Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Center for Tobacco Products,

(FDA No. FDA-2014-H-2237)
Complainant
v.

Vicente Cruz
d/b/a ENR Market,

Respondent.
Docket No. C-15-708
Decision No. CR4050

Date: July 16,2015

INITIAL DECISION

The Center for Tobacco Products (CTP) seeks to impose a civil money penalty
against Respondent, Vicente Cruz d/b/a ENR Market, located at 431 Zion Street,
Hartford, Connecticut 06106, for eight violations of the Federal Food, Drug, and
Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its implementing regulations,
21 C.F R. pt. 1140, within a forty-eight month period. Specifically, CTP alleges
that ENR Market violated the Act by impermissibly selling cigarettes to minors,
failing to verify, by means of photo identification containing a date of birth, that
the purchasers were 18 years of age or older, and selling individual cigarettes.

Procedural History

CTP began this matter by serving an administrative complaint seeking an $11,000
civil money penalty on Respondent ENR Market, at 431 Zion Street, Hartford,
Connecticut 06106, and by filing a copy of the complaint with the Food and Drug
Administration’s (FDA) Division of Dockets Management. Respondent timely
answered CTP’s complaint admitting the allegations but contesting the amount of
the civil money penalty. On February 5, 2015, I issued an Acknowledgement and
Prehearing Order (APHO) that set deadlines for the parties to file their pre-hearing
exchanges. CTP filed its pre-hearing exchange on May 19, 2015. Respondent
ENR Market subsequently timely filed its pre-hearing exchange, admitting all
allegations in the Complaint but contesting the amount of the civil money penalty.

On May 18, 2015, CTP filed a Motion for Partial Summary Decision, seeking a
judgment solely on Respondent ENR Market’s liability. Respondent’s response to
the Motion was due on or before June 17,2015. As of the date of this decision,
Respondent has not filed a response to CTP’s Motion for Partial Summary
Decision.

Decision on the Record

Pursuant to 21 CFR § 17.37(b), all direct testimony of witnesses shall be admitted
in the form of a written declaration. In its Motion for Partial Summary Decision,
CTP submitted one witness declaration, but did not provide any additional witness
declarations or a witness list in its pre-hearing exchange. Respondent ENR
Market has not submitted direct testimony, nor has it requested to cross examine
CTP’s sole witness. Because neither party has requested to cross-examine an
opposing party’s witness, the evidentiary record is considered complete.
Therefore, I will decide this case on the basis of the written record. In light of the
decision now being issued, CTP’s May 18, 2015 Motion for Partial Summary
Decision is now moot.

Analysis
I. Violations

In its Complaint, CTP alleges that Respondent ENR Market committed eight
violations of the Act and its implementing regulations within a forty-eight month
period. On January 20, 2015, ENR Market filed an answer to the Complaint
admitting all the allegations but contesting the amount of the civil money penalty.
Answer. Additionally, on June 10, 2015, ENR Market filed an informal brief,
once again admitting all the allegations but contesting the amount of the civil
money penalty. Informal Brief of Respondent.

CTP makes the following uncontested allegations:

e At approximately 2:42 p.m. on August 7, 2012, at Respondent ENR
Market’s business establishment, 431 Zion Street, Hartford, Connecticut
06106, an FDA-commissioned inspector observed Respondent’s staff
selling a package of Newport Box cigarettes to a person younger than 18
years of age. The inspector also observed that staff failed to verify, by
means of photographic identification containing a date of birth, that the
purchaser was 18 years of age or older. CTP Ex. 6 § 3.

e Ina warning letter dated November 8, 2012, CTP informed Respondent of
the inspector’s August 7, 2012, observations, and that such actions violate
federal law, 21 C.F.R. § 1140.14(a) and (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. Id. §§ 1-2.

e At approximately 10:11 a.m. on January 29, 2013, at Respondent ENR
Market’s business establishment, 431 Zion Street, Hartford, Connecticut
06106, FDA-commissioned inspectors observed Respondent’s staff selling
a box of Maverick Menthol Box 100s cigarettes to a person younger than
18 years of age. The inspectors also observed that staff failed to verify, by
means of photographic identification containing a date of birth, that the
purchaser was 18 years of age or older. CTP Ex.3 § 1.

e¢ Inacomplaint dated August 19, 2013, CTP initiated its first civil money
penalty action, CRD Docket Number C-13-1017, FDA Docket Number
FDA-2013-H-0844, against Respondent ENR Market for three violations of
21 C.F R. pt. 1140 within a 24-month period. CTP alleged those violations
to have occurred on August 7, 2012', and January 29, 2013. Id.

e The first action concluded when Respondent, Vicente Cruz, settled the
claims. On August 23, 2013, Mr. Cruz signed an Acknowledgment Form
in which he acknowledged the violations occurred, waived his ability to
contest the violations in the future, and stated that he understood that the
violations may be counted in determining the total number of violations for
purposes of future enforcement actions. CTP MSD Ex. A.

e At approximately 9:52 a.m. on October 21, 2013, at Respondent ENR
Market’s business establishment, 431 Zion Street, Hartford, Connecticut
06106, FDA-commissioned inspectors observed Respondent’s staff selling
a package of Newport Box 100s cigarettes to a person younger than 18
years of age. The inspectors also observed that staff sold individual
cigarettes. Complaint Supporting Documents/Exhibits § 1.

' “For the purposes of calculating the penalty, FDA counted all the violations
found during the initial inspection on August 7, 2012 as a single violation, and all
subsequent violations as separate violations.” Informal Brief of Complainant at
8-9.

e Inacomplaint dated April 2, 2014, CTP initiated its second civil money
penalty action, CRD Docket Number C-14-870, FDA Docket Number
FDA-2014-H-0378, against Respondent ENR Market for five violations of
21 C.F R. pt. 1140 within a 36-month period. CTP alleged those violations
to have occurred on August 7, 2012, January 29, 2013, and October 21,
2013. Id.

e The second action concluded when Administrative Law Judge Scott
Anderson issued an Initial Decision and Default Judgment on June 3, 2014,
“accepting the facts alleged in the Complaint as true” and finding “those
facts establish Respondent’s liability under the ACT.” The judgment
became binding on Respondent on July 3, 2014. CTP Ex. 4.

e At approximately 9:09 a.m. on August 5, 2014, at Respondent ENR
Market’s business establishment, 431 Zion Street, Hartford, Connecticut
06106, FDA-commissioned inspectors documented Respondent’s staff
selling a single cigarette to a person younger than 18 years of age. The
inspectors also documented that staff failed to verify, by means of
photographic identification containing a date of birth, that the purchaser
was 18 years of age or older. Complaint § 1.

e Inacomplaint dated December 18, 2014, CTP initiated its third and current
civil money penalty action, CRD Docket Number C-15-708, FDA Docket
Number FDA-2014-H-2237, against Respondent ENR Market for eight
violations of 21 C.F.R. pt. 1140 within a 48-month period. CTP alleged
those violations to have occurred on August 7, 2012, January 29, 2013,
October 21, 2013, and August 5, 2014. Id.

CTP asserts that these allegations, as supported by documentary evidence, are
sufficient to establish a basis for liability against Respondent.

Respondent ENR Market has not disputed these allegations. Therefore, I find that
these facts establish Respondent Vicente Cruz d/b/a ENR Market’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.

§ 387c(a)(7)(B); 21 C.F.R. § 1140.1(b). The Secretary of the U.S. Department of
Health and Human Services issued the regulations at 21 C.F.R. pt. 1140 under
section 906(d) of the Act. 21 U.S.C. § 387a-1; see 21 U.S.C. § 387£(d)(1); 75 Fed.
Reg. 13,225, 13,229 (Mar. 19, 2010). Under 21 C.F.R. § 1140.14(a), no retailer
may sell cigarettes to any person younger than 18 years of age. Under 21 C.F.R.

§ 1140.14(b)(1), retailers must verify, by means of photographic identification
containing a purchaser’s date of birth, that no cigarette purchasers are younger

than 18 years of age. Finally, under 21 C.F.R. § 1140.14(d), no retailer may sell
individual cigarettes.

A. II. Civil Money Penalty

Pursuant to 21 U.S.C. § 333(f)(9), Respondent ENR Market is liable for a civil
money penalty not to exceed the amounts listed in FDA’s civil money penalty
regulations at 21 C.F.R. § 17.2. In its Complaint, CTP sought to impose the
maximum penalty amount, $11,000, against Respondent for eight violations of the
Act and its implementing regulations within a forty-eight month period.
Complaint § 1. CTP subsequently lowered the amount of civil money penalty it is
seeking to $7,500 “in light of Respondent’s annual profits as well as other income
that Respondent derives from tobacco sales.” Informal Brief of Complainant at 9.

When determining the amount of a civil money penalty, I am required to take into
account “the nature, circumstances, extent and gravity of the violations and, with
respect to the violator, ability to pay, effect on ability to continue to do business,
any history of prior such violations, the degree of culpability, and such other
matters as justice may require.” 21 U.S.C. § 303(f)(5)(B).

i. Nature, Circumstances, Extent and Gravity of the Violations

Time and again, Respondent ENR Market has failed to comply with the Act and
its implementing regulations. Respondent admitted to four violations for selling
cigarettes to persons younger than 18 years of age, 21 C.F.R. § 1140.14(a), three
violations for failing to verify, by means of photo identification containing a
purchaser’s date of birth, that no cigarette purchasers are younger than 18 years of
age, 21 C.F.R. § 1140.14(b)(1), and two violations for selling individual cigarettes,
21 C.F.R. § 1140.14(d). Each violation was committed by the owners of the
establishment. The repeated inability of Respondent to comply with federal
tobacco regulations is serious in nature and the civil money penalty amount should
be set accordingly.

ii. Respondent’s Ability to Pay

CTP is seeking a $7,500 civil money penalty against Respondent ENR Market.
Respondent states that the proposed penalty will cause “undue hardship because it
will be difficult if not impossible to make it up.” Informal Brief of Complainant at
9. Additionally, Respondent and his wife “can’t physically work any more hours
and they can’t afford to hire anyone else.” Id. Respondent provided no other
evidence of its ability to pay, nor of the financial hardship that would be incurred
if the penalty is imposed.
In its production of documents, Respondent ENR Market provided CTP with tax
returns for 2012, 2013 and 2014. CTP states that Respondent reported an
increasing Net Profit of over J cach year, including
in income from [JJ Tobacco sales each year.” In Respondent’s lone tax
return submitted into the record by CTP, for the year 2012, Respondent reported
an annual profit of J. with J Tobacco sales of J. CTP Exh. 1.
Additionally, profits from the business were reported as Respondent’s
HE income. Using these figures, imposition of a $7,500 penalty would
take away nearly gg of Respondent’s annual income, a severe punishment.
Without Respondent’s tax returns for 2013 and 2014, however, or any other
evidence of Respondent’s current financial situation, it is impossible to accurately
assess Respondent’s current ability to pay a civil money penalty.

iii. Effect on Ability to do Business

There is nothing in the evidentiary record that shows the effect a civil money
penalty will have on Respondent ENR Market’s ability to do business.
Respondent did not address how this penalty will affect its ability to do business
other than to state that it will be difficult to recover the lost profits and that it is
now “emphatically clear” that it risks losing its business if it sells tobacco products
to minors. Informal Brief of Complainant at 9. CTP argues that “[t]here is no
evidence that this penalty will prevent Respondent from conducting the business,”
and “[t]he likely result will simply be lower profits for 2015.” Informal Brief of
Complainant at 10. Without evidence to the contrary, I must conclude that the
proposed civil money penalty will not have a substantial effect on Respondent’s
ability to do business.

iv. History of Prior Violations

The current action is the third civil money penalty action brought against
Respondent ENR Market within the past forty-eight months for violations of the
Act and its implementing regulations. In the first civil money penalty action, CRD
Docket Number C-13-1017, FDA Docket Number FDA-2013-H-0844,
Respondent violated the prohibition against selling cigarettes to persons younger
than 18 years of age, 21 C.F.R. § 1140.14(a), on August 7, 2012, and January 29,
2013. On those same dates, Respondent also violated the requirement that
retailers verify, by means of photo identification containing a purchaser’s date of

* In the Informal Brief of Complainant, CTP cites to Respondent’s tax returns for
the years 2012, 2013 and 2014 in CTP Exhibit 1. CTP Exhibit 1 only contains
Respondent’s tax returns for the year 2012, and omits Respondent’s tax returns for
the years 2013 and 2014. Therefore, CTP’s claims regarding Respondent’s tax
returns for the years 2013 and 2014 are not supported by the evidentiary record.
birth, that no cigarette purchasers are younger than 18 years of age. 21 C.F.R.
§ 1140.14(b)(1). Respondent settled these claims with CTP for an undisclosed
penalty amount.

In the second civil money penalty action, CRD Docket Number C-14-870, FDA
Docket Number FDA-2014-H-0378, Respondent ENR Market violated the
prohibition against selling cigarettes to persons younger than 18 years of age, 21
C.F.R. § 1140.14(a), on October 21, 2013. On the same date, Respondent also
violated the prohibition against selling individual cigarettes, 21 C.F.R. §
1140.14(d). An Initial Decision and Default Judgment issued, imposing a $5,000
civil money penalty against Respondent.

The current action “brings Respondent’s total violation count to four sales to a
minor in violation of 21 C.F.R. § 1140.14(a), three failures to verify identification
in violation of 21 C.F.R. § 1140.14(b)(1), and two sales of individual cigarettes in
violation of 21 C.F.R. § 1140.14(d).” Informal Brief of Complainant at 10. I
agree with CTP that “[t]hese repeat violations show an unwillingness or inability
to sell tobacco products in accordance with federal tobacco regulations.” Id.
While Respondent has already paid substantial civil money penalties for its
previous violations, its continued inability to comply with the federal tobacco
regulations call for a more severe penalty.

v. Degree of Culpability

Respondent ENR Market admitted to all violations in its answer and informal
brief. Both Respondent and his wife “acknowledge their misconduct and freely
admit that they were wrong...” and “wish to apologize for their conduct...”
Informal Brief of Respondent at 9. Based on Respondent ENR Market’s own
admissions, I hold it fully culpable for all eight violations of the Act and its
implementing regulations.

vi. Additional Mitigating Factors

Respondent ENR Market stated that it has taken steps to prevent future violations
“by having age affidavits both in English and Spanish available to customers.”
Informal Brief of Respondent at 9. Respondent also apologized for its conduct
and “pledge[d] that it will not happen again.” Id.

vii. Penalty

Tacknowledge the financial strain a large penalty amount will have on
Respondent’s small business, as well as the steps taken by Respondent to ensure
additional future violations are not found. However, CTP is accurate in its
assessment that “[i]n light of the multiple repeat violations, as well as
Respondent’s unwillingness or inability to correct the violations, a large penalty is
necessary in order for Respondent to grasp the seriousness and importance of these
regulations.” Id. at 9. Based on the foregoing reasoning, I find CTP’s reduced
penalty amount of $7,500 to be appropriate under 21 U.S.C. §§ 303(f)(5)(B) and
333(f)(9).

Conclusion

Pursuant to 21 C.F.R. § 17.45, Lenter judgment in the amount of $7,500 against
Respondent, Vicente Cruz d/b/a ENR Market, for eight violations of the Federal
Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its

implementing regulations, 21 C.F.R. pt. 1140, within a forty-eight month period.

/s/
Catherine Ravinski
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Connie Miller, NP,
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-15-1633
Decision No. CR4040

Date: July 14, 2015

DECISION

The Centers for Medicare & Medicaid Services (CMS), through its administrative
contractor, Novitas Solutions (Novitas), determined that Petitioner was not eligible for
enrollment in the Medicare program earlier than July 14, 2014, and that Petitioner could
not submit claims for payment of services performed or delivered earlier than June 14,
2014. Petitioner requested a hearing in which she sought a retroactive effective date for
billing privileges of May 1, 2014. For the reasons stated below, I affirm Novitas’
determination.

I. Case Background and Procedural History

On May 6, 2014, Petitioner mailed to Novitas an initial Medicare enrollment application
(Form CMS-855I) and a reassignment of benefits application (Form CMS-855R) seeking
to reassign her Medicare payments to Texas EM-I Medical Services, PA, which Novitas
received on May 7, 2014. CMS Exhibits (Exs.) 1, 2, 12. Petitioner was not already
enrolled in the Medicare program when she filed her applications. CMS Ex. 14. In two
May 12, 2014 letters, Novitas requested additional information to process Petitioner’s
applications. CMS Exs. 5, 6. In two letters dated June 11, 2014, Novitas rejected
Petitioner’s applications because Petitioner did not supply the requested information.
CMS Exs. 7, 8.

On July 11, 2014, Novitas received a new Medicare enrollment application (Form CMS-
8551), and a Medicare reassignment of benefits application (Form CMS-855R) again
seeking to reassign her Medicare payments to Texas EM-I Medical Services, PA. CMS
Exs. 3, 4, 12. These applications are the subject of the present appeal. Novitas received
these applications on July 14, 2014. CMS Ex. 13 at 1. Novitas requested additional
information, which Petitioner timely supplied. CMS Exs. 9, 10. On October 2, 2014,
Novitas approved Petitioner’s applications indicating an “Effective date” of June 14,
2014. CMS Ex. 11.

By letter dated October 21, 2014, Petitioner requested reconsideration in order to obtain a
May 1, 2014 effective date. In a January 16, 2015 reconsideration determination, Novitas
upheld its earlier determination. Novitas explained that the effective date for billing
privileges was based on the date Novitas received Petitioner’s applications that were
processed to completion. Novitas explained that the application processed to completion
was received on July 14, 2014. Novitas also stated that it had decided to provide
Petitioner with a 30-day retroactive billing period to June 14, 2014. However, Novitas
indicated that it could not consider the applications Petitioner filed in May 2014 because
they had not been processed to completion. CMS Exs. 12, 13.

By letter dated February 25, 2015, Petitioner timely filed a request for a hearing with the
Departmental Appeals Board, Civil Remedies Division. Following the issuance of my
March 25, 2015 Acknowledgment and Pre-hearing Order (Order), CMS filed a
prehearing brief and motion for summary disposition (CMS Br.), and 14 proposed
exhibits (CMS Exs. 1-14). One of the exhibits contained written direct testimony from a
CMS witness. CMS Ex. 14. Petitioner filed a document in response which is
substantively the same as the hearing request.

II. Decision on the Record

Because Petitioner did not object to any of CMS’s proposed exhibits, I admit CMS Exs.
1-14 into the record. See Order § 7; Civil Remedies Division Procedures (CRDP)

§ 14(e).

My Order advised the parties that they must submit written direct testimony for each
proposed witness and that an in-person hearing would only be necessary if the opposing
party requested an opportunity to cross-examine a witness. Order §{j 8-10; CRDP

§ 16(b). CMS submitted written direct testimony for one witness; however, Petitioner
did not request to cross-examine the witness. Therefore, I issue this decision based on
the written record. Order § 11; CRDP § 19(d).
III. Issue

Whether CMS had a legitimate basis to determine that July 14, 2014, was the effective
date for Petitioner’s Medicare enrollment and that Petitioner could retrospectively bill for
services rendered to Medicare beneficiaries on or after June 14, 2014.

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

The Social Security Act authorizes the Secretary of Health and Human Services
(Secretary) to promulgate regulations governing the enrollment process for providers and
suppliers in the Medicare program.” 42 U.S.C. §§ 1302, 1395cc(j). Under the
Secretary’s regulations, a provider or supplier who seeks billing privileges under
Medicare must “submit enrollment information on the applicable enrollment application.
Once the provider or supplier successfully completes the enrollment process ... CMS
enrolls the provider or supplier into the Medicare program.” 42 C.F.R. § 424.510(a).

I. Novitas received Petitioner’s applications (Forms CMS-855I and
CMS-855R) on July 14, 2014, and Novitas ultimately approved them.

Petitioner completed and signed Forms CMS-855I and CMS-855R on June 27, 2014.
CMS Ex. 3 at 29; CMS Ex. 4 at 4. On July 9, 2014, a representative from Texas EM-I
Medical Services, PA, signed the Form CMS-855R. On July 11, 2014, the applications
were mailed to Novitas. CMS Ex. 12 at 2. Both Petitioner and Novitas acknowledge that
Novitas received these applications on July 14, 2014. CMS Ex. 12 at 2; CMS Ex. 13 at 2.
Novitas processed these applications and, on October 2, 2014, Novitas informed
Petitioner that she was enrolled in the Medicare program and that her reassignment of
benefits was approved. CMS Ex. 11. Therefore, the evidence of record supports the
conclusion that Novitas received Petitioner’s enrollment and reassignment applications
on July 14, 2014, and that Novitas approved these applications.

2. Novitas properly concluded that Petitioner’s enrollment and
reassignment of Medicare benefits was effective on July 14, 2014, with
a retrospective billing period commencing on June 14, 2014.

' My findings of fact and conclusions of law are set forth in italics and bold font.

> A “supplier” furnishes services under Medicare, and the term supplier applies to
physicians and other nonphysician practitioners and facilities that are not included within
the definition of the phrase “provider of services.” 42 U.S.C. § 1395x(d).
In its initial determination, Novitas stated that Petitioner’s effective date was June 14,
2014. CMS Ex. 11 at 2. In its reconsidered determination, Novitas explained that the
effective date for Medicare billing privileges was July 14, 2014, with a retrospective
billing period commencing June 14, 2014. CMS Ex. 13.

The Secretary’s regulations provide that the effective date of enrollment of physicians
and non-physician practitioners is “the later of the date of filing of a Medicare
enrollment application that was subsequently approved by a Medicare contractor or the
date an enrolled physician . . . first began furnishing services at a new practice location.”
42 C.F.R. § 424.520(d) (emphasis added). The “date of filing” is the date that the
Medicare contractor “receives” a signed provider/supplier enrollment application that the
Medicare contractor is able to process to approval. 73 Fed. Reg. 69,726, 69,769 (Nov.
19, 2008); see also Caroline Lott Douglas, PA, DAB CR2406, at 5-7 (2011); Rizwan
Sadiq, M.D., DAB CR2401, at 5 (2011). Because Novitas received the applications from
Petitioner on July 14, 2014, and Novitas was ultimately able to approve them, Novitas
properly determined July 14, 2014, as Petitioner’s effective date.

The regulations applicable to this case permit limited retrospective billing for physician
or non-physician practitioner services provided up to 30 days before the effective date of
enrollment. 42 C.F.R. § 424.521(a). Thus, Novitas correctly determined, based on a July
14, 2014 date of receipt, Petitioner could retrospectively bill for services provided to
beneficiaries beginning on June 14, 2014.

3. Ihave no jurisdiction to review Novitas’ decision to reject Petitioner’s
applications filed in May 2014.

Petitioner originally filed both a Form CMS-855I and Form CMS-855R in May 2014.
CMS Exs. 1, 2. Novitas issued letters to Petitioner acknowledging receipt of the
applications and requesting additional information in order to process the applications.
Novitas warned Petitioner that a failure to provide the requested information within 30
days could result in a rejection of the applications. CMS Exs. 5, 6. When Novitas did
not receive the requested information, Novitas informed Petitioner that her applications
were rejected. CMS Exs. 7, 8.

Petitioner acknowledges that Novitas rejected its application, but did not expressly
dispute that she failed to provide the requested information. Rather, Petitioner asserts
that Novitas made a number of errors in processing the applications filed by other
practitioners associated with Texas EM-I Medical Services, PA. CMS Ex. 12 at 1;
Request for Hearing at 1.

I have no jurisdiction to review Novitas’ rejection of Petitioner’s May 2014 applications.
The Secretary has given CMS the authority to reject an enrollment application when
“{t]he prospective provider or supplier fails to furnish complete information on the
provider/supplier enrollment application within 30 calendar days from the date of the
contractor request for the missing information.” 42 C.F.R. § 424.525(a)(1). The
Secretary also decided that “[e]nrollment applications that are rejected are not afforded
appeal rights.” 42 C.F.R. § 424.525(d). Therefore, I have no authority to consider
whether Novitas properly rejected Petitioner’s original applications for enrollment or
reassignment. Further, because Novitas did not process those applications to completion,
they can play no part in the determination of Petitioner’s Medicare enrollment effective
date or the effective date of reassignment. See 42 C.F.R. § 424.520(d).

V. Conclusion

I affirm Novitas’ determination that Petitioner’s effective date of enrollment is July 14,
2014, with a 30-day retrospective billing period commencing on June 14, 2014.

/s/
Scott Anderson
Administrative Law Judge


The Center

Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Center for Tobacco Products,

(FDA No. FDA-2015-H-0109)

Complainant
v.

C K Food and Fuel MN Inc.
d/b/a C K Food and Fuel,

Respondent.
Docket No. C-15-910
Decision No. CR4037

Date: July 13, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

‘or Tobacco Products (CTP) began this matter by serving an administrative

complaint on Respondent, C K Food and Fuel MN Inc. d/b/a C K Food and Fuel, at 4751
Nicollet Avenue, Minneapolis, Minnesota 55419, and by filing a copy of the complaint
with the Food and Drug Administration’s (FDA) Division of Dockets Management. The

complaint a
failed to veri

leges that C K Food and Fuel impermissibly sold cigarettes to minors and
ify, by means of photo identification containing a date of birth, that the

purchasers were 18 years of age or older, thereby violating the Federal Food, Drug, and
Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its implementing regulations, 21 C.F.R.

pt. 1140. TI

e complaint likewise alleges that Respondent C K Food and Fuel had

previously admitted to three violations of C.F.R. pt. 1140 and, therefore, CTP seeks to

impose a $5.

,000 civil money penalty against Respondent C K Food and Fuel.

As provided

for in 21 C.F.R. §§ 17.5 and 17.7, on January 15, 2015, CTP served the

complaint on Respondent C K Food and Fuel 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.

I. Procedural History

On March 13, 2015, Respondent C K Food and Fuel filed an answer to the complaint.
On March 20, 2015, I issued an Acknowledgment and Pre-Hearing Order which
established discovery request and production deadlines.

On April 27, 2015, CTP served Respondent with a request for production of documents.
As established in the Acknowledgment and Pre-Hearing Order, Respondent was given 30
days to provide the requested documents, which Respondent has failed to do.

On June 1, 2015, CTP filed a Motion to Compel Discovery and Motion to Extend
Deadlines. On June 2, 2015, I granted CTP’s motions and ordered Respondent to comply
with CTP’s request for production of documents or file a motion for protective order by
July 1, 2015. Respondent was warned that failure to comply with the order may result in
sanctions, including the issuance of an Initial Decision and Default Judgment finding
Respondent liable for the violations in the complaint. CTP filed a status report on July 6,
2015, indicating that Respondent has not produced any documents as requested by CTP
and has failed to comply with any court orders or discovery requests. Due to this
noncompliance, I am striking Respondent’s answer. 21 C.F.R. § 17.35 (c)(3).

Il. Default Decision

Striking Respondent’s answer leaves the complaint unanswered. Therefore, I am
required to issue an initial decision by default if the complaint is sufficient to justify a
penalty. 21 C.F.R. § 17.11(a). Accordingly, I must determine whether the allegations in
the complaint establish violations of the Act.

For purposes of this decision, I assume the facts alleged in the Complaint are true and
conclude the default judgment is merited based on the allegations of the Complaint and
the sanctions imposed on Respondent for failure to comply with the orders. 21 C.F.R.
§ 17.11. Specifically:

e CTP previously issued a warning letter to Respondent C K Food and Fuel on
September 5, 2013, citing violations! of 21 C.F.R. pt. 1140 on July 23, 2013, at

' In the complaint, CTP describes the action or actions that took place at Respondent

C K Food and Fuel’s business establishment on July 23, 2013, as both “a violation” and
as “violations.” Complaint J 10. In a previous administrative complaint dated May 8,
2014 , and attached to the present complaint, however, CTP described two discrete
Respondent’s business establishment, 4751 Nicollet Avenue, Minneapolis,
Minnesota 55419;

e¢ On May 13, 2014, CTP initiated a previous civil money penalty action, CRD
Docket Number C-14-1095, FDA Docket Number FDA-2014-H-0608, against
Respondent C K Food and Fuel for three violations of 21 C.F.R. pt. 1140 within a
24-month period. CTP alleged those violations to have occurred on July 23, 2013
and January 9, 2014;

e The previous action concluded when Martin Onuh, Respondent’s authorized
representative, settled the claims on Respondent’s behalf. On June 14, 2014, Mr.
Onuh signed an Acknowledgment Form in which he “admitt[ed] that the
violations . . . occurred, waiv[ed] his ability to contest the violations in the future,
and stat[ed] that he understood that violations may be counted in determining the
total number of violations for purposes of future enforcement actions.” The
Administrative Law Judge closed the case on June 27, 2014;

e At approximately 1:16 p.m. on July 14, 2014, at Respondent’s business
establishment, 4751 Nicollet Avenue, Minneapolis, Minnesota 55419,
FDA-commissioned inspectors documented Respondent’s staff selling a package
of Newport Box cigarettes to a person younger than 18 years of age. The
inspectors also documented that staff failed to verify, by means of photographic
identification containing a date of birth, that the purchaser was 18 years of age or
older.

These facts establish Respondent C K Food and Fuel’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. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b).
The Secretary of the U.S. Department of Health and Human Services issued the
regulations at 21 C.F.R. pt. 1140 under section 906(d) of the Act. 21 U.S.C. § 387a-1;
see 21 U.S.C. § 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). Under

21 C.F.R. § 1140.14(a), no retailer may sell a tobacco product to any person younger than
18 years of age. Further, under 21 C.F.R. § 1140.14(b)(1), retailers must verify, by
means of photographic identification containing a date of birth, that the purchaser was 18
years of age or older.

A $5,000 civil money penalty is permissible under 21 C.F.R. § 17.2.

violations at Respondent C K Food and Fuel’s business establishment on July 23, 2013:
a violation of 21 C.F.R. § 1140.14(a) and a violation of 21 C.F.R. § 1140.14(b)(1).
Therefore, I will infer that CTP’s description in the present complaint of “‘a violation”
occurring on July 23, 2013, was a typographical error.
Order

For these reasons, I enter default judgment in the amount of $5,000 against Respondent
C K Food and Fuel MN Inc. d/b/a C K Food and Fuel. 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/
Catherine Ravinski
Administrative Law Judge