Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Brian Justin Hansen, D.O.
(OI File No. H-14-4-0247-9),

Petitioner,
v.
The Inspector General.
Docket No. C-14-1536
Decision No. CR3777

Date: April 14, 2015

DECISION

The Inspector General (IG) of the United States Department of Health and Human
Services excluded Petitioner, Brian Justin Hansen, D.O., for 18 years from participating
in Medicare, Medicaid, and all other federal health care programs. The exclusion was
based on Petitioner’s conviction of a criminal offense related to neglect or abuse of
patients in connection with the delivery of a health care item or service. Petitioner
requested a hearing to dispute the exclusion. For the reasons stated below, I conclude
that the IG proved that a basis for a mandatory exclusion exists. Further, | affirm the
length of the exclusion because an 18-year exclusion is not unreasonable due to the three
undisputed aggravating factors that are present in this case.

I. Procedural History

Ina May 30, 2014 letter, the IG notified Petitioner that he was being excluded from
Medicare, Medicaid, and all federal health care programs under section 1128(a)(2) of the
Social Security Act, which is codified at 42 U.S.C. § 1320a-7(a)(2), for a period of

18 years. The IG advised Petitioner that the exclusion was based on his felony
conviction, in the Iowa District Court for Franklin County, of a criminal offense related
to neglect or abuse of patients in connection with the delivery of a health care item or
service. Further, the IG imposed a length of exclusion in excess of the five-year statutory
minimum period because the IG found there was evidence of the following aggravating
circumstances:

1)

2)

3)

The acts that resulted in Petitioner’s conviction, or similar acts, were committed
over a period of one year or more. The IG states that Petitioner’s acts occurred
from about 2006 to about 2012.

The acts that resulted in Petitioner’s conviction were premeditated, were part of a
continuing pattern of behavior, and consisted of nonconsensual sexual acts. The
IG asserts that Petitioner engaged in sexual contact with multiple patients who
received mental health services from him.

Petitioner was convicted of other offenses besides those which formed the basis
for his exclusion, or was the subject of another adverse action by a federal, state or
local government agency or board, where the adverse action was based on the
same set of circumstances that serves as the basis for imposition of the

exclusion. The IG asserts that the lowa Board of Medicine accepted Petitioner’s
voluntary surrender of his license to practice medicine.

IG Exhibit (Ex.) 1.

On July 21, 2014, Petitioner, through counsel, timely requested a hearing to dispute the
exclusion. On August 20, 2014, I convened a telephonic prehearing conference, the
substance of which is summarized in my Order and Schedule for Filing Briefs and
Documentary Evidence (Order) dated August 22, 2014. See 42 C.F.R. § 1005.6. In
compliance with the Order, the IG submitted a brief (IG Br.) together with 17 exhibits.

(

IL. Issues

Petitioner submitted a response brief (P. Br.) and two exhibits. The IG filed a reply brief
IG Reply Br.)

Petitioner requested that he and another witness testify. I directed Petitioner to submit
written direct testimony, see 42 C.F.R. § 1005.16(b), and provided the IG with the
opportunity to object to that testimony and/or request to cross-examine the witnesses.
Petitioner filed the written direct testimony and the IG objected to this testimony.

The issues in this case are limited to determining if there is a basis for exclusion and, if

so, whether the length of the exclusion imposed by the IG is unreasonable after
considering relevant aggravating and mitigating factors. 42 C.F.R. § 1001.2007(a)(1);
see also 42 C.F.R. § 1001.102.
Ill. Evidentiary Rulings and Decision on the Record

Petitioner did not object to IG Exs. 1-7 and 15-17, and the IG did not object to P. Exs. 1
and 2. Therefore, I admit those exhibits into the record.

Petitioner objects to IG Exs. 8 through 14 (investigative report by the Iowa Division of
Criminal Investigation and transcripts of interviews of Petitioner’s victims by a special
agent with the Iowa Division of Criminal Investigation) because they “consist entirely of
hearsay statements of [Petitioner’s] victims . . . [and] the information provided by these
witnesses has never been subjected to testing through cross-examination or discovery by
[Petitioner].” P. Br. at 8. I overrule the hearsay objection because the exhibits are
relevant to this case, the Federal Rules of Evidence do not directly apply, and there is no
reason to believe that these exhibits are unreliable (i.e., that they do not reflect what the
individuals told investigators). 42 C.F.R. § 1005.17(b), (c); 57 Fed. Reg. 3298, 3327
(Jan. 29, 1992) (“We expect the ALJs to continue their current practice of admitting
evidence that may be barred by the rules of evidence, such as hearsay, if a determination
is made that the evidence is reliable. However, if an ALJ believes that proffered
evidence inadmissible under the rules of evidence is wholly unreliable, the ALJ should
exclude the evidence.”). Further, I overrule Petitioner’s other objection because
Petitioner could have called these individuals as witnesses and, if necessary, requested
subpoenas to compel their presence at a hearing. See 42 C.F.R. §§ 1005.8(a), 1005.9(a);
see also 57 Fed. Reg. at 3326 (“Since both parties have the right to submit statements in
lieu of testimony, each party bears the burden of subpoenaing witnesses whose
statements are proposed as exhibits by the opposing party. The courts have held such
statements admissible in administrative proceedings, despite their hearsay character and
absent any cross-examination of the witness who gave the statement.”). Therefore, I
admit IG Exs. 8-14 into the record.

Petitioner submitted written direct testimony for himself and a witness. The IG objects to
Petitioner’s written direct testimony and that of his witness, the Chairman and CEO of
ABCM Corporation, because it is irrelevant under the limited review that I perform in
these cases. I agree with the IG that the testimony of Petitioner’s witness’ testimony is
not relevant because it relates to Petitioner’s post-conviction employment at ABCM
Corporation and to Petitioner’s efforts at rehabilitation. Although this testimony appears
to be submitted in an effort to mitigate the length of the exclusion, I am precluded from
considering any mitigating factors to reduce the length of exclusion except for the three
mitigating factors listed in the regulations. 42 C.F.R. § 1001.102(c). Therefore,
Petitioner’s witness’ testimony must be excluded as irrelevant and immaterial. 42 C.F.R.
§ 1005.17(c). Although Petitioner’s testimony includes matters not relevant under the
regulations, he testifies to other matters that are relevant. Therefore, I overrule the IG’s
objection to Petitioner’s testimony (P. Testimony) and admit that into the record.
The IG indicated that he does not think that an in-person hearing is necessary and did not
have any witness testimony to offer. IG Br. at 24. The IG stated in his February 9, 2015
and March 6, 2015 objections to the written direct testimony filed by Petitioner that he
did not want to cross-examine those witnesses. In my January 8, 2015 Order permitting
Petitioner to submit written direct testimony, I stated that if the IG did not seek to cross-
examine Petitioner’s witnesses, I would decide this case on the written record following
the final submissions of the parties. Therefore, I decide this case on the written record.

IV. Jurisdiction

I have jurisdiction to adjudicate this case. 42 U.S.C. § 1320a-7(f)(1); 42 C.F.R.
§§ 1001.2007, 1005.2.

V. Findings of Fact, Conclusions of Law, and Analysis’

The IG must exclude from participation in all federal health care programs “[a]ny
individual or entity that has been convicted, under Federal or State law, of a criminal
offense relating to neglect or abuse of patients in connection with the delivery of a health
care item or service.” 42 U.S.C. § 1320a-7(a)(2); 42 C.F.R. § 1001.101(a). The
minimum length of a mandatory exclusion is five years; however, the IG may impose a
longer exclusion if any of the aggravating factors specified in the regulations exist.

42 C.F.R. § 1001.102(b). If aggravating factors justify an exclusion that is longer than
five years, then the length of exclusion may be reduced (to no less than five years) if
mitigating factors specified in the regulations exist. 42 C.F.R. § 1001.102(c). The IG has
the burden of proving, by a preponderance of the evidence, that a basis for exclusion and
aggravating factors exists, and Petitioner has the burden of proving that any mitigating
factors exist. 42 C.F.R. § 1005.15(c), (d); Order 5. The IG’s length of exclusion may
only be modified if it is unreasonable. See 42 C.F.R. § 1001.2007(a)(1)(ii).

A. Petitioner pled guilty to sexual exploitation by a counselor or therapist, a
violation under section 709.15(2)(a), (c) of the Iowa Code, and the Iowa District
Court for Franklin County (District Court) entered judgment against Petitioner
and imposed a sentence on him.

Petitioner was a physician licensed to practice in Iowa from 2004 until 2013. In 2012 the
Iowa Board of Medicine (Board of Medicine) suspended his license and in 2013,
Petitioner surrendered his license. P. Testimony at 2; IG Exs. 2, 15, 17. Based ona
complaint alleging Petitioner engaged in doctor/patient and doctor/co-worker sexual
relationships as well as other sexually-related misconduct, the Board of Medicine and

' My findings of fact and conclusions of law are set forth in italics and bold font.
Iowa law enforcement authorities conducted extensive investigations of Petitioner. IG
Exs. 3, 8-14.

Petitioner was contracted to work at Franklin General Hospital and Franklin Medical
Center in 2006. IG Ex. 3 at 2; see also P. Testimony at 2. The investigations uncovered
at least six women who both worked with Petitioner and were Petitioner’s patients. Each
of these woman described interactions with Petitioner in which he would provide ongoing
medical care for them while also aggressively seeking to engage in sexual activity with
them. In many cases, Petitioner would call these women, separately, to his office and
when they arrived, he would be watching pornography on his computer and, in some
cases, masturbating. Petitioner also pursued each of the women, and engaged in some
type of inappropriate and/or nonconsensual sexual contact with each. IG Exs. 3, 9-14.

On September 25, 2012, the Board of Medicine filed charges against Petitioner for sexual
and ethical misconduct related to six female patients. On that same date, the Board of
Medicine issued an Emergency Adjudicative Order suspending his license to practice as a
physician in lowa. IG Exs. 15, 16. In suspending Petitioner, the Board of Medicine
concluded, following a full investigation, that:

[Petitioner] may not continue to practice medicine without
posing an immediate danger to the public health, safety or
welfare ... . [Petitioner] has engaged in a pattern of behavior
toward multiple patients that was threatening, aggressive, and
in some cases assaultive. Allowing him to continue to
practice with restrictions is not sufficient to protect the public.
It is not safe for [Petitioner] to continue to practice medicine
until [the Board of Medicine’s charges are] resolved.

IG Ex. 15 at 5.

On May 29, 2013, the lowa Attorney General’s Office filed a Trial Information with the
District Court charging Petitioner with eight counts of criminal offenses related to sexual
misconduct with seven women. IG Ex. 4. The Iowa Attorney General’s Office
subsequently filed an Amended Trial Information with a single felony charge of engaging
in a pattern, practice or scheme, from 2006 to 2012, to have sexual contact with six
patients who received mental health services from Petitioner. IG Ex. 5. On May 30,
2013, Petitioner pled guilty to the amended charge and the District Court accepted the
plea. IG Ex. 6. The District Court also: entered judgment against Petitioner based on a
violation of section 709.15(2)(a), (c) of the lowa Code (sexual exploitation by a
counselor or therapist); sentenced Petitioner to a suspended term of five years in prison;
and ordered Petitioner to register as a sex offender, pay a $7,500 fine, and have
supervised probation. I.G. Ex. 7.
Following Petitioner’s guilty plea, on October 25, 2013, Petitioner surrendered his license
to practice as a physician to resolve the charges filed by the Board of Medicine. IG Ex.
17.

B. Petitioner was convicted of a state law offense related to abuse of patients in
connection with the delivery of a health care item or service. 42 U.S.C. § 1320a-
7(a)(2); 42 C.F.R. § 1001.101(b).

The IG must exclude an individual from participation in all federal health care programs
if the individual has been convicted of a criminal offense related to abuse of patients in
connection with the delivery of a health care item or service. 42 U.S.C. § 1320a-7(a)(2).
An individual is “convicted” of a criminal offense “when a judgment of conviction has
been entered against the individual . . . by a Federal, State, or local court... .” Jd.

§ 1320a-7(i)(1). Further, an individual is also “convicted” of a criminal offense when “a
plea of guilty . . . by the individual . . . has been accepted by a Federal, State, or local
court.” Jd. § 1320a-7(i)(3). As previously discussed, Petitioner pled guilty to a criminal
offense under state law, and the court accepted his plea and issued a judgment of
conviction. IG Exs. 6, 7. Further, Petitioner concedes he pled guilty and was convicted.
P. Br. at 2. Accordingly, for purposes of exclusion, Petitioner was “convicted” of a
criminal offense.

Petitioner disputes that his conviction was related to abuse. Petitioner argues that under
the definition of the term “abuse” in 42 C.F.R. § 488.301, Petitioner was not convicted of
an offense related to abuse of a patient. As noted by Petitioner, under 42 C.F.R.

§ 488.301, “Abuse means the willful infliction of injury, unreasonable confinement,
intimidation, or punishment with resulting physical harm, pain, or mental anguish.”

P. Br. at 3 (emphasis added). The IG argues in opposition that the “common and
ordinary meaning of the term should control in these proceedings.” IG Reply Br. at 4.

I agree with the IG. Neither the statute nor the regulations applicable to exclusion cases
define the word “abuse.” See 42 U.S.C. § 1320a-7; 42 C.F.R. §§ 1000.10, 1001.2.
However, this does not mean that I ought to apply a definition of that word used in an
unrelated regulation. The definitions in 42 C.F.R. § 488.301 are only applicable to

42 C.F.R. Part 488, Subpart E, and not 42 C.F.R. Part 1001 (ie., the substantive
regulations governing this case). Section 488.301 clearly states as a prefatory phrase
before the definitions: “As used in this subpart.” Further, the regulations at 42 C.F.R.
Part 488, Subpart E, implement 42 U.S.C. §§ 1395i-3 and 1396r, which relate to skilled
nursing facilities under the Medicare and Medicaid programs. 42 C.F.R. § 488.300.
However, the term “abuse” as used with respect to exclusions appears in 42 U.S.C.

§ 1320a-7(a)(2), which is an unrelated statute. Therefore, I will not apply the definition
of “abuse” in 42 C.F.R. § 488.301 in this case, but will use the common and ordinary
meaning of that word.

Citing Dictionary.com and Merriam-Webster Dictionary, the IG asserts that abuse means
treatment of another individual “in a harmful, injurious, or offensive way” and “improper
or excessive treatment.” IG Br. at 14-15. A general legal definition appropriate to this
case is “[p]hysical or mental maltreatment, often resulting in mental, emotional, sexual,
or physical injury.” Black’s Law Dictionary (9" ed. 2009).

Based on the record as a whole, I conclude that Petitioner was convicted of a crime
related to the abuse of patients in connection with providing health care items or services.
The crime to which Petitioner pled guilty is entitled “Sexual exploitation by a counselor,
therapist, or school employee.” Iowa Code § 709.15. The definition of “counselor” and
“therapist” includes physicians who provide mental health services. Id. § 709.15(1)(a).
Sexual exploitation under the statute occurs when there is a pattern, practice, or scheme
of conduct to engage in:

Any sexual conduct with a patient or client or former patient
or client within one year of the termination of the provision of
mental health services by the counselor or therapist for the
purpose of arousing or satisfying the sexual desires of the
counselor or therapist or the patient or client or former patient
or client which includes but is not limited to the following:
kissing; touching of the clothed or unclothed inner thigh,
breast, groin, buttock, anus, pubes, or genitals; or a sex act as
defined in [another section].

Id. § 709.15(2)(a), (c).

Petitioner argues that this criminal provision is a strict liability provision that criminalizes
any sexual contact with a patient regardless as to whether the patient was harmed and that
he was not convicted of crimes dealing with sexual abuse or assault. Request for Hearing
(RFH) at 1-2. Petitioner asserts that he did not intend to inflict injury, physical harm,
pain, or mental anguish on any of the women with whom he had sexual contact, and, “[a]t
most, [Petitioner] acted with an intent to achieve sexual gratification for himself.” P. Br.
at 3. Finally, Petitioner argues that abuse under 42 U.S.C. § 1320a-7(a) does not include
consensual sexual contact with patients. RFH at 2.

Petitioner’s arguments urge a very narrow application of the exclusion statute. However,
the mandatory exclusion provisions have never been viewed in such a constrained
manner. In regard to section 1320a-7(a)(2) in particular, the question as to whether a
conviction is related to abuse “is a legal determination to be made by the Secretary based
on the facts underlying the conviction. Further, the offense that is the basis for the
exclusion need not be couched in terms of patient abuse or neglect... Since a
determination as to whether an offense related to patient abuse or neglect is fact-
intensive, we feel it is most appropriate for the []IG to exercise its authority to make such

determinations on a case-by-case basis.” 57 Fed. Reg. 3298, 3303 (Jan. 29, 1992). It is
significant that the term “related to” simply means that there must be a nexus or common
sense connection. See Quayum v. U.S. Dep’t of Health and Human Servs., 34 F .Supp.2d
141, 143 (E.D.N.Y. 1998); see also 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, I must reject Petitioner’s arguments that a strict liability statute
cannot result in a determination that the criminal offense was related to abuse or that a
sex-based offense cannot be related to abuse of a patient because the individuals involved
consented to the sexual activity. Finally, it is clear that “the []IG may exclude an
individual convicted of an offense related to patient abuse or neglect irrespective of
whether the individual intended to harm patients.” 57 Fed. Reg. at 3303 (emphasis
added). As stated by one court:

there is no requirement that the Secretary demonstrate that
actual neglect or abuse of patients occurred, nor is there a
requirement that the individual or entity be convicted of an
actual offense of patient neglect or abuse. The phrase
“relating to” clearly encompasses a broader range of conduct
than actual neglect or abuse. Westin’s failure to file a report
with the Colorado Department of Health or to place a copy of
that report in Grundmeier’s medical records related to the
neglect of a patient.

Westin v. Shalala, 845 F.Supp. 1,446, 1,451 (D. Kan. 1994). Therefore, whether
Petitioner intended harm or not is immaterial to determining whether the criminal offense
for which he was convicted related to abuse. Rather, I must look to the facts underlying
the conviction in this case.

I am mindful that Petitioner did not plead guilty to all of the charges originally brought
against him, two of which included “sexual abuse,” and that Petitioner’s “guilty plea is
not a blanket admission of the [victims’] statements within the []IG’s attached interviews
....” P. Testimony at 3; IG Ex. 4. However, I cannot disregard consideration of the
facts uncovered during the parallel investigations into Petitioner’s sexual misconduct by

the Board of Medicine and Iowa law enforcement.

The record is clear that Petitioner, during periods of time while he medically treated
multiple female patients, engaged in aggressive efforts to have sexual relations with
them. Petitioner either succeeded in this or, at the least, engaged in physical contact of a
sexual nature in attempting to have sexual relations. A review of the investigation
interview statements of the victims reveals that their experiences were abusive in nature
under the ordinary meaning of that word. IG Exs. 3, 9-14.
Finally, Petitioner does not dispute that his conviction was related to the delivery of an
item or service under a state health care program. Petitioner admits that much of his
sexual advances and contact with the victims coincided with Petitioner’s medical
treatment of these women. P. Br. at 4. Further, the victims often indicated that their time
spent with Petitioner during treatment led to a sexual encounter or attempted sexual
encounter. IG Ex. 3. Finally, the Board of Medicine concluded in its Emergency
Adjudicative Order suspending Petitioner’s medical license that five of the six victims
were patients of Petitioner during the period of time in which Petitioner engaged in
sexual and ethical misconduct. IG Ex. 15. Therefore, I conclude that the IG has proven
that Petitioner is subject to a mandatory exclusion under 42 U.S.C. § 1320a-7(a)(2).

C. Based on the presence of three aggravating factors and the absence of any
mitigating factors, Petitioner’s exclusion for 18 years is not unreasonable.

Because I have concluded that a basis exists to exclude Petitioner pursuant to 42 U.S.C.
§ 1320a-7(a)(2), Petitioner must be excluded for a minimum period of five years.

42 U.S.C. § 1320a-7(c)(3)(B). While the IG must impose the five-year minimum
mandatory term of exclusion, the IG is authorized to lengthen that term if certain
aggravating factors exist. See 42 C.F.R. § 1001.102. Those aggravating factors are
detailed at 42 C.F.R. § 1001.102(b)(1)-(9). The IG added 13 years to Petitioner’s five-
year minimum exclusion based on the presence of three aggravating factors: 42 C.F.R.
§§ 1001.102(b)(2) (the acts resulting in the conviction were committed over a period of
one year or more); (b)(4) (the acts resulting in the conviction were premeditated, were
part of a continuing pattern of behavior, or consisted of nonconsensual sexual acts); and
(b)(9) (the individual has been the subject of an adverse action taken by a state agency,
based on the same circumstances that serve as the basis for imposing the exclusion).

I must uphold the IG’s determination as to the length of exclusion if it is not
unreasonable. 42 C.F.R. § 1001.2007(a)(1)(ii). This means that: “So long as the amount
of time chosen by the [JIG is within a reasonable range, based on demonstrated criteria,
the ALJ has no authority to change it under this rule. We believe that the deference

§ 1001.2007(a)[] grants to the [JIG is appropriate, given the []IG’s vast experience in
implementing exclusions under these authorities.” 57 Fed. Reg. at 3321.

Petitioner does not dispute that the aggravating factors relied on by the IG exist. P. Br.
at 3. Petitioner, however, argues that the IG has placed too much weight on these factors
resulting in a length of exclusion that is too long. P. Br. at 3. Both parties recognize that
it is the quality of the aggravating (or mitigating) factors that is most important when
considering the length of exclusion, and not the sheer number of aggravating factors that
are present in a given case. As the Secretary stated in the preamble to the final rule
establishing the exclusion regulations:

10

We do not intend for the aggravating and mitigating factors to
have specific values; rather, these factors must be evaluated
based on the circumstances of a particular case. For example,
in one case many aggravating factors may exist, but the
subject’s cooperation with the OIG may be so significant that
it is appropriate to give that one mitigating factor more
weight than all of the aggravating. Similarly, many
mitigating factors may exist in a case, but the acts could have
had such a significant physical impact on program
beneficiaries that the existence of that one aggravating factor
must be given more weight than all of the mitigating. The
weight accorded to each mitigating and aggravating factor
cannot be established according to a rigid formula, but must
be determined in the context of the particular case at issue.

57 Fed. Reg. at 3314-3315.

As indicated by the analysis below, I conclude that each of the aggravating factors
present in this case is extremely significant. Further, there are no mitigating factors.
Therefore, based on the cumulative aggravating factors, I cannot conclude that the IG’s
letermination to impose an 18-year exclusion is unreasonable.

1. The acts resulting in Petitioner’s conviction were committed
over a period of one year or more.

The IG asserts that the criminal conduct Petitioner engaged in lasted nearly seven years.
IG Br. at 18; IG Reply Br. at 6. Petitioner argues that I should look at the time span of
Petitioner’s conduct in relation to each of his victims rather than consider the total time
he engaged in the criminal conduct with all of his victims cumulatively. P. Br. at 4. To
facilitate this, Petitioner provided a chart, based on information from the Board of
Medicine’s investigation (IG Ex. 3), showing the period of time Petitioner treated each
victim in comparison with the length of time Petitioner made sexual advances/contact
with the victims. P. Br. at 4. The chart shows that none of the six victims was subject to
Petitioner’s sexual advances/contact for the entire time the IG asserts Petitioner engaged
in his criminal behavior. As Petitioner points out, one victim was subject to his sexual
advances/contact for less than a year. P. Br. at 4. As the IG points out, the chart shows
that one victim was subject to Petitioner’s sexual advances/contact for five and a half
years. IG Reply Br. at 6-7; see P. Br. at 4.

I conclude that the IG has demonstrated that the acts resulting in the underlying
conviction occurred over a period of one year or more. 42 C.F.R. § 1001.102(b)(2).
Petitioner was charged with and pled guilty to a criminal offense that expressly
referenced the existence of a pattern, practice, or scheme to engage in sexual contact with
11

six women from 2006 to 2012. IG Exs. 5-7. I find it immaterial that Petitioner did not
engage in criminal conduct for the entire period of 2006 through 2012 with any one
victim, although Petitioner admits, through his chart, that two of the victims were subject
to his sexual advances/contact for five or more years. Further, the fact that Petitioner
engaged in illegal conduct for a period of time that is six to seven times longer than the
minimum one year required for aggravation means that this aggravating factor provides
strong support for a lengthy exclusion. See Anderson v. Thompson, 311 F.Supp.2d 1,121,
1,130 (D. Kan. 2004) (ten-year length of criminal conduct along with another aggravating
factor supported 15-year exclusion). The duration of Petitioner’s misconduct shows a
prolonged lack of integrity that supports the IG’s decision to increase the five-year
minimum exclusion period to 18 years.

2. The acts resulting in Petitioner’s conviction were premeditated, part of a
continuing pattern of behavior, and consisted, at least in certain
circumstances, of nonconsensual sexual acts.

The IG asserts that the record is clear that the conduct resulting in Petitioner’s conviction
was premeditated, part of a continuing pattern of behavior, and included nonconsensual
sexual acts. IG Br. at 19-20. Specifically, the IG argued:

For purposes of the aggravating factor found at 42 C.F.R. §
1001.102(b)(4), Petitioner does not contest the premeditated
nature of his conduct or the fact that his actions represented a
continuous pattern of behavior. In pleading guilty, Petitioner
admitted that he “engaged in a pattern, practice[,] or scheme
to engage in sexual contact” with six female patients over the
course of seven years. I.G. Ex. 5; see also L.G. Ex. 7 at 1;
1.G. Ex. 17 at 4. During that time, Petitioner repeatedly and
strategically took sexual advantage of female patient-
employees who had confided in him about their mental health
problems and consulted him for other medical services. See
1G. Ex. 3 at 3-14; LG. Ex. 15 at 2-5; LG. Ex. 16 at 6-8; LG.
Ex. 17 at 2-4. His behavior reflected a modus operandi of
luring patients into a false sense of security, then
incrementally ratcheting up his sexual actions when their
defenses were down. See I.G. Ex. 3 at 8; I.G. Ex. 9 at 32-33;
LG. Ex. 10 at 16; 1.G. Ex. 12 at 38; 1.G. Ex. 13 at 6; I.G. Ex.
14 at 21. Petitioner engaged in a continuous, almost
methodical pattern that began with flirting; graduated to
sexually explicit communications, displaying of pornographic
videos, and masturbating in front of his patients; and
culminated in Petitioner coercing patients into performing sex
acts. See I.G. Ex. 3 at 3-4, 8-13; I.G. Ex. 9 at 4-7, 11-12, 30;

12

1G. Ex. 10 at 15-16, 21, 28-30; LG. Ex. 11 at 9-10, 11-17;
I.G. Ex. 12 at 9-15, 20, 25; 1.G. Ex. 13 at 9-13; LG. Ex. 14 at
8-9, 14, 20.

IG Br. at 19-20. The IG points out that in order for this aggravating factor under
42 C.F.R. § 1001.102(b)(4) to apply, the acts resulting in the conviction only need to be
part of a continuing pattern or involve nonconsensual sexual acts. See IG Br. at 20.

Petitioner concedes that this aggravating factor applies because he engaged in a
continuing pattern of behavior, but argues that this aggravating factor is not very
important because all of Petitioner’s victims were, first and foremost, Petitioner’s co-
workers and not patients. Petitioner asserts that co-workers at a hospital or clinic who
regularly interact with a physician are less vulnerable to sexual advances from the
physician than individuals who are only patients. P. Br. at 5-6. Petitioner, however,
disputes any allegation that he engaged in a sex act with any of the victims by force and
asserts that he pled guilty to an offense for which lack of consent was not an element.
P. Testimony at 2-3.

I conclude that the IG has demonstrated that the acts resulting in the underlying
conviction were part of a continuing pattern of behavior. 42 C.F.R. § 1001.102(b)(4). As
the IG points out, Petitioner was charged with and pled guilty to a criminal offense that
expressly referenced the existence of a pattern, practice, or scheme to engage in sexual
contact with six women. IG Exs. 5-7. Further, it is clear from the investigation into
Petitioner’s actions that Petitioner did not randomly or accidentally engage in sexually-
related conduct with six victims, but rather, followed a preconceived method that
included luring the victims to his office, displaying pornography to them, performing a
sexual act on himself while they were in his office, and eventually engaging or
attempting to engage in sexual contact with the victims. See IG Ex. 3.

Although Petitioner argues that Petitioner’s victims were in an excellent position, as co-
workers, to rebuff Petitioner, the record reflects that Petitioner’s victims were actually
more vulnerable to Petitioner because of their dual role as patient/employee. Petitioner
was the medical director for the clinic at Franklin Medical; therefore, Petitioner was not
only a physician but also a manager who held a position of authority over his victims.

P. Testimony at 2. Further, I consider it significant that none of Petitioner’s victims were
other physicians. IG Ex. 3; IG Ex. 9 at 3; IG Ex. 10 at 4; IG Ex. 11 at 4; IG Ex. 12 at 4;
IG Ex. 13 at 4; IG Ex. 14 at 3. This brings credibility to the concerns voiced by some of
his victims that Petitioner might try to have their employment adversely affected for
refusing to provide sex. IG Ex. 3 at 4, 9, 10; IG Ex. 17 at 2. I note that two of
Petitioner’s physician colleagues told the Board of Medicine’s investigator that Petitioner
was a “predator.” IG Ex. 3 at 15, 16. Petitioner’s pattern of conduct is extremely
egregious and further strengthens the IG’s position that an 18-year exclusion is
warranted.

13

3. Petitioner was charged with ethical misconduct and suspended from practice
as a physician by the Iowa Board of Medicine, and Petitioner surrendered
his license to practice as a physician in Iowa following his conviction.

On September 25, 2012, the Board of Medicine filed charges against Petitioner for ethical
misconduct and issued an emergency order suspending Petitioner’s license to practice as
a physician. IG Exs. 15-16. The Board of Medicine conducted its own investigation of
Petitioner while Iowa law enforcement conducted a parallel investigation. See IG Exs. 3,
8. The charges filed by the Board of Medicine involved allegations of misconduct related
to the criminal charges that the lowa Attorney General’s Office later filed in District
Court in May 2013. Compare IG Exs. 4, 5 with IG Ex. 16. The settlement agreement
that Petitioner signed in his misconduct case, which also became a final order of the
Board of Medicine, indicated that Petitioner surrendered his license to practice as a
physician in lowa. IG Ex. 17. That settlement agreement referenced Petitioner’s
conviction. IG Ex. 17 at 4-5.

There is no doubt that Petitioner was subject to an adverse action by a state government
board and that the adverse action was based on the same set of circumstances that serves
as the basis for his exclusion. 42 C.F.R. § 1001.102(b)(9). Although in some cases an
action by a state licensing board might be merely based on the fact that a petitioner had
been convicted of a crime, this case presents a significantly more egregious scenario. In
the present case, the Board of Medicine not only initiated its charges against Petitioner
months before criminal charges were filed, but the Board of Medicine issued an
Emergency Adjudicative Order suspending Petitioner’s license to practice as a physician
at the same time. IG Exs. 15, 16. The Board of Medicine stated that, after it “conducted
a full investigation of this matter,” the Board of Medicine found “that it was presented
with evidence which establishes that [Petitioner’s] continued treatment of female patients
without appropriate monitoring constitutes an immediate danger to the public health,
safety, and welfare.” IG Ex. 15 at 1. The Board of Medicine concluded in its order that
Petitioner may not continue to practice medicine without posing an immediate danger to
the public and that the “imposition of other interim safeguards would not be sufficient to
protect the public health, safety, or welfare.” IG Ex. 15 at 5.

The Board of Medicine’s Emergency Adjudicative Order suspending Petitioner’s medical
license is particularly aggravating because the Board of Medicine, following a full
investigation and providing Petitioner an opportunity to respond, concluded that
Petitioner was such a threat to the public that no safeguard short of suspension would be
effective. Petitioner ultimately surrendered his license without defending against the
Board of Medicine’s allegations that formed the basis of the Emergency Adjudicative
Order. Such a surrender is not “any less serious than if the license was revoked.”

57 Fed. Reg. at 3305. This aggravating factor underscores why the IG believes Petitioner
is significantly untrustworthy to participate in federal health care programs.

14

4. Petitioner did not prove the existence of any mitigating factors that would
justify a reduction in the length of exclusion imposed by the IG.

If the IG proves that an aggravating factor listed in the regulations exists to warrant an
exclusion of more than five years, then a petitioner may raise mitigating factors listed in
the regulations to seek a reduction in the length of exclusion. 42 C.F.R. § 1001.102(c).
Petitioner did not raise any mitigating factors listed in the regulations.

Petitioner submitted numerous letters from his family, friends, former co-workers, and
former patients attesting to Petitioner’s good character, skill as a physician, and ability to
rehabilitate. P. Ex. 1; P. Ex. D attached to P. Testimony. Petitioner testified to his
rehabilitation as well. P. Testimony at 4-5. However, as discussed early in relation to the
1G’s objection to testimony from Petitioner’s witness, I may not consider such
information to mitigate the length of exclusion because none of it proves the existence of
a listed mitigating factor in the regulations. 42 C.F.R. § 1001.102(c)(1)-(3). Iam
prohibited from considering any other factors to reduce the length of exclusion. Id.

§ 1001.102(c); see also 57 Fed. Reg. at 3314 (rejecting suggestions from the public that
an ALJ should be allowed to consider anything that might be mitigating when setting the
length of an exclusion).

Petitioner also submitted a proposed decision issued by an Iowa Administrative Law
Judge (lowa ALJ) reversing a determination by state officials to deny Petitioner
authorization to work as a contractor for ABCM Corporation. The Iowa ALJ concluded:

While I agree with the Department’s finding that [Petitioner]
committed a very serious offense, the ultimate purpose of this
background check evaluation process is to protect patients
from potential abuse or criminal activity by care givers — not
to further punish offenders. Based on the absence of patient
care or contact and the willingness of [ABCM’s CEO] to
provide direct supervision, I am convinced that [Petitioner]
can be allowed to work for ABCM, with restrictions, without
placing facility residents at risk of harm.

P. Ex. 2 at 7.

Although I respect the lowa ALJ’s evaluation of the evidence in the case before her, the
decision does not provide a basis for reducing the length of exclusion. I note that the
Iowa ALJ considered factors well beyond the mitigating factors listed in the regulations
applicable here. P. Ex. 2 at 7 (“[T]he evidence presented at hearing regarding
rehabilitation, the restrictions of probation, and the nature of the proposed work convince
me that [Petitioner] should be allowed to work for ABCM, with restrictions.”’). Further,
15

the Iowa ALJ’s decision was very limited in scope because it only applied to Petitioner’s
employment with a single company. P. Ex. 2 at 6 (“With limited exceptions, the outcome
of a record check evaluation applies only to employment in a specific position with the
requesting employer.”). In contrast, the issue before me is whether and how long
Petitioner should be excluded from participation in all federal health care programs.

VI. Conclusion

For the foregoing reasons, I affirm the IG’s determination to exclude Petitioner for
18 years from participating in Medicare, Medicaid, and all federal health care programs
pursuant to 42 U.S.C. § 1320a-7(a)(2).

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Lawrence H. Iteld, MD, LLC,
(NPI: 1093143125),
Petitioner,
v.
Centers for Medicare & Medicaid Services.

Docket No. C-15-951

Decision No. CR3773

Date: April 15, 2015

DECISION

I enter summary judgment in favor of the Centers for Medicare & Medicaid Services
(CMS) sustaining the determination to establish May 21, 2014 as the effective date of
participation in Medicare of Petitioner, Lawrence H. Iteld, M.D., LLC.
I. Background
Petitioner requested a hearing to challenge a reconsideration determination that affirmed
the effective date determination. CMS moved for summary judgment and, with its
motion, it filed four exhibits that are identified as CMS Ex. 1 — CMS Ex. 4. Petitioner
opposed the motion and filed no exhibits. I receive CMS Ex. 1 — CMS Ex. 4 into
evidence.
IL. Issue, Findings of Fact and Conclusions of Law

A. Issue

The issue is whether Petitioner is entitled to an earlier effective date of Medicare
participation than May 21, 2014.
B. Findings of Fact and Conclusions of Law

CMS argues that I should dismiss this case because Petitioner filed an untimely request
for reconsideration. It is true that his request was untimely. Petitioner had 60 days to
request reconsideration from the date that he received CMS’s initial determination. He
did not file a reconsideration request for approximately five months from the date of his
receipt of the initial determination. However, the Medicare contractor proceeded to
accept the reconsideration request and to issue a reconsidered determination on the
merits. CMS Ex. 3. I have no reason to preclude Petitioner from a hearing on the merits
inasmuch as the contractor waived the timeliness of the filing requirement.

As to the merits, there are no disputed material facts. Petitioner is a physician. On
December 17, 2013, he opened a solo practice, operating as a limited liability company.
On May 21, 2014, Petitioner applied to participate in Medicare under the name of his
limited liability company. CMS Ex. 4. A Medicare contractor accepted his application
and awarded Petitioner an effective date of enrollment of May 21, 2014. As provided
under the regulations, the contractor allowed Petitioner to claim reimbursement for
services provided up to 30 days prior to the effective date of his enrollment. The effect of
this determination was that Petitioner could claim reimbursement for the Medicare
services that were provided by his limited liability company beginning April 21, 2014,
but not earlier than that.

The effective date of a supplier’s enrollment in Medicare is governed by 42 C.F.R. §
424.520(d). This regulation provides that the effective date of a supplier’s participation
in Medicare is the /ater of the following dates: the date of filing of an approved
Medicare enrollment application or the date that the supplier actually began providing
services at a new practice location. Under the regulation the earliest date that Petitioner
could qualify to participate would be the date that he filed his application for enrollment
and that date, May 21, 2014, is the date that the contractor awarded to Petitioner. Asa
matter of law, Petitioner could not receive an earlier effective date of participation. The
regulations also give a contractor authority to allow a supplier to claim reimbursement for
services provided up to 30 days prior to the effective date of the supplier’s enrollment.
42 C.F.R. § 424.521(a)(1). The contractor did so in this case and thus, Petitioner could
claim reimbursement for services provided as of April 21, 2014. That date is the earliest
date under the regulations for which Petitioner could claim reimbursement for the
services provided by his limited liability company.

Petitioner argues that in a telephone conversation a representative of the Medicare
contractor told him that he could claim reimbursement for services that he provided as
early as December 2013 even though he had not completed his enrollment application.
He asserts that he should be able to rely on what he characterizes as an oral
representation. He argues additionally that the enrollment process and the forms and

regulations issued by Medicare relating to enrollment are complex and confusing. He
contends that as a matter of common sense and fairness, he should be given the benefit of
what he claims was the contractor’s assurance.

Petitioner’s argument is an equitable one and it reduces to his claiming that he should be
afforded an earlier effective date of participation than that which is allowed for by
regulations because of an allegedly misleading statement by the contractor’s
representative that he relied on to his detriment. I have no authority to grant Petitioner
what he seeks. The regulation governing the effective date of participation does not
allow for exceptions on equitable grounds. It is quite clear and, in fact, Petitioner was
awarded the earliest effective date of participation allowed under the regulations, and the
earliest date for which he could claim reimbursement for services that the law permits. I
cannot ignore the regulatory standard and give Petitioner more than that.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
NMS Healthcare of Hagerstown,
(CCN: 21-5256),
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-1566
Decision No. CR3772

Date: April 10, 2015

DECISION

lenter summary judgment in favor of the Centers for Medicare & Medicaid
Services (CMS) and against Petitioner, NMS Healthcare of Hagerstown, LLC. I
impose civil money penalties against Petitioner of $5650 for each day of a period
that began on January 22, 2014 and that ran through March 27, 2014 and civil
money penalties of $150 for each day of a period that began on March 28, 2014
and that ran through June 25, 2014.

I. Background

Petitioner is a skilled nursing facility that participates in the Medicare program. It
requested a hearing to challenge the remedy determinations that I cite above.

The parties exchanged pre-hearing submissions that included proposed exhibits.
CMS offered 87 proposed exhibits that are identified as CMS Ex. 1-CMS Ex. 87.
Petitioner offered 38 proposed exhibits that are identified as P. Ex. 1—P. Ex. 38.
CMS moved to exclude certain of Petitioner’s exhibits. On February 4, 2015 I
issued a ruling (February ruling) granting CMS’s motion in substantial part. I
explained my rationale in detail in that ruling and it is unnecessary that I restate it
in detail here other than to summarize it briefly. The exhibits that I excluded were
proffered by Petitioner, as justification after the fact, for its decision to confine a
resident against her will in a locked wing of Petitioner’s facility. I ruled that those
exhibits were irrelevant because Petitioner’s duty to the resident was to assess her
and make care decisions based on existing clinical evidence of which it had
knowledge prior to Petitioner’s decision to confine the resident against her will in
a locked secure unit. Petitioner may not justify, post facto, a decision that it failed
to make based on adequate clinical evidence or analysis.

I am receiving the parties’ proposed exhibits into the record except for those
exhibits that I excluded from consideration in my February ruling.

I scheduled an in-person hearing. Shortly prior to the hearing CMS moved for
summary judgment. I postponed the hearing without date so that I could decide
CMS’s motion.

II. Issues, Findings of Fact and Conclusions of Law
A. Issues

The issues are whether: Petitioner failed to comply with Medicare participation
requirements; Petitioner’s noncompliance with certain requirements was so
egregious as to constitute immediate jeopardy for Petitioner’s residents; and,
CMS’s remedy determinations are reasonable.

Summary judgment should not be entered in a case unless all necessary issues are
resolved by undisputed material facts. In resolving the issues of this case I rely
only on material facts that are undisputed.

B. Findings of Fact and Conclusions of Law
1. Immediate jeopardy level noncompliance

At the center of this case is a determination by CMS that Petitioner contravened
Medicare nursing facility regulations to the extent that it placed a resident or
residents of its facility at immediate jeopardy. The term “immediate jeopardy” is
defined at 42 C.F.R. § 488.301 to mean noncompliance that is so egregious as to
cause, or to be likely to cause, serious injury, harm, impairment, or death to one or
more facility residents. The allegations of immediate jeopardy level
noncompliance relate to a resident who is identified as Resident # 4, and they
consist of the following:
e 42 C.F.R. § 483.10(j)(1)(vii). This regulation directs a skilled nursing
facility to provide “immediate access” to members of the immediate family
of any of its residents. CMS asserts that Petitioner violated this
requirement in that it restricted an immediate family member (one of
Resident # 4’s daughters) from visiting Resident # 4 based solely on the
request of another of Resident # 4’s daughters who held a power of attorney
(POA) from Resident # 4. CMS alleges that Petitioner restricted Resident
# 4’s access to other persons as well, including an attorney who sought to
represent Resident # 4, again responding solely to the request of the
resident’s daughter who held a POA.

© 42 C.F.R. § 483.13. Among other things this regulation prohibits a skilled
nursing facility from involuntarily secluding a resident. CMS alleges that
Petitioner violated this regulation by placing Resident # 4 in its locked wing
against the resident’s wishes and without making any determination that

secluding the resi

dent was justified by the resident’s medical condition.

e 42 C.E.R. § 483.20(k)(3)(). This regulation mandates a skilled nursing
facility to provide care that meets professional standards of quality. CMS
asserts that this regulation prohibits a facility from confining a resident — as
Petitioner allegedly did with Resident # 4 — without making a determination

of clinical necessi

ity. Any action taken by a facility pursuant to its

determination, according to CMS, must utilize the least restrictive means
possible. CMS contends that Petitioner contravened the regulatory

requirements in tl

at it confined Resident # 4 without making a clinical

determination that confinement was necessary and without making any
judgment that the means that it resorted to were the least restrictive means
necessary to protect the resident’s health and safety.

The undisputed materia

facts unequivocally sustain CMS’s assertions. Petitioner

has raised no facts that create a genuine fact dispute in this case nor has it offered
arguments that justify its actions in light of the undisputed material facts.

The undisputed materia
resided at Petitioner’s fa

facts are as follows. Resident # 4, a woman in her 70s,
cility beginning in December 2011. The resident has a

number of health problems that include a bipolar mood disorder, chronic

obstructive pulmonary d

isease, hypothyroidism, and hypertension. CMS Ex. 9 at

39. From December 2011 until January 2014 the resident resided continuously in

the non-restricted part o
the facility’s premises.

f Petitioner’s facility. She was free to come and go within
Her movements were unrestricted.

Resident # 4 was hospitalized briefly between January 17 and 22, 2014. She was
admitted complaining of chest pain. CMS Ex. 9 at 30. Tests were performed that
did not reveal cardiac disease and at the end of her stay the resident was
discharged without complaints of chest pain. /d. During her hospital stay the
resident evidenced some confusion and expressed some resistance about being
returned to Petitioner’s facility. Jd. at 37. However, she eventually cooperated
and returned. Jd.

The resident was moved to the locked unit of Petitioner’s facility upon her return
on January 22, 2014. From that date and thereafter, the resident was confined
behind a locked door that denied her egress from the wing on which she was
confined and from the facility itself. Petitioner not only confined Resident # 4, it
restricted her access to members of her immediate family and to other individuals,
including an attorney who sought to provide her with legal counsel. Many of
these restrictions predated the resident’s confinement. In November and
December of 2013 members of Petitioner’s staff confronted an attorney with
whom Resident # 4 was consulting and ordered him to leave Petitioner’s premises.
CMS Ex. 67 at 2-3, 38-39. After being confined Resident # 4 complained that
she wanted to speak with an attorney but that Petitioner would not allow her to.

Id. at9. Beginning in at least 2012 Petitioner’s staff restricted one of the
resident’s daughters from visiting the resident. CMS Ex. 9 at 17, 23, 115.

When interviewed, Resident # 4 expressed a desire to leave the facility and
complained about the restrictions on her freedom of movement. CMS Ex. 67 at
40. The resident’s desire to leave was known to Petitioner’s staff. Jd. at 13.

The only reference in the resident’s treatment record to the decision to confine her
is a social services note dated January 22 that says, laconically: “Resident moved
to room 418B.” CMS Ex. 9 at 132. The clinical record suggests no basis for
confining Resident # 4 against her will or for restricting her access to family
members and an attorney. Nothing whatsoever in the record suggests a change in
the resident’s medical or psychiatric condition prior to or on January 22, 2014 that
would support confining her. To the contrary, the record of the resident’s mental
status shows her to be calm and cooperative and not to be deteriorating in the
nearly three years prior to her being confined. CMS. Ex. 9 at 52-110. There is no
physician’s report supporting confining the resident or restricting her access to
visitors. There is no comprehensive assessment suggesting a need to change her
status. Nor is there anything in the resident’s care plan that either records the
change in status or addresses how it is to be managed.
Similarly, there is no explanation in the resident’s treatment records as to why the
particular restrictions employed by the facility were clinically necessary. Why,
for example, were certain individuals excluded from the facility? Petitioner has no
assessments or explanations of the medical or clinical reasons for this decision.

There is, however, a reason for Petitioner’s actions and it stands without rebuttal.
Petitioner confined Resident # 4 and restricted her access to visitors at least in part
because Petitioner’s daughter, (“JF”), who held a power of attorney (POA),
wanted her mother to be confined and the restrictions to be imposed. Petitioner
took the actions it took in part because JF requested that it take them. The only
reasonable conclusion that I can draw from the undisputed facts of this case is that
Petitioner acted on JF’s desire that her mother be confined without making any
determination as to whether confinement and visitor restrictions were clinically
justified or whether seclusion and restrictions were the least restrictive and most
reasonable means of protecting Resident #4. CMS Ex. 9 at 17, 23, 115; CMS Ex.
82.

Petitioner asserts that it made the clinical determination that the confinement and
restrictions it imposed on Resident # 4 were in the resident’s best interest. It
argues that its decisions to confine Resident # 4 and impose restrictions on her
access to visitors were made based on professional assessments of the resident’s
condition and reflected the judgment and professional expertise of Petitioner’s
staff. Petitioner concedes that it has nothing whatsoever in writing to support
these contentions. It asserts that written assessments were unnecessary in this case
and it relies, rather, on the after the fact declarations of several medical
professionals. It contends that, at the very least, these declarations raise issues of
fact that preclude the entry of summary judgment against it.

I disagree with Petitioner’s contention that there was no need to record evaluations
or assessments of Resident # 4 showing that her confinement and the restrictions
imposed on her access to visitors were clinically necessary. An absolutely
essential element of a skilled nursing facility’s obligation to a resident is that it
document the care that it provides to its residents. Failure to do so is grounds to
conclude that the care was not provided. River City Care Ctr, DAB No. 2627, at
9 (2015); Evergreene Nursing Care Ctr., DAB No. 2069, at 25 (2007), citing
Western Care Mgmt. Corp. d/b/a Rehab Specialties Inn, DAB No. 1921, at 48
(2004). Furthermore, a skilled nursing facility is required by law to prepare a
comprehensive plan of care that lays out in precise detail the problems that the
resident is experiencing and explains how the facility intends to address those
problems. 42 C.F.R. § 483.20. That plan of care must be based on a
comprehensive and detailed assessment. /d. The regulation may not state
explicitly that the assessment and care plan must be in writing but it is
inconceivable that a facility would develop an oral plan that is not memorialized in
writing. That simply defies common sense.

Moreover, in this case, Petitioner had a written plan of care for Resident # 4.
CMS Ex. 9 at 38-50. That plan is devoid of any mention of Petitioner’s decision
to confine Resident # 4 and restrict her access to visitors.

But, even if there is no legal requirement that a facility memorialize its
assessments in writing, Petitioner has offered no facts showing that it actually
assessed Resident # 4 and concluded that confinement and restrictions on access to
visitors were necessary based on actual clinical findings. Petitioner has offered
the written testimony of five individuals: Stephanie Comer-Concordia, NP;
Barbara Sweeney, RN; M. Khalid Waseem, M.D.; Charles A. Crecelius, MD,
PhD, FACP, CMD; and Daniel Haimowitz, M.D., CMD, to support its assertions
that it made its decisions based on clinical evidence. I have examined these
statements closely. None of them identify any clinical facts that, if true, would
show that Petitioner actually assessed Resident # 4 as needing to be confined and
having her access to visitors restricted.

Ms. Concordia avers that:

I participated in the Interdisciplinary Team that made the decision
that it was in Resident # 4’s best interest after her acute
hospitalization to readmit to our facility on that [secure] unit. This
was done in concert with the assessment done by our medical
director and was agreed to enthusiastically by the Resident’s POA.
We all believed that this placement was clinically beneficial to the
Resident’s best interest. This conversation occurred on the date of
her readmission to the facility, which is why Resident # 4 was placed
on the secure unit.

P. Ex. 28 at 1-2. However, Ms. Concordia points to zero clinical evidence that
supports her conclusion. She merely avers that there was an assessment without
saying what facts were adduced, how they were evaluated, or why the facility’s
staff came to the conclusions that she avers they came to. Simply saying that the
staff thought that they were acting in the resident’s best interest or that the POA
enthusiastically agreed to the staff’s actions raises no material facts at all. The
actions taken by Petitioner were unjustified absent clinical evidence to support
them and proof that judgments were based on that evidence.
Ms. Sweeney adds nothing to Ms. Concordia’s testimony. She avers that
Petitioner’s Interdisciplinary Team “informally” decided in January 2014 that it
would be in the resident’s best interest to confine her. P. Ex. 17 at 4. This merely
reiterates Ms. Concordia’s unfounded conclusion.

Petitioner relies on the following statement by Dr. Waseem, as support for its
contentions that Resident # 4 was assessed as being suitable for confinement and
that there are disputed issues of fact:

Anytime a resident has been deemed incapable, we always reconfirm
that finding at each visit, when we look for changes in condition . . .
The decision for [placement in a secure unit] was made by Resident
# 4’s Interdisciplinary Team and in consultation with Resident # 4’s
POA who was responsible for making healthcare decisions,
including where to receive care.

P. Ex. 32 at 2. But, this assertion raises no facts and in particular it raises no
clinical facts justifying the resident’s confinement. Dr. Waseem does not recite
any specific reason for confining the resident. Nor does he recite clinical findings
about the resident’s condition. He suggests nothing that shows that the resident’s
condition changed after her hospitalization in a way that necessitated confinement.

Dr. Waseem never assessed Resident # 4 as being suitable for confinement prior to
Petitioner’s deciding to confine her. He concedes that in his testimony. Dr.
Waseem states:

Although Resident # 4 did not need the secure unit prior to her
January 2014 hospital admission, it was and remains my considered
determination that placement after that hospitalization in a secure
unit was both beneficial and necessary for the Resident’s welfare.
Shortly after the placement and since that time, I concurred with the
facility’s assessment of the placement on the secure unit and believe
it was in the patient’s best interest.

Id. (emphasis added). As Dr. Waseem admits, his evaluation — whatever he might
have done — was made after the fact. That provides no support for Petitioner’s
assertion that it assessed the resident before it confined her.

Neither Dr. Crecelius nor Dr. Haimowitz had anything to do with caring for
Resident # 4 prior to Petitioner’s decision to confine her. They provided no care
to the resident and were not consulted about her care. In my February 4, 2015
ruling I found Dr. Haimowitz’ testimony to be largely irrelevant. Petitioner has
not shown how his testimony is relevant here. His testimony consists solely of his
opinion as to whether Petitioner, viewed from the vantage point of hindsight, acted
appropriately. That adds nothing to the facts of this case. Moreover, Dr.
Haimowitz hasn’t added a single fact to this case that is material or that raises a
fact dispute. He suggests that it was appropriate to confine Resident # 4 because
she was an “elopement risk.” P. Ex. 30. But, he has cited to nothing in the record
to show that the resident was assessed by Petitioner’s staff as being at risk for
eloping as of January 22, 2014. Obviously, the possibility that the resident might
elope hadn’t bothered the staff prior to the resident’s January 2014 hospitalization
sufficiently for the staff to modify the resident’s care. What changed during or as
a consequence of the hospitalization? Dr. Haimowitz cites to nothing. Moreover,
neither does Petitioner’s staff.

Petitioner cites Dr. Crecelius for the proposition that there is no standard of care
for determining precisely how to evaluate a resident for placement in a secure unit.
P. Ex. 26 at 3. I will accept that assertion as true for the purposes of this decision.
It changes nothing. The absence of a precise standard of care did not mean that
Petitioner had license to act arbitrarily. Whether or not there was a precise
standard of care, Petitioner still was required to assess the resident for the
suitability of confinement, to plan her care, and to use the least restrictive means
necessary to protect her.

Petitioner also quotes Dr. Crecelius as saying this:

It is unrealistic and not within the standard of care to require
frequent or arbitrary redeterminations of capacity when there is no
substantial change in condition in a disease process which has no
realistic expectation of sustained improvement.

P. Ex. 26 at 3. But, CMS is not arguing that Petitioner was required to make
“frequent” or “arbitrary” redeterminations of Resident # 4’s capacity. Implicit in
Petitioner’s decision to confine the resident was that the Resident’s condition had
changed in some way as to make confinement necessary. Absent that, there would
be no reason whatsoever to confine her inasmuch as she had lived perfectly well
without confinement at Petitioner’s facility for three years prior to January 2014.
But, if her condition changed, Petitioner had to document it and assess it. And, if
it hadn’t, then the decision to confine her was unjustified. Either way, Petitioner
was obligated to explain why it confined the resident. It failed utterly to do that.
Petitioner argues that Resident # 4 received a prescription for the medication
Haldol during her hospital stay and suggests that this is clinical evidence that
justifies her confinement upon her readmission to the facility. However, there is
nothing in the facility’s records suggesting that the resident’s prescription was
considered as a reason for confining her. Indeed, none of Petitioner’s staff now
assert that they decided to confine her for that reason.

Petitioner also suggests that it confined Resident # 4 in order to protect her against
the possibility that a family member other than JF might attempt to abduct the
resident from the facility. As support for this assertion Petitioner relies on an
incident that occurred on January 15, 2012, in which one of the resident’s
daughters was found assisting the resident to pack her belongings in an apparent
attempt to leave the facility. CMS Ex. 9 at 23. Petitioner characterizes that
episode as proof of “abuse” and asserts that it was trying to protect the resident
from such episodes in the future by confining her.

The episode in question occurred more than two years prior to January 22, 2014.
There is no evidence at all that anything of that nature happened during the
intervening period and there is zero proof that this ancient episode had anything at
all to do with Petitioner’s decision to confine the resident in January 2014. The
resident resided peacefully and undisturbed at Petitioner’s facility during the two
years between the January 15, 2012 incident and January 2014 and, based on
facility records, no thought was given to confining her during that entire time.

Furthermore, Petitioner has provided no explanation as to why it was necessary to
confine the resident in order to protect her from family members other than JF. It
leaps to the conclusion that shutting the resident away behind a locked door is the
least restrictive approach that one could reasonably employ without providing an
iota of analysis as to why this is so.

Petitioner asserts that its restrictions on visitors’ access to Resident # 4 were
“reasonable.” It doesn’t explain why they were reasonable. It has offered no facts
to support its assertion that these restrictions were necessary or reasonable. It
makes a series of characterizations concerning the individuals whose visits were
restricted or prohibited without any factual support for them. For example, it
asserts that the resident’s daughter who assisted the resident in packing her
belongings in 2012 was attempting to “kidnap” the resident. That characterization
contains no support in the record. Petitioner did not investigate the incident, did
not prepare a report, and apparently, interviewed no one about it. Whether the
daughter was attempting to carry out her mother’s wishes or had some other
motive is simply unknown. If Petitioner wanted to restrict that individual’s
visitation rights it was required to explain why it was doing so and to document its
explanation. It did not.
10

Similarly, Petitioner contends that an attorney “surreptitiously” attempted to have
Petitioner revoke her POA and it suggests that banning him from visiting the
facility was an appropriate response. There are no facts suggesting that the lawyer
did something surreptitiously. Petitioner asserts that the attorney failed to contact
its administrator, its director of nursing, its general counsel, the resident’s
physician, its medical director, or the facility social worker before speaking with
Resident # 4. But, Petitioner has offered nothing to show that the attorney had a
duty to speak to any of these individuals before speaking to the resident. At the
time there was no legal impediment prohibiting the resident from consulting with
counsel. She was absolutely entitled to speak with the attorney in private and
without the interference of any of the individuals whose titles are cited by
Petitioner.

Finally, Petitioner argues that JF’s assent to confining Resident # 4 was a “health
care” decision and within the scope of the POA given to JF. I disagree. The
record is devoid of any evidence to suggest that JF made a health care decision. In
fact, there is nothing in the record that explains JF’s reasoning at the time that she
assented to her mother’s confinement.

One can speculate as to JF’s reasons. She may have wanted her mother confined
for reasons of personal convenience, or to further limit contact between her mother
and other family members. Or, she may have genuinely believed that her mother’s
medical condition required confinement. But, there is nothing in the record —
nothing at all — that explains her reasoning at the time that the decision was made
to confine Resident # 4. On its face, the decision to confine the resident was
arbitrary, and the arbitrariness of that decision is not mitigated in any way by the
fact that JF held a POA on her mother’s behalf.

A skilled nursing facility is not excused of its obligations to provide care by the
fact that a resident or someone on the resident’s behalf demands that the facility
provide a certain type or level of care. The regulations governing skilled nursing
facilities do not allow facilities to abdicate their responsibilities to residents in
order to cater to the whims of residents’ family members, whether or not they have
POAs. Otherwise, nursing facilities could be turned into prisons in which family
members lock their relatives away purely for the sake of convenience. When a
family member — even one holding a POA — requests a facility to confine a
resident that facility continues to have the duty to ascertain that what is asked for
is clinically necessary and that whatever is decided upon is the least restrictive
approach that is reasonable to protect the resident and assure his or her health and
safety. Doing anything less than could be consent to imprisonment.
11

Moreover, a facility is not inherently a neutral arbiter. There can be a conflict of
interest between a facility and its resident. Here, for example, Resident # 4 had
repeatedly expressed an interest in leaving Petitioner’s facility. Had Resident # 4
left, the financial consequences to Petitioner would have been substantial.
Resident # 4 generated a steady stream of revenue to Petitioner, no doubt
amounting to several thousand dollars a month. The line of least resistance for
Petitioner to follow in dealing with the resident would have been to do everything
in its power to retain her, even to the extent of confining her, if that was necessary
to keep her on its rolls. Given that potential conflict of interest it was incumbent
on Petitioner to be scrupulously neutral in dealing with the resident. Simply going
along with JF’s wishes in this case — without independently assessing the resident
to determine whether confining her and restricting her access to visitors was
appropriate — was anything but neutral.

CMS’s findings of immediate jeopardy are not clearly erroneous. Whether or not
Resident # 4 was actually harmed seriously by Petitioner’s actions is not
determinative of the issue of immediate jeopardy. There was a very high
likelihood that residents — including Resident # 4 — would be harmed by
Petitioner’s cavalier approach to confinement. As I have stated, nursing facilities
are not intended to be prisons for older or incapacitated individuals. Residents of
nursing facilities have rights and those rights include the right to freedom of
movement. A facility may not confine or seclude any of its residents for reasons
that are not medically necessary and that are not documented. Nor may it
unreasonably restrict a resident’s access to the outside world, including visitors.

Any time a facility confines a resident unreasonably it is imprisoning that resident
and doing so in a particularly cruel way. Elderly and frail individuals may not be
capable of exercising their rights vigorously. Those who are confined against their
will or without medical reason may be too feeble to protect themselves. The result
is that they suffer the psychological trauma that goes with imprisonment and the
hopelessness that comes with the knowledge that there may be no way out.

Petitioner offered no facts to challenge the duration of its noncompliance. It did
not allege that it abated its immediate jeopardy level deficiencies prior to March
28, 2014. Indeed, Resident # 4 was confined at Petitioner’s facility throughout the
period that began on January 22, 2014 and that ran through March 28, 2014.
Given that Petitioner was noncompliant at the immediate jeopardy level
throughout this period the only issue that potentially is in dispute is the daily
penalty amount of $5650 that CMS determined to impose against Petitioner.
12

I find no material fact dispute as to whether this penalty amount is reasonable. It
falls within the middle of the range of penalties (between $3050 and $10,000 per
day) that CMS may impose for immediate jeopardy level deficiencies. 42 C.F.R.
§ 488.438(a)(1)(i). I find that the undisputed material facts establish that the
penalty amount is entirely consistent with the seriousness of Petitioner’s
noncompliance.

Petitioner asserts that Resident # 4 was not actually harmed by her confinement.
That assertion is belied by the undisputed facts of this case. The resident was
forced to live for months and to interact on a daily basis with individuals whose
cognitive functioning was lower than hers. CMS Ex. 9 at 140, 142, 143. The
resident was deprived of interactions with people whose cognitive levels were
higher and she was deprived of access to individuals with whom she had lived and
interacted with for years. Moreover, housing her in the locked unit subjected the
resident to the trauma and the stigma of being forced to live with individuals who
suffered from behavioral problems that rendered them unmanageable in the
unsecured part of Petitioner’s facility. CMS Ex. 67 at 41, 42.

Finally, the resident was imprisoned against her will. Petitioner’s staff kept her
behind a locked door despite the resident’s frequently expressed desire to leave
and they did so without clinical evidence supporting the resident’s imprisonment.
Asserting that the resident was unharmed by such imprisonment defies reality.

The seriousness of Petitioner’s noncompliance also is illustrated by the likelihood
of harm to other residents besides Resident # 4. The cavalier way in which
Petitioner confined Resident # 4 potentially put other residents at risk for similar
treatment. It is evident that Petitioner had no safeguards in place to assure that
residents’ rights were respected in circumstances where family members — even if
they meant well — insisted that residents be confined against their will.

Petitioner contends that there are disputed facts that necessitate a hearing as to
penalty amount. It has identified none.

2. Non-immediate jeopardy level noncompliance

CMS asserts that the undisputed material facts establish that Petitioner manifested
four non-immediate jeopardy level deficiencies that continued unabated through
June 25, 2014. It argues that the presence of these deficiencies supports
imposition of $150 daily civil money penalties for each day of the period that ran
from March 28 through June 25, 2014.
13

CMS alleges that during the period the undisputed material facts establish that
Petitioner failed to comply substantially with the following regulations.

e 42 C.E.R. § 483.10(b)(4). This section, among other things, affords a
skilled nursing facility resident the right to participate in the formulation of
any advanced directive (an “advanced directive” is a statement in which a
resident provides written instruction to a facility or other health care
provider concerning the care he or she is to receive under certain
conditions. An advanced directive is frequently used to instruct a provider
about end of life care when the author of the directive is incapacitated).
CMS asserts that Petitioner failed to comply with this section because it, in
conjunction with JF, Resident # 4’s POA, made an amendment to the
resident’s advanced directive without consulting her.

e 42 C.F.R. § 483.10(k). The regulation states that a resident shall have
reasonable right to use a telephone where his or her calls cannot be
overheard. CMS alleges that Petitioner contravened this regulation by
restricting Resident # 4’s access to a telephone. First, according to CMS, it
allowed only individuals who provided a special code to facility staff to talk
to the resident. Second, CMS alleges that the resident was restricted to the
use of a specific phone and that the facility required that a staff member
place all calls made by the resident.

e 42 C.E.R. § 483.13(c). In relevant part this regulation requires a skilled
nursing facility to develop and implement policies that protect against
misappropriation of residents’ property. CMS contends that Petitioner
failed to comply with this requirement in that it did not report to law
enforcement authorities allegations from Resident # 4’s complaint that
certain property belonging to her (a cellphone) had been misappropriated.

e 42 C.E.R. § 483.75(I)(1). This section requires a facility to maintain
complete and accurate clinical records, among other things. CMS asserts
that Petitioner failed to comply with this requirement because it maintained
records for a resident, identified as Resident # 60, that were internally
inconsistent on a critical issue, that being whether cardio-pulmonary
resuscitation should be administered to the resident in the event of a life-
threatening emergency.

The civil penalty amount that is at issue here, $150 a day, is minimal, comprising
only five percent of the maximum allowable penalty amount for non-immediate
jeopardy level violations. 42 C.F.R. § 488.438(a)(1)(ii). The penalty amount is so
low that establishing even one of the four alleged deficiencies would be sufficient
to sustain the penalties that CMS determined to impose.
14

I find it unnecessary to resolve whether Petitioner failed to comply with the
requirements of 42 C.F.R. § 483.10(b)(4) and 42 C.F.R. § 483.13(c). Petitioner
has raised arguments concerning its alleged noncompliance with these
requirements that, in my judgment, preclude summary judgment. But, there is no
dispute of fact as to Petitioner’s compliance with the other two regulations and I
find that the undisputed material facts plainly establish noncompliance and justify
the minimal civil money penalties that CMS imposed.

Petitioner asserts that it “vehemently” denies that it restricted Resident # 4’s
access to the telephone. However, it defines “access” in limited and self-serving
terms. It argues that Resident # 4 never was prohibited from making outgoing
calls. For purposes of this decision I will accept that assertion as true. But, that
begs the question of whether the resident’s use of the phone was restricted. CMS
alleges that Petitioner limited incoming calls to the resident to individuals who had
a special access code. Petitioner hasn’t denied that allegation. That is an obvious
restriction on the resident’s use of the telephone because it means that certain
individuals weren’t allowed to speak to the resident over the phone when they
attempted to contact her. Likewise, Petitioner hasn’t denied that the facility
required the resident’s calls to be placed for her. There is no evidence that the
resident was unable to make calls on her own and so, this limitation was an
unreasonable restriction of the resident’s right to make calls in private.

Petitioner has offered no facts challenging CMS’s assertions concerning its
noncompliance with the requirements of 42 C.F.R. § 483.75(1)(1). Consequently,
CMS’s allegations stand unrebutted.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Stephen M. Robins, M.D., P.A.,
(PTAN: 0435000001),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-852
Decision No. CR3769
Date: April 8, 2015
DECISION

Petitioner, Stephen M. Robins, M.D., P.A., submitted an application to revalidate his
enrollment in the Medicare program as a supplier of durable medical equipment,
prosthetics, orthotics, and supplies (DMEPOS). With his application, Petitioner
requested a hardship exception from paying the 2013 application fee of $532. The
Centers for Medicare & Medicaid Services (CMS) denied Petitioner’s request, and
Petitioner appealed. I affirm CMS’s determination finding CMS had a legitimate basis to
deny Petitioner’s request because Petitioner has not proven an applicable hardship to
qualify for the fee exception.

I. Background and Procedural History

Petitioner is a licensed optician and a supplier of DMEPOS in Boynton Beach, Florida,
who does business as “Boynton Optics.” CMS Exhibit (Ex.) 3 at 6, 13, 15, 16. Petitioner
was enrolled in the Medicare program as a supplier of DMEPOS for contact lenses,
eyeglasses, and prosthetic cataract lenses. CMS Ex. 3 at 16. The National Supplier
Clearinghouse of Palmetto GBA (NSC) serves as the Medicare contractor that processes
enrollment applications for suppliers of DMEPOS. In 2013, NSC requested Petitioner to
revalidate his enrollment as a DMEPOS supplier in the Medicare program. CMS Ex. 2.
The NSC revalidation request advised Petitioner of the $532 revalidation fee but also
advised that he could alternatively submit a request if he believed he qualified for a
hardship exception waiver. CMS Ex. 2 at 2. On October 21, 2013, Petitioner submitted a
revalidation application, CMS Form 8558, with a letter requesting a hardship exception
to the requirement to pay the $532 application fee. CMS Ex. 3. Petitioner stated that his
annual sales for the post-operative cataract surgical eyeglasses he provided to patients
were “very small,” and that “no profit for them is generated after expenses.” CMS Ex. 3
at 1. Petitioner explained that the optical section of his practice is provided only as an
accommodation for his elderly patients, and given the “annual sales are only a few
thousand dollars,” he maintained “the revalidation fee is a burden.” CMS Ex. 3 at 1.
Petitioner attached financial documentation including income data for 2012 and for the
first two and a half quarters of 2013 (through August 7, 2013) outlining the sales and
expenses incurred by the optical section of his business. CMS Ex. 3 at 2-5.

NSC notified Petitioner on November 20, 2013, that it was denying his request for a
ardship exception. CMS Ex. 4. NSC cited Chapter 15 of the Medicare Provider
Integrity Manual (PIM),' which addresses the criteria for determining a hardship
exception and advised Petitioner that he had not presented a strong argument with
“comprehensive documentation” to support his request for a hardship exception. CMS
Ex. 4; PIM, ch. 15, § 15.19.1.C. NSC further advised Petitioner that he could request
reconsideration of the denial. CMS Ex. 4.

On December 23, 2013, Petitioner requested reconsideration and provided additional
financial documentation for 2013 with his request. CMS Ex. 5. NSC received
Petitioner’s request on December 30, 2013. CMS Ex. | at 1. A hearing officer notified
Petitioner, by letter dated January 24, 2014, that on reconsideration the hearing officer
considered all of the documentation available in the case file, and Petitioner did not meet
the requirements for a hardship exception from the application fee. CMS Ex. 1.

Petitioner filed a timely appeal for an administrative law judge determination, and I was
assigned this case. Following the issuance of my Acknowledgment and Pre-Hearing
Order (Order), CMS moved for summary judgment and filed a supporting brief

(CMS Br.) with five exhibits (CMS Exs. 1-5). My Order required the parties to provide
comprehensive pre-hearing exchanges, including a brief addressing all issues of law and
fact and any motion for summary judgment the party might make. In accordance with
my Order, I construe CMS’s motion for summary judgment as its pre-hearing brief.
Petitioner submitted his pre-hearing brief and opposition to CMS’s motion for

summary judgment (P. Br.) with one exhibit, Petitioner Exhibit (P. Ex.) 1. CMS filed

' Although the NSC letter cited to section “15.9.1C” of the PIM as support for its denial
of Petitioner’s request, the reference is a typographical error, and it appears that NSC
intended to cite to section “15.19.1C.” of the PIM, which contains the language NSC
referenced in its letter. CMS Ex. 4.
a reply brief (CMS Reply) and an objection to P. Ex. 1. Petitioner then filed a sur-reply
(P. Sur-reply).

Absent any objection, I admit CMS Exs. 1-5 into the record. For the reasons discussed in
my finding below, I also admit P. Ex. 1 into the record. Neither party requested the
opportunity to cross-examine any direct witness testimony, which I directed to be
submitted with a party’s pre-hearing exchange by sworn affidavit or declaration;
therefore, in accordance with my Order, a hearing in this matter is not necessary. Order
at § 10. I issue this decision on the full merits of the written record.

II. Background Law

The Patient Protection and Affordable Care Act of 2010, in relevant part, required
DMEPOS suppliers to pay an application fee when they revalidate their Medicare
enrollments. Social Security Act (Act) § 1866(j)(2)(C)(i) (42 U.S.C.

§ 1395cc(j)(2)(C)(i)).. These fees cover the cost of screening providers and suppliers and
also fund Medicare program integrity efforts. Act § 1866(j)(2)(C)(iii) (42 U.S.C.

§ 1395cc(j)(2)(C)(iii)). If the payment of the enrollment fee creates a hardship, an
applicant may request an exemption. 42 U.S.C. § 1866(j)(2)(C)(ii) (42 U.S.C.

§ 1395cc(j)(2)(C)(ii)); 42 C.F.R. § 424.514(b).

The PIM provides criteria that may be considered when making a hardship determination.
These factors, although not all inclusive, are: (a) considerable bad debt expenses;

(b) significant amount of charity care/financial assistance furnished to patients;

(c) presence of substantive partnerships (whereby clinical, financial integration are
present) with those who furnish medical care to a disproportionately low-income
population; (d) whether an institutional provider receives considerable amounts of
funding through disproportionate share hospital payments, or (e) whether the provider is
enrolling in a geographic area that is a Presidentially-declared disaster under the Robert
T. Stafford Disaster Relief and Emergency Assistance Act. PIM, ch. 15, § 15.19.1(C)(2).
Under “Criteria for Determination,” the PIM directs that the comprehensive
documentation in support of the request “. . . may include, without limitation, historical
cost reports, recent financial reports such as balance sheets and income statements, cash
flow statements, tax returns, etc.” Jd.

Although the preamble to the final rule relating to the application fee states that hardship
requests “will be considered on a case-by-case basis” (76 Fed. Reg. 5862, 5909 (Feb. 2,
2011)), the final rule also reflects the Secretary’s intention that “exceptions will only be
approved infrequently.” 76 Fed. Reg. at 5955. CMS is not required to present evidence
“contravening the allegations in the [hardship exception] request” or “to investigate the
allegations ina... request.” Dr. S.A. Brooks, DPM, DAB No. 2615 at 17 (2015).
III. Discussion
A. Issue

Whether CMS had a legitimate basis to deny Petitioner a hardship exception from
paying the $532 Medicare enrollment fee for the revalidation application he
submitted on October 21, 2013.

B. Findings of Fact and Conclusions of Law

1. There is good cause to not exclude Petitioner Exhibit 1 because this
information was not available to Petitioner when he submitted his
request for reconsideration.

An applicant may appeal CMS’s determination concerning a hardship exception to an
enrollment application fee in the same manner as an applicant would appeal a denial of
enrollment or a revocation of Medicare billing privileges.? 42 C.F.R. § 424.514(h)(2).
Such appeals must follow the procedures in 42 C.F.R. Part 498. 42 C.F.R. § 405.803(a).
At the levels of appeal above reconsideration, a supplier is precluded from submitting
new evidence absent good cause. 42 C.F.R. §§ 405.803(e), 498.56(e).

CMS objects to Petitioner’s Exhibit 1, arguing that the exhibit constitutes prohibited new
evidence under 42 C.F.R. § 498.56(e). CMS Reply at 3. CMS argues I should not admit
the exhibit because Petitioner has not provided good cause establishing why he did not
provide the evidence at the reconsideration level of review. CMS Reply at 3. CMS
maintains that the documents in the exhibit were likely either in Petitioner’s possession or
accessible to Petitioner. CMS Reply at 3.

Petitioner’s Exhibit 1 is comprised of a one-page copy of a website printout from the
State of Florida showing the credentials of the optician he employs along with a copy of a
W-2 Wage and Tax Statement that shows the wages Petitioner paid to the optician in
2013. When Petitioner submitted his reconsideration request on December 23, 2013, he
included documentation that consisted of income and expense data for both 2012 and
2013 (through December 2013). CMS Ex. 5 at 3-10. However, considering the calendar
year was not yet over, Petitioner has good cause for filing this new evidence because he
would not have had access to the optician’s 2013 W-2 Wage and Tax Statement at the

> Providers and suppliers have appeal rights in hardship exception cases as provided in
“[42 C.F.R.] § 405.874.” 42 C.F.R. § 424.514(h)(2). In 2012, when the U.S.
Department of Health and Human Services replaced the provisions at 42 C.F.R.

§ 405.874 with 42 C.F.R. §§ 405.800-.818, it did not update the cross-reference in 42
C.F.R. § 424.514(h)(2). 77 Fed. Reg. 29,002, 29,016-17 (May 16, 2012). Petitioner’s
appeal rights are now found in 42 C.F.R. § 405.803.
time he submitted his December 23, 2013 reconsideration request. Considering that this
exhibit contains information relating to Petitioner’s expenses for 2013 and that fee
exceptions relate to some financial hardships, I find it relevant, and I admit it finding
Petitioner has shown good cause. See 42 C.F.R. §§ 498.56(e)(2), 498.60(b). Although
part of the one-page exhibit contains some information relating to Petitioner’s optician’s
credentials that were likely available to Petitioner when he submitted his request for
reconsideration, I do not exclude that portion of the exhibit considering its inclusion does
not prejudice CMS.

2. NSC had a legitimate basis to determine Petitioner was not entitled to
an exception to the $532 Medicare enrollment application fee because
a showing of non-profitability alone does not qualify as an applicable
hardship.

According to Petitioner, the number of post-operative eyeglasses that he provides to his
elderly Medicare patients is a small number (less than a few thousand dollars in sales per
year), and his optical business runs at a net loss; however, he continues to operate that
section in order to accommodate and better serve the elderly patients he treats. CMS Ex.
5 at 1-2; P. Br. at 3; P. Sur-reply at 1; Request for Hearing.

Petitioner’s hardship reasons do not comport with the examples that the PIM lists as
acceptable justifications. Petitioner does not specifically maintain that he provides
services to disadvantaged program beneficiaries nor do I find any evidence in the record
to support this. Further, Petitioner does not maintain, nor do I find evidence, that he has
bad debts, that he has had a challenge collecting payment from his patients, that his
patients are disproportionately low-income, or that he furnishes significant charity care.
Instead, Petitioner maintains that he provides the post-operative cataract eyeglasses as an
accommodation to a small number of his elderly patients and that the operation of the
optical section of his business, considering both Medicare reimbursed and non-Medicare
reimbursed expenses, operates at a net loss. CMS Ex. 5 at 2; P. Br. at 3; P. Sur-reply at 1.

A review of the financial documentation Petitioner submitted shows the 2012 and 2013
income and expense figures include expenses for supplies, lab costs, and the salary for
the licensed optician he employs. CMS Ex. 3 at 2-5; CMS Ex. 5 at 3-10; P. Ex. 1. The
financial documentation suggests that for 2012, the optical section’s net sales were less
than $6,000, with a net loss of $16,000. CMS Ex. 3 at 2-4; CMS Ex. 5 at 1-2. In 2013,
the net sales for the optical section of Petitioner’s business were less than $3,000. CMS
Ex. 5 at 1. Petitioner also projects lower net sales trends in the future. CMS Ex. 5 at 1.
According to Petitioner, a fee of hundreds of dollars on top of ongoing losses should
satisfy the requirements of a hardship exception. P. Br. at 3; P. Sur-reply. Petitioner
does not dispute that for 2012 and 2013, Petitioner’s Medicare payments were in excess
of the application fee; however, Petitioner maintains that CMS must instead consider the
optical section’s net profitability. P. Br. at 3; P. Sur-reply.
I note that the financial documentation Petitioner provided is specific to the optical
section of his practice. Petitioner is a licensed optician and operates a full-time optician
practice that is open five days per week. P. Br. at 3; CMS Ex. 3 at 13, 15. Petitioner did
not submit any financial information pertaining to the overall company and indicated that
he does not file a separate tax return for the optical section of his practice. P. Br. at 3.
Petitioner chose not to submit tax returns for his overall company at the initial or
reconsideration levels of review, which might have demonstrated relevant allocations for
charitable care that I could further consider. Instead, Petitioner has only presented
evidence that the optical section of Petitioner’s business was operating at a loss in 2012
and 2013, and even if I were to determine that his assessments were accurate, a showing
of non-profitability for one section of Petitioner’s business, which is sustained for the
convenience of customers, is not sufficient for me to reverse CMS’s determination and
find an applicable fee exception.

IV. Conclusion

I affirm NSC’s reconsidered determination and find that NSC had a legitimate basis to
determine that Petitioner is not entitled to a hardship exception from paying the $532
Medicare enrollment fee for his revalidation application submitted on October 21, 2013.
If Petitioner opts to remain a DMEPOS supplier eligible for reimbursement of his sales to
Medicare beneficiaries, Petitioner must pay the required fee.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2014-H-2285)

Complainant
v.

Gritz Liquors LLC
d/b/a Gritz Liquors,

Respondent.
Docket No. C-15-767
Decision No. CR3757
Date: April 2, 2015
INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Gritz Liquors LLC d/b/a Gritz Liquors, at 34 West Street,
Annapolis, Maryland 21401, and by filing a copy of the complaint with the Food and
Drug Administration’s (FDA) Division of Dockets Management. The complaint alleges
that Gritz Liquors impermissibly sold cigarettes to minors and failed to verify, 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. CTP seeks to impose
a $500 civil money penalty against Respondent Gritz Liquors.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on January 5, 2015, CTP served the
complaint on Respondent Gritz Liquors 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 Gritz Liquors filed a request for extension of time to file its Answer on
January 31, 2015. I granted Respondent’s motion and provided an extension to March 6,
2015. Respondent failed to file an Answer by that date. Pursuant to 21 C.F.R. § 17.11, 1
assume that the facts alleged in the complaint (but not its conclusory statements) are true.
Specifically:

e At approximately 11:54 A.M. on February 7, 2014, at Respondent’s business
establishment, 34 West Street, Annapolis, Maryland 21401, 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;

e Ina warning letter dated April 24, 2014, CTP informed Respondent of the
inspector’s observations from February 7, 2014, 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;

e At approximately 10:59 A.M. on July 31, 2014, at Respondent’s business
establishment, 34 West Street, Annapolis, Maryland 21401, 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 Gritz Liquors’ 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 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.

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
Gritz Liquors LLC d/b/a Gritz Liquors. 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