Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Ajith Kadakol, M.D., and
Premier Vascular Care, P.C.,!
Petitioners,
v.
Centers for Medicare & Medicaid Services.

Docket No. C-13-774
Decision No. CR2967

Date: October 23, 2013

DECISION

Petitioners, Ajith Kadakol, M.D. (Dr. Kadakol) and his solo medical practice, Premier
Vascular Care, P.C. (Premier Vascular), requested a hearing to challenge the effective
date of Premier Vascular’s enrollment in the Medicare program. Wisconsin Physician
Services Insurance Corporation (WPS), an administrative contractor for the Centers for
Medicare & Medicaid Services (CMS) established an “effective billing date” of June 19,
2012, based on its receipt of Petitioners’ enrollment application. CMS now moves for
summary disposition. In response, Petitioners have expressed their continued desire for a

' This case had been previously docketed only under the name of Ajith Kadakol, M.D.
However, the underlying decisions involve the effective date for Dr. Kadakol’s solo
practice, Premier Vascular Care, P.C., not just Dr. Kadakol, who was already enrolled in
Medicare and associated with another practice location. Premier Vascular Care is a
supplier affected by the initial and reconsidered determinations and should be a named
party in this case. In addition, the effective date for Premier Vascular Care will affect Dr.
Kadakol’s ability to bill Medicare under Premier Vascular Care’s billing privileges, so he
remains a named party in the case.
hearing, which, in light of Petitioners’ appearance pro se in this matter, I will construe as
an opposition to a resolution of this case through summary disposition.

For the reasons set forth below, I find Petitioners have not raised any genuine dispute of
material fact and that CMS is entitled to judgment as a matter of law. Therefore, I grant
summary judgment in favor of CMS.

I. Case Background and Procedural History

On July 16, 2012, Certified Professional Billing Solutions, LLC, a medical billing
company, submitted to WPS an enrollment application (form CMS-855I ) and supporting
documents on behalf of Petitioners. WPS reports it received Petitioners’ enrollment
application on July 19, 2012. WPS accepted and processed Petitioners’ enrollment
application and, on November 7, 2012, sent a notice letter to Petitioners advising them
that their application had been approved and their “Effective Billing Date” was June 19,
2012, “30 days prior to the filing date” of their enrollment application.2, CMS Exhibit
(Ex.) 1, at 49.

On January 14, 2013, Petitioners’ billing company submitted to WPS a request for
reconsideration. CMS Ex. 2. The request for reconsideration incorporated a letter dated
August 9, 2012, that the billing company previously sent to WPS. CMS Ex. 2, at 2. The
August 9 letter stated that Petitioners sent an application “on or about March 1, 2012.
After calling numerous times and being told that it takes over 90 days to be processed we
finally found out that the application had not been received and we resubmitted the
contract on June 1, 2012.” CMS Ex. 2, at 2. The letter requested an effective date of
March 1, 2012. CMS Ex. 2, at 2.

Before a reconsidered determination had been issued, Dr. Kadakol exchanged emails
with the WPS hearing officer reviewing his case and explained his prior work with a
group practice, S.S. Hans M.D., P.C., as well as with the Henry Ford Health System.
CMS Ex. 4, at 2. He stated that the enrollment application related to his work with the

Henry Ford Health System and a separate enrollment application for Premier Vascular

were both submitted in September 2011. CMS Ex. 4, at 2. He requested that his billing
privileges for Premier Vascular be effective March 1, 2012, which was the day he began

> WPS used the term “Effective Billing Date” to refer to the date when Petitioners may
retrospectively bill for Medicare services. By regulation, the “effective date” would
ordinarily be the date WPS received Petitioners’ enrollment application that it eventually
approved. See 42 C.F.R. § 424.520(d). CMS may, however, permit Petitioners to
retrospectively bill for services for up to 30 days prior to that effective date. 42 C.F.R.

§ 424.521(a). To be consistent with the regulation, this decision uses “effective date” in
later sections to refer to the effective date of enrollment that is established by regulation,
not the date when Petitioners’ retrospective billing period begins.

providing services at the Premier Vascular location. CMS Ex. 4, at 2. The WPS hearing
officer responded to Dr. Kadakol by email, stating that she had a copy of the enrollment
application related to Dr. Kadakol’s work at the Henry Ford Health System but did not
have the application for Premier Vascular allegedly submitted on or around the same
time. CMS Ex. 4, at 1. She noted that the Henry Ford Health application had FedEx
tracking information and requested that Dr. Kadakol send her information about how he
sent the Premier Vascular application.» CMS Ex. 4, at 1. The hearing officer stated that
WPS phone records confirmed telephone calls about the Henry Ford Health enrollment
application, but no such records existed for the Premier Vascular enrollment application.
CMS Ex. 4, at 1. On March 23, 2013, WPS issued its reconsidered determination, which
stated that the “effective billing date will remain June 19, 2012.” CMS Ex. 5, at 2.

On April 24, 2013, Petitioners filed their request for hearing (RFH). Following my
Acknowledgment and Prehearing Order dated May 15, 2013 (Prehearing Order),
Petitioners filed a notice of appointment of representative that appointed Karen Touchette
as Petitioners’ authorized representative for the hearing. CMS subsequently filed a
motion for summary disposition (CMS Mot.) and eight supporting documentary exhibits
(CMS Exs. 1-8). Petitioners did not file a response to the motion for summary
disposition, a prehearing brief, or any proposed exhibits by the deadline established in the
Prehearing Order. See Prehearing Order at 3 § 4.b. On August 7, 2013, I issued an Order
to Show Cause requiring Petitioners to submit their prehearing briefing within 10 days,
or, in the alternative, to request the case be decided on the written record. I warned
Petitioners that I would dismiss the hearing request if they did not comply with the terms
of the Order to Show Cause. By facsimile dated August 17, 2013, Dr. Kadakol stated
that he “desire[d] a hearing” but he “do[es] not have any additional evidence to submit.”
Petitioners’ Response (P. Resp.) at 1. Dr. Kadakol stated that his “biller” was handling

is files and “has no[t] done a satisfactory job.” P. Resp. at 1. He also requested an
opportunity “to present the facts of my case before you make a decision.” P. Resp. at 1.

Based upon Dr. Kadakol’s statement that he has no evidence to submit, I find that there is
no need for an in-person hearing. In addition, Dr. Kadakol did not file a written brief as
directed in the Order to Show Cause, nor did he request an extension of time to file a
brief. The August 7 Order to Show Cause was clear in its requirement that Petitioners

ad to submit a brief within 10 days, which was already 24 days past the original filing
deadline. Dr. Kadakol implied that he did not have enough time to draft his written
arguments (“I received this letter only two days prior to today”), but that point is without
merit considering Petitioners have had since June 19, 2013 (when CMS submitted its
prehearing exchange) to draft a response to CMS’s motion for summary disposition.

> There is nothing in the record that shows that Petitioner responded to the WPS hearing
officer’s request for the shipping information of the September 2011 Premier Vascular
enrollment application.
Dr. Kadakol appears to shift blame to the individual that he appointed to represent
Petitioners in this matter, but that does not establish good cause to extend any filing
deadlines or permit Petitioners a second opportunity in which to comply with my Order
to Show Cause. It may be unfortunate that Petitioners appointed who they did to
represent them, and Petitioners may regret that decision now, but that error in judgment
does not justify prolonging this case any more than it has been, especially when
Petitioners have unequivocally asserted that they have no additional evidence to submit.
P. Resp. at 1. Indeed, Petitioners are not immune from the errors of their appointed
representative. Nevertheless, Petitioners’ response made it clear that they did not intend
to abandon their hearing request, so, rather than dismiss this case for failure to comply
with my Order to Show Cause, I will incorporate Petitioners’ arguments at the
reconsideration level in my consideration of this case.

Accordingly, this decision is issued on the written record. In the absence of objections
from Petitioners, I admit CMS Exs. 1-8 into the record.

II. Analysis
A. Issues
This case presents the following issues:
1. Whether summary judgment is appropriate; and

2. Whether CMS and its contractor properly determined the effective date for
Petitioners’ Medicare billing privileges.

B. Findings of Fact & Conclusions of Law
1. Summary judgment is appropriate.

Summary judgment is appropriate if “the record shows that there is no genuine issue as to
any material fact, and the moving party is entitled to judgment as a matter of law.”
Senior Rehab. & Skilled Nursing Ctr., DAB No. 2300, at 3 (2010) (citations omitted).
The moving party must show that there are no genuine issues of material fact requiring an
evidentiary hearing and that it is entitled to judgment as a matter of law. Jd. If the
moving party meets its initial burden, the non-moving party must “come forward with
“specific facts showing that there is a genuine issue for trial... .”” Matsushita Elec.
Industrial Co. v. Zenith Radio, 475 U.S. 574, 587 (1986). “To defeat an adequately
supported summary judgment motion, the non-moving party may not rely on the denials
in its pleadings or briefs, but must furnish evidence of a dispute concerning a material
fact — a fact that, if proven, would affect the outcome of the case under governing law.”
Senior Rehab., DAB No. 2300, at 3. To determine whether there are genuine issues of
material fact for hearing, an ALJ must view the evidence in the light most favorable to
the non-moving party, drawing all reasonable inferences in that party’s favor. Id.

Here, CMS moved for summary disposition and provided documentary evidence that
sufficiently establishes the material facts of the case. CMS Mot. at 1; CMS Exs. 1-8.
Petitioners have not disputed the documentary evidence that CMS submitted, nor have
they provided their own evidence that would establish a genuine dispute of material fact.
See P. Resp. at | (“I do not have any additional evidence to submit.”). Petitioners request
an in-person hearing so they can “present the facts of [the] case before . . . a decision.”

P. Resp. at 1. However, as Petitioners concede, there are no additional facts to present at
a hearing, and Petitioners have presented no evidence in response to CMS’s motion for
summary disposition. Thus, I find that Petitioner has not presented any evidence or
raised any factual inferences that establish a genuine dispute of material fact that would
preclude summary judgment.

The only issue to be resolved in this case is a matter of law, which, as discussed below,
must be decided in CMS’s favor. Accordingly, summary judgment is appropriate.

2. WPS received Petitioners’ enrollment application on July 19, 2012.

The undisputed evidence that CMS submitted shows that WPS received Petitioners’
enrollment application on July 19, 2012. CMS Ex. 1. A WPS worksheet lists the receipt
date of Petitioners’ enrollment application as “07/19/2012,” see CMS Ex. 1, at 1, and the
cover letter to Petitioners’ application and first page of the application are stamped “JUL
19 2012,” see CMS Ex. 1, at 5-6. Petitioners have not come forward with any evidence
that suggests WPS received their enrollment application sometime other than July 19,
2012.

Petitioners claim that they submitted an enrollment application for Premier Vascular in
either September 201 1(according to Dr. Kadakol) or on March 1, 2012 (according to the
billing company). CMS Ex. 4, at 2; RFH at 2. Not only do the inconsistencies in the
dates belie their claim about an earlier application, but Petitioners have provided no
evidence to support their assertion.* Summary judgment cannot be defeated by bald
allegations that have no record support whatsoever.

* The billing company acknowledged that WPS never received the March 1, 2012
enrollment application. See RFH at 2. WPS, therefore, could not establish an effective
date based on the March 1, 2012 application because doing so depends upon the actual
receipt of an enrollment application that is approved. 42 C.F.R. § 424.520(d); 73 Fed.
Reg. 69,725, 69,769 (Nov. 19, 2008).
3. CMS properly determined that the effective date of Petitioners’ billing
privileges in the Medicare program is July 19, 2012, with retrospective
billing privileges beginning June 19, 2012.

The regulation establishing the effective date of Medicare billing privileges for suppliers
such as Petitioners states:

The effective date for billing privileges for physicians, nonphysician
practitioners, and physician and nonphysician practitioner organizations 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 or nonphysician practitioner 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 enrollment application that the
Medicare contractor is able to process to approval. 73 Fed. Reg. 69,725, 69,769 (Nov. 9,
2008). In this case, WPS received Petitioners’ enrollment application on July 19, 2012,
and later approved that application. CMS Ex. 1, at 1. Dr. Kadakol claims that he started
providing services at the Premier Vascular location on March 1, 2012. CMS Ex. 4, at 2-
3. Therefore, the applicable regulation requires that the effective date of Petitioners’
Medicare billing privileges must be the later of those two dates, July 19, 2012.

The regulations permit limited retroactive billing for suppliers such as Petitioners that
have recently been enrolled in the Medicare program. See 42 C.F.R. § 424.521(a).
Specifically, the applicable regulation states in relevant part:

Physicians . . . and physician and nonphysician practitioner organizations
may retrospectively bill for services when a physician . . . or a physician or
a nonphysician organization have met all program requirements, including
State licensure requirements, and services were provided at the enrolled
practice location for up to—

(1) 30 days prior to their effective date if circumstances precluded enrollment
in advance of providing services to Medicare beneficiaries . . .

Id. Accordingly, CMS could permit Petitioners to bill retrospectively to June 19, 2012,
which is 30 days prior to their effective date of July 19, 2012.
III. Conclusion

For all of the foregoing reasons, I find that there is no genuine dispute of material facts
and that CMS is entitled to judgment as a matter of law. Therefore, I grant summary
judgment in favor of CMS.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division

Sylvia F. Redd,
(OI File No.: H-12-42608-9),

Petitioner,
v.
The Inspector General.
Docket No. C-13-467
Decision No. CR2959

Date: October 22, 2013

DECISION

Petitioner, Sylvia F. Redd, appeals the determination of the Inspector General (I.G.) for
the U.S. Department of Health and Human Services to exclude her from participating in
Medicare, Medicaid, and all federal health care programs pursuant to section 1128(a)(1)
of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(1)) for a period of 10 years. For
the reasons discussed below, I find that there is a basis for the I.G. to exclude Petitioner
and that a 10-year exclusion is reasonable based on the presence of three aggravating
factors and no mitigating factors.

I. Background and Procedural History

The following facts are undisputed. Petitioner was a registered nurse licensed in
Mississippi. I.G. Exhibit (Ex.) 3, at 1. Starting in September 2003, Petitioner, in
conjunction with a licensed physician, began referring Medicare patients to a durable
medical equipment (DME) supplier that sold power wheelchairs in exchange for
monetary remuneration for the referrals. P. Br. at 3; P. Ex. 5. An April 20, 2010 grand
jury indictment charged Petitioner and the physician as co-conspirators in a scheme to
defraud the Medicare program. I.G. Ex. 3. On September 26, 2011, Petitioner was
convicted of one count of Conspiracy to Violate the Anti-Kickback Statute and
Conspiracy to Steal Funds from Medicare in violation of 18 U.S.C. § 371. LG. Ex. 2, at
1, 2. Petitioner was sentenced to serve 15 months incarceration, three years supervised
release, and ordered to pay $997,225.52 in restitution to the U.S. Department of Health
and Human Services, Centers for Medicare & Medicaid Services (CMS). /d. at 6. Ina
letter dated December 31, 2012, the I.G. notified Petitioner that she was being excluded
from participating in Medicare, Medicaid and all federal health care programs pursuant to
section 1128(a)(1) of the Act. The I.G. based the exclusion on Petitioner’s
aforementioned conviction in the United States District Court, Southern District of
Mississippi, of a criminal offense related to the delivery of an item or service under
Medicare. I.G. Ex. 1. The LG. excluded Petitioner for a period of 10 years, five years
above the statutory minimum exclusion period for mandatory exclusions, based on the
presence of three aggravating factors. I.G. Ex. 1.

Petitioner timely filed an appeal to her exclusion. The Civil Remedies Division received
the request on February 25, 2013, and assigned the case to me for possible hearing and a
written decision. I granted Petitioner’s unopposed request to extend the scheduling of the
prehearing conference. I held a prehearing telephone conference with the parties on June
3, 2013, the substance of which I summarized in my Order and Schedule for Filing Briefs
and Documentary Evidence. During that prehearing conference, I explained to Petitioner
that she was entitled to representation by counsel but that I could not appoint counsel for
er. I also told her that if she should choose later to be represented by counsel, she need
only have her attorney submit a Notice of Appearance to my office as soon as possible.
Petitioner proceeded to represent herself.

Pursuant to my scheduling order, I asked the parties to answer the questions on short-
form briefs sent to them, together with any additional arguments and supporting
documents. The I.G. filed the short-form brief together with I.G. Exs. 1 -3. Petitioner
submitted her brief (P. Br.) together with P. Exs. 1- 5. The LG. submitted a reply brief
(LG. Reply). Absent objection, I admit I.G. Exs. 1-3 and P. Exs. 1-5.

Both parties indicated in their briefs that testimonial evidence was not needed. I.G. Br. at
6; P. Br. at 4. Therefore, an in-person hearing is not necessary, and I base this decision
on the written record of the documentary evidence and arguments the parties submitted.
IL. Discussion

A. Issues

The legal issues before me are limited to those set out at 42 C.F.R. § 1001.2007(a)(1):
1. Whether the I.G. was authorized to exclude Petitioner from participating
in Medicare, Medicaid, and all other federal health care programs
pursuant to section 1128(a)(1) of the Act; and

2. Whether the length of the 10-year length of the proposed period of
exclusion is unreasonable.

B. Findings of Fact and Conclusions of Law

1. Petitioner pleaded guilty to Conspiracy to Violate the Anti-Kickback
Statute and Conspiracy to Steal Funds from Medicare.

The LG. is excluding Petitioner based on section 1128(a)(1) of the Act. The essential
elements necessary to support this exclusion are: (1) the individual to be excluded must
have been convicted of a criminal offense, whether felony or misdemeanor; and (2) the
criminal offense is related to the delivery of an item or service under Medicare or any
state health care program.

a. Petitioner does not contest that she was convicted
of a criminal offense within the meaning of section
1128(a)(1) of the Act.

An individual is “convicted” of a criminal offense when: (1) a judgment of conviction
has been entered by a federal, state, or local court whether or not an appeal is pending or
the record has been expunged; (2) there has been a finding of guilt in a federal, state, or
local court; (3) a plea of guilty or no contest has been accepted in a federal, state, or local
court; or (4) an accused individual enters a first offender program, deferred adjudication
program, or other arrangement where a judgment of conviction has been withheld. Act

§ 1128(i) (42 U.S.C. § 1320a-7(i)); see also 42 C.F.R. § 1001.2.

Petitioner does not dispute that, on September 26, 2011, the United States District Court,
Southern District of Mississippi accepted her plea of guilty to one count of Conspiracy to
Violate the Anti-Kickback Statute and Conspiracy to Steal Funds from Medicare in
violation of 18 U.S.C. § 371. These events qualify as a conviction under the Act.

b. Petitioner does not dispute that her offense was
related to the delivery of an item or service under
Medicare.

Petitioner also does not dispute that her conviction was related to the delivery of an item
or service under Medicare. P. Br. at 2. Petitioner’s conviction was based on her
involvement in a scheme to refer patients to a DME supplier of power wheelchairs to be
paid for by Medicare even though the patients did not qualify. IG. Ex. 2, at 1; see also
P. Ex. 5, at 2. Petitioner’s role was to obtain intake information from the patients and
then her co-conspirator, a physician, would sign a Certificate of Medical Necessity
attesting that the patients qualified for a power wheelchair. The patients would then be
referred to the DME supplier. In return, both Petitioner and her co-conspirator shared in
a cash kickback provided to them by the DME supplier. I.G. Exs. 2, at 1, 2; 3, at 2, 3. It
is clear that a nexus exists between Petitioner’s criminal acts and the purported delivery
of an item or service under Medicare. The fact that the court ordered Petitioner to pay
restitution to Medicare also confirms that her offense was program-related. I.G. Ex. 2, at
6.

c. Petitioner must be excluded for a minimum of five
years.

The I.G. must exclude an individual or entity convicted of an offense related to the
delivery of a health care item or service under Medicare or a state health care program.
Act § 1128(a)(1) (42 U.S.C. § 1320a-7(a)(1)); 42 C.F.R. § 1001.101(a). An exclusion
made pursuant to section 1128(a)(1) of the Act must be for a minimum period of five
years. Act § 1128(c)(3)(B) (42 U.S.C. § 1320a-7(c)(3)(B)); 42 C.F.R. § 1001.102(a). As
noted above, Petitioner does not dispute that she was convicted of the offense of
Conspiracy to Violate the Anti-Kickback Statue and Conspiracy to Steal Funds from
Medicare. The actions that formed the basis of Petitioner’s conviction are clearly related
to the delivery of a health care service under the Medicare program. Accordingly, there
is a basis for the LG. to exclude Petitioner and that exclusionary period must be for a
minimum period of five years.

2. Excluding Petitioner for 10 years is within a reasonable range.

Petitioner seeks a reduction to her period of exclusion to the minimum statutory five-year
period. P. Br. at 4-5. An Administrative Law Judge (ALJ) ALJ reviews the length of an
exclusion de novo to determine whether it falls within a reasonable range considering any
aggravating and mitigating factors. Sushil Aniruddh Sheth, M.D., DAB No. 2491, at 5
(2012) (citing Joseph M. Rukse, Jr., R.Ph., DAB No. 1851, at 10-11 (2002)). To
determine whether an exclusion period is within a reasonable range, an ALJ must weigh
any aggravating and mitigating factors in the case, and evaluate the quality of the
circumstances surrounding the factors. Vinod Chandrashekhar Patwardhan, M.D., DAB
No. 2454, at 6 (2012) (citing Jeremy Robinson, DAB No. 1905, at 11 (2004)). The
regulations provide several factors that the I.G. may consider as aggravating and a basis
for lengthening an exclusion period. 42 C.F.R. § 1001.102(b). If an aggravating factor
justifies an increase to the length of an exclusion, the I.G. may then consider various
mitigating factors as a basis to reduce the exclusion period to no less than five years. 42
C.F.R. § 1001.102(c).

a. The I.G. reasonably relied on three aggravating
factors to enhance the length of Petitioner’s exclusion
period beyond the minimum five-year period.

In this case, the I.G. reasonably relied on three aggravating factors to enhance the period
of Petitioner’s exclusion beyond the minimum mandatory period. The LG. found that the
acts resulting in Petitioner’s conviction: (1) caused, or were intended to cause, a financial
loss to a government program of $5,000 or more; (2) were committed over a period of
one year or more; and (3) the sentence the court imposed included incarceration. 42
C.F.R. § 1001.102(b)(1), (2) and (5); see I.G. Ex. 1.

Regarding the first aggravating factor, the U.S. District Court ordered Petitioner to pay
$997,225.52 in restitution to CMS as a result of the loss to the government that
Petitioner’s offenses caused. I.G. Ex. 2, at 6. Governmental loss is an “exceptional
aggravating factor” when, as here, the loss is “very substantially greater than the statutory
standard.” Jeremy Robinson, DAB No. 1905, at 11 (2004). On its own, the
governmental loss here, 199 times greater than the minimum needed to support an
increase to the exclusion period, must be afforded such substantial weight.

Petitioner argues the full amount of the restitution should not be considered as an
aggravating factor. P. Br. at 3-4. Petitioner claims that the court-ordered restitution is
apportioned jointly and severally against her and the co-conspirators (both the physician
and the owner of the DME supplier). /d. Petitioner accordingly claims less culpability to
that of her co-conspirators maintaining that collectively her co-conspirators processed
244 claims, but she only processed paperwork for 24 patients, of which only 18 received
wheelchairs. Jd. at 5. The established facts underlying a conviction are not reviewable in
this forum. 42 C.F. R. § 1001.2007(d). Petitioner’s involvement in the scheme and her
specific culpability have already been determined by the U.S. District Court and,
therefore, cannot be re-adjudicated in this forum. The District Court judge determined
Petitioner’s sentence to include $997,225.52 in restitution that was assigned jointly and
severally with her co-conspirators. Based on this determination by the court, Petitioner is
not automatically relieved from paying the full amount of the restitution if her co-
conspirators fail to pay. Furthermore, the 1.G. must consider the entire amount of
financial loss to Medicare when determining whether to lengthen a period of exclusion.
42 CFR. § 1001.102(b)(1).

The I.G. also reasonably enhanced Petitioner’s exclusion period considering the acts
leading to her convictions occurred over a period of more than one year. Petitioner
participated in the conspiracy and scheme to defraud Medicare from September 2003
through to July 2005 — for over a period of one-year and ten months. LG. Ex 3, at 1.
The length of Petitioner’s involvement in the scheme demonstrates that her lack of
integrity was more than just short-lived and supports an increase from the five-year
minimum period of exclusion.
The LG. also reasonably enhanced Petitioner’s exclusion period because her sentence
included incarceration. Specifically, Petitioner’s sentence included a period of 15 months
of incarceration. The Board previously determined that a nine-month period of
incarceration was “relatively substantial,” and supported an eight-year exclusion period.
Jason Hollady, M.D., DAB No. 1855, at 12 (2002). In this case, Petitioner’s period of
incarceration was six months longer. Accordingly, this aggravating factor bears
substantial weight and supports an increase beyond the five-year minimum exclusion
period.

b. Lam unable to consider the factors Petitioner
argues in order to reduce her period of exclusion.

Petitioner expresses remorse for her actions, claims that she has taken ownership for her
involvement, and she has fulfilled her sentence. P. Br. at 3, 5-6. She notes that she
voluntarily reported her guilty plea to the Louisiana State Board of Nursing, agreed to a
license suspension, and asks that a 5-year exclusion run coterminous with her exclusion
from the state Medicaid program. Jd. at 4-5; P. Ex. 4, at 1.

Here I may only consider three mitigating factors, when: (1) a petitioner was convicted of
three or fewer misdemeanor offenses and the resulting financial loss to the program was
less than $1,500; (2) the record in the criminal proceedings demonstrates that a petitioner
ad a mental, physical, or emotional condition that reduced culpability; and (3) a
petitioner’s cooperation with federal or state officials resulted in others being convicted
or excluded, or additional cases being investigated, or a civil money penalty being
imposed. 42 C.F.R. § 1001.102(c). Characterizing a mitigating factor as “‘in the nature
of an affirmative defense,” the Board has ruled that a petitioner has the burden of proving
any mitigating factor by a preponderance of the evidence. Barry D. Garfinkel, M.D.,
DAB No. 1572 at 8 (1996).

Because Petitioner was convicted of a felony that involved program financial losses many
times greater than $1,500, the first factor does not apply here. Nor does Petitioner claim
any mental, physical, or emotional condition that reduced her culpability. She also does
not allege that she cooperated with government officials so that others were investigated,
convicted, excluded, or penalized. Therefore I find no legally-recognized mitigating
factor that I may consider to reduce her exclusionary period.

III. Conclusion

For the foregoing reasons, the I.G. has a basis to exclude Petitioner from participating in
Medicare, Medicaid, and all federal health care programs. After considering three
aggravating factors and no mitigating factors, an exclusion of 10 years is within a
reasonable range. Therefore, I sustain the I.G.’s exclusion of Petitioner effective January
20, 2013.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Zanco, L.L.C.
d/b/a Shell,

Respondent.

Docket No. C-13-1092
FDA Docket No. FDA-2013-H-0912

Decision No. CR2956

Date: October 22, 2013

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint
(Complaint) against Respondent, Zanco, L.L.C. d/b/a Shell, alleging facts and
legal authority sufficient to justify the imposition of a civil money penalty of $250.
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 $250.

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’s staff unlawfully
sold cigarettes to a minor, failed to verify that the tobacco purchaser was of
sufficient age prior to this transaction, and impermissibly used a self-service
display of regulated tobacco products in a non-exempt facility, 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 $250.

On August 20, 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 timely take
one of these actions 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.

I am required to issue an initial decision by default if the Complaint is sufficient to
justify a penalty, and the Respondent fails to timely answer 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 Shell, an establishment that sells tobacco products and is
located at 56 Lathrop Road, Plainfield, Connecticut 06374. Complaint { 2.

e On July 28, 2012, during an inspection of Respondent’s establishment, an
FDA-commissioned inspector observed that Respondent’s staff sold
cigarettes to a minor. “Specifically, a person younger than 18 years of age
was able to purchase a package of Newport Box cigarettes . . . at
approximately 2:29 PM ET ....” During that same transaction, the
inspector also observed that Respondent’s 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] July 28, 2012 ....” Complaint 4 9.

e On October 18, 2012, CTP issued a Warning Letter to Respondent detailing
the inspector’s observations from July 28, 2012. The letter explained that
the inspector’s observations constituted violations of 21 C.F.R.
§ 1140.14(a) and (b)(1). 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 and stated that it
was Respondent’s responsibility to comply with the law. Complaint § 9.

¢ On October 19, 2012, delivery records show that the Warning Letter was
received by “Shawn,” but the FDA did not receive a response to the
Warning Letter. Complaint § 10.

e On January 22, 2013, and January 29, 2013, FDA-commissioned inspectors
conducted a two-part inspection of Respondent’s establishment. On those
dates, the inspectors documented that “the establishment, which [was] a
convenience store open to the public, ha[d] a display of loose cigarette
tobacco and smokeless tobacco that [was] accessible to the public,” in
violation of 21 C.F.R. § 1140.16(c). 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. § 1140.14(a), no retailer may sell cigarettes to any person younger than
18 years of age. Under 21 C.F.R. § 1140.14(b)(1), a retailer must verify, by means
of photo identification containing the bearer’s date of birth, that no purchaser of
cigarettes is younger than 18 years of age. 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. The regulations prohibit retailers
from using self-service displays as a method of sale for cigarettes and smokeless
tobacco. 21 C.F.R. § 1140.16(c)(1). However, self-service displays of regulated
tobacco products 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).

Here, Respondent violated 21 C.F.R. § 1140.14(a) on July 28, 2012, when its staff
sold cigarettes to a minor. Respondent also violated 21 C.F.R. § 1140.14(b)(1)
when its staff did not verify, by checking the tobacco purchaser’s photographic
identification, that the tobacco purchaser was 18 years of age or older prior to this
transaction. Additionally, on January 22, 2013 and January 29, 2013,
Respondent’s establishment contained a self-service display of loose cigarette and
smokeless tobacco. On those dates, Respondent’s establishment functioned as a
convenience store that was open to the public. Therefore, Respondent violated

21 C.F.R. § 1140.16(c) because it impermissibly used a self-service display for
regulated tobacco products in a facility that did not prohibit minors from entering.

Respondent’s actions and omissions 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 $250 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-0828)

Complainant
v.

Evergreen Food Mart LLC
d/b/a Evergreen Gulf,

Respondent.
Docket No. C-13-997
Decision No. CR2952

Date: October 17, 2013

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an
administrative complaint on Respondent, Evergreen Food Mart LLC d/b/a
Evergreen Gulf, at 634 Wethersfield Avenue, Hartford, Connecticut 06114, and by
filing a copy of the complaint with the Food and Drug Administration's (FDA)
Division of Dockets Management. The complaint alleges that Evergreen Gulf
impermissibly sold cigarettes minors and failed to verify purchasers’ ages 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 Evergreen Gulf.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on August 21, 2013, CTP served
the complaint on Respondent Evergreen Gulf 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 Evergreen Gulf 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, I assume that the facts alleged in the complaint (but not its
conclusory statements) are true. Specifically:

e At approximately 12:59 PM EST on February 27, 2012, at Respondent's
business establishment, 634 Wethersfield Avenue, Hartford, Connecticut
06114, an FDA-commissioned inspector observed the sale of a package of
Parliament cigarettes to a person younger than 18 years of age;

e At approximately 12:59 PM EST on February 27, 2012, at Respondent's
business establishment, 634 Wethersfield Avenue, Hartford, Connecticut
06114, an FDA-commissioned inspector observed that staff failed to verify,
by means of photo identification containing the bearer's date of birth, that a
cigarette purchaser was 18 years of age or older;

e Ina warning letter dated March 15, 2012, CTP informed Respondent of the
inspector's February 27, 2012 observations, and that such actions violate
ederal law, 21 C.F.R. §§ 1140.14(a) and 1140.14(b)(1). The letter further
warned that if Respondent failed to correct its violations, a civil money
penalty action or other regulatory action could occur;

e At approximately 10:57 AM on January 29, 2013, at Respondent's business
establishment, 634 Wethersfield Avenue, Hartford, Connecticut 06114, an
FDA-commissioned inspector documented the sale of a package of
Maverick 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 Evergreen Gulf'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 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 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 cigarette purchaser 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 Evergreen Food Mart LLC d/b/a Evergreen Gulf. 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


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Hampden Gas Mart, Inc.
d/b/a Westside Mobil,

Respondent.

Docket No. C-13-1064
FDA Docket No. FDA-2013-H-0877

Decision No. CR2950

Date: October 17, 2013

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint
(Complaint) against Respondent, Hampden Gas Mart, Inc. d/b/a Westside Mobil,
that alleges facts and legal authority sufficient to justify the imposition of a civil
money penalty of $500. Respondent did not 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 assess a civil money
penalty of $500.

CTP began this case by serving the 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 sold
cigarettes to minors and failed to verify that cigarette 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, Cigarettes and Smokeless
Tobacco, 21 C.F.R. Part 1140 (2012). CTP seeks a civil money penalty of $500.

On August 21, 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 proposed 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 ordering Respondent to pay the full
amount of the proposed penalty.

Respondent has not filed an answer within the time provided by regulation, nor
has it requested an extension. Pursuant to 21 C.F.R. § 17.11(a), 1am required to
“assume the facts alleged in the Complaint to be true” and, if those facts establish
liability under the Act, issue a default judgment and impose a civil money penalty.
Accordingly, I must determine whether the allegations in the Complaint establish
violations of the Act.

Specifically, CTP alleges the following facts in its Complaint:

e Respondent owns Westside Mobil, an establishment that sells tobacco
products and is located at 562 Westfield Street, West Springfield,
Massachusetts 01089. Complaint { 3.

e On August 6, 2012, an FDA-commissioned inspector observed two
violations of 21 C.F.R. Part 1140 at Respondent’s establishment. The
inspector observed a violation of 21 C.F.R. § 1140.14(a) when “a person
younger than 18 years of age was able to purchase a package of Marlboro
cigarettes . . . at approximately 2:04 PM ET[.]” The inspector also
observed a violation of 21 C.F.R. § 1140.14(b)(1) when “the minor's
identification was not verified before the sale... .” Complaint ¥ 10.

e CTP issued a Warning Letter to Respondent on October 25, 2012. The
Warning Letter explained that the inspector’s August 6, 2012 observations
constituted violations of regulations found at 21 C.F.R. §§ 1140.14(a) and
1140.14(b)(1), and that the named violations were not necessarily intended
to be an exhaustive list of all violations at the establishment. The Warning
Letter went on to state that if Respondent failed to correct the violations,
regulatory action by the FDA or a civil money penalty action could occur
and that Respondent is responsible for complying with the law. Complaint
q 10.
e FDA received no response to the Warning Letter from Respondent, though
United Parcel Service records demonstrate that an individual named “Rice”
received the Warning Letter on October 26, 2012. Complaint § 11.

e¢ On January 30, 2013, at approximately 2:04 PM ET, FDA-commissioned
inspectors documented additional violations of 21 C.F.R. Part 1140 at
Respondent’s establishment. The inspectors documented a violation of 21
C.F.R. § 1140.14(a) when “a person younger than 18 years of age was able
to purchase a package of Newport Box cigarettes . . . [.]” The inspectors
also documented a violation of 21 C.F.R. § 1140.14(b)(1) when “the
minor's identification was not verified before the sale... .” 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 distributed or offered for sale in any state 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). 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); 21 U.S.C. § 387f(d)(1); 75 Fed.
Reg. 13,229 (Mar. 10, 2010). The regulations prohibit the sale of cigarettes to any
person younger than 18 years of age. 21 C.F.R. § 1140.14(a). The regulations
also require retailers 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).

Taking the above alleged facts as true, Respondent had four violations of
regulations contained in 21 C.F.R. Part 1140 within a six-month period.
Specifically, Respondent had two violations on August 6, 2012, and two violations
on January 30, 2013. Respondent’s actions on two occasions violated the
prohibition against selling cigarettes to persons younger than 18 years of age. 21
C.F.R. § 1140.14(a). Respondent’s actions on two occasions also violated the
requirement that retailers verify, by means of photo identification containing a
purchaser’s date of birth, that no cigarette purchaser is younger than 18 years of
age. 21 C.F.R. § 1140.14(b)(1). Therefore, Respondent’s actions constitute
violations of law for which a civil money penalty is merited.
The regulations require me to impose a civil money penalty in an amount that is
either the maximum provided for by law or the amount sought in the Complaint,
whichever is smaller. 21 C.F.R. § 17.11(a)(1)-(2). The regulations currently
allow a maximum penalty of $2,000 for a fourth violation within a six-month
period. 21 C.F.R. § 17.2. CTP, however, has requested a fine of $500. Therefore,
I find that a civil money penalty of $500 is warranted and so 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.

S & W Kiosko, LLC
d/b/a El Kiosko,

Respondent.

Docket No. C-13-1052!
FDA Docket No. FDA-2013-H-0866

Decision No. CR2949

Date: October 16, 2013

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint
(Complaint) against Respondent, S & W Kiosko, LLC d/b/a El Kiosko, that
alleges facts and legal authority sufficient to justify 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 assess a civil money penalty of $500.

' CTP initially referred to this matter as “C-13-1053” in the Complaint and
accompanying cover letter. On August 22, 2013, however, CTP filed a Notice of
CRD Docket Number Correction requesting that “all future filings reference C-13-
1052.”
CTP began this case by serving the 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 sold
cigarettes to a minor on two occasions and failed to verify that a purchaser of
cigarettes was 18 years of age or older on two occasions, thereby violating the
Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its
implementing regulations, Cigarettes and Smokeless Tobacco, 21 C.F.R. Part 1140
(2012). 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 proposed 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 ordering Respondent to pay the full
amount of the proposed penalty.

Respondent has not filed an answer within the time provided by regulation, nor
has it timely requested an extension. Pursuant to 21 C.F.R. § 17.11(a), lam
required to “assume the facts alleged in the [C]omplaint to be true” and, if those
facts establish liability under the Act, issue a default judgment and impose a civil
money penalty. Accordingly, I must determine whether the allegations in the
Complaint establish violations of the Act.

Specifically, CTP alleges the following facts in its Complaint:

e Respondent owns El Kiosko, an establishment that sells tobacco products
and is located at 570 Wethersfield Avenue, Hartford, Connecticut 06114.
Complaint §[ 3.

e¢ On February 27, 2012, an FDA-commissioned inspector observed two
violations of 21 C.F.R. Part 1140 at Respondent’s establishment. The
inspector observed a violation of 21 C.F.R. § 1140.14(a) when “a person
younger than 18 years of age was able to purchase a package of Maverick
Menthol Box cigarettes . . . at approximately 1:11 PM EST[.]” The
inspector also observed a violation of 21 C.F.R. § 1140.14(b)(1) when “the
minor's identification was not verified before the sale... .” Complaint
q 10.

e On March 22, 2012, CTP issued a Warning Letter to Respondent regarding
the inspector’s observations from February 27, 2012. The letter explained
that the observations constituted violations of regulations found at 21
C.F.R. §§ 1140.14(a) and 1140.14(b)(1), and that the named violations
were not necessarily intended to be an exhaustive list of all violations at the
establishment. The Warning Letter went on to state that if Respondent
failed to correct the violations, regulatory action by the FDA or a civil
money penalty action could occur and that Respondent is responsible for
complying with the law. Complaint § 10.

e Sandra Huertas responded to the Warning Letter on Respondent’s behalf by
letter on March 24, 2012. “Ms. Huertas apologized for the violations and
stated that Respondent held a meeting to explain all regulations and laws to
their employees.” Complaint 11.

e On January 4, 2013, at approximately 11:42 AM, FDA-commissioned
inspectors documented two additional violations of 21 C.F.R. Part 1140 at
Respondent’s establishment. The inspectors documented a violation of 21
C.F.R. § 1140.14(a) when “a person younger than 18 years of age was able
to purchase a package of Salem Box cigarettes . . . [.]” The inspectors also
documented a violation of 21 C.F.R. § 1140.14(b)(1) when “the minor's
identification was not verified before the sale... .” Complaint § 1.

e On January 8, 2013, CTP issued a Notice of Compliance Check Inspection
to El Kiosko due to a minor’s “purchase [of] a regulated tobacco product”
on January 4, 2013, at approximately 11:42 AM. The Notice stated that the
violation described was not necessarily the only violation reported.

Complaint § 2.

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 distributed or offered for sale in any state 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). 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); 21 U.S.C. § 387f(d)(1); 75 Fed.
Reg. 13,229 (Mar. 10, 2010). The regulations prohibit the sale of cigarettes to any
person younger than 18 years of age. 21 C.F.R. § 1140.14(a). The regulations
also require retailers 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).

Taking the above alleged facts as true, Respondent had four violations of
regulations contained in 21 C.F.R. Part 1140 within an eleven-month period.
Specifically, Respondent had two violations on February 27, 2012, and two
violations on January 4, 2013. Respondent’s actions twice violated the prohibition
against selling cigarettes to persons younger than 18 years of age. 21 C.F.R.
§ 1140.14(a). Respondent’s actions also twice violated the requirement that
retailers verify, by means of photo identification containing a purchaser’s date of
birth, that no cigarette purchaser is younger than 18 years of age. 21 C.F.R.

§ 1140.14(b)(1). Therefore, Respondent’s actions constitute violations of law for
which a civil money penalty is merited.

The regulations require me to impose a civil money penalty in the amount that is
either the maximum provided for by law or the amount sought in the Complaint,
whichever is smaller. 21 C.F.R. § 17.11(a)(1)-(2). The regulations currently
allow a maximum penalty of $2,000 for a fourth violation within an eleven-month
period. 21 C.F.R. § 17.2. CTP, however, has requested a fine of $500. Therefore,
I find that a civil money penalty of $500 is warranted and so 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.

Homeport Trading, Inc.
d/b/a Cigar Q,

Respondent.

Docket No. C-13-1081
FDA Docket No. FDA-2013-H-0890

Decision No. CR2942
Date: October 4, 2013
INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint
(Complaint) against Respondent, Homeport Trading, Inc. d/b/a Cigar Q, alleging
facts and legal authority sufficient to justify the imposition of a civil money
penalty of $250. 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 $250.

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 on multiple occasions, 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
$250.
On August 20, 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 Cigar Q, an establishment that sells tobacco products and
is located at 19018 Lenton Place Southeast, Monroe, Washington 98272.
Complaint § 2.

e On July 19, 2012, during an inspection of Respondent’s establishment, an
FDA-commissioned inspector observed that the establishment contained
“multiple customer[-Jaccessible shelves containing cigarette tobacco and
smokeless tobacco[;] . . . a customer[-Jaccessible beverage cooler
containing Grizzly and Copenhagen smokeless tobacco[;] . . . and Davidoff
cigarettes in a customer[-]accessible display on the sales counter.” In
addition, “[d]uring the inspection, the clerk on duty told the inspector that
minors are allowed to enter at any time.” Complaint ¥ 9.

¢ On October 25, 2012, CTP issued a Warning Letter to Respondent detailing
the inspector’s observations from July 19, 2012. The letter explained that
the inspector’s observations constituted a violation of 21 C.F.R.
§ 1140.16(c) and advised Respondent that the FDA may initiate a civil
money penalty action or take other regulatory action against Respondent if
it failed to correct the violation. The letter also stated that it was
Respondent’s responsibility to comply with the law. Complaint { 9.

e¢ On January 7, 2013, Jong Ohm responded by e-mail to the Warning Letter
on behalf of Respondent. “Mr. Ohm stated that the establishment does not
allow minors in at any time[,] and that the establishment moved the
Davidoff cigarettes from the sales counter and relocated its beverage cooler
with its smokeless tobacco behind the sales counter.” Complaint § 10.

e On January 22, 2013, and February 12, 2013, FDA-commissioned
inspectors conducted a two-part inspection of Respondent’s establishment.
On those dates, the inspectors documented that “[t]he establishment ha[d] .
. . multiple brands of smokeless tobacco and cigarette tobacco on a
customer[-]accessible display in the middle of the establishment.” The
inspectors also documented that “a person younger than 18 years of age
was able to enter the establishment.” 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. The
regulations prohibit the use of a self-service display as a method of sale for
cigarettes and smokeless tobacco. 21 C.F.R. § 1140.16(c)(1). However, 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).

Here, Respondent violated 21 C.F.R. § 1140.16(c) when its staff offered cigarettes
and smokeless tobacco for sale in a manner other than a direct, face-to-face
exchange with its customers on July 19, 2012, January 22, 2013, and February 12,
2013. On those dates, Respondent impermissibly utilized self-service displays for
regulated tobacco products because Respondent’s facility is not one where minors
are prohibited from entering. 21 C.F.R. § 1140.16(c)(2)(ii). 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 $250 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

Pisani's Orthotics & Prosthetics, Inc.,
(PTAN: 0333950001),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-13-926
Decision No. CR2941

Date: October 3, 2013

DECISION

Petitioner, Pisani’s Orthotics & Prosthetics, Inc., is a supplier of durable medical
equipment, prosthetics, orthotics, and supplies (DMEPOS), located in Lake Worth,
Florida, that, until recently, participated in the Medicare program. The Centers for
Medicare & Medicaid Services (CMS) has revoked its Medicare provider number, and
Petitioner appeals. CMS now moves for summary judgment.

Neither party presents any witness testimony, so an in-person hearing would serve no
purpose. This matter may therefore be decided on the written record, without considering
whether the standards for summary judgment are satisfied.

Because the supplier was not operational at the address it provided to the Medicare
contractor, CMS properly revoked its provider number.

Background
Until its Medicare provider number was revoked, effective February 19, 2013, Petitioner

participated in the Medicare program as a supplier of DMEPOS. Ina letter dated March
22, 2013, the Medicare contractor, Palmetto GBA, notified Petitioner that its Medicare
supplier number was revoked effective February 19, 2013, because the contractor’s site
investigator found a different business located at the address the supplier had provided.
As a result, the investigator could not inspect the facility to verify the supplier’s
compliance with supplier standards. CMS Exhibit (Ex.). 1 at 2.

In a letter dated April 2, 2013, Petitioner requested reconsideration. Petitioner’s letter
explains that its office relocated and, after receiving a Medicare contractor’s letter
requesting revalidation, it “initiated” that process. Petitioner admits that, at the times of
its relocation and the attempted inspection, “the necessary change-of-address forms were
not filed... .” CMS Ex. 3 at 1.

In a reconsideration determination, dated May 23, 2013, CMS affirmed the revocation.
CMS Ex. 5. Petitioner now appeals that determination. CMS has filed a motion for
summary judgment/pre-hearing brief (CMS Br.), and Petitioner has filed a pre-hearing
brief (P. Br.). CMS submits 6 exhibits (CMS Exs. 1-6), and Petitioner submits 7 exhibits
(P. Exs. 1-7). In the absence of any objections, I admit into evidence CMS Exs. 1-6 and
P. Exs. 1-7).

Discussion

Summary Judgment. CMS has moved for summary judgment, arguing that no material
facts are in dispute. To grant summary judgment, I must draw all reasonable inferences
in the light most favorable to the non-moving party and find that the case presents no
genuine issues of material fact and that the moving party is entitled to judgment as a
matter of law. 1866/CPayday.com, L.L.C., DAB No. 2289, at 2-3 (2009); I/inois
Knights Templar Home, DAB No. 2274, at 3-4 (2009), and cases cited therein.

But I need not reach that issue here, because neither party asks for an in-person hearing.
My pre-hearing order directed the parties to file, among other submissions, a list of all
proposed witnesses, and to include, as a proposed exhibit, the written direct testimony of
any proposed witness. Acknowledgment and Pre-hearing Order at 3, J 4(c)(iv). The
order explains that an in-person hearing is necessary only if a party files a witness’s
admissible, written direct testimony, and the opposing party asks to cross-examine. Id. at
5,410. Because neither party lists any witnesses, an in-person hearing would serve no
purpose. The case can therefore be decided based on the written record.

CMS properly revoked Petitioner’s Medicare enrollment.
The supplier failed to meet Medicare requirements, because
it did not inform the CMS contractor that it had moved its
practice location, which meant that the CMS contractor
could not inspect the supplier’s premises.’

'T make this one finding of fact/conclusion of law.
Requirements fora DMEPOS supplier’s Medicare participation. To receive Medicare
payments for items furnished to a Medicare-eligible beneficiary, a supplier of medical
equipment and supplies must have a supplier number issued by the Secretary of Health
and Human Services. Social Security Act (Act) § 1834(j)(1)(A); 42 C.F.R. § 424.505.

In order to obtain and retain its supplier number, a supplier must meet the standards set
forth in 42 C.F.R. § 424.57(c), and CMS may revoke its billing privileges if it fails to do
so. 42 C.F.R. § 424.535(a)(1). Among other requirements, the supplier must “report to
CMS any changes in information supplied on the application within 30 days of the
change.” 42 C.F.R. § 424.57(c)(2). The supplier must also permit CMS or its agents to
conduct on-site inspections to ascertain its compliance with governing regulations. 42
C.F.R. § 424.57(c)(8). CMS may revoke billing privileges if it determines, based on an
on-site review, that the supplier is no longer operational to furnish Medicare covered
items or services, or is not otherwise meeting Medicare enrollment requirements. 42
CFR. § 424.535(a)(5).

Petitioner’s relocation. Prior to January 1, 2013, Petitioner was a Medicare-enrolled
DMEPOS supplier located at 3199 Lake Worth Road, Lake Worth, Florida. CMS Ex. 6
at 1; P. Exs. 1,2. On January 1, 2013, Petitioner moved but did not report its change of
address to the Medicare contractor.”

On February 19, 2013, an inspector employed by the contractor attempted an onsite
inspection at the 3199 Lake Worth Road location but found that the premises were
occupied by an entirely different business. CMS Ex. 6 at 7, 10, 11. She was therefore
not able to inspect the supplier’s premises. Immediately thereafter, the contractor sent
the supplier a revalidation request, directing it to submit complete enrollment
information. CMS Ex. 2; P. Ex. 2. The correspondence was returned to the contractor.
CMS Ex. 2 at 4; P. Ex. 2 at 1, 3.

Petitioner has admitted that it relocated on January 1, 2013, but failed to inform the
contractor of its new address. P. Ex. 1; CMS Ex. 3 at | (in which Petitioner writes: “[i]n
the time our office relocated, and an inspection was attempted, the necessary change of
address forms were not filed, and thus the inspector was not able to locate our office.”);
CMS Ex. 4 (conceding that “the change of address had not been processed yet” at the
time of the contractor’s site visit).

* Suppliers are required to report such changes by filing form CMS-855S. Medicare
Program Integrity Manual § 15.1.2; CMS Ex. 3 at 3-11; see 42 C.F.R. § 424.510(a).
Based on this, I find that Petitioner did not comply with the standards set forth in section
424.57(c). It was not in compliance with section 424.57(c)(2), because it did not, within
30 days, advise the CMS contractors that it changed locations. | also find that Petitioner
did not comply with 42 C.F.R. § 424.57(c)(8). Because it failed to notify the CMS
contractor of its new address, the contractor was unable to conduct the necessary on-site
inspection.°

Conclusion

Because Petitioner did not meet the standards of 42 C.F.R. § 424.57(c), CMS properly
revoked its billing privileges.

/s/
Carolyn Cozad Hughes
Administrative Law Judge

* CMS and its contractors must, with diminishing resources, monitor the performance of a
vast number of providers and suppliers and, in order to do so, it must be able to rely on
the location information provided by the supplier. Sending an investigator to the wrong
location depletes scarce resources and undermines the agency’s ability to do its job.


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Gladys Pino,
Petitioner,
v.
The Inspector General.
Docket No. C-12-1294
Decision No. CR2938

Date: September 30, 2013

DECISION

The Inspector General (I.G.) of the U.S. Department of Health and Human Services
(HHS) notified Petitioner, Gladys Pino, 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 one exhibit (P. Ex. 1). The
1.G. submitted its reply brief (I.G. Reply Br.) together with LG. Ex. 6. On February 28,
2013, I afforded Petitioner an opportunity to provide her written direct testimony;
Petitioner submitted that testimony as P. Ex. 2. 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 an item or
service under Medicare, Medicaid or another state health care program. The I.G. and
Petitioner submitted briefs. In the absence of an objection, I admit into evidence LG.
Exs. 1-6 and P. Exs. 1-2. 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.

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 $98,186.78 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 2) and
Grand Theft over $100,000 (Count 1). LG. Ex. 6, at 1. In her written testimony,
Petitioner denied knowledge or direct involvement in the fraudulent billing of Medicaid.
P. Ex. 2.

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 $98,186.78 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 $98,186.78 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
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 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 $98,186.78. 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, ‘[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
$98,186.78 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

> 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.

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