previously charged with Medicaid theft or fraud
because she was not convicted of those charges. In this decision I am not relying on the
previous unproven charges against Petitioner to conclude there is a nexus. However, this
does not mean that I cannot conclude that the basis for an order of restitution is related to
the original charges, thus providing evidence of a nexus between Petitioner’s criminal
conviction and the Medicaid program.
IV. Conclusion

For the foregoing reasons, I sustain the I.G.’s determination to exclude Petitioner from
participating in Medicare, Medicaid, and all federal health care programs for the statutory
five-year minimum period pursuant to 42 U.S.C. § 1320a-7(a)(1), (c)(3)(B).

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Juliane Sardina,
Petitioner,
v.
The Inspector General.
Docket No. C-13-22
Decision No. CR2935

Date: September 30, 2013

DECISION

The Inspector General (I.G.) of the U.S. Department of Health and Human Services
(HHS) notified Petitioner, Juliane Sardina, that she was being excluded from
participation in Medicare, Medicaid, and all other federal health care programs for a
minimum period of five years under 42 U.S.C. § 1320a-7(a)(1). For the reasons stated
below, I conclude that the I.G. has a basis for excluding Petitioner from program
participation and that the five-year exclusion is mandated by law.

I. Background

By letter dated August 31, 2012, the I.G. notified Petitioner that she was being excluded
from Medicare, Medicaid, and all federal health care programs for a minimum period of
five years pursuant to section 1320a-7(a)(1). The I.G. advised Petitioner that the
exclusion was based on her conviction in the Eleventh Judicial Circuit Court in and for
Miami-Dade County, Florida, of a criminal offense related to the delivery of an item or
service under the Medicare or a state healthcare program, including the performance of
management or administrative services relating to the delivery of items or services, under
any such program. Request for Hearing (RFH), Exhibit (Ex.) A at 1.
Petitioner timely filed her RFH and this case was assigned to me for hearing and
decision. On October 24, 2012, I convened a prehearing conference by telephone, the
substance of which is summarized in my Order and Schedule for Filing Briefs and
Documentary Evidence (Order) of that same date. See 42 C.F.R. § 1005.6. Pursuant to
the Order, the I.G. submitted its brief (I.G. Br.) together with five exhibits (I.G. Exs. 1-5).
Petitioner submitted a response brief (P. Br.) together with two exhibits (P. Exs. 1-2).
The L.G. submitted its reply brief (1.G. Reply Br.) together with I.G. Ex. 6. On February
28, 2013, I afforded Petitioner an opportunity to provide her written direct testimony;
Petitioner submitted that testimony as P. Ex. 3. See 42 C.F.R. § 1005.16(b). On March
29, 2013, the LG. indicated it did not wish to cross-examine Petitioner. On May 31,
2013, I issued an order directing the parties to provide me with supplemental briefing on
whether Petitioner’s conviction for compounding a felony (a crime under Florida law that
is related to the obstruction of justice) has a sufficient nexus to the delivery of an item or
service under Medicare, Medicaid or another state health care program. The I.G.
submitted its brief along with LG. Ex. 7. Petitioner filed her supplemental brief. In the
absence of an objection, I admit into evidence L.G. Exs. 1-7 and P. Exs. 1-3. Because I
have admitted Petitioner’s written testimony into the record and the I.G. declined to
cross-examine Petitioner, an in-person hearing is unnecessary. Therefore, I issue this
decision on the basis of the written record.

IL. Issue

The sole issue before me is whether the I.G. has a basis for excluding Petitioner from
participating in Medicare, Medicaid, and all other federal health care programs pursuant
to 42 U.S.C. § 1320a-7(a)(1). See 42 C.F.R. § 1001.2007(a)(1)-(2).

III. Findings of Fact, Conclusions of Law, and Analysis!

HHS must exclude an individual from participation in Medicare, Medicaid or all other
federally-funded health care programs if the individual was convicted under federal or
state law of a criminal offense related to the delivery of an item or service under
Medicare or a state health care program. 42 U.S.C. § 1320a-7(a)(1).

The essential elements necessary to support an exclusion based on 42 U.S.C. § 1320a-
7(a)(1) are: (1) the individual to be excluded must have been convicted of a criminal
offense; and (2) the criminal offense must have been related to the delivery of an item or
service under Title XVIII of the Social Security Act (Medicare) or any state health care
program. A state health care program includes Medicaid. 42 U.S.C. § 1320a-7(h)(1);
42 C.F.R. § 1001.2 (definition of State health care program).

' My findings of fact and conclusions of law are set forth in italics and bold font.
A, Petitioner pled guilty to two counts of compounding a felony and was
ordered to pay restitution of $23,858.26 to the Florida Medicaid Fraud Control
Unit.

In 2010, Petitioner, a speech language pathologist (SLP) licensed in the state of Florida,
was charged in the state of Florida with Medicaid Fraud/Filing a False Claim, Grand
Theft over $20,000, and Conspiracy to Commit Medicaid Fraud/Filing False Claim. I.G.
Ex. 6 at 5-6. In 2012, the charges were amended and Petitioner pled guilty to two counts
of compounding a felony pursuant to Florida Statute (F.S.), section 843.14. I.G. Exs. 1,
at 2; 2 at 4. Under the terms of the plea agreement, Petitioner agreed to cooperate with
prosecutors, which included providing a statement to investigators, and paying restitution
of $23,858.26 to the Florida Medicaid Fraud Control Unit. I.G. Ex. 1, at 2-3. The state
court ratified the plea agreement, indicated an intention to sentence Petitioner
consistently with that agreement, and ordered her to pay $23,858.26 to the Medicaid
Fraud Control Unit as restitution. I.G. Exs. 3; 4.

B. Petitioner was convicted of a criminal offense for the purposes of 42 U.S.C.
§ 1320a-7(a)(1).

Under section 1320a-7(a)(1), Petitioner must be “convicted of a criminal offense.” For
the purposes of a violation under section 1320a-7(a)(1), the term “convicted” includes
“when a plea of guilty or nolo contendere by the individual . . . has been accepted by a
Federal, State, or local court” and “when the individual . . . has entered into participation
in a first offender, deferred adjudication . . . where judgment of conviction has been
withheld.” 42 U.S.C. § 1320a-7(i); see also 42 C.F.R. § 1001.2. In the present matter,
Petitioner pled guilty to two violations of F.S. section 843.14 and, as part of that
agreement, received “a withhold of adjudication as to each count... .” IG. Ex. 1, at 1, 3.
Further, the state court ratified the terms of the plea agreement. I. G. Ex. 3. Petitioner
does not dispute that she was convicted of a criminal offense. P. Br. at 1. Therefore, I
conclude that Petitioner was convicted of a criminal offense within the meaning of
section 1320a-7(a)(1).

C. Petitioner’s conviction requires exclusion under section 42 U.S.C. § 1320a-
7(a)(1) because her criminal conduct related to the delivery of an item or service
under a state health care program (i.e., Medicaid).

In order for Petitioner to be excluded under section 1320a-7(a)(1), Petitioner’s criminal
conviction must be “related to” the delivery of an item or service under Medicaid.
Although the term “related to” is not defined in the statute, it is well established “that an
offense is ‘related to’ the delivery of an item or service under a covered program if there
isa... nexus between the offense and the delivery of an item or service under the
program.” James Randall Benham, DAB No. 2042 (2006) (internal citations omitted);
Cf. Friedman v. Sebelius, 686 F.3d 813, 820 (D.C. Cir. 2012) (describing the phrase
“related to” in another part of section 1320a-7 as “deliberately expansive words,” “the
ordinary meaning of [which] is a broad one,” and one that is not subject to “crabbed and
formalistic interpretation”) (internal quotes omitted). Therefore, to determine whether
Petitioner’s offense is related to the delivery of an item or service under Medicaid, it is
necessary to examine the underlying conviction.

Although Petitioner does not dispute that she was convicted of a criminal offense, she
argues that her conviction was not related to the delivery of an item or service under
Medicaid. P. Br. at 1-3. Petitioner explains that the Florida Medicaid Fraud Control Unit
conducted an investigation into whether claims for reimbursement were properly
submitted for services provided by speech language pathology assistants (SLPAs) who
Petitioner was supervising and for whom services were claimed under her Medicaid
provider number. Petitioner does not dispute that the investigation by the Florida
Medicaid Fraud Control Unit involved whether she billed the Medicaid program under

er Medicaid provider number for unsupervised services of the SLPAs. Petitioner claims
first that she was unaware that under Florida law, services provided by SLPAs may be
billed, at a lower rate, but only if the services provided by the SLPAs were directly
supervised by a licensed SLP. Petitioner contends that she was not aware that the claims
were being submitted using her Medicaid provider number for the services of SLPAs,
much less that the claims were submitted at the wrong rate. P. Br. at 2. She states that as
part of her plea agreement, the initial allegations of Medicaid Fraud were dismissed and
the charges against her were amended to violations of compounding a felony. P. Br. at 2.
Petitioner argues that the offense to which she agreed to plead guilty “is not related to the
delivery of an item or service under Medicaid, but was related to the investigation [of
Medicaid fraud and improper billing] conducted in this case.” P. Br. at 2; see also P. Ex.
1, at 3. She does not dispute that as part of her negotiated plea agreement, she was
ordered to pay restitution to the Florida Medicaid Fraud Control Unit of $23,858.26. P.
Br. at 2.

I agree with Petitioner that she was convicted of a crime that is in the nature of
obstructing an investigation. Further, the only direct statement as to what the criminal
offense involved indicates that she was convicted of a failure to cooperate with the
Florida Medicaid Fraud Control Unit. P. Ex. 1, at 3. In my order for supplemental
briefing, I raised the concern that interpreting section 1320a-7(a)(1) to apply in this case
might have the effect of rendering section 1320a-7(b)(2) (exclusion for a conviction
related to the obstruction of an investigation) superfluous. Therefore, I directed the I.G.
to explain how the present case is different from all cases that might only arise under
section 1320a-7(b)(2). The I.G.’s response appeared to primarily focus on the fact that
Petitioner was ordered to pay restitution to the Florida Medicaid Fraud Control Unit in an
amount consistent with the amount of money that Petitioner had been originally charged
with stealing from the Medicaid program. As explained below, I accept the I.G.’s
argument and agree that the order of restitution in this matter serves to meet the “nexus”
requirement for exclusion and to distinguish the current case from other cases that could
only be brought under section 1320a-7(b)(2).”

Although Petitioner was convicted of compounding a felony, “[i]n determining whether
an offense is related to the delivery of an item or service under a covered program such as
Medicaid, ‘[iJ]t is not the labeling of the offense under the state statute which determines
whether the offense is program-related.”” Lyle Kai, R.Ph., DAB No. 1979 (2005) quoting
Berton Siegel, D.O., DAB No. 1467, at 7 (1994). Therefore, I must look to more than
just the conviction documents to determine if there is a nexus between the criminal
offense and the Medicaid program.

As noted by the I.G., Petitioner was ordered to pay “RESTITUTION in the amount of
$23,858.26 at no less than $500.00 per month to: Office of the Attorney General,
Medicaid Fraud Control Unit.” I.G. Exs. 3; 4. The amount of restitution is consistent
with the amount of money for which Petitioner was charged with Grand Theft from the
Medicaid program.’ I.G. Ex. 6, at 5. This is significant because the order of restitution to
a state Medicaid fraud control unit alone can serve as sufficient evidence of nexus
between Petitioner’s conviction and the Medicaid program. Blessing Okuji, DAB
CR2343, at 5 (2011); see also Craig Richard Wilder, DAB No. 2416, at 8 (2011)
(holding that the amount of restitution a petitioner agreed to pay is considered a
reasonable measure of program loss). If an individual has been convicted of a criminal
offense, then proof that any sentence based on that conviction included the payment of

> In my order for supplemental briefing, I noted that previous exclusions brought under
section 1320a-7(a)(1) that involved a conviction for an obstruction of justice also
included a conviction for another offense on which the exclusion was primarily based.
See Pamela Gail Hill DAB CR347 (1994); William F. Middleton, DAB CR297 (1993).
The present case appeared to be the same as previous exclusions imposed under section
320a-7(b)(2), where the excluded individuals were only convicted of an obstruction of
justice related offense. See Katherine Elaine Turner, DAB CR2030 (2009); Philip J.
Bisig, DAB CR1288 (2005); Nazirul Quayum, D.D.S., DAB CR408 (1995). However, I
find that the present case differs from previous section 1320a-7(b)(2) exclusion cases
because none of those decisions indicate that the excluded individuals were ordered to
pay restitution.

3 In my order for supplemental briefing, I noted that I could not consider, for purposes of
finding a nexus, that Petitioner had been previously charged with Medicaid theft or fraud
because she was not convicted of those charges. In this decision I am not relying on the
previous unproven charges against Petitioner to conclude there is a nexus. However, this
does not mean that I cannot conclude that the basis for an order of restitution is related to
the original charges, thus providing evidence of a nexus between Petitioner’s criminal
conviction and the Medicaid program.

restitution to a protected program or the agency in charge of that program requires that I
find a nexus between the conviction and the delivery of an item or service under the
program. /d.; Alexander Nepomuceno Jamias, DAB CR1480 (2006). Thus, the I.G. has
proven that there is nexus between Petitioner’s conviction and the delivery of items or
services under the Medicaid program.

D. Petitioner must be excluded for the statutory minimum of five years under
42 U.S.C. § 1320a-7(c)(3)(B).

Petitioner informed me that she voluntarily relinquished her Medicaid number and that
she is not a Medicare provider and does not foresee becoming one. She is only
contesting her exclusion because under a new Florida law she will lose her license to
practice as a SLP if she is on the I.G.’s exclusion list. While I sympathize with Petitioner
that Florida law has changed since she pled guilty in her criminal case, I am bound by
applicable federal law. Because I have concluded that a basis exists to exclude Petitioner
pursuant to 42 U.S.C. § 1320a-7(a)(1), Petitioner must be excluded for a minimum period
of five years. 42 U.S.C. § 1320a-7(c)(3)(B); 42 C.F.R. § 1001.2007(a)(2). The statute
does not give me discretion to reduce the length of exclusion below the minimum period
of five years and I conclude that the five-year exclusion imposed by the I.G. is mandated
by statute.

IV. Conclusion
For the foregoing reasons, I sustain the I.G.’s determination to exclude Petitioner from

participating in Medicare, Medicaid, and all federal health care programs for the statutory
five-year minimum period pursuant to 42 U.S.C. § 1320a-7(a)(1), (c)(3)(B).

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedi

ies Division

Center for Tobacco Products,

Complainant

Vv.

Guevara LLC
d/b/a Franklin Package Store,

Respondent.

Docket No. C-13-1110
FDA Docket No. FDA-2013-H-0914

Decision No. CR2934

Date: Septeml
INITIAL DECISION AND

The Center for Tobacco Products (CTP) fi
(Complaint) against Respondent, Guevara

ber 30, 2013
DEFAULT JUDGMENT

led an Administrative Complaint
LLC d/b/a Franklin Package Store,

alleging facts and legal authority sufficient to justify imposing a civil money

penalty of $500. Respondent did not time

ly answer the Complaint, nor did

Respondent request an extension of time within which to file an answer.
Therefore, I enter a default judgment against Respondent and order that

Respondent pay a civil money penalty in t

CTP began this case by serving the Compl

ie amount of $500.

aint on Respondent and filing a copy of

the Complaint with the Food and Drug Administration’s (FDA) Division of
Dockets Management. The Complaint alleges that Respondent’s staff unlawfully
sold regulated tobacco products to minors on two separate occasions and failed to

verify that the tobacco purchasers were of
transactions, thereby violating the Federal

sufficient age prior to these
Food, Drug, and Cosmetic Act (Act)

and its implementing regulations found at 21 C.F.R. Part 1140. CTP seeks a civil

money penalty of $500.
On August 15, 2013, CTP served the Complaint on Respondent by United Parcel

Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and
accompanying cover letter, CTP explained that, within 30 days, Respondent

should pay the penalty, file an answer, or request an extension of time within
which to file an answer. CTP warned Respondent that if it failed to take one of
these actions within 30 days an Administrative Law Judge could, pursuant to

21 C.F.R. § 17.11, issue an initial decision by default ordering Respondent to pay

the full amount of the proposed penalty. Respondent did not take any of the
required actions within the time provided by regulation.

lam required to issue an initial decision by default if the Complaint is sufficient to
justify a penalty, and the respondent fails to answer timely or to request an
extension. 21 C.F.R. § 17.11(a). For that reason, I must decide whether a default
judgment is appropriate here. I conclude that it is based on the allegations of the
Complaint and Respondent’s failure to answer them.

For purposes of this decision, I assume the facts alleged in the Complaint are true.
21 C.F.R. § 17.11(a). Specifically, CTP alleges the following facts in its
Complaint:

Respondent owns Franklin Package Store, an establishment that sells
tobacco products and is located at 402 Franklin Avenue, Hartford,
Connecticut 06114. Complaint { 3.

On August 3, 2012, an FDA-commissioned inspector observed violations
of 21 C.F.R. Part 1140 while inspecting Respondent’s establishment.
Respondent violated 21 C.F.R. § 1140.14(a) when Respondent’s staff
“Tsold] tobacco products to a minor[;] . . . [s]pecifically, a person younger
than 18 years of age was able to purchase a package of Newport Box
cigarettes .. . at approximately 2:17 PM ET...” Respondent’s staff also
violated 21 C.F.R. § 1140.14(b)(1) when the staff “[f]ail[ed] to verify the
age of a person purchasing tobacco products[,] by means of photographic
identification containing the bearer’s date of birth[,] .. . before the sale. . .
on August 3, 2012....” Complaint ¥ 10.

On October 18, 2012, CTP issued a Warning Letter to Respondent detailing
the inspector’s observations from August 3, 2012. In addition to describing
the violations, the letter advised Respondent that the FDA may initiate a
civil money penalty action or take other regulatory action against
Respondent if Respondent failed to correct the violations. The letter also
stated that it was Respondent’s responsibility to comply with the law.
Complaint § 10.

e The FDA did not receive a response to the Warning Letter, but United
Parcel Service records show that “BATISTA J” received the letter on
October 19, 2012. Complaint § 11.

e On January 4, 2013, FDA-commissioned inspectors documented additional
violations of 21 C.F.R. Part 1140 at Respondent’s establishment.
Specifically, at approximately 10:32 AM ET, Respondent’s staff sold a
package of Newport Box 100s cigarettes to a person younger than 18 years
of age. In addition, Respondent’s staff did not verify the minor’s age by
checking the minor’s photo identification prior to this sale, as required by
21 C.F.R. § 1140.14(b)(1). Complaint §

These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is
misbranded if sold or distributed in violation of regulations issued under section
906(d) of the Act. 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R § 1140.1(b). Under

21 C.F.R. § 1140.14(a), no retailer may sell cigarettes or smokeless tobacco to any
person younger than 18 years of age. Under 21 C.F.R. § 1140.14(b)(1), a retailer
must verify, by means of photo identification containing the bearer’s date of birth,
that no purchaser of cigarettes or smokeless tobacco is younger than 18 years of
age.

Here, Respondent’s staff sold cigarettes to minors on two separate occasions:
August 3, 2012, and January 4, 2013. Prior to these transactions, Respondent’s
staff did not verify, by checking the tobacco purchaser’s photographic
identification, that the tobacco purchaser was 18 years of age or older as the
regulations require. Respondent’s actions and omissions on two separate
occasions at the same retail outlet constitute violations of law for which a civil
money penalty is merited. Accordingly, I find that a civil money penalty of $500
is permissible under 21 C.F.R. § 17.2 and order one imposed.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Corbet Turner and Samuel Turner
d/b/a Beer and Bottle Shoppe,

Respondent.

Docket No. C-13-989
FDA Docket No. FDA-2013-H-0829

Decision No. CR2933
Date: October 1, 2013
INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint
(Complaint) against Respondent, Corbet Turner and Samuel Turner d/b/a Beer and
Bottle Shoppe, alleging facts and legal authority sufficient to justify the imposition
of a civil money penalty of $500. Respondent did not timely answer the
Complaint, nor did Respondent request an extension of time within which to file
an answer. Therefore, I enter a default judgment against Respondent and order
that Respondent pay a civil money penalty in the amount of $500.

CTP began this case by serving a Complaint on Respondent and filing a copy of
the Complaint with the Food and Drug Administration’s (FDA) Division of
Dockets Management. The Complaint alleges that Respondent impermissibly
used self-service displays in a non-exempt facility and that Respondent’s staff
unlawfully sold a regulated tobacco product to a minor, thereby violating the
Federal Food, Drug, and Cosmetic Act (Act) and its implementing regulations
found at 21 C.F.R. Part 1140. CTP seeks a civil money penalty of $500.
On August 16, 2013, CTP served the Complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and
accompanying cover letter, CTP explained that, within 30 days, Respondent
should pay the penalty, file an answer, or request an extension of time within
which to file an answer. CTP warned Respondent that if it failed to take one of
these actions within 30 days the Administrative Law Judge could, pursuant to 21
C.F.R. § 17.11, issue an initial decision by default ordering Respondent to pay the
full amount of the proposed penalty. Respondent did not take any of the required
actions within the time provided by regulation.

lam required to issue an initial decision by default if the Complaint is sufficient to
justify a penalty, and the Respondent fails to answer timely or to request an
extension. 21 C.F.R. § 17.11(a). For that reason, I must decide whether a default
judgment is appropriate here. I conclude that it is based on the allegations of the
Complaint and Respondent’s failure to answer them.

For purposes of this decision, I assume the facts alleged in the Complaint are true.
21 C.F.R. § 17.11(a). Specifically, CTP alleges the following facts in its
Complaint:

e Respondent owns Beer and Bottle Shoppe, an establishment that sells
tobacco products and is located at 1889 South Business Highway 65,
Hollister, Missouri 65672. Complaint § 3.

e On June 8, 2012, an FDA-commissioned inspector observed a violation of
the regulations found at 21 C.F.R. Part 1140 while inspecting Respondent’s
establishment. Respondent “violated 21 C.F.R. § 1140.16(c) by having
‘self-service displays . . . that provide a consumer direct access to cigarettes
and smokeless tobacco’” while “‘fail[ing] to ensure that minors are neither
present nor permitted to enter at any time as the establishment is open to the
general public during business hours.” Complaint § 10.

¢ On September 13, 2012, CTP issued a Warning Letter to Respondent
detailing the inspector’s observations from June 8, 2012. In addition to
describing the violations, the letter advised Respondent that the FDA may
initiate a civil money penalty action or take other regulatory action against
Respondent if Respondent failed to correct the violations. The letter also
stated that it was Respondent’s responsibility to comply with the law.
Complaint § 10.
¢ On September 20, 2012, Karen Turner, manager of Beer and Bottle
Shoppe, responded by telephone to the Warning Letter on behalf of
Respondent. “Ms. Turner stated that the tobacco products were moved and
... no longer self-service.” Complaint § 11.

e On January 11, 2013, and January 16, 2013, FDA-commissioned inspectors
documented additional violations of 21 C.F.R. Part 1140 during another
inspection of Respondent’s establishment. Respondent violated 21 C.F.R.
§ 1140.14(a) on January 11, 2013, at approximately 5:42 PM CT, when “a
person younger than 18 years of age was able to purchase a package of
Skoal Long Cut Wintergreen smokeless tobacco.” Additionally, on those
inspection dates, Respondent’s establishment had “a self-service display
that include[d] loose cigarette tobacco in a customer[-]accessible part of the
establishment.” On those dates, the establishment was “open to persons of
all ages[;] [t]herefore , th[e] facility d[id] not qualify as one where minors
are not present or permitted to enter at any time.” Complaint § 1.

These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is
misbranded if sold or distributed in violation of regulations issued under section
906(d) of the Act. 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R § 1140.1(b). Under 21
C.F.R. § 1140.16(c)(1), a retailer may sell cigarettes and smokeless tobacco only
in a direct, face-to-face exchange between the retailer and the consumer.
Examples of methods of sale that are not permitted include vending machines and
self-service displays. However, vending machines and self-service displays are
permitted if located in facilities where the retailer ensures that no person younger
than 18 years of age is present, or permitted to enter, at any time. 21 C.F.R. §
1140.16(c)(2)(ii). Under 21 C.F.R. § 1140.14(a), no retailer may sell cigarettes or
smokeless tobacco to any person younger than 18 years of age.

Here, Respondent violated 21 C.F.R. § 1140.16(c) when its staff sold cigarettes
and smokeless tobacco in a manner other than a direct, face-to-face exchange with
its customer on multiple occasions: June 8, 2012, January 11, 2013, and January
16, 2013. On those dates, Respondent’s establishment was not exempt from the
requirement that tobacco products be sold only via a direct, face-to-face exchange
because the establishment was open to the general public. Additionally, on
January 11, 2013, Respondent violated 21 C.F.R. § 1140.14(a) when its staff sold

smokeless tobacco to a minor. Respondent’s actions on multiple occasions at the
same retail outlet constitute violations of law for which a civil money penalty is
merited. Accordingly, I find that a civil money penalty of $500 is permissible
under 21 C.F.R. § 17.2.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2013-H-0809)

Complainant
v.

Kuma H. Mamie
d/b/a 7-Eleven #22921,

Respondent.
Docket No. C-13-973
Decision No. CR2932

Date: September 26, 2013

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an
administrative complaint on Respondent, Kuma H. Mamie d/b/a 7-Eleven #22921,
at 8101 Fenton Street, Silver Spring, Maryland 20910, and by filing a copy of the
complaint with the Food and Drug Administration's (FDA) Division of Dockets
Management. The complaint alleges that, 7-Eleven #22921 impermissibly sold
cigarettes to a minor on two separate occasions and failed to verify the purchaser’s
age by means of photo identification containing a date of birth, violating the
Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its
implementing regulations, 21 C.F.R. Part 1140. CTP seeks to impose a $500 civil
money penalty against Respondent 7-Eleven #22921.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on July 10, 2013, CTP served the
complaint on Respondent 7-Eleven #22921 by United Parcel Service. In the
complaint and accompanying cover letter, CTP explained that, within 30 days,
Respondent should pay the penalty, file an answer, or request an extension of time
in which to file an answer. CTP warned Respondent that, if it failed to take one of
these actions within 30 days, the Administrative Law Judge could, pursuant to

21 C.F.R. § 17.11, issue an initial decision ordering it to pay the full amount of the
proposed penalty.

Respondent 7-Eleven #22921 has neither filed an answer within the time
prescribed, nor requested an extension of time within which to file an answer.
Pursuant to 21 C.F.R. § 17.11, Lassume that the facts alleged in the complaint (but
not its conclusory statements) are true. Specifically:

e At Respondent's business establishment, 8101 Fenton Street, Silver Spring,
Maryland 20910, on August 2, 2012, an FDA-commissioned inspector
observed a sale of cigarettes to a person younger than 18 years of age;

e At Respondent's business establishment, 8101 Fenton Street, Silver Spring,
Maryland 20910, on August 2, 2012, an FDA-commissioned inspector
observed that staff failed to verify, by means of photo identification
containing the bearer's date of birth, that no purchaser of cigarettes or
smokeless tobacco is younger than 18 years of age;

e Ina warning letter dated October 11, 2012, CTP informed Respondent of
the inspector's August 2, 2012 observations, and that such actions violate
federal law, 21 C.F.R. §§ 1140.14(a) and 1140.14(b)(1). The letter further
warned that Respondent's failure to correct its violations could result in a
civil money penalty or other regulatory action;

e At approximately 2:07 p.m. ET on December 13, 2012, at Respondent's
business establishment, 8101 Fenton Street, Silver Spring, Maryland 20910,
an FDA commissioned inspector observed the sale of a package of Newport
Box cigarettes to a person younger than 18 years of age; staff also failed to
verify, by means of photo identification containing the bearer's date of
birth, the purchaser’s age.

These facts establish Respondent 7-Eleven #22921’s liability under the Act. The
Act prohibits misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco
product is misbranded if sold or distributed in violation of regulations issued under
section 906(d) of the Act. 21 U.S.C. § 387f(d); see 21 U.S.C. § 387¢(a)(7)(B);

21 C.F.R. § 1140.1(b). The Secretary issued the regulations at 21 C.F.R. Part
1140 under section 906(d) of the Act. 21 U.S.C. 387(a); see 21 U.S.C.

§ 387£(d)(1); 75 Fed. Reg. 13,229 (Mar. 10, 2010). Under 21 C.F.R. § 1140.14(a),
no retailer may sell cigarettes or smokeless tobacco to any person younger than 18
years of age. Under 21 C.F.R. § 1140.14(b)(1), a retailer must verify, by means of
photo identification containing the bearer's date of birth, that no person purchasing
cigarettes or smokeless tobacco is younger than 18 years of age.

A $500 civil money penalty is permissible under 21 C.F.R. § 17.2.
Order

For these reasons, I enter default judgment in the amount of $500 against
Respondent Kuma H. Mamie d/b/a 7-Eleven #22921. Pursuant to 21 C.F.R.

§ 17.11 (b), this order becomes final and binding upon both parties after 30 days
of the date of its issuance.

/s/
Carolyn Cozad Hughes
Administrative Law Judge