Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.
Thais Mini Market Inc. d/b/a I & S Grocery Inc.,
Respondent.

Docket No. C-13-588
FDA Docket No. FDA-2013-H-0367

Decision No. CR2791

Date: May 20, 2013

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) initiated the above-captioned matter when it
filed an Administrative Complaint for Civil Money Penalties (Complaint) with the
Departmental Appeals Board, Civil Remedies Division (CRD) and the Food and Drug
Administration’s (FDA) Division of Dockets Management. CTP seeks to impose civil
money penalties under the Federal Food, Drug, and Cosmetic Act (Act) and the Act’s
implementing regulations.

The Complaint alleges the following facts. Respondent owns an establishment located at
490 Avon Avenue, Newark, NJ 07108, that sells tobacco products. Complaint § 3. CTP
conducted two inspections of the establishment. Complaint § 9. During a June 9, 2012
inspection, an FDA-commissioned inspector observed that Respondent:

[Sold] tobacco products to a minor, in violation of 21 C.F.R. § 1140.14(a);
and . . . [f]ail[ed] to verify the age of a person purchasing tobacco products
2

by means of photographic identification containing the bearer's date of
birth, as required by 21 C.F.R. § 1140.14(b)(1).

Complaint § 10.

On August 9, 2012, CTP issued a warning letter to Respondent specifying the violations
that the inspector observed. The letter warned Respondent if it failed to correct the
violations, CTP could seek to impose civil money penalties and that Respondent was
responsible for complying with the law. Complaint § 10.

Manuel Rosario responded to the Warning Letter on Respondent’s behalf and “stated that
employees are told to check IDs before selling tobacco products and the establishment is
placing more emphasis on checking IDs” and that “[m]anagement [was] also reviewing
CTP’s website to obtain more information on tobacco sales to pass along to employees.”
Complaint § 11.

During a subsequent inspection, an FDA-commissioned inspector documented that “a
person younger than 18 years of age was able to purchase Newport Box 100s cigarettes
on January 17, 2013, at approximately 3:37 PM ET.” Complaint § 1. The inspector also
documented that “the minor’s identification was not verified before the sale... on
January 17, 2013, at approximately 3:37 PM ET[.]” Complaint ¥ 1. Finally, the
inspector documented a violation for “[s]elling unpackaged cigarettes, in violation of
21 CFR. § 1140.14(d).” Complaint § 1.

In compliance with 21 C.F.R. §§ 17.5 and 17.7, CTP served Respondent with the
Complaint on April 2, 2013, via United Parcel Service. CTP charged Respondent with
violating 21 C.F.R. § 1140.14(a) (sale of tobacco products to a minor), 21 C.F.R.

§ 1140.14(b)(1) (failure to verify the age of a purchaser of tobacco products by means of
photographic identification containing the bearer’s date of birth) and 21 C.F.R.

§ 1140.14(d) (breaking open a package of cigarettes in order to sell individual cigarettes).
Complaint {fj 1, 10. CTP asked the CRD to impose a $2,000 civil money penalty based
on four alleged violations of the regulations in a 24-month period. Complaint § 13.

The Complaint provided detailed instructions related to filing an answer and requesting
an extension of time to file an answer. Complaint J 14-18, 20-22. The Complaint stated
that failure to file an answer could result in the imposition of a civil money penalty
against Respondent. Complaint § 19. Respondent neither filed an answer nor requested
an extension of time within the 30-day time period prescribed in 21 C.F.R. § 17.9.

If a respondent does not file an answer within 30 days of a properly served complaint, the
regulations provide that:
3
the presiding officer shall assume the facts alleged in the complaint to be
true, and, if such facts establish liability under the relevant statute, the
presiding officer shall issue an initial decision within 30 days of the time
the answer was due, imposing: (1) The maximum amount of penalties
provided for by law for the violations alleged; or (2) The amount asked for

in the complaint, whichever amount is smaller.

21 CFR. §

7.11(a). Further, a failure to file a timely answer means that “respondent

waives any right to a hearing and to contest the amount of penalties and assessments”

imposed in tl

e initial decision. 21 C.F.R. § 17.11(b).

Accepting the facts alleged in the Complaint as true, I find that those facts establish
Respondent’s liability under the Act. See 21 U.S.C. §§ 333(f)(9), 387c(a)(7)(B), 387£(d);
21 C.F.R. §§ 1140.1(b), 1140.14. Lalso find that CTP’s request to impose a $2,000 civil

money penal

ty is permissible. See 21 C.F.R. § 17.2.

Therefore, Respondent is directed to pay a civil money penalty in the amount of
$2,000.00. This initial decision becomes final and binding upon both parties within 30
days of the date of its issuance. 21 C.F.R. § 17.11(b).

It is so ordered.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Advanced Mobility B & G, Inc.,
(Supplier No.: 6244940001),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-13-457
Decision No. CR2790

Date: May 16, 2013

DECISION

I grant the motion of the Centers for Medicare & Medicaid Services (CMS) for summary
disposition and sustain the revocation of the Medicare supplier number for Advanced
Mobility B & G, Inc. (Petitioner).

I. Background

Prior to the revocation at issue in this case, Petitioner was enrolled in the Medicare
program as a supplier of durable medical equipment, prosthetics, orthotics and supplies
(DMEPOS). Ina letter dated October 26, 2012, National Supplier Clearinghouse (NSC),
the CMS contractor, informed Petitioner that its billing number would be revoked
retroactive to October 4, 2012. CMS Exhibit (Ex.) 3. The letter stated an NSC
representative twice attempted to conduct a visit to Petitioner’s facility, but was
unsuccessful because the facility was closed during the posted hours of operation, in
violation of 42 C.F.R. §§ 424.57(c) and 424.535(a)(5)(ii). CMS Ex. 3, at 2. On October
30, 2012, Petitioner requested reconsideration. In its reconsideration request, Petitioner
acknowledges “[t]he violations did occur[,]” but offers explanations as to why its facility
was not open on those two occasions. CMS Ex. 4, at 1-2. The Medicare hearing officer
issued an unfavorable reconsideration decision on December 18, 2012. CMS Ex. 5.
Petitioner timely filed a request for hearing (RFH) before an administrative law judge
(ALJ) by letter dated February 15, 2013 and I issued an Acknowledgment and Initial
Docketing Order (Order).

Pursuant to the Order, on March 29, 2013, CMS filed a Motion for Summary Disposition
and Memorandum in Support Thereof (CMS Motion). CMS proffered six exhibits in
support of its Motion. On April 15, 2013, Petitioner filed its Response to CMS’s Motion
for Summary Disposition (P. Response) and proffered three exhibits. In the absence of
objection from either party, I admit all the proffered exhibits into the record. My
decision is based on the record before me, which includes the documentary evidence
admitted and the parties’ pleadings.

Il. Controlling Statutes and Regulations

Pursuant to section 1834(j)(1)(A) of the Social Security Act (Act), 42 U.S.C. §
1395m(j)(1)(A), a supplier of equipment and supplies may not be paid for items provided
to an eligible beneficiary unless the supplier has a supplier number issued by the
Secretary of the Department of Health & Human Services (Secretary). In order to
participate in the Medicare program as a DMEPOS supplier and obtain a supplier
number, an entity must meet the standards specified at 42 C.F.R. § 424.57(b) and (c)(1)-
(29). Once billing privileges are issued, CMS or the CMS contractor may revoke a
supplier’s billing privileges for failure to meet the standards specified in the regulations.
42 C.F.R. § 424.57(d); see also 42 C.F.R. § 424.535(a)(1). It is well-established that
failure to comply with even one standard is a basis for revocation. See, e.g., Rita Lemons
d/b/a Experts Are Us Inc., DAB CR2398, at 7 (2011).

Supplier standard seven requires a supplier to maintain a physical facility that, among
other things, is accessible and staffed during posted hours of operation. 42 C.F.R §
424.57(c)(7)(i)(C). The regulations further provide that CMS may revoke a supplier’s
billing number if it determines that the supplier is no longer operational to furnish
Medicare covered items or services, or has failed to satisfy any or all of the Medicare
enrollment requirements. 42 C.F.R. § 424.535(a)(5)(ii).

Ill. Issues, Findings of Facts and Conclusions of Law
A. Issue

The issue before me in this case is whether NSC and CMS had a basis to revoke
Petitioner’s Medicare supplier number.
B. Findings of Facts and Conclusions of Law

CMS is entitled to summary disposition because the undisputed facts
establish that Petitioner was not in compliance with supplier standard seven,
42 C.F.R. § 424.57(¢)(7).

Summary disposition is appropriate when a case presents no issue of material fact, and its
resolution turns on questions of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-
48 (1986). The Departmental Appeals Board (Board) has stated that, “[w]hile the Federal
Rules of Civil Procedure (FRCP) are not binding in this administrative appeal, we are
guided by those rules and by judicial decisions on summary judgment... .” Senior
Rehabilitation and Skilled Nursing Center, DAB No. 2300, at 3 (2010) (internal citation
omitted). The party moving for summary judgment carries the initial burden of showing
that there are no genuine issues of material fact and that it is entitled to judgment as a
matter of law. Jd. If the moving party carries its burden, then the non-moving party must
come forward with specific facts showing that there is a genuine issue for trial. Jd.

Furthermore, in determining whether there are genuine issues of material fact, I must
view the evidence in the light most favorable to the non-moving party, drawing all
reasonable inferences in that party’s favor. Id. (citing United States v. Diebold, Inc., 369
USS. 654, 655 (1962). Finally, the Board has instructed that for purposes of summary
judgment, an ALJ should not engage in assessing credibility or evaluating the weight of
conflicting evidence. Holy Cross Village at Notre Dame, DAB No. 2291, at 5 (2009).

I find that summary disposition is appropriate in this case because there are no material
facts in dispute, and because this case turns entirely on questions of law. I conclude that
CMS’s position is correct as a matter of law.

In this case, the material and dispositive facts are not in dispute. Petitioner was a
DMEPOS supplier that participated in the Medicare program. Petitioner’s posted hours
of operations are Monday through Friday, 8:00 a.m. through 12:00 p.m., and 1:00 p.m.
through 5:00 p.m. CMS Ex. 2, at 3; see also RFH, Attachment (Att.) B, at 1. On
September 21, 2012 at 2:00 p.m., an NSC site inspector attempted to inspect Petitioner’s
facility and found the office was not open. CMS Ex. 2, at 7; CMS Ex. 3, at 1. The site
inspector attempted a second site visit on October 4, 2012 at 11:35 a.m., but again the
Petitioner’s facility was closed. CMS Ex. 2, at 7. According to the site inspector’s
report, Petitioner left a sign on the door indicating someone would return at 4:00 p.m. and
left a telephone number where the supplier could be reached. CMS Ex. 2, at 7. The site
inspector called the number and the supplier answered, stating that he was out making a
delivery and would return by 4:00 p.m. CMS Ex. 2, at 7. Petitioner confirms the
foregoing facts as true. P. Response at 3; see also CMS Ex. 4. Thus, the undisputed facts
establish the Petitioner’s facility was closed on September 21, 2012 and October 4, 2012,
at the times the site inspector attempted a site visit. The regulations require suppliers to

maintain facilities that are “accessible and staffed during posted hours of operation.” 42
C.F.R. § 424.57(c)(7)(i)(C). Based on the undisputed facts then, Petitioner failed to meet
these standards.

Petitioner nevertheless argues that the facts show that the facility was accessible and
staffed on October 4, 2012, because an employee of Petitioner answered the telephone
when the site inspector called. P. Response at 3. Petitioner’s argument is unavailing. It
is well-established that leaving a sign on the door whenever the office is closed does not
satisfy the standard that facilities be accessible and staffed during posted hours of
operation. [ta Udeobong d/b/a Midland Care Medical Supply and Equipment, DAB
CR2088 (2010), aff'd DAB No. 2324 (2010). Nor does the fact that Petitioner was
available by telephone to let the inspector know that the facility would be open later in
the day cure the deficiency. “A supplier is neither ‘staffed’ nor ‘accessible,’ if the
supplier’s location is closed and locked.” Amman’s Orthopedics and Prosthetics, Inc.
DAB CR2337, at 5 (2011).

Because I find that Petitioner failed to meet the supplier standards in 42 C.F.R. §
424.57(c), I need not consider Petitioner’s argument that the record shows Petitioner was
operational during the relevant time period. The regulations state, and the Board has
reaffirmed, that “‘failure to comply with even one supplier standard is a sufficient basis
for revoking a supplier’s billing privileges.” 1866/CPayday.com, L.L.C., DAB No. 2289,
at 13 (2009).

Thus, for the reasons stated above, I find that CMS appropriately revoked Petitioner’s
supplier number for failure to comply with the DMEPOS supplier requirements.

IV. Conclusion

Because the undisputed facts establish that Petitioner did not meet all the standards
required by 42 C.F.R. § 424.57(c), I grant CMS’s motion for summary disposition and
sustain the revocation of Petitioner’s supplier number.

/s/
Richard J. Smith
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

A Plus Diabetic Footwear and Supplies,
Petitioner,
v.
Centers for Medicare and Medicaid Services.
Docket No. C-13-146
Decision No. CR2788
Date: May 16, 2013
DECISION

Palmetto GBA (Palmetto), an administrative contractor acting on behalf of the Centers
for Medicare and Medicaid Services (CMS), found A Plus Diabetic Footwear and
Supplies (Petitioner) not to be operational and revoked Petitioner’s billing privileges as a
supplier in the Medicare program. Petitioner appealed. For the reasons stated below, I
affirm the determination to revoke Petitioner’s enrollment.

I. Background

In September 2011, Petitioner completed an application to enroll in the Medicare
program as a supplier of durable medical equipment, orthotics, prosthetics, and supplies
(DMEPOS). CMS Ex. 1. Petitioner provided its address as 951 North 1* Street,
Albemarle, NC 28001. CMS Ex. 1, at 3. In November 2011, Petitioner was enrolled as a
supplier. CMS Ex. 2. However, by the beginning of November 2011, Petitioner had
vacated the premises at 951 North 1“ Street. CMS Ex. 3, at 6. On or about November
28, 2011, Petitioner signed and submitted a Form CMS-855S to inform CMS that its
mailing address had changed to 1205 Ash Street, Albemarle, NC 28001; Petitioner
clearly stated that “[w]e are not changing business location, just the mailing address.”
CMS Ex. 6, at 1-5. Petitioner did not otherwise inform CMS of a change of address.
CMS Ex. 7 4 16. On June 15, 2012, an inspector for Palmetto attempted to conduct an
on-site inspection of Petitioner at its enrolled business address, 951 N. 1* Street,
Albemarle, North Carolina 28001. CMS Ex. 3. The site investigator found Petitioner not
to be operational at that address. CMS Ex. 3, at 1, 2, 6. On July 2, 2012, CMS revoked
Petitioner’s enrollment as a supplier in the Medicare program, effective June 15, 2012,
and established a two year re-enrollment bar. CMS Ex. 4. On July 17, 2012, Petitioner
requested reconsideration of the revocation, and submitted a corrective action plan (CAP)
with a Form CMS-855S indicating that Petitioner’s mailing address was 1205 Ash Street,
Albemarle, NC 28001 and physical address was 1205 Ash Street, New London, NC
28127. CMS Ex. 8. Palmetto rejected the CAP because a site inspector determined that
Petitioner’s purported address in New London, NC did not exist. CMS Ex. 9 at 2. On
October 24, 2012, CMS issued an unfavorable reconsidered determination affirming the
revocation. CMS Ex. 5.

Petitioner timely filed a request for a hearing (RFH) with the Departmental Appeals
Board, Civil Remedies Division.' In response to my November 30, 2012
Acknowledgment and Pre-hearing Order (Order), CMS filed a Motion for Summary
Judgment and nine proposed exhibits. CMS listed one witness, Tameka Harris, and
included a declaration from Ms. Harris as CMS exhibit (Ex.) 7. Petitioner filed a two
page brief without any exhibits or listing any witnesses (P. Br.). Because Petitioner did
not object to CMS’s witness or any of CMS’s proposed exhibits, I admit CMS Exs. 1
through 9 into the record. Petitioner failed to affirmatively state that it wishes to cross-
examine CMS’s witness, as directed by my Acknowledgement and Prehearing Order.
Order {J 9-10. Accordingly, no hearing will be held, the record is closed, and I will issue
this decision based on the written record. See Order § 11.

II. Discussion

In order to participate in the Medicare program as a supplier, a prospective supplier must
complete the applicable Form CMS-855 enrollment application, which requires
disclosure of the supplier’s address. See 42 C.F.R. § 424.510(a). CMS may perform
periodic revalidations and on-site reviews to verify the enrollment information submitted
to CMS, determine the supplier’s compliance with Medicare enrollment requirements,
and determine whether the supplier is operational. 42 C.F.R. §§ 424.510(d)(8);
424.515(c), 424.517(a). CMS may revoke a supplier’s enrollment if it is not operational.
42 C.F.R. § 424.535(a)(5). CMS may revoke a DMEPOS supplier’s enrollment if it fails

' Petitioner has the right to administrative law judge review of an unfavorable
reconsidered determination to revoke billing privileges. 42 C.F.R. §§ 498.3(b)(17);
498.5(1)(2); 498.40. However, the denial of a CAP is not reviewable in this proceeding.
Home Health Connect, DAB No. 2419, at 10-11 (2011).
to comply with any of the supplier standards. 42 C.F.R. § 424.57(d). Supplier standard
seven requires a supplier to maintain a physical facility on an appropriate site. 42 C.F.R.
§ 424.57(c)(7).

A. Issue

Whether CMS has a legitimate basis to revoke Petitioner’s enrollment as a supplier in the
Medicare program based on a determination that Petitioner was not operational under

42 C.F.R. § 424.535(a)(5) and that it failed to comply with supplier standard seven under
42 CFR. § 424.57(c)(7).

B. Findings of Fact, Conclusions of Law, and Analysis

I. During the June 15, 2012 site visit, the site inspector observed that
another business was located at the address Petitioner provided as its
business location and concluded that Petitioner did not otherwise
appear operational.

Palmetto’s site inspector conducted his site visit of Petitioner’s business location at 11:05
a.m. on June 15, 2012. CMS Ex. 3. The site inspector went to the location listed as the
business address on Petitioner’s enrollment application, 951 N. 1“ Street, Albemarle,
North Carolina 28001. CMS Ex. 1, at 3. This location did not have a sign with the
supplier’s business name posted on the facility and did not have hours of operation
posted. CMS Ex. 3, at 2. The site inspector noted on the site survey form that he was
unable to conduct the site inspection because another business, First Street Thrift, was
now operating in the space that should have been Petitioner’s business location. CMS
Ex. 3, at 6. The owner of First Street Thrift told the site inspector that he took over the
space in November 2011 and that A Plus Diabetic Footwear and Supplies was no longer
in business. CMS Ex. 3, at 2, 6.

Consistent with the inspector’s observations, Petitioner admitted that it had “relocated as
of 11-01-2011 to the current date” to another location. Petitioner’s RFH at 1. Somewhat
contradictorily, Petitioner later stated that it was “still in the [N. 1“ Street] location
through 2011, until [it] had established through the city zoning that we would operate the
business from 1205 Ash Street.” P. Br. at 1. Petitioner explained that:

I can honestly say I do not understand what the problem is: we couldn’t
afford the rent at the other place, moved to our new location, told our
patients and updated our business license and insurance, WE JUST

> My findings of fact and conclusions of law are set forth, in italics and bold font.
FORGOT TO TELL MEDICARE. . . .[W]hy does it matter where we were
operating from, we would have eventually realized we needed to inform
you....

P. Br. at 2 (emphasis in original). Therefore, I find that Petitioner was not operational at
the location listed on its Medicare application and did not inform Medicare of its change
to a new location prior to the time the site inspector conducted the site survey on June 15,
2012.

2. CMS has a legitimate basis to revoke Petitioner’s enrollment in the
Medicare program because Petitioner was not operational pursuant to
42 CFR § 424.535(a)(5) and did not comply with 42 C.F.R.
§ 424.57(c)(7).

CMS may revoke a currently enrolled supplier’s Medicare billing privileges if:

CMS determines, upon on-site review, that the provider or supplier is no
longer operational to furnish Medicare covered items or services... .
Upon on-site review, CMS determines that-

oR KK

(ii) A Medicare Part B supplier is no longer operational to furnish
Medicare covered items or services, or the supplier has failed to
satisfy any or all of the Medicare enrollment requirements, or has
failed to furnish Medicare covered items or services as required by
statute or regulations.

42 CFR. § 424.535(a)(5)(ii).

A supplier is “operational” when it has a “qualified physical practice location, is open to
the public for the purpose of providing health care related services, is prepared to submit
valid Medicare claims, and is properly staffed, equipped, and stocked (as applicable
based on the type of facility or organization, provider or supplier specialty, or the services
or items being rendered) to furnish these items or services.” Id. § 424.502. CMS has
authority to perform off cycle revalidations that may be accompanied by site visits. Id.

§ 424.515(d). The purpose of a site visit is to verify information on file with the
contractor and to confirm compliance with Medicare supplier standards. § 424.517(a).
The Palmetto enrollment file, and the Provider Enrollment, Chain, and Ownership
System do not indicate that Petitioner notified Palmetto of its change in business address
prior to the revocation. CMS Ex. 7 §§ 13, 16. Petitioner admits that it did not submit a
change of business address prior to the revocation. P. Br. at 2. In the present matter, the
undisputed facts indicate that CMS performed a site visit that was within its authority and
found that another business was operating at the business address listed in Petitioner’s
enrollment application, and Petitioner did not notify Medicare that it had moved to a
different location.

In its brief, Petitioner does not dispute the observations of the site inspector during the
June 15, 2012 attempted site visit. Instead, Petitioner states, “I do not understand why
[the site inspector] did not contact us at that time and request where we were located at,
so that we could discuss with him what paperwork needed to be completed.”

P. Br. at 1. Petitioner cannot place the burden of locating a supplier on the contractor or
its employees. Petitioner must timely notify the contractor of any change in location.
42 CFR. § 424.516(d)(2).

It is also undisputed that on November 28, 2011, Petitioner submitted a change of mailing
address form listing 951 N. 1" Street, Albemarle, North Carolina 28001 as its business
location and 1205 Ash Street Albemarle, North Carolina only as its new mailing address.
CMS Ex. 6, at 1-9; CMS Ex. 7 § 14. Petitioner included a hand written comment on this
form stating: “We are not changing our business location, just the mailing address. We
are having problems with our mail service at the business location.” CMS Ex. 6, at 1.
This form was signed November 28, 2011, 27 days after the purported relocation date
referred to in Petitioner’s hearing request. RFH at 1.

Revocation of enrollment is a discretionary act of CMS, see 42 C.F.R. § 424.535(a), and
through the reconsideration process, CMS can decide to exercise its discretion not to
revoke a supplier should the circumstances warrant such action. See 42 C.F.R. § 498.24.
However, I do not have the authority to review CMS’s discretionary act to revoke a
provider or supplier. Letantia Bussell, DAB No. 2196, at 13 (2008). Rather, “the right to
review of CMS’s determination by an [administrative law judge] serves to determine
whether CMS has the authority to revoke [the provider’s or supplier’s] Medicare billing
privileges, not to substitute the [administrative law judge’s] discretion about whether to
revoke.” Jd. Once CMS establishes a legal basis on which to proceed with a revocation,
then the action to revoke is a permissible exercise of discretion. See id. at 10.

In the present matter, CMS provided evidence, which is undisputed, that Petitioner was
not operational on June 15, 2012, at its business address listed in Petitioner’s enrollment
application and that Petitioner had not been operational at that location since the end of
2011. Petitioner clearly understood that it needed to provide CMS with information
concerning an address change because it timely submitted a change in its mailing address.
Despite Petitioner’s failure to properly change its business address, Palmetto sent a site
inspector to the physical address provided by Petitioner in its CAP; however, Petitioner
provided an incorrect address and the site inspector could not find Petitioner’s business
address listed in New London, North Carolina. CMS Ex. 5, at 3. During both attempted
site inspections, the site inspector was unable to access Petitioner’s facility to verify
compliance with the supplier standards. Petitioner submitted no evidence that it had

timely submitted any paperwork to CMS of its alleged change of business address prior
to the revocation. Therefore, I conclude that CMS had a legal basis to revoke Petitioner’s
billing privileges under 42 C.F.R. § 424.535(a)(5)(i) and 42 C.F.R. § 424.57(c)(7).

III. Conclusion

Because Petitioner was not operational at the business location listed in its enrollment
application when CMS conducted a site visit and Petitioner did not notify CMS of a
change of address, CMS’s revocation of Petitioner’s enrollment and billing privileges in
the Medicare program is affirmed.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Louis J. Gaefke, D.P.M.,
(NPI: 1629148648),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-13-145
Decision No. CR2785

Date: May 14, 2013

DECISION

Petitioner, Louis J. Gaefke, D.P.M., challenges the determination by Wisconsin Physician
Services Insurance Corporation (WPS), an administrative contractor for the Centers for
Medicare & Medicaid Services (CMS), to revoke Petitioner’s Medicare billing privileges
effective August 2, 2012, and to impose a three-year bar on re-enrollment. Both parties
now move for summary judgment. For the reasons set forth below, I find that there is no
genuine dispute of material facts and that CMS is entitled to judgment affirming its
revocation of Petitioner’s Medicare billing privileges. Accordingly, I grant summary
judgment in favor of CMS. However, I also conclude that WPS erroneously set April 2,
2012, as the effective date of the revocation. Therefore, the effective date of Petitioner’s
revocation is modified to September 2, 2012.

I. Case Background and Procedural History

Petitioner is a podiatrist licensed to practice in Kansas and Missouri. He participated in
the Medicare program as a supplier of services.’ By five letters, all dated August 3, 2012,

' A “supplier” is a “physician or other practitioner, or an entity other than a provider, that
furnishes health care services under Medicare.” 42 C.F.R. § 400.202.
WPS notified Petitioner that it was revoking his Medicare billing privileges. WPS sent
Petitioner a separate letter for each of the provider transaction access numbers (PTANs)
associated with his National Provider Identifier (NPI).? WPS stated that the revocation
was effective retroactively to August 2, 2012. WPS did not allege specific facts in the
letters, but rather quoted 42 C.F.R. § 424.535(a)(8), titled “Abuse of billing privileges,”
as its basis for revoking Petitioner’s billing privileges. WPS also established a three-year
bar on Petitioner’s re-enrollment in the Medicare program. CMS Exhibit (Ex.) 2, at 4-13.

On August 28, 2012, Petitioner requested reconsideration. Petitioner asserted that the
letters from WPS violated regulatory requirements for revocation notices and claimed
that WPS refused to provide him with additional details about the revocation when he
inquired. Petitioner stated that he did not submit a corrective action plan (CAP) because
he cannot correct a problem about which he is unaware. He generally denied that the
revocation authority stated in 42 C.F.R. § 424.535(a)(8) applied to him. Petitioner also
noted that the revocation was imposed retroactively, which violated the applicable
regulations. CMS Ex. 2, at 1-3.

After further efforts to obtain the documents that CMS and WPS relied on to revoke
Petitioner’s billing privileges, Petitioner received that material on October 2, 2012.

Three days later, on October 5, 2012, Petitioner sent a second request for reconsideration
that addressed the material CMS provided to Petitioner. CMS Ex. 3. He claimed that the
instances of improper billing that CMS and WPS relied upon were “all the result of
isolated billing errors and thus do not show that [Petitioner] in any way abused his
Medicare billing privileges.” CMS Ex. 3, at 1. On October 10, 2012, WPS issued its
reconsidered determination. The WPS hearing officer stated that “[a]ccording to our
records [Petitioner] has submitted claims for services that could not have been
furnished.” CMS Ex. 1, at 1. WPS therefore upheld the revocation of Petitioner’s billing
privileges.

On November 16, 2012, Petitioner timely requested a hearing. In response to my
November 28, 2012 Acknowledgment and Pre-hearing Order (Order), CMS filed a
motion for summary judgment and brief (CMS Br.) along with six proposed exhibits
(CMS Exs. 1-6). Petitioner filed a response to CMS’s motion for summary judgment, as
well as his own motion for summary judgment and brief (P. Br.). Petitioner filed seven
proposed exhibits, which he labeled alphabetically as Petitioner’s Exhibits (P. Exs.) A
through G. CMS did not file a response to Petitioner’s motion for summary judgment.

> While WPS sent five separate letters to Petitioner, the combined practical effect was
the revocation of Petitioner’s Medicare billing privileges and enrollment. Therefore,
WPS made only one initial determination. See 42 C.F.R. § 498.3(b)(17) (explaining that
an “initial determination” includes “whether to deny or revoke a. . . supplier’s Medicare
enrollment ...”). Petitioner sent a single request for reconsideration and WPS issued a
single reconsidered determination. CMS Exhibits (Exs). 1, 2.
Petitioner objects to the admission of a letter from “AdvanceMed” (presumably CMS Ex.
1, at 42-43), as well as the declaration of Megan Dimmock (CMS Ex. 6). P. Br. at 26 n.3.
Petitioner argues that these exhibits should be excluded as a “reasonable sanction for the
misconduct of CMS and WPS.” P. Br. at 26 n.3. Petitioner posits that there is a
conspiracy to force through the revocation of his billing privileges without providing him
with specific information about why the revocation action was taken. However, aside
from Petitioner’s theory, Petitioner has not offered any direct evidence that CMS’s
investigation was improper or that these exhibits contain evidence unduly prejudicial to
the presentation of Petitioner’s case before me. Further, Petitioner has not argued that
Ms. Dimmock’s statement is not reliable or authentic; therefore, I find it admissible in
these proceedings. See 42 C.F.R. § 498.61. I admit CMS Exs. 1-6 and P. Exs. A-G into
the record.

II. Discussion
A. Issues
This case presents the following three issues:
1. whether summary judgment is appropriate;

2. whether CMS has the authority to revoke Petitioner’s billing privileges
under 42 C.F.R. § 424.535(a)(8); and

3. if CMS has the authority to revoke Petitioner’s billing privileges,
whether CMS properly established the effective date of revocation.

B. Findings of Fact, Conclusions of Law, and Analysis
The Social Security Act (Act) authorizes the Secretary of Health and Human Services

(Secretary) to establish by regulation procedures for enrolling providers and suppliers in
the Medicare program. 42 U.S.C. § 1395cc(j)(1)(A). The Secretary promulgated

> Petitioner argues that if I affirm the revocation of Petitioner’s billing privileges, I
should vacate the three-year re-enrollment bar that CMS imposed on Petitioner so that
Petitioner is “free to apply for reenrollment in Medicare immediately.” P. Br. at 23. The
length of the re-enrollment bar CMS imposes is not a determination subject to review by
an administrative law judge. See Ravindra Patel, M.D., DAB CR2171, at 7 n.5 (2010);
Emmanuel Brown M.D. and Simeon K. Obeng, M.D., DAB CR2145, at 10 (2010); see
also 42 C.F.R. § 498.3(b)(17) (establishing as an initial decision subject to review
“Cw]hether to deny or revoke a. . . supplier’s Medicare enrollment . . . ,” but not the
length of reenrollment bar). Even if I had authority to review the length of the
reenrollment bar, I could not reduce it to less than one year. 42 C.F.R. § 424.535(c).
enrollment regulations. See 42 C.F.R. § 424.500 et seg. The regulations provide CMS
with the authority to revoke the billing privileges of an enrolled provider or supplier if
CMS determines that certain circumstances exist. Jd. § 424.535(a). Relevant to this case,
CMS may revoke a provider’s or supplier’s billing privileges if:

The provider of supplier submits a claim or claims for services that could
not have been furnished to a specific individual on the date of service.
These instances include but are not limited to situations where the
beneficiary is deceased, the directing physician or beneficiary is not in the
State or country when services were furnished, or when the equipment
necessary for testing is not present where the testing is said to have
occurred.

Id. § 424.535(a)(8). When CMS revokes a provider’s or supplier’s billing privileges, any
provider agreement in effect at the time of revocation is terminated. Id. § 424.535(b). In
addition, after revocation CMS must impose a bar on re-enrollment for a minimum of one
year, but no more than three years. Jd. § 424.535(c).

A provider or supplier may request reconsideration of the initial determination to revoke
is or her billing privileges. 42 C.F.R. §§ 498.5(/)(1), 498.22(a). If dissatisfied with the
reconsidered determination, the supplier may request a hearing before an administrative
law judge. Jd. § 498.5(/)(2). When appropriate, administrative law judges may decide a
case arising under 42 C.F.R. pt. 498 by summary judgment. See Civil Remedies Division
Procedures § 7; Livingston Care Center v. U.S. Dep’t of Health & Human Services, 388
F.3d 168, 172 (6th Cir. 2004) (citing Crestview Parke Care Ctr. v. Thomson, 373 F.3d
743 (6th Cir. 2004). Summary judgment is appropriate and an in-person hearing is not
required if the record shows that there is no genuine dispute of any material fact and the
moving party is entitled to judgment as a matter of law. Senior Rehab. & Skilled Nursing
Ctr., DAB No. 2300, at 3 (2010) (citations omitted). To determine whether there are
genuine issues of material fact for an in-person hearing, the administrative law judge
must view the evidence in the light most favorable to the non-moving party, drawing all
reasonable inferences in that party’s favor. Jd. (citation omitted).

1. Summary judgment is appropriate.

There is no genuine dispute of material facts in this case. CMS has presented evidence
showing that Petitioner submitted claims for services that could not have been provided
to a specific individual on the date of service. Petitioner does not dispute that his billing
agent, D.A.R.E. Foot Care, submitted these claims on his behalf, but argues that the
claims at issue contained clerical errors and did not support a “pattern of abusive billing.”
However, the nature of the billing errors is not material to the outcome of the case. The
regulation applicable here does not require a “pattern of abusive billing” or expressly
exclude clerical errors. 42 C.F.R. § 424.535(a)(8). Any evidence or factual inferences
that may be drawn showing that the claims submitted by Petitioner or his billing agent
were clerical errors, accidental, or not a “pattern of abusive billing” do not alter the plain
language of the regulation and do not impact the result here. Petitioner has not submitted
any evidence that fairly detracts from CMS’s evidence. This case turns on a matter of
law, and is therefore appropriate for summary judgment.

For purposes of summary judgment, I draw all inferences in favor of Petitioner. Even
though not material to the outcome, I accept as true, solely for purposes of summary
judgment, that Petitioner did not intend to defraud Medicare and that all but one of the
improper claims resulted from the clerical errors of Petitioner’s billing agent.

2. The undisputed facts show that Petitioner billed Medicare for services
that could not have been provided to a specific beneficiary on the date
of service.

In support of its motion for summary judgment, CMS presented the results of an
investigation that show Petitioner submitted Medicare claims for services that could not
have been provided to the beneficiaries identified in the claims because either the
beneficiaries were deceased on the dates of the claimed services or the claimed services
involved medical care to six or more toes for beneficiaries who only had one foot. CMS
Ex. 1, at 44-45. In response, Petitioner does not dispute that his billing agent, D.A.R.E.
Foot Care, submitted the claims in question. P. Br. at 7-12. Petitioner concedes that one
of the claims at issue was not the result of the billing agent, but Petitioner’s
“documentation oversight.” P. Br. at 1, 10. However, with regard to all claims,
Petitioner qualifies them as billing mistakes, accidental, and not rising to the level of
abuse required by regulation. P. Br. at 6; P. Ex. A, at 9 10.

The evidence shows that Petitioner or Petitioner’s billing agent submitted 27 claims for
services that Petitioner performed after the beneficiary indentified on the claim had died.
CMS Ex. 1, at 44.4 Petitioner argues that he provided care to beneficiaries with the same
or similar names to the deceased beneficiaries identified on the submitted claims.
Petitioner provided treatment sheets that support his argument. P. Ex. B. But Petitioner’s
exhibits also show that the treatment sheets and submitted claims identify two separate
individuals. For example, Petitioner provided treatment to a living beneficiary, “C.B.,”
on September 16, 2011. P. Ex. B, at 1. C.B. was born January 6, 1944. P. Ex. B, at 1.
However, the beneficiary identified on the claim sheet, also with the initials “C.B.,” was
born October 22, 1910. P. Ex. B, at 3. The “C.B.” identified in the submitted claim died
on April 8, 2011, and therefore could not have received treatment on September 16, 2011.

* Petitioner argues that four claims identified in CMS Ex. 1, at 44 were duplicates. P. Br.
at 6. Therefore, while that exhibit shows that Petitioner submitted 31 improper claims, I
accept as true for purposes of summary judgment that only 27 of those claims identified
represent actual claims submitted to Medicare. See CMS Ex. 1, at 44.
Petitioner’s evidence does not create a dispute about whether he or his agent submitted
the claims at issue to Medicare, or about whether those claims identified deceased
beneficiaries as receiving treatment. Therefore, Petitioner has not come forward with
evidence to refute CMS’s evidence that shows he submitted claims for services that could
not have been provided to a specific beneficiary because that beneficiary was dead.

The evidence also shows that Petitioner or Petitioner’s billing agent submitted eight
claims for services that Petitioner performed on 6-10 toes even though the beneficiaries
identified on the claims had one leg amputated. CMS Ex. 1, at 45. Petitioner provided
treatment sheets for these claim. P. Exs. C, G. For example, Petitioner submitted
treatment sheets supporting his argument that he provided treatment to the only foot that
beneficiary “W.H.” had. P. Ex. C. However, Petitioner’s exhibits show that the
treatment sheet and claim forms do not match. The claims that Petitioner submitted to
Medicare for payment state that he provided care on 6-10 toes even though the treatment
sheet has one foot with an “X” marked through it. P. Ex. C, at 1-2. Petitioner’s evidence
does not refute CMS’s evidence establishing that he billed Medicare for services on 6-10
toes, which could not have been provided to the amputated beneficiaries identified in the
claims.

3. CMS has a sufficient basis to revoke Petitioner’s Medicare billing
privileges pursuant to 42 C.F.R. § 424.535(a)(8).

CMS has the authority to revoke a supplier’s Medicare billing privileges if that supplier
“submits a claim or claims for services that could not have been furnished to a specific
individual on the date of service.” 42 C.F.R. § 424.535(a)(8). As explained above, the
facts in this case show that Petitioner or his billing representative, D.A.R.E. Foot Care,
submitted claims for services that could not have been furnished to a specific individual
on the date of service. It is undisputed that Petitioner ultimately billed Medicare for
services when the patient named in the claim died before the date of service. P. Br. at 7-
9. Petitioner also billed Medicare for services performed on 6-10 toes when the patient
named in the claims had one leg amputated. P. Br. at 9-12. Therefore, the regulation
authorizes CMS to decide whether to revoke Petitioner’s Medicare billing privileges.

Petitioner attempts to shift blame for the improper claims onto the company acting as his
billing representative. P. Br. at 6-12. However, Petitioner has voluntarily entered into a
contractual relationship with D.A.R.E. Foot Care which, according to him, required him
to yield to D.A.R.E. Foot Care his right to personally submit claims to CMS. P. Br at 18;
P. Ex. A, at 1 93. Petitioner asserts that suppliers today need to use third party billing
agents and that Petitioner had no reason to question what claims were being submitted
under his Medicare billing number. P. Br. at 18. Finally, Petitioner objects to a punitive
penalty vicariously imposed on him. P. Br. at 19.
Revocation of billing privileges is remedial and not punitive in nature. If Petitioner’s
agent is improperly billing Medicare for services, this conduct is just as harmful as if
Petitioner is doing so directly. Petitioner’s failure to properly supervise the billing for
services is not a defense because otherwise CMS would have no means to stop improper
billing. In fact, suppliers would be protected when acting through an agent. Petitioner
as not alleged that D.A.R.E. Foot Care falsely or fraudulently misused his supplier
number to bill for services or that he did not authorize them to bill Medicare on his
behalf. Therefore, Petitioner alone is responsible for the accurate billing of his services.

Petitioner also claims that CMS must show “patterns of abusive billing practices” before
the regulation authorizes revocation. P. Br. at 17-22. Petitioner argues that accidental
billing errors are not a basis for revocation because they are not “abusive.” However, the
elements that Petitioner cites as necessary for revocation are not regulatory requirements
for revocation. The regulatory text does not mention, let alone require, a finding of
‘abusive billing practices” or a “pattern” of such practices. 42 C.F.R. § 424.535(a)(8).
Further, the regulation does not expressly exclude accidental billing errors as a basis for
revocation. Jd.

Petitioner premises much of his legal theory on the preamble to the final rule establishing
42 C.F.R. § 424.535(a)(8). It states in relevant part:

This revocation authority is not intended to be used for isolated
occurrences or accidental billing errors. Rather, this basis for
revocation is directed at providers and suppliers who are engaging in
a pattern of improper billing... .

* * *

We recognize the impact that this revocation has, and a revocation
will not be issued unless sufficient evidence demonstrates abusive
billing patterns. Accordingly, we will not revoke billing privileges
under § 424.535(a)(8) unless there are multiple instances, at least
three, where abusive billing practices have taken place... .

73 Fed. Reg. 36,448, 36,455 (June 27, 2008).

The statements in the preamble, however, are an articulation of enforcement policy rather
than a rule establishing essential elements that must be proven to uphold a revocation
under section 424.535(a)(8). The quotation above responded to concerns expressed by
the public that there was “not enough guidance given to the contractors . .. which could
cause overburdened contractors to implement this policy too widely.” Id. CMS’s
decision to revoke billing privileges is, after all, discretionary. See 42 C.F.R.

§ 424.535(a) (“CMS may revoke a currently enrolled provider or supplier’s Medicare
billing privileges . . . for the following reasons”) (emphasis added). The context of the
statement, therefore, shows that it is guidance to CMS contractors rather than a rule that
is enforceable against CMS. See CMS LCD Complaint; L29288, DAB No. 2499, at 4
(2013) (stressing the importance of determining the context of a response to public
comments in the preamble to a final rule).

This interpretation is supported by the fact that the text quoted from the preamble directly
contradicts the plain language of the regulation. The regulation authorizes CMS to
revoke a supplier’s billing privileges after that supplier submits “a c/aim or claims” for
services that could not have been provided. 42 C.F.R. § 424.535(a)(8) (emphasis added).
One claim may trigger CMS’s authority to revoke billing privileges. However, the
preamble contradictorily states that CMS “will not revoke billing privileges under

§ 424.535(a)(8) unless there are multiple instances, at least three, where abusive billing
practices have taken place.” 73 Fed. Reg. at 36,455.

If the language in a preamble conflicts with the plain language of the regulation, the
regulatory language must prevail. Cf Ass’n of Am. R.R.s v. Costle, 562 F.2d 1310, 1316
(D.C. Cir. 1977) (“Where the enacting or operative parts of a statute are unambiguous,
the meaning of the statute cannot be controlled by language in the preamble.”). Hada
change to the basis for revocation under section 424.535(a)(8) been intended in the final
tule, the regulatory text could have been modified to require a finding of three or more
instances of abusive billing practices. See CMS LCD Complaint: L29288, DAB No.
2499, at 5 (“Had the intent been to exclude specialist physicians from certifying medical
necessity, different wording could have easily accomplished that result.”). No such
change was made. Further, a duly promulgated regulation has the force and effect of
federal law. See Chrysler Corp. v. Brown, 441 U.S. 281, 295-96 (1979). Iam bound to
pply the regulatory text even if it is more broadly worded than the statements in the
preamble to the final rule. Cf: CMS LCD Complaint; L29288, DAB No. 2499, at 5.
Therefore, a “pattern of abusive billing” need not be established for an administrative law
judge to uphold the revocation of Medicare billing privileges.

2

Apart from the preamble to the final rule, Petitioner also relies on the title of section
424.535(a)(8), “Abuse of billing privileges,” for his position that CMS must show
Petitioner intended to submit improper claims. P. Br. at 17. However, the title to a
section or subsection is not controlling, does not add elements to the operative language,
and may only be used as an interpretative aid. See Bhd. of R.R. Trainmen v. Balt. & Oh.
R. Co., 331 U.S. 519, 528-29 (1947); Ellen L. Morand, DAB No. 2436, at 8 (2012)
(“General principles of statutory construction provide that the title of a statutory
provision should not be read in a manner that limits the plain meaning of the statutory
text.”’) (citations omitted). Section 424.525(a)(8) does not mention the word “abuse.”
Accordingly, neither “abuse” nor “abusive billing practices” are required before CMS is
authorized to revoke Petitioner’s billing privileges pursuant to 42 C.F.R. § 424.535(a)(8).
Finally, Petitioner argues that the plain language of the regulation, “‘a specific
individual,” does not authorize revocation under the circumstances here. Petitioner
asserts, and CMS does not dispute, that Petitioner provided services to some Medicare
beneficiaries on the dates that he billed Medicare, albeit not to the beneficiaries named in
the claims or the exact services stated in the claims. Petitioner states that:

[i]f the regulation was intended to reach instances where the service was
provided to a beneficiary but was mistakenly billed under the name of
another, deceased beneficiary, it would not read “a specific beneficiary”
[sic] but would read “the specific beneficiary[,]” expressly linking the
identity of the person to whom the service was provided to the identity of
the person for whom the claim was submitted.

P. Br. at 18 (emphasis in original). Petitioner’s argument is unpersuasive.

Use of the article “a” does not warrant the broad reading Petitioner seeks; a claim
containing a misidentified beneficiary is an acceptable practice so long as the underlying
service was performed to some other beneficiary. Petitioner’s argument overlooks that
the regulation authorizing revocation requires that the improper claim be for services that
Petitioner could not have provided to “a specific individual,” not just “an individual.”

42 C.F.R. § 424.535(a)(8) (emphasis added). Contrary to Petitioner’s argument, the
regulation requires specificity with reference to whom the services were allegedly
provided, not a generic identification of any individual. The specific individual identified
in a claim must be the specific individual who received the services claimed, otherwise
the claim is for services that could not have been provided to “‘a specific individual,” and
revocation is permissible. Jd. Petitioner admits that the specific individuals identified in
the claims at issue were not the specific individuals receiving the services claimed. P. Br.
at 7-9.

> Even if Petitioner is correct in his interpretation of section 424.535(a)(8), this
interpretation does not absolve him from having filed eight claims for debridements of
six to ten toes for individuals who only had one foot. This is because the individuals on
whom he claimed to have performed services were not in question, only whether the
services claimed could have been performed. Petitioner admits that the individuals in
each of these claims only had one foot. P. Br. at 9-12.
10

CMS need only show that Petitioner submitted a claim’ or claims for services that could
not have been provided to a specific individual on the date of service. CMS has made
such a showing in this case.

4. The effective date of the revocation of Petitioner’s billing privileges is
September 2, 2012.

CMS notified Petitioner by notices, all dated August 3, 2012, that it was revoking his
billing privileges effective August 2, 2012. CMS Ex. 2, at 4-13. Petitioner argued that
CMS failed to properly set the effective date 30 days following notice. P. Br. at 28.

The revocation of Medicare billing privileges is effective 30 days after CMS or its
contractor issues the notice of revocation, unless certain exceptions apply. 42 C.F.R.

§ 424.535(g). As Petitioner argues, none of the exceptions listed in section 424.535(g)
apply to this case. Therefore, the effective date of Petitioner’s revocation is September 2,
2012.

5. Petitioner is not entitled to summary judgment based on his due
process arguments.

Petitioner argues that WPS and CMS violated his due process rights because the
revocation notices did not comply with the regulatory requirement that the notice provide
Petitioner with enough information to make an adequate response. P. Br. at 25-28.
Petitioner claims the revocation is based on a “shocking disregard for the truth and
essential principles of justice.” P. Br. at 1-2.

The lack of specific factual allegations in the revocation notices (CMS Ex. 2, at 4-13)
and CMS’s unexplained reluctance to immediately provide Petitioner with specific
information when requested is far from “good government.” CMS Exs. 2, at 14; 3, at 64.
However, CMS’s actions or omissions do not justify granting Petitioner judgment. This
is because Petitioner received timely notice of the action, received specific information
about the revocation before CMS rendered the reconsidered determination, and has since
ad ample opportunity to defend himself at this level of appeal. For example, my Order
in this case obliged CMS to submit its brief and all its exhibits first and allowed
Petitioner to respond to these arguments and evidence. See Order § 4. CMS submitted
all of the documents from its investigation that it relied on to revoke Petitioner’s billing

® Petitioner admits fault for billing for the debridement of six or more toes to patient S.V.
because Petitioner failed to include a notation in his records that S.V. is a partial amputee.
P. Br. at 10. Despite Petitioner’s characterization of his actions as a mistake, this
admitted filing of a single claim for services that could not have been performed on S.V.
is enough to compel me to affirm CMSs discretionary determination to revoke
Petitioner’s billing privileges under 42 C.F.R. § 424.535(a)(8).

11

privileges as well as a copy of documents Petitioner provided to CMS during the
reconsideration stage. CMS Exs. 1, 3. Petitioner also filed nearly 70 pages of
substantive exhibits and the written testimony of several witnesses. P. Exs. A-G. This
evidence has been considered and entered into the record in this proceeding.

Due process is afforded when, such as here, Petitioner was given adequate notice and a
reasonable opportunity to respond at the hearing level. See Green Hills Enters., LLC,
DAB No. 2199, at 9 (2008). Further, Petitioner has not shown actual prejudice in his
ability to defend his case before me; therefore, I cannot find a due process violation. Jd.
at 8. Accordingly, Petitioner has not shown that he is entitled to judgment in his favor.

III. Conclusion

For the reasons explained above, I grant summary judgment in favor of CMS. There is
no genuine dispute of material facts and CMS is entitled to judgment affirming its
revocation of Petitioner’s Medicare billing privileges. However, I direct CMS to modify
the effective date of the revocation of Petitioner’s billing privileges to September 2, 2012.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Complete Home Care, Inc.
(Supplier No.0399220001),

Petitioner,
v.
Centers for Medicare and Medicaid Services.
Docket No. C-13-127
Decision No. CR2783

Date: May 14, 2013

DECISION

The Centers for Medicare and Medicaid Services (CMS) revoked Petitioner’s Medicare
enrollment and billing privileges. Petitioner, Complete Home Care, Inc., appeals, and
CMS and Petitioner have filed cross motions: CMS moves for summary judgment and
Petitioner’s moves to dismiss CMS’s revocation action. As discussed below, the
uncontroverted facts compel revocation of Petitioner’s supplier billing number. I
accordingly grant CMS’s motion for summary judgment and deny Petitioner’s motion to
dismiss.

I. Background

Petitioner was enrolled in the Medicare program as a supplier of durable medical
equipment, prosthetics, orthotics, and supplies (DMEPOS). CMS Exhibit (Ex.) 1. A
CMS contractor from the National Supplier Clearinghouse (NSC) attempted to conduct
two site inspections at Petitioner’s location. CMS Ex. 4. At the time of the two
inspection attempts, Petitioner’s posted hours of operation were Monday through Friday,
from 9 a.m. to 6 p.m. /d. The NSC inspector attempted the first site visit on June 26,
2012, at 9:30 a.m, but the inspector reported that no one was there. A sign on the door
indicated that an employee would return at 2 p.m., and the NSC inspector returned at 2:45
p.m., but found no one there. CMS Ex. 4 at 2, 7,9, and 10. The inspector attempted a
second site visit on June 27, 2012, at 10:30 a.m. /d. at 2, 7, and 10. He knocked on the
door, and he reported there was no answer. CMS Ex. 4 at 7. He also called the telephone
contact number on the sign posted on the door, and there was no answer. CMS Ex. 4 at
7. The NSC inspector could not complete either site visit inspection because he found
nobody at the site to let him inside. Jd. On August 16, 2012, NSC sent a letter notifying
Petitioner that it was revoking Petitioner’s Medicare billing number effective June 27,
2012, the date CMS determined that Petitioner’s practice location was not operational.
CMS Ex. 1. NSC barred Petitioner from re-enrolling for two years from this effective
date. Id.

The notice letter specifically stated that the basis for the revocation was that Petitioner
was in violation of 42 C.F.R. § 424.57(c)(7) and 42 C.F.R. § 424.535(a)(5)(ii)! because it
was closed during posted hours of operation on June 26 and 27, 2012, when a NSC
inspector attempted to complete site inspections to verify Petitioner’s compliance with
supplier standards. Jd. at 2. The notice letter further informed Petitioner of its right to
request reconsideration of the revocation determination within 60 days of the postmark of
the notice. Petitioner filed a timely request for reconsideration, which NSC received on
August 28, 2012. CMS Exs. 2, 3. On October 23, 2012, the Hearing Officer issued an
unfavorable decision and upheld the revocation of Petitioner’s billing number because
Petitioner was not in compliance with the Medicare enrollment requirements. CMS Ex.
3.

Petitioner requested a hearing with the Civil Remedies Division of the Departmental
Appeals Board (DAB). With its hearing request, Petitioner attached several documents.”
This case was assigned to me for written decision.

' This subsection states: “(a) Reasons for revocation. CMS may revoke a currently
enrolled provider or supplier’s Medicare billing privileges and any corresponding
provider agreement or supplier agreement for the following reasons: . . . (5) On-site
review. CMS determines, upon on-site review, that the provider or supplier is no longer
operational to furnish Medicare covered items or services, or is not meeting Medicare
enrollment requirements under statute or regulation to supervise treatment of or to
provide Medicare covered items or services for, Medicare patients. Upon on-site review,
CMS determines that -- . . . (ii) A Medicare Part B supplier is no longer operational to
furnish Medicare covered items or services, or the supplier has failed to satisfy any or all
of the Medicare enrollment requirements, or has failed to furnish Medicare covered items
or services as required by the statute or regulations.”

> Petitioner did not submit these documents as marked exhibits when it filed its hearing
request, and I now identify and mark them as follows: Petitioner Exhibit (P. Ex.) 1
CMS filed its motion for summary judgment accompanied by four exhibits, CMS Exs.
1-4. Pursuant to my Acknowledgment and Pre-hearing Order, Petitioner submitted its
pre-hearing exchange accompanied by two exhibits, which I mark as P. Ex. 1A and P. Ex.
2A to avoid confusion with the exhibits previously submitted with the request for
hearing.

II. Applicable Law

To receive Medicare payments for items furnished to a Medicare-eligible beneficiary, the
Secretary of the U.S. Department of Health and Human Services must issue a billing
number toa DMEPOS supplier. Social Security Act (Act) § 1834(j)(1)(A). To receive
such direct-billing privileges, a DMEPOS supplier must also meet and maintain each of
the 25 supplier enrollments standards set forth in 42 C.F.R. §§ 424.57(c)(1)-(25). Among
other things, a DMEPOS supplier must maintain a physical facility on an appropriate site
which is in a location that is accessible to the public, staffed during posted hours of
operation, and which maintains a visible sign and posted hours of operation. 42 C.F.R.
§424.57(c)(7). Also, a DMEPOS must permit CMS or its agent to conduct on-site
inspections to ascertain supplier compliance with each of these enrollment standards. 42
C.F.R. § 424.57(c)(8). A provider or supplier is operational if it “has a qualified physical
practice location, is open to the public for the purpose of providing health care related
services, is prepared to submit valid Medicare claims, and is properly staffed, equipped,
and stocked . . . to furnish these items or services.” 42 C.F.R. § 424.502. CMS will
revoke a currently-enrolled Medicare supplier’s billing privileges if CMS or its agent
determines that the supplier is not in compliance with any supplier enrollment standard.
See 42 C.F.R. § 424.57(d); A to Z DME, LLC, DAB No. 2303, at 3 (2010); see also
1866I1CPayday.com, DAB No. 22839, at 13 (2009) (“[F]ailure to comply with even one
supplier standard is a sufficient basis for revoking a supplier’s billing privileges.”).

If an on-site visit reveals that a supplier is no longer operational, or otherwise fails to
meet one of the supplier standards, CMS may revoke the supplier’s Medicare billing

(Facility Photos); P. Ex. 2 (Pharmacy Licenses); P. Ex. 3 (Pharmacy Inspection Report);
P. Ex. 4 (HQAA Award of Accreditation); P. Ex. 5 (Certificate of Liability Insurance); P.
Ex. 6 (Building Inspection Report-Fire Department); P. Ex. 7 (Copies of Account
Payables and Account Receivables for site visit days); P. Ex. 8 (Copies of Delivery Slips,
Invoices, Ongoing Business transactions); P. Ex. 9 (Palmetto GBA October 23, 2012
Reconsideration Decision letter). CMS has moved to exclude these exhibits, and I find
them immaterial and lacking good cause for admission at this late stage of the proceeding
pursuant to 42 C.F.R. § 498.56(e). Nonetheless, they will remain a part of the record for
purposes of any further appeal.
privileges. 42 C.F.R. § 424.535(a)(5)(ii). The effective date of revocation is the date
CMS determines the supplier was no longer operational. 42 C.F.R. § 424.535(g).
Suppliers who have had their billing privileges revoked “are barred from participating in
the Medicare program from the effective date of the revocation until the end of the re-
enrollment bar,” which is ““a minimum of 1 year, but not greater than 3 years depending
on the severity of the basis for revocation.” 42 C.F.R. § 424.535(c).

III. Issue

The issue I decide here is whether CMS is entitled to summary judgment because, when
considering the evidence in the light most favorable to the Petitioner, it is undisputed that
CMS had a legitimate basis to revoke Petitioner’s Medicare billing privileges.

IV. Findings of Fact and Conclusions of Law
A, This case is appropriate for summary judgment.

CMS filed a Motion for Summary Judgment. The Departmental Appeals Board (the
Board) stated the standard for summary judgment as follows:

Summary judgment is appropriate when the record shows that there is no
genuine issue as to any material fact, and the moving party is entitled to
judgment as a matter of law. . .. The party moving for summary judgment
bears the initial burden of showing that there are no genuine issues of material
fact for trial and that it is entitled to judgment as a matter of law. . . . To defeat
an adequately supported summary judgment motion, the non-moving party
may not rely on the denials in its pleadings or briefs, but must furnish
evidence of a dispute concerning a material fact — a fact that, if proven, would
affect the outcome of the case under governing law. . . . In determining
whether there are genuine issues of material fact for trial, the reviewer must
view the evidence in the light most favorable to the non-moving party,
drawing all reasonable inferences in that party’s favor.

Senior Rehab. & Skilled Nursing Ctr., DAB No. 2300, at 3 (2010) (citations omitted).
The role of an administrative law judge (ALJ) in deciding a summary judgment motion
differs from the ALJ’s role in resolving a case after a hearing. The ALJ should not assess
credibility or evaluate the weight of conflicting evidence. Holy Cross Vill. at Notre
Dame, DAB No. 2291, at 4-5 (2009). Petitioner has not disputed the material facts that
CMS alleges: no one was continually present at Petitioner’s location on the dates of the
on-site visits attempted during Petitioner’s posted hours of operation.
B. CMS had a legitimate basis to revoke Petitioner’s supplier number as
non-operational because Petitioner was not staffed during its hours of
operation.

On June 26, 2012, the NSC inspector attempted to conduct an unannounced site
inspection on behalf of CMS at Petitioner’s location during its posted hours of operation.
However, the NSC inspector found that he could not enter because the location was
closed. He noted that the door sign indicated Petitioner’s office hours were Monday
through Friday from 9 a.m. through 6 p.m. There also was a sign posted on the door
stating someone would return by 2 p.m. and instructing deliveries to be left by the door.
CMS Ex. 4 at 7, 9. He returned at 2:45 p.m., but no one was there, and the sign now
stated someone would return at 5 p.m. CMS Ex. 4 at 7, 10. He noted that the door was
locked, he knocked on the door, and there was no response. He also took date-stamped
photographs. CMS Ex. 4 at 9, 10. On June 27, 2012, at 10:30 a.m., the NSC inspector
made a second attempt at a site visit; however, the door was locked again. He noted that
the lights were on so he knocked on the door, but no one appeared to be inside the office.
A sign posted on the door indicated that someone would return by 5 p.m. He took date-
stamped photographs. CMS Ex. 4 at 2, 7, 10. The NSC inspector reported he also tried
to call the number listed on the sign posted on the door, but no one answered. CMS Ex. 4
at 7.

In its request for hearing, Petitioner’s owner states, that at the time of the two site visits,
the location at 1104 W. Russell Street was open with limited hours ‘due to a family
emergency’ and that this location “was temporary [sic] closed at the time of the
inspection visits.” Request for Hearing (RFH) at 1. Petitioner’s owner further contends
that his staff was supporting all calls and services at a second location. RFH at 1. In his
prehearing brief, Petitioner’s owner now contends that Petitioner’s pharmacist opened the
location at 9 a.m., and another staff member was present for part of the day but later went
home feeling ill. At noon the pharmacist reportedly went to a VA hospital, placed a sign
on the inside door indicating someone would return by 2 p.m., returned to the location at
1:45 p.m., and then left at 2:30 p.m. to take care of another client at the VA. He then
reportedly posted the sign saying he would return by 5 p.m. Similarly, Petitioner’s owner
contends that on June 27, 2012, the pharmacist had to make two visits to the VA hospital
and again missed the site inspector when he visited at 10:30 a.m.*

> Petitioner does not state when, if at all, anyone was present at the W. Russell Street
location on June 27". The site inspector reportedly arrived there at 10:30 a.m. to find no
one there and a sign posted on the inside door stating that someone would return by 5
p.m. Petitioner does not dispute the recitation of these facts or that the site inspector
called the telephone number posted on the door and no one answered. By way of
explanation, Petitioner supposes that the call may have been blocked “by the hospital
system” when the pharmacist was in the VA hospital.

Petitioner’s owner concedes that even though there were times during the day of June 26
and June 27th when no one was physically at this location and the doors were locked, the
facility nevertheless was open for business because the outside entrance doors to the
building were open with a message posted on the inside door that someone would return
to the location to service them. Petitioner’s owner further claims that Petitioner’s
telephone number is maintained in the telephone directory together with a toll-free
number available through directory assistance, and, if someone called those numbers, an
employee at its other location would answer. Therefore, Petitioner contends the location
was accessible and open to the public because visitors could see the sign posted and call
the number posted on the sign if they needed assistance. Petitioner does not dispute that
the telephone number on the sign was the cell phone number of the pharmacist.
Petitioner also does not dispute that the site inspector called this number, but the call was
not answered. However Petitioner’s owner then argues that if the NSC inspector had
called the main business number (which was not the number listed on the facility’s door
nor the temporary signage), he is confident that the staff would not have missed that call.
Petitioner’s owner requested to cross-examine the inspector with regard to this disputed
fact, however, I will accept these facts as true for purposes of summary judgment.

Petitioner presented its exhibits in an effort to show that its business was active during
the relevant period and that someone was at the office at some point during the dates of
the two site visits. However, these records and documents do not present a dispute of
material fact as to whether anyone was continually present during Petitioner’s hours of
operation on the dates the inspector attempted the on-site visits.

For a supplier to be “operational,” it must be “open to the public for the purpose of
providing health care related services . . . and [be] properly staffed . . . to furnish these
services.” 42 C.F.R. § 424.502 (emphasis added). Among other things, a DMEPOS
supplier must permit CMS or its agent to conduct on-site inspections to ascertain supplier
compliance with each of the enrollment standards, and the supplier must be accessible
and staffed during posted hours of operation to beneficiaries and to CMS. 42 C.F.R.

§ 424.57(c)(7). A supplier is neither “open to the public” nor “accessible,” if the
supplier location is closed due to staff making patient deliveries or visits. It is incumbent
on Petitioner to make whatever reasonable arrangements are necessary to keep its
business open while allowing for patient consultations and visits. ““A Medicare supplier
differs from a strictly private business in that it is an integral part of a publicly run
program. The requirement that a supplier be open at all times during normal business
hours reflects CMS’s determination that a supplier be available to beneficiaries to meet
their needs and to alleviate their medical conditions.” A to Z DME, LLC, DAB CR1995,
at 6 (2009), aff'd A to Z DME, LLC, DAB No. 2303 (2010).

The Board also has held that the supplier standard “would have no meaning if suppliers
could deviate from their posted hours of operation on a regular basis.” [ta Udeobong,
d/b/a/ Midland Care Med. Supply and Equipment, DAB No. 2324, at 7 (2010). In
Udeobong, the petitioner admitted that it was closed from noon until 1 p.m. every day for
lunch, which was outside of its regularly posted hours of 10 a.m. to 5 p.m., Monday
through Friday. The Board further held that “‘[t]his problem would not be cured even if
. .. its employees posted temporary signs when they left, stating when they would
return.” Jd. Therefore, considering Petitioner concedes that staff was not physically
present at its facility at all times during the posted hours of operation on the dates of the
NSC site visits, I concur with CMS that Petitioner was not operational. CMS and its
contractors have limited resources and cannot be compelled to attempt multiple on-site
inspections during a supplier’s posted business hours to determine if a supplier is
complying with all Medicare requirements.

Cc. Tam unauthorized to grant Petitioner’s request for equitable relief
because it did not meet the legal requirements for enrollment.

Petitioner makes an argument for equitable relief despite not meeting the legal staffing
requirements for being open during posted business hours on the dates of the two
attempted site visits. Specifically, in a response to CMS’s objections to Petitioner’s
exhibits, Petitioner’s owner argues that I should consider that both of his supplier
locations have maintained certain accreditations since 2009. However, Petitioner never
disputed that no one was in fact available at Petitioner’s location at all times during
Petitioner’s hours of operation or claimed that the NSC inspector was at the wrong
address. Even if Petitioner could show that it had been operational for some time prior to
or after the on-site visit, it would not provide a legitimate basis for reversing the
revocation. See Mission Home Health et al., DAB No. 2310, at 7 (2010).

Even though I may sympathize with Petitioner’s predicaments, I am without authority to
order CMS to provide an exemption to Petitioner under the circumstances because
Petitioner’s equitable arguments give me no grounds to restore Petitioner’s billing
privileges. See US Ultrasound, DAB No. 2302, at 8 (2010) (‘[nJeither the ALJ nor the
Board is authorized to provide equitable relief by reimbursing or enrolling a supplier who
does not meet statutory or regulatory requirements.”). Moreover, I have no authority to
declare statutes or regulations invalid or ultra vires. 1866/CPayday.com, L.L.C., DAB
No. 2289, at 14 (2009) (“[a]n ALJ is bound by applicable laws and regulations and may
not invalidate either a law or regulation on any ground.”).

V. Conclusion

I find the undisputed facts establish Petitioner was not operational when it was not open
and accessible on two separate occasions during its posted hours of operation. I grant
CMS’s motion for summary judgment, I deny Petitioner’s motion to dismiss CMS’s
revocation action, and I sustain the revocation of Petitioner’s supplier number for
DMEPOS Medicare billing privileges, effective June 27, 2012. Accordingly, Petitioner
is barred from re-enrolling for two years from the effective date of its revocation.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Phoenix Smoke Shops LLC
d/b/a 55th Avenue Smoke Shop,

Respondent.

Docket No. C-13-578
FDA Docket No. FDA-2013-H-0356

Decision No. CR2782

Date: May 13, 2013

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint
(Complaint) against Respondent, Phoenix Smoke Shops LLC d/b/a 55th Avenue
Smoke Shop, alleging facts and legal authority sufficient to justify the imposition
of a civil money penalty of $5,000. Respondent did not timely answer the
Complaint, nor did Respondent request an extension of time within which to file
an answer. Therefore, I enter a default judgment against Respondent and order
that Respondent pay a civil money penalty in the amount of $5,000.

CTP began this case by serving a Complaint on Respondent and filing a copy of
the Complaint with the Food and Drug Administration’s (FDA) Division of
Dockets Management. The Complaint alleges that Respondent sold cigarettes or
smokeless tobacco in a manner other than a direct, face-to-face exchange with its
customer; failed to ensure specific tobacco-related items complied with applicable
federal regulations; sold tobacco products to a minor or minors; and failed to
verify, by means of photographic identification containing the bearer’s date of
birth, the age of a person purchasing tobacco products, thereby violating the
Federal Food, Drug, and Cosmetic Act (Act) and its implementing regulations
found at 21 C.F.R. Part 1140. CTP seeks a civil money penalty of $5,000.

On March 29, 2013, CTP served the Complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and
accompanying cover letter, CTP explained that, within 30 days, Respondent
should pay the penalty, file an answer, or request an extension of time within
which to file an answer. CTP warned Respondent that, if it failed to take one of
these actions within 30 days, the Administrative Law Judge could, pursuant to 21
C.F.R. § 17.11, issue an initial decision ordering Respondent to pay the full
amount of the proposed penalty. Respondent did not take any of the required
actions within the time provided by regulation.

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

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

e Respondent owns 55th Avenue Smoke Shop, a business that sells tobacco
products and is located at 5540 West Glendale Avenue, Glendale, Arizona
85301.

e On October 18, 2011, an FDA-commissioned inspector observed violations
while inspecting Respondent’s establishment. Specifically, Respondent
violated 21 C.F.R. § 1140.16(c)(1) and (c)(2)(ii) when Respondent’s staff
sold cigarettes or smokeless tobacco in a manner other than a direct, face-
to-face exchange with its customer in a facility that fails to ensure that no
person younger than 18 years of age is present, or permitted to enter, at any
time. Respondent also violated 21 C.F.R. § 1140.14(e) when it failed to
either ensure specific tobacco-related items complied with applicable
federal regulations or remove those items from the establishment.

e On December 22, 2011, CTP issued a Warning Letter to Respondent
detailing the inspector’s observations from October 18, 2011. In addition
to describing the violations, the letter advised Respondent that the FDA
may initiate a civil money penalty action or take other regulatory action
against Respondent if Respondent failed to correct the violations. The
letter also stated that it was Respondent’s responsibility to comply with the
law.

On December 29, 2011, Mr. Ramey Sweis responded, by telephone, to the
Warning Letter on behalf of Respondent. Mr. Sweis stated that all cigarette
tobacco products would be removed from the self-service display and
placed behind the counter.

On January 26 and 30, 2012, FDA-commissioned inspectors documented
additional violations during another inspection of Respondent’s
establishment. Specifically, Respondent violated 21 C.F.R. § 1140.14(a)
when Respondent’s staff sold tobacco products to a minor, and violated 21
C.F.R. § 1140.14 (b)(1) when Respondent’s staff did not verify the minor’s
identification, by means of photographic identification containing the
bearer’s date of birth, before this sale.

On June 11, 2012, CTP initiated a civil money penalty action against
Respondent for the violations observed on October 18, 2011, and January
26 and 30, 2012. In response to the action, Respondent paid the penalty
and the Administrative Law Judge closed the case on August 14, 2012.

On November 16, 2012, FDA-commissioned inspectors documented
additional violations during another inspection of Respondent’s
establishment. Specifically, at approximately 12:21 p.m., a person younger
than 18 years of age was able to purchase a package of “Top Regular
Superoll” cigarette tobacco. Additionally, Respondent’s staff did not verify
the minor’s identification, by means of photographic identification
containing the bearer’s date of birth, before this sale.

On November 21, 2012, CTP issued a Notice of Compliance Check
Inspection to Respondent’s establishment. This notice informed
Respondent that an inspection was conducted on November 16, 2012, and
detailed the violations that the inspectors observed during the inspection.

These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is

misbranded if sold or distributed ii
906(d) of the Act. 21 U.S.C. § 38

n violation of regulations issued under section
7¢(a)(7)(B); 21 C.F.R § 1140.1(b). Under 21

C.F.R. § 1140.16(c)(1), a retailer may sell cigarettes and smokeless tobacco only

in a direct, face-to-face exchange

between the retailer and the consumer.

Examples of methods of sale that are not permitted include vending machines and
self-service displays. However, vending machines and self-service displays are
permitted if located in facilities where the retailer ensures that no person younger
than 18 years of age is present, or permitted to enter, at any time. 21 C.F.R. §
1140.16(c)(2)(ii). Under 21 C.F.R. § 1140.14(e), retailers must ensure that all
self-service displays, advertising, labeling, and other items, that are located in the
retailer’s establishment and that do not comply with the requirements of 21 C.F.R.
Part 1140 are removed or are brought into compliance with that part. Under 21
C.F.R. § 1140.14(a), no retailer may sell cigarettes or smokeless tobacco to any
person younger than 18 years of age. Finally, under 21 C.F.R. § 1140.14(b)(1), a
retailer must verify, by means of photo identification containing the bearer’s date
of birth, that no person purchasing cigarettes or smokeless tobacco is younger than
18 years of age.

Here, Respondent’s staff sold cigarettes or smokeless tobacco in a manner other
than a direct, face-to-face exchange with its customer on October 18, 2011. On
that date, Respondent’s establishment was not exempt from the requirement that
tobacco products be sold only via a direct, face-to-face exchange because minors
were permitted to enter the establishment. Additionally, on October 18, 2011,
Respondent failed to ensure specific tobacco-related items complied with
applicable federal regulations. During two later inspections, one on January 26
and 30, 2012, and another on November 16, 2012, Respondent’s staff sold
cigarettes or smokeless tobacco to a minor or minors. Lastly, Respondent’s staff
did not check the photographic identification of the tobacco purchasers prior to
these transactions as required by the regulations. Respondent’s actions and
omissions on multiple occasions at the same retail outlet constitute violations of
law for which a civil money penalty is merited. Accordingly, I find that a civil
money penalty of $5,000 is permissible under 21 C.F.R. § 17.2 for at least five
violations of 21 C.F.R. Part 1140 within a thirty-six month period.

/s/
Steven T. Kessel
Administrative Law Judge