Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.
K and S Market, LLC and Karwan Sofi,
Respondents.

Docket No. C-14-1898
FDA Docket No. FDA-2014-H-1385

Decision No. CR3474

Date: November 21, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint)
against Respondents, K and S Market, LLC and Karwan Sofi that alleges facts and legal
authority sufficient to justify the imposition of a civil money penalty of $2,000. The
Respondents did not answer the Complaint, nor did Respondents request an extension of
time within which to file an answer. Therefore, I enter a default judgment against the
Respondents and assess a civil money penalty of $2,000.

CTP began this case by serving the Complaint on Respondents and filing a copy of the
Complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The Complaint alleges that Respondents impermissibly sold cigarettes to a
minor, failed to verify that cigarette purchaser was 18 years of age or older, and sold
individual cigarettes thereby violating the Federal Food, Drug, and Cosmetic Act (Act),
21 USC. § 301 et seq., and its implementing regulations, Cigarettes and Smokeless
Tobacco, 21 C.F.R. pt. 1140 (2013). CTP seeks a civil money penalty of $2,000.
On September 23, 2014, CTP served the Complaint on Respondents 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, Respondents should pay the proposed
penalty, file an answer, or request an extension of time within which to file an answer.
CTP warned Respondents that if they failed to take one of these actions within 30 days,
an Administrative Law Judge could, pursuant to 21 C.F.R. § 17.11, issue an initial
decision ordering Respondents to pay the full amount of the proposed penalty.

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

Specifically, CTP alleges the following facts in its Complaint:

e Respondents own K and S Market, LLC, an establishment that sells tobacco
products and is located at 604 Ferry Street, New Haven, Connecticut 06513.
Complaint § 3.

e During a two-part inspection of Respondents’ establishment on August 16, 2013
and August 21, 2013, at an unspecified time, an FDA-commissioned inspector
observed Respondent’s staff “sell[] individual cigarettes. Complaint J 10.

¢ On December 12, 2013, CTP issued a Warning Letter to the Respondents
regarding the inspector’s observations from August 16, 2013 and August 21, 2013.
The letter explained that the observations constituted violations of regulations
found at 21 C.F.R. §1140.14(d) and that the named violations were not necessarily
intended to be an exhaustive list of all violations at the establishment. The
Warning Letter went on to state that if the Respondents failed to correct the
violations, regulatory action by the FDA or a civil money penalty action could
occur and that the Respondents are responsible for complying with the law.
Complaint § 10.

e Karwan Sofi, Respondent’s manager, responded to the Warning Letter on the
Respondents’ behalf by letter on December 19, 2013 . “Mr. Sofi stated that the
Respondents discontinued the sale of individual cigarettes.” Complaint § 11.

e During a subsequent inspection of Respondents’ establishment on February 28,
2014, at approximately 11:31 AM, FDA-commissioned inspectors documented
that “‘a person younger than 18 years of age was able to purchase individual
cigarettes . . .[.]” The inspectors also documented that “the minor’s identification
was not verified before the sale... .” Complaint § 1.
These facts establish that Respondents are liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is misbranded
if distributed or offered for sale in any state in violation of regulations issued under
section 906(d) of the Act. 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b). The
Secretary of the U.S. Department of Health and Human Services issued the regulations at
21 CFR. 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). The regulations prohibit the
sale of cigarettes to any person younger than 18 years of age. 21 C.F.R. § 1140.14(a).
The regulations also require retailers to verify, by means of photo identification
containing a purchaser’s date of birth, that no cigarette purchasers are younger than

18 years of age. 21 C.F.R. § 1140.14(b)(1). Additionally, the regulations prohibit the
sale of individual cigarettes. 21 C.F.R. § 1140.14(d).

Taking the above alleged facts as true, Respondents violated the prohibition against
selling individual cigarettes, 21 C.F.R. § 1140.14(d) during a two-part inspection on
August 16, 2013 and August 21, 2013, and on February 28, 2014. On February 28, 2014,
the Respondents also violated the prohibition against selling cigarettes to persons
younger than 18 years of age, 21 C.F.R. § 1140.14(a); and the requirement that retailers
verify, by means of photo identification containing a purchaser’s date of birth, that no
cigarette purchasers are younger than 18 years of age. 21 C.F.R. § 1140.14(b)(1).
Therefore, Respondents’ actions constitute violations of law that merit a civil money
penalty.

CTP has requested a fine of $2,000, which is a permissible fine under the regulations.
21 C.F.R. § 17.2. Therefore, I find that a civil money penalty of $2,000 is warranted and
so order one imposed.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Theresa Sikole, N.P.
(NPI: 1225472798),
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-1540
ALJ Ruling No. 2015-5

Date: November 20, 2014

DISMISSAL

Petitioner, Theresa Sikole, N.P., requested a hearing to challenge the effective date of her
participation in the Medicare program. The Centers for Medicare & Medicaid Services
(CMS) now moves to dismiss her hearing request. CMS argues that Petitioner has no
right to a hearing, because the Medicare contractor dismissed her reconsideration request
as untimely and that dismissal is not a reviewable determination.

For the reasons set forth below, I grant CMS’s motion and dismiss Petitioner’s hearing
request pursuant to 42 C.F.R. § 498.70(b).

Background

Petitioner is a nurse practitioner who began working for TridentUSA Mobile Clinical
Services, LLC, in April 2013. On May 7, 2013, Mobilex, a subsidiary of TridentUSA,
filed two enrollment applications (a CMS-855I (supplier enrollment) and a CMS-855R
(reassignment of benefits)) on behalf of Petitioner and requested April 23, 2013, as the
effective date for her enrollment. CMS Exhibits (Exs.) 11-12. Ina letter dated August 5,

2013, the Medicare contractor rejected Petitioner’s enrollment applications because she
did not timely provide information that the contractor had requested earlier. CMS Ex. 9.

On September 9, 2013, Mobilex filed a new set of enrollment applications on behalf of
Petitioner, and again requested April 23, 2013 as the effective date for her enrollment.
CMS Exs. 7-8. By notice letter dated November 18, 2013, the contractor approved
Petitioner’s enrollment and granted her billing privileges retroactive to August 10, 2013.
CMS Ex. 4. The November 18 notice advised Petitioner that, if she did not agree with
that initial determination, she had to request reconsideration within 60 days of the
notice’s date. CMS Ex. 4 at 3, 6.

On March 14, 2014, 116 days after the initial determination, Petitioner filed a request for
reconsideration with the Medicare contractor. CMS Ex. 3. She argued that the contractor
should establish an earlier effective date for her Medicare enrollment based on her earlier,
but rejected May 2013 application. By letter dated June 20, 2014, the contractor hearing
officer dismissed Petitioner’s reconsideration request as untimely. CMS Ex. 1. The
notice correctly did not include further appeal rights.

Nevertheless, on July 8, 2014, Petitioner filed her request for hearing before an
administrative law judge. CMS now moves to dismiss Petitioner’s hearing request,
which, after first failing to file any response, Petitioner now opposes. Along with its
motion to dismiss, CMS filed 12 exhibits (CMS Exs. 1-12). Petitioner, in response to a
show cause order that I issued on October 22, 2014, filed her opposition to CMS’s
motion as well as six exhibits, labeled “Affidavit of Tina Fidler” and P. Exs. 1-5. While
I am not convinced Petitioner has shown good cause to accept her untimely submissions,
that issue is ultimately moot because, in any event, I do not have jurisdiction to consider
the merits of this case."

Discussion

To receive Medicare payments for services furnished to program beneficiaries, a
Medicare supplier must be enrolled in the Medicare program. 42 C.F.R. § 424.505. To
enroll, a prospective supplier must complete and submit an enrollment application.

42 C.F.R. §§ 424.510(d)(1), 424.515(a). When CMS determines that a prospective
supplier meets the applicable enrollment requirements, it grants her Medicare billing
privileges. For suppliers such as Petitioner Sikole, the effective date for billing privileges

' Petitioner, through her recently-retained counsel, suggests that her being pro se during
most of this case is good cause for me to accept her submissions out of time. I don’t
accept Petitioner’s premise that a law degree is necessary to understand the meaning of a
deadline. Petitioner missed hers and has not offered any cause, let alone good cause,
explaining why. Nevertheless, I have read Petitioner’s submissions in making this ruling,
and find that they do not change the outcome.
“is the later of the date of filing” a subsequently approved enrollment application or “the
date an enrolled physician . . . first began furnishing services at a new practice location.”
42 C.F.R. § 424.520(d) (emphasis added). The regulations do not permit CMS or its
contractor to establish a supplier’s effective date based on the filing date of a rejected
enrollment application; the applicable regulation hinges on the receipt of a subsequently
approved application. Id.; Karthik Ramaswamy, M.D., DAB No. 2563 at 4 (2014).

CMS’s determination as to the effective date of enrollment is an “initial determination”
that is subject to review under the procedures set forth in 42 C.F.R. Part 498. 42 C.F.R.
§§ 498.3(a)(1), (b)(15). A supplier or prospective supplier dissatisfied with an
enrollment-related initial determination may request reconsideration by filing a written
request within 60 days from receipt of the notice of the initial determination. 42 C.F.R.
§§ 498.5(/)(1); 498.22. If CMS (or its contractor) receives a properly-filed request for
reconsideration, it makes a reconsidered determination that affirms or modifies the initial
determination. Jd. § 498.24(c). A supplier or prospective supplier dissatisfied with an
enrollment-related reconsidered determination is then entitled to a hearing before an
administrative law judge. Jd. § 498.5(/)(2). The regulations do not provide for a hearing
in the absence of a reconsidered determination. See Denise A. Hardy, D.P.M., DAB No.
2464 at 4-5 (2012); Hiva Vakil, M.D., DAB No. 2460 at 4-5 (2012). A request for
reconsideration that the contractor rejects or dismisses does not constitute a “reconsidered
determination” that triggers the right to a hearing before an administrative law judge. See
42 C.F.R. §§ 498.24, 498.5(/)(2); see also Ramaswamy, DAB No. 2563 at 7.

Here, the Medicare contractor dismissed Petitioner’s request for reconsideration as
untimely. CMS Ex. 1. Because the dismissal of a reconsideration request is not a
“reconsidered determination,” the regulations do not provide for any further
administrative review. Petitioner, therefore, has no right to a hearing. I do not have
jurisdiction to address Petitioner’s claim that she is entitled to an earlier effective date for
her Medicare enrollment.

Conclusion
Neither CMS nor its contractor issued a “reconsidered determination” in this case.

Petitioner, therefore, does not have a right to an ALJ hearing. I dismiss her hearing
request pursuant to 42 C.F.R. 498.70(b).

/s/

Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2014-H-1382)

Complainant,
v.

Bootheel Petroleum Co., Inc.
d/b/a B J’s Kwik Shop,

Respondent.
Docket No. C-14-1895
Decision No. CR3472

Date: November 20, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Bootheel Petroleum Co., Inc. d/b/a B J’s Kwik Shop, at 623
North State Route 25, Dexter, Missouri 63841, and by filing a copy of the complaint with
the Food and Drug Administration’s (FDA) Division of Dockets Management. The
complaint alleges that B J’s Kwik Shop impermissibly sold a tobacco product to a minor,
and failed to verify, by means of photo identification containing a date of birth, that the
tobacco purchaser was 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
CFR. pt. 1140. An Administrative Law Judge (ALJ) has previously found Respondent
to have committed two violations of regulations found at 21 C.F.R. pt. 1140. See
Bootheel Petroleum Co., Inc. d/b/a B J’s Kwik Shop, DAB CR3037, at 2-3 (2014);
Complaint J 11. Therefore, CTP seeks to impose a $2,000 civil money penalty against
Respondent BJ’s Kwik Stop.
As provided for in 21 C.F.R. §§ 17.5 and 17.7, on September 24, 2014, CTP served the
complaint on Respondent B J’s Kwik Shop 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 B J’s Kwik Shop has neither filed an answer within the time prescribed, nor
requested an extension of time within which to file an answer. Pursuant to 21 C.F.R.

§ 17.11, L assume that the facts alleged in the complaint (but not its conclusory
statements) are true. Specifically:

e CTP previously issued a warning letter to Respondent BJ’s Kwik Shop on March
28, 2013, citing a violation of 21 C.F.R. pt. 1140 on March 12, 2013, at
Respondent’s business establishment, 623 North State Route 25, Dexter, Missouri
63841.

e¢ On October 24, 2013, CTP initiated a civil money penalty action against
Respondent, CRD Docket Number C-14-41, FDA Docket Number FDA-2013-H-
1252. CTP cited two violations of 21 C.F.R. pt. 1140(a) within a twelve month
period.

¢ On December 19, 2013, the previous civil money penalty action concluded when
the ALJ issued an Initial Decision and Default Judgment against the Respondent in
which he found Respondent committed two violations of 21 C.F.R. pt. 1140 by
selling cigarettes to a minor on two separate occasions. The Initial Decision and
Default Judgment became final and binding on January 18, 2014. See Bootheel
Petroleum Co., Inc. d/b/a B J’s Kwik Shop, DAB CR3037, at 2-3 (2014);
Complaint § 11.

e At approximately 11:49 a.m. on March 4, 2014, at Respondent’s business
establishment, 623 North State Route 25, Dexter, Missouri 63841,
FDA-commissioned inspectors documented that a person younger than 18 years of
age was able to purchase a package of Grizzly Long Cut Premium Wintergreen
smokeless tobacco. 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 B J’s Kwik Shop’s liability under the Act. The Act
prohibits misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is
misbranded if sold or distributed in violation of regulations issued under § 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 CFR. pt. 1140 under § 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 $2,000 civil money penalty is permissible under 21 C.F.R. § 17.2.
Order

For these reasons, I enter default judgment in the amount of $2,000 against Respondent
Bootheel Petroleum Co., Inc. d/b/a B J’s Kwik Shop. 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


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2014-H-1404)

Complainant,
v.

IT, Inc.
d/b/a Mobil Mart,

Respondent.
Docket No. C-14-1915
Decision No. CR3471
Date: November 20, 2014
INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, IT, Inc. d/b/a Mobil Mart at 1598 West Ogden Avenue,
Naperville, Illinois 60540 and by filing a copy of the complaint with the Food and Drug
Administration’s (FDA) Division of Dockets Management. The complaint alleges that
Mobil Mart unlawfully utilized a self-service display of smokeless tobacco in a non-
exempt facility, sold cigarettes to a minor, and failed to verify, by means of photo
identification containing a date of birth, that a cigarette purchaser was 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
$250 civil money penalty against Respondent Mobil Mart.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on September 24, 2014, CTP served the
complaint on Respondent Mobil Mart 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 Mobil Mart has neither filed an answer within the time prescribed, nor
requested an extension of time within which to file an answer. Pursuant to 21 C.F.R.
§ 17.11, L assume that the facts alleged in the complaint (but not its conclusory
statements) are true. Specifically:

e At Respondent’s business establishment, 1598 West Ogden Avenue, Naperville,
Illinois 60540, on April 26, 2013, at approximately 2:37 PM, FDA-commissioned
inspectors observed Respondent’s staff selling a package of Newport Box 100s
cigarettes to a person younger than 18 years of age. The inspectors also observed
that Respondent’s staff failed to verify, by means of photo identification
containing the bearer’s date of birth, that the purchaser of a tobacco product was
18 years of age or older;

e Ina warning letter issued on May 9, 2013, CTP informed Respondent of the
inspector’s observations from April 26, 2013, and that such actions violate federal
law, 21 C.F.R. § 1140.14(a) and (b)(1). The letter further warned that if
Respondent failed to correct its violations, the FDA could impose a civil money
penalty or take other regulatory action;

e At Respondent’s business establishment, 1598 West Ogden Avenue, Naperville,
Illinois 60540, on March 13, 2014, at an undisclosed time, FDA-commissioned
inspectors documented the presence of a self-service display of smokeless
tobacco. The inspectors also documented that the establishment was open to the
general public during business hours.

These facts establish Respondent’s liability under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is misbranded
if sold or distributed in violation of regulations issued under section 906(d) of the Act.

21 USC. § 387£(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 CFR. pt. 1140 under section 906(d) of the Act. 21 U.S.C. § 387a-1; see 21 U.S.C.

§ 387£(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). Under 21 C.F R.

§ 1140.14(a), no retailer may sell cigarettes or smokeless tobacco to any person younger
than 18 years of age. Under 21 C-F.R. § 1140.14(b)(1), retailers must verify, by means of
photo identification containing the bearer’s date of birth, that no cigarette or smokeless
tobacco purchaser is younger than 18 years of age. The regulations also require a retailer
to sell cigarettes and smokeless tobacco only in a direct, face-to-face exchange without
the assistance of any electronic or mechanical device (such as a vending machine).

21 CFR. § 1140.16(c).
A $250 civil money penalty is permissible under 21 C.F.R. § 17.2.

Order

For these reasons, I enter default judgment in the amount of $250 against Respondent, IT,
Inc. d/b/a Mobil Mart. 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


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Jones 1902 Realty LLC,
d/b/a Jones Tavern

Respondent.

Docket No. C-15-9
FDA Docket No. FDA-2014-H-1499

Decision No. CR3470

Date: November 20, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint)
against Respondent, Jones 1902 Realty LLC, d/b/a Jones Tavern that alleges facts and
legal authority sufficient to justify the imposition of a civil money penalty of $2,250.
Respondent did not answer the Complaint, nor did Respondent request an extension of
time within which to file an answer. Therefore, I enter a default judgment against
Respondent and assess a civil money penalty of $2,250.

CTP began this case by serving the Complaint on Respondent and filing a copy of the
Complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The Complaint alleges that Respondent impermissibly sold cigarettes to
minors, failed to verify that cigarette purchasers were 18 years of age or older, utilized a
vending machine to sell regulated tobacco products in a non-exempt facility, and offered
tobacco products for sale using false or misleading advertising, thereby violating the
Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its
implementing regulations, Cigarettes and Smokeless Tobacco, 21 C.F.R. pt. 1140 (2013).
CTP seeks a civil money penalty of $2,250.

On October 8, 2014, CTP served the Complaint on Respondent by United Parcel Service,
pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and accompanying cover letter,
CTP explained that within 30 days, Respondent should pay the proposed penalty, file an
answer, or request an extension of time within which to file an answer. CTP warned
Respondent that if it failed to take one of these actions within 30 days, an Administrative
Law Judge could, pursuant to 21 C.F.R. § 17.11, issue an initial decision ordering
Respondent to pay the full amount of the proposed penalty.

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

Specifically, CTP alleges the following facts in its Complaint:

e Respondent owns Jones Tavern, an establishment that sells tobacco products and
is located at 1902 Lafayette Street, Scranton, Pennsylvania 18504. Complaint § 3.

e During an inspection of Respondent’s establishment on September 29, 2013, at
approximately 4:57 PM, an FDA-commissioned inspector observed that “a person
younger than 18 years of age was able to purchase a package of Newport Box
100s cigarettes ... [.]” The inspector also observed that “the minor’s
identification was not verified before the sale ... [.]” Finally, the inspector
observed that the minor “was able to . . .purchase a tobacco product from [a]
vending machine.” Complaint § 11.

¢ On November 14, 2013, CTP issued a Warning Letter to Respondent regarding the
inspector’s observations from September 29, 2013. The letter explained that the
observation constituted violations of regulations found at 21 C.F.R. § 1140.14(a),
(b)(1), and (c), and that the named violations were not necessarily intended to be
an exhaustive list of all violations at the establishment. The Warning Letter went
on to state that if Respondent failed to correct the violations, regulatory action by
the FDA or a civil money penalty action could occur and that Respondent was
responsible for complying with the law. Complaint § 11.

e Sandra Golay responded to the Warning Letter by a January 7, 2014, email and a
January 15, 2014, telephone call. “Ms. Golay stated that the establishment’s
corrective actions were to post signage on [the] entrance door prohibiting anyone
under the age of 18 from entering the establishment and to instruct all bartenders
to check identification of anyone entering the establishment that looks under the
age of 27 and attempts to purchase cigarettes.” Complaint § 12.

e During a subsequent two-part inspection of Respondent’s establishment conducted
on March 23, 2014, and May 12, 2014, FDA-commissioned inspectors
documented four violations: (1) the sale of Newport Box 100s cigarettes to a
minor on March 23, 2014 at 3:58 PM; (2) a violation 21 C.F.R. § 1140.14(b)(1), as
a result of not verifying the minor’s identification before the March 23, 2014 sale;
(3) a violation of 21 C.F.R. § 1140.14(c), at an unspecified date and time, when “a
person younger than 18 years of age was able to enter the establishment and
purchase a tobacco product from the vending machine;” and (4) at an unspecified
date and time, “[t]he cigarettes [in the vending machine in Respondent’s
establishment] stocked to correspond with the ‘Camel Lights Hard Pack’ and
“Marlboro Lights Low in Tar and Nicotine’ buttons [were] not labeled as such,”
and “the buttons [used] the terms ‘low tar’ and ‘light.’” Complaint

gi.

These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is misbranded
if distributed or offered for sale in any state in violation of regulations issued under
section 906(d) of the Act. 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b). A tobacco
product is also misbranded under section 903 of the Act if its labeling is false or
misleading in any particular or if it is offered for sale and its advertising is false or
misleading in any particular. 21 U.S.C. § 387c(a)(1) and (a)(7)(A). 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). The regulations prohibit the sale of cigarettes
to any person younger than 18 years of age. 21 C.F.R. § 1140.14(a). The regulations
also require retailers to verify, by means of photo identification containing a purchaser’s
date of birth, that no cigarette purchasers are younger than 18 years of age. 21 C.F.R.

§ 1140.14(b)(1). Moreover, the regulations require retailers to sell cigarettes or
smokeless tobacco exclusively in a direct, face-to-face exchange without the assistance of
any mechanical device in a facility that does not ensure that no person younger than 18
years of age is present or permitted to enter, at any time. 21 C.F.R. § 1140.14(c).

Taking the above alleged facts as true, Respondent violated the prohibition against selling
cigarettes to persons younger than 18 years of age, 21 C.F.R. § 1140.14(a), on September
29, 2013, and March 23, 2013. Those same dates, Respondent violated the requirement
that retailers verify, by means of photo identification containing a purchaser’s date of
birth, that no cigarette purchasers are younger than 18 years of age. 21 C.F.R.

§ 1140.14(b). On September 29, 2013, and again during a two-part inspection on March
23,2014, and May 12, 2014, Respondent then impermissibly maintained a vending
machine in a facility that allows minors to enter, in violation of 21 C.F.R. § 1140.14(c).
Finally, during a two-part inspection on March 23, 2014, and May 12, 2014, Respondent
violated the prohibition against offering tobacco products for sale using false or
misleading advertising, 21 U.S.C. § 387c, when it sold cigarette packages that did not
correspond to their labels on the vending machine and contained the labels “low tar” and
“light.”

CTP has requested a civil fine of $2,250, which is a permissible fine under the
regulations. 21 C.F.R. § 17.2. Therefore, I find that a civil penalty of $2,250 is
warranted and so order one imposed.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Richard A. Felsing, DC,
(PTAN: NA2119),
(NPI: 1518911379)
Petitioner,
v.
Centers for Medicare & Medicaid Services
Docket No. C-14-1303
Decision No. CR3469

Date: November 20, 2014

DECISION

Petitioner, Richard A. Felsing, DC, is a chiropractor, who practices in the State of
Nebraska. He participated in the Medicare program as a supplier of services. His license
to practice expired on August 1, 2012, and was not reinstated until October 7, 2013. He
did not report the loss of his license to the Medicare contractor, but continued to submit
claims to the program. When the Medicare contractor learned of the gap in licensing, it
revoked his Medicare billing privileges, effective August 1, 2012. Petitioner appeals the
revocation.

CMS properly revoked Petitioner Felsing’s Medicare billing privileges because he was
not properly licensed.

Background
Until his billing privileges were revoked, Petitioner participated in the Medicare program

as a supplier of services. See 42 C.F.R. § 410.21. Ina letter dated December 9, 2013, the
Medicare contractor, Wisconsin Physicians Service, advised Petitioner Felsing that his
Medicare privileges were revoked effective August 1, 2012, because his license to
practice expired and because he did not report that his license was inactive. CMS Ex. 1.
Petitioner requested reconsideration. In a reconsidered determination, dated April 18,
2014, a Medicare Hearing Officer upheld the revocation. CMS Ex. 4. Petitioner timely
appealed, and that appeal is now before me.

The parties filed cross-motions for summary judgment. However, because neither party
has any witnesses to present, an in-person hearing would serve no purpose. See
Acknowledgment and Pre-hearing Order at 5 (§ 8) and 6 (§ 10). This matter may
therefore be decided based on the written record, without considering whether the
standards for summary judgment are satisfied.

CMS submitted a brief and four exhibits (CMS Exs. 1-4). In addition to his hearing
request, Petitioner submitted a letter brief, which he marked as P. Ex. 1, and one exhibit,
which he marked as P. Ex. 2. In the absence of any objections, I admit into evidence
CMS Exs. 1-4 and P. Ex. 2. I consider the arguments presented in Petitioner’s letter brief
but do not admit it as an exhibit.

Discussion

Because Petitioner had no license to practice, and he failed
to report that he had no license, CMS properly revoked his
Medicare enrollment. 42 C.F.R. §§ 424.535(a)(1) and
(ay(9).!

Medicare regulations allow CMS to revoke a Medicare supplier’s enrollment, if the
supplier no longer meets the enrollment requirements for a supplier of its type. 42 C.F.R.
§ 424.535(a)(1). Those requirements include complying with federal and state licensure
provisions. 42 C.F.R. § 424.516(a)(2). A chiropractor, such as Petitioner Felsing, must
obviously be licensed by the state in which he practices. 42 C.F.R. § 410.20(b); see

42 CFR. § 410.21 (a).

Here, because Petitioner was without a license, CMS properly revoked his billing
privileges pursuant to 42 C.F.R. § 424.535(a)(1).

Regulations also allow CMS to revoke a supplier’s enrollment if he does not comply with
reporting requirements, including any adverse legal action or change in enrollment.
42 CFR. § 424.535(a)(9); 42 C.F.R. § 424.516(d).

' T make this one finding of fact/conclusion of law.
Petitioner concedes that his license lapsed and that he did not report that lapse. He
explains that he inadvertently allowed his license to lapse because he changed offices and
did not receive a renewal notice from the state licensing authorities. When he learned
that his license was inactive, he took the steps necessary to regain it (i.e, he took courses
and an exam and he paid a fine). Petitioner points to his long and exemplary record as a
chiropractor and the hardship that the revocation places on the patient population he
serves. He insists that he did not intend to defraud or mislead and asks for “leniency.”

Ihave no reason to doubt that Petitioner Felsing made an honest, albeit serious, mistake.
Nevertheless, as he concedes, he is responsible for maintaining his license. If a supplier
is without a valid license, CMS is authorized to revoke Medicare enrollment. The
practitioner’s “inability to practice . . . for any length of time” triggers his noncompliance
with the Medicare enrollment requirements and authorizes revocation of his billing

privileges.” Akram A. Ismail, M.D., DAB No. 2429 at 8 (2011).

That he failed to report the license lapse provides CMS an alternative justification for
revoking Petitioner’s Medicare enrollment. 42 C.F.R. § 424.535(a)(9).

Conclusion

Because Petitioner’s medical license lapsed and he failed to report it, CMS properly
revoked his billing privileges under 42 C.F.R. §§ 424.535(a)(1) and 424.535(a)(9).

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.
M and F Smoke Shop LLC,
Respondent.

Docket No. C-14-1989
FDA Docket No. FDA-2014-H-1466

Decision No. CR3465

Date: November 18, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint)
against Respondent, M and F Smoke Shop LLC that alleges facts and legal authority
sufficient to justify the imposition of a civil money penalty of $500. Respondent did not
answer the Complaint, nor did Respondent request an extension of time within which to
file an answer. Therefore, I enter a default judgment against Respondent and assess a
civil money penalty of $500.

CTP began this case by serving the Complaint on Respondent and filing a copy of the
Complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The Complaint alleges that Respondent used a self-service display in a
non-exempt location, impermissibly sold cigarettes to a minor, and failed to verify that a
cigarette purchaser was 18 years of age or older, thereby violating the Federal Food,
Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its implementing regulations,
Cigarettes and Smokeless Tobacco, 21 C.F.R. pt. 1140 (2013). CTP seeks a civil money
penalty of $500.

On October 7, 2014, CTP served the Complaint on Respondent by United Parcel Service,
pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and accompanying cover letter,
CTP explained that within 30 days, Respondent should pay the proposed penalty, file an
answer, or request an extension of time within which to file an answer. CTP warned
Respondent that if it failed to take one of these actions within 30 days, an Administrative
Law Judge could, pursuant to 21 C.F.R. § 17.11, issue an initial decision ordering
Respondent to pay the full amount of the proposed penalty.

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

Specifically, CTP alleges the following facts in its Complaint:

e Respondent owns M and F Smoke Shop, an establishment that sells tobacco
products and is located at 3458 West Van Buren Street, Suite 101, Phoenix,
Arizona 85009. Complaint § 3.

e During an inspection of Respondent’s establishment on November 4, 2013, at an
unspecified time, an FDA-commissioned inspector observed that the
establishment, which was open to minors, “had cigarette tobacco available on
shelves in an area of the establishment open to all customers.” Complaint § 10.

¢ On January 9, 2014, CTP issued a Warning Letter to Respondent regarding the
inspector’s observation from November 4, 2013. The letter explained that the
observation constituted a violation of regulations found at 21 C.F.R. § 1140.16(c),
and that the named violation was not necessarily intended to be an exhaustive list
of all violations at the establishment. The Warning Letter went on to state that if
Respondent failed to correct the violations, regulatory action by the FDA or a civil
money penalty action could occur and that Respondent was responsible for
complying with the law. Complaint J 10.

e On January 10,2014, Andrew Hilton, who identified himself as the manager of M
and F Smoke Shop, responded to the Warning Letter via telephone. Hilton stated
that “the establishment [was] now restricted to customers [18] years of age or
older at all times, and that he and the establishment’s staff [would] enforce the
new restriction.” Complaint § 11.
e During a subsequent inspection of Respondent’s establishment conducted on
March 19, 2014, at approximately 10:56 AM, FDA-commissioned inspectors
documented that “a person younger than 18 years of age was able to purchase a
package of Marlboro cigarettes ... [.]” The inspectors also documented that the
“minor’s identification was not verified before the sale ....”

These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is misbranded
if distributed or offered for sale in any state in violation of regulations issued under
section 906(d) of the Act. 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b). The
Secretary of the U.S. Department of Health and Human Services issued the regulations at
21 CFR. 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). The regulations prohibit the
sale of cigarettes to any person younger than 18 years of age. 21 C.F.R. § 1140.14(a).
The regulations also require retailers to verify, by means of photo identification
containing a purchaser’s date of birth, that no cigarette purchasers are younger than

18 years of age. 21 C.F.R. § 1140.14(b)(1). Moreover, the regulations dictate that a
retailer may sell cigarettes and smokeless tobacco only in a direct, face-to-face exchange
between the retailer and the consumer. 21 C.F.R. § 1140.16(c). A self-service display is
a method of sale expressly prohibited by the regulations unless the self-service display is
located in a facility in which 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).

Taking the above alleged facts as true, on November 4, 2013, Respondent violated

21 CFR. § 1140.16(c) by utilizing a self-service display to sell regulated tobacco
products in a facility that permitted persons younger than 18 years of age to enter.
Respondent then violated the prohibition against selling cigarettes to persons younger
than 18 years of age, 21 C.F.R. § 1140.14(a), on March 19, 2014. Finally, on March 19,
2014, Respondent also violated the requirement that retailers verify, by means of photo
identification containing a purchaser’s date of birth, that no cigarette purchasers are
younger than 18 years of age. 21 C.F.R. § 1140.14(b)(1). Respondent’s actions thus
constitute violations of law that merit a civil money penalty.

CTP has requested a civil fine of $500, which is a permissible fine under the regulations.
21 CFR. § 17.2. Therefore, I find that a civil penalty of $500 is warranted and so order
one imposed.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Frank Rivera,
(O.L. File No. H-14-40267-9),

Petitioner,
v.
The Inspector General.
Docket No. C-14-1535
ALJ Ruling No. 2015-3

Date: November 17, 2014

RULING DISMISSING REQUEST
FOR HEARING

I dismiss the hearing request of Petitioner, Frank Rivera. Petitioner has not raised any
issue that I have authority to hear and decide.

The Inspector General (1.G.) excluded Petitioner from participating in Medicare, State
health care programs (Medicaid), and all other federally funded health care programs
based on the mandate contained in section 1128(a)(1) of the Social Security Act (Act).
This section directs the exclusion of any individual who is convicted of a criminal offense
related to the delivery of an item or service under Medicare or a Medicaid program. The
1.G. excluded Petitioner for a minimum period of five years. That is the minimum
exclusion period required by the Act for individuals who are excluded pursuant to section
1128(a)(1). Act § 1128(c)(3)(B).

Petitioner requested a hearing. In his hearing request he challenged only the length of his
exclusion, contending that it was unreasonable. He did not deny that he had been
convicted of an offense within the meaning of section 1128(a)(1) nor did he challenge the
1.G.’s authority to exclude him.
The I.G. moved to dismiss Petitioner’s hearing request on the grounds that Petitioner had
failed to state a reviewable issue. I directed Petitioner to file a brief answering the I.G.’s
motion and I afforded the I.G. the opportunity to reply. Petitioner filed a brief and the
1.G. replied. The I.G. also filed six exhibits to support its arguments, which are identified
as I.G. Ex. 1 — 1.G. Ex. 6. I receive these into the record.

In cases involving exclusions imposed pursuant to section 1128(a)(1) there are only two
potential issues that I have the authority to hear and decide: first, whether the exclusion
is for a crime that mandates exclusion pursuant to the section; and second, whether the
length of the exclusion — if it is for a period of more than five years — is reasonable. I
have no authority to review the I.G.’s exercise of discretion to exclude an individual nor
do I have authority to review the I.G.’s exercise of discretion as to the date when an
exclusion begins. 42 C.F.R. § 1005.4(c)(7). Lalso lack the authority to reduce an
exclusion period to a length that is shorter than the five-year statutory minimum period.
Act § 1128(c)(3)(B).

As I have stated, Petitioner concedes that he was convicted of a crime within the reach of
section 1128(a)(1). The only issue that Petitioner raised in his hearing request and brief
is whether the five-year exclusion is reasonable in his case. I do not have the authority to
review that contention inasmuch as the exclusion imposed by the I.G. is for the five-year
statutory minimum period.

Petitioner also raises issues that address the timing of his exclusion. He asserts that the
New York Medicaid program had excluded him more than five years prior to the I.G.
excluding him. He asserts that it is unfair for the I.G. now to exclude him, arguing,
essentially, that the I.G. is tacking on a second period of exclusion to the one that was
imposed previously.

That also is an argument that I have no authority to consider because the timing of the
commencement of an exclusion period is, as I have stated, a non-reviewable act of
discretion by the I.G. That said, it is clear from the facts that the I.G. actually imposed
the mandatory exclusion in this case in close proximity to the date of Petitioner’s
conviction of the crime for which he was excluded. The undisputed facts are that
Petitioner was finally convicted of a crime related to the New York Medicaid program on
July 2, 2013. 1.G. Ex. 5; 1.G. Ex. 6. The 1.G. excluded Petitioner on June 30, 2014, less
than a year after the date of his conviction.

What Petitioner really asserts is that it is unfair that he be excluded by the New York
Medicaid program and then, nearly five years later, be excluded by the I.G. But, the
1.G.’s mandate to exclude Petitioner is unrelated to the actions taken by the New York
Medicaid program. The I.G.’s mandate derives from Petitioner’s 2013 conviction and
not from the actions taken previously by State authorities. Moreover, the Act mandates
the I.G.’s exclusion determination. The I.G. must exclude Petitioner irrespective of the
actions taken by New York authorities, it could not exclude Petitioner pursuant to section
1128(a)(1) until his conviction became final, and it was mandated at that point to exclude
Petitioner for a minimum period of five years. All of this is required by law and I have
no authority to modify or even to address it.

Finally, Petitioner argues that he should at least be given credit for his State-imposed
exclusion and that the time that he was excluded by the State of New York should be
subtracted from the period of the I.G.-imposed exclusion. The I.G. has no discretion to
do that. Furthermore, I have no authority to address that argument for the reasons that I
have explained.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2014-H-1363)

Complainant,
v.

Chungu Wembi
d/b/a Wembi-6 Grocery,

Respondent.
Docket No. C-14-1874
Decision No. CR3463

Date: November 14, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Chungu Wembi d/b/a Wembi-6 Grocery, at 269 South Hoskins
Road, Charlotte, North Carolina 28208, and by filing a copy of the complaint with the
Food and Drug Administration’s (FDA) Division of Dockets Management. The
complaint alleges that Wembi-6 Grocery impermissibly made individual cigarettes
available for sale on multiple occasions, 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 $250 civil money penalty against Respondent Wembi-6
Grocery.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on September 17, 2014, CTP served the
complaint on Respondent Wembi-6 Grocery 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 Wembi-6 Grocery has neither filed an answer within the time prescribed, nor
requested an extension of time within which to file an answer. Pursuant to 21 C.F.R.

§ 17.11, L assume that the facts alleged in the complaint (but not its conclusory
statements) are true. Specifically:

e Atan undisclosed time on August 3, 2013, at Respondent’s business
establishment, 269 South Hoskins Road, Charlotte, North Carolina 28208, an
FDA-commissioned inspector observed the presence of individual unpackaged
cigarettes. Specifically, Respondent’s staff confirmed the cigarettes were
available for individual purchase for $0.35;

e Ina warning letter issued on October 3, 2013, CTP informed Respondent of the
inspector’s August 3, 2013 observation, and that such an action violates federal
law, 21 C.F.R. § 1140.14(d). The letter further warned that Respondent’s failure
to correct its violation could result in a civil money penalty or other regulatory
action;

e Atan undisclosed time on March 12, 2014, at Respondent’s business
establishment, 269 South Hoskins Road, Charlotte, North Carolina 28208, FDA-
commissioned inspectors documented the presence of individual unpackaged
cigarettes for sale. Specifically, Respondent’s staff indicated the cigarettes were
on sale for $0.35.

These facts establish Respondent Wembi-6 Grocery’s liability under the Act. The Act
prohibits misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is
misbranded if sold or distributed in violation of regulations issued under § 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 CFR. pt. 1140 under § 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(d) no retailer may break or otherwise open any cigarette or smokeless tobacco
package to sell or distribute individual cigarettes.

A $250 civil money penalty is permissible under 21 C.F.R. § 17.2.
Order

For these reasons, I enter default judgment in the amount of $250 against Respondent
Chungu Wembi d/b/a Wembi-6 Grocery. 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


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2014-H-1248)

Complainant
v.

Orange Petromart L.L.C.
d/b/a Orange Petromart / Mobil Mart,

Respondent.
Docket No. C-14-1767
Decision No. CR3459

Date: November 13, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Orange Petromart L.L.C. d/b/a Orange Petromart / Mobil
Mart, at 248 Boston Post Road, Orange, Connecticut 06477, and by filing a copy of the
complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The complaint alleges that Orange Petromart / Mobil Mart impermissibly
sold cigarettes to a minor, utilized a self-service display in a non-exempt facility, and
failed to verify, by means of photo identification containing a date of birth, that a
cigarette purchaser was 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 CFR. pt. 1140. The complaint likewise alleges that Respondent Orange Petromart /
Mobil Mart previously admitted to three violations of regulations found at 21 C.F.R. pt.
1140 and, therefore, CTP seeks to impose a $10,000 civil money penalty against
Respondent Orange Petromart / Mobil Mart.
As provided for in 21 C.F.R. §§ 17.5 and 17.7, on September 15, 2014, CTP served the
complaint on Respondent Orange Petromart / Mobil Mart 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 Orange Petromart / Mobil Mart has neither filed an answer within the time
prescribed, nor requested an extension of time within which to file an answer. Pursuant
to 21 C.F.R. § 17.11, L assume that the facts alleged in the complaint (but not its
conclusory statements) are true. Specifically:

e CTP previously issued a warning letter to Respondent Orange Petromart / Mobil
Mart on November 15, 2012, citing violations! of 21 C.F. R. pt. 1140 on
September 27, 2012, at Respondent’s business establishment, 248 Boston Post
Road, Orange, Connecticut 06477;

¢ On August 21, 2013, CTP initiated a previous civil money penalty action, CRD
Docket Number C-13-1118, FDA Docket Number FDA-2013-H-0921, against
Respondent for three violations of 21 C.F.R. pt. 1140 within a twenty-four month
period. CTP alleged those violations to have occurred on September 27, 2012, and
February 20, 2013;

e The previous action concluded when Tahir Mahmood, Respondent’s authorized
representative, settled the claims on Respondent’s behalf. On October 10, 2013,
Mr. Mahmood signed an Acknowledgment Form in which he “admitt[ed] that the
violations . . . occurred, waiv[ed] his ability to contest the violations in the future,
and stat[ed] that he understood that that violations may be counted in determining
the total number of violations for purposes of future enforcement actions.” The
Administrative Law Judge closed the case on November 25, 2013;

' Tn the complaint, CTP describes the actions that took place at Respondent Orange
Petromart L.L.C. d/b/a Orange Petromart’s business establishment on September 27,
2012, as both “a violation” and as “violations.” Complaint § 10. In a previous
administrative complaint initiated on August 21, 2013, and attached to the present
complaint, CTP described two discrete violations at Orange Petromart L.L.C. d/b/a
Orange Petromart / Mobil Mart’s business establishment on September 27, 2012: a
violation of 21 C.F.R. § 1140.14(a) and a violation of 21 C.F.R. § 1140.14(b)(1).
Therefore, I will infer that CTP’s description in the present complaint of “a violation”
occurring on September 27, 2012, was a typographical error.

e During a two-part inspection on December 11, 2013 and December 23, 2013,
FDA-commissioned inspectors documented the following at Respondent’s
business establishment: Respondent’s staff sold cigarettes to a minor and failed to
verify the minor’s identification before the sale on December 11, 2013 at 4:59 PM;
and the presence of a customer-accessible shelf of cigarettes on December 23,
2013.

These facts establish Respondent Orange Petromart / Mobil Mart’s liability under the
Act. The Act prohibits misbranding of a tobacco product. 21 U.S.C. § 331(k). A
tobacco product is misbranded if sold or distributed in violation of regulations issued
under section 906(d) of the Act. 21 U.S.C. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21
C.F.R. § 1140.1(b). The Secretary of the U.S. Department of Health and Human Services
issued the regulations at 21 C.F.R. pt. 1140 under section 906(d) of the Act. 21 U.S.C.

§ 387a-1; see 21 U.S.C. § 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010).
Under 21 C.F.R. § 1140.14(a), no retailer may sell smokeless tobacco 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
smokeless tobacco purchasers are younger than 18 years of age. The regulations also
require a retailer to sell cigarettes and smokeless tobacco only in a direct, face-to-face
exchange without the assistance of any electronic or mechanical device (such as a
vending machine). 21 C.F.R. § 1140.14(c).

Under 21 C.FR. § 17.2,a $10,000 civil money penalty is permissible for six violations of
the regulations found at 21 C.F.R. pt. 1140 within a forty-eight month period.

Order

For these reasons, I enter default judgment in the amount of $10,000 against Respondent
Orange Petromart L.L.C. d/b/a Orange Petromart / Mobil Mart. 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


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Sonoma Prosthetic Eyes,
(PTAN: 6811110001),
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-1660
Decision No. CR3455
Date: November 12, 2014
DECISION

I. Introduction
I sustain the determination of the Centers for Medicare & Medicaid Services (CMS) to
revoke the Medicare enrollment of Petitioner, Sonoma Prosthetic Eyes, as a supplier of
durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). I find that
Petitioner failed to comply with the requirements of 42 C.F.R. § 424.57(c)(7). However,
I do not find that Petitioner failed to comply with the requirements of 42 C.F.R.
§ 424.535(a)(5)(ii). Therefore, the effective date of Petitioner’s loss of billing privileges
is November 12, 2013.
CMS filed a brief and six proposed exhibits that it identified as CMS Ex. | — CMS Ex. 6.
Petitioner filed a brief and six proposed exhibits that it identified as P. Ex. 1 — P. Ex. 6.

Neither party objected to my receiving any of the proposed exhibits. I receive the parties’
exhibits into the record.!

Petitioner must show good cause for me to receive any documentary evidence that it
did not offer at reconsideration. 42 C.F.R. § 498.56(e). The reconsideration
determination in this case is silent as to what exhibits may have been offered by
CMS styled its brief as a motion for summary judgment. It is unnecessary for me to
decide whether the criteria for summary judgment are met here, because neither CMS nor
Petitioner offered written direct testimony. Consequently, there is no need for me to
convene an in-person hearing in order to permit cross-examination of witnesses. I decide
the case based on the parties’ written submissions.

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

The issues are: whether CMS is authorized to revoke Petitioner’s enrollment as a
DMEPOS supplier; and the effective date of Petitioner’s loss of billing privileges.

B. Findings of Fact and Conclusions of Law

CMS asserts two grounds for revoking Petitioner’s enrollment. First, it contends that
Petitioner failed to comply with the requirements of 42 C.F.R. § 424.57(c)(7). In relevant
subparts, this regulation requires that a DMEPOS supplier must be accessible and staffed
during posted hours of operation and that it maintain a permanent visible sign in plain
view that posts its hours of operation. 42 C.F.R. § 424.57(c)(7)(i)(C), (D). Second, CMS
argues that Petitioner was not “operational” within the meaning of 42 C.F.R.

§ 424.535(a)(5)(ii). The grounds for revocation have meaning here, because as I shall
discuss further, revocation for noncompliance with 42 C.F.R. § 424.57 is prospective
whereas revocation for failure to comply with 42 C.F.R. § 424.535 may be retroactive.

CMS asserts that, on October | and 4, 2013, an inspector working for a Medicare
contractor attempted to visit Petitioner’s site in order to verify that it was complying with
applicable participation requirements. On both occasions, according to CMS, the site
was dark and no one answered the door. Petitioner did not have a visible sign posting its
hours of operation. CMS Ex. 4.

These facts plainly establish grounds for revoking Petitioner’s enrollment for
noncompliance with the requirements of 42 C.F.R. § 424.57(c)(7). Petitioner was
obligated to post its hours of operation and, moreover, it was obligated to be accessible
during whatever hours it posted. It failed in both respects based on the facts offered by
CMS.

Petitioner, so I have no way of knowing from the face of the determination what was or
what was not offered by Petitioner there. CMS Ex. |. I infer that the exhibits were
offered at reconsideration from the absence of objection by CMS counsel to my receiving
Petitioner’s exhibits.
Petitioner asserts that it was open “by appointment only” and that CMS’s contractor was
aware of that. Petitioner’s brief at 2. It contends that it was available immediately by
telephone and that it “scheduled . . . appointments at the earliest convenient time for the
inspector and in both instances gave prompt and unlimited access to the office.” Id. I
infer from this assertion that Petitioner is asserting that it had made appointments with the
inspector to be open for inspection and that the Medicare contractor knew that
Petitioner’s office was open only by appointment. But, Petitioner has not explained why
— if appointments were made — the inspector arrived to find a dark and un-staffed facility.
I note that Petitioner does not contend that it had staff ready and waiting at the appointed
times but that no one showed up to inspect its facility at those times. Nor does Petitioner
deny that there was no sign at the entrance of the facility that stated its operating hours
(even if they were limited to pre-arranged appointments). Thus, Petitioner’s assertions,
assuming them to be true, do not squarely meet CMS’s contentions, nor do they rebut the
evidence offered by CMS showing that Petitioner failed to post its hours of operation.

Petitioner argues additionally that “‘the site inspector officer was unable to complete the
site inspection because they did not follow protocol for suppliers with By Appointment
Only Status.” Petitioner’s brief at 6. Petitioner does not explain what it means by this
assertion. However, Petitioner does not contend that it had specific appointment times
for inspections and that the inspector did not show up at these times. Petitioner never
contends that it was open and available for inspections at pre-arranged times.

Petitioner also alleges that it was not provided an opportunity to file a corrective action
plan. That may be so. However, the regulations governing participation by DMEPOS
suppliers do not contain language mandating CMS to afford a non-compliant supplier the
opportunity to submit a corrective action plan before revoking that supplier’s billing
privileges for noncompliance with regulatory requirements. Indeed, the regulation makes
revocation for noncompliance mandatory:

CMS will revoke a supplier’s billing privileges if it is found
not to meet the standards in paragraphs (b) and (c) of this
section.

42 C.F.R. § 424.57(d) (emphasis added). CMS had no discretion in this instance. It was
required to revoke Petitioner’s billing privileges based on its noncompliance. A
corrective action plan, had Petitioner submitted one, would have been irrelevant.

Petitioner makes additional arguments that add up to a complaint that it was denied due
process by CMS. I find these arguments to be without merit. It contends, for example,
that it did not receive an acknowledgement that its reconsideration request had been
received. But, Petitioner hasn’t demonstrated any harm from this oversight. In
particular, it hasn’t shown that it was denied the opportunity to present evidence and/or
argument at reconsideration. It asserts also that the information and arguments that it
presented at reconsideration were reviewed “carelessly.” Petitioner’s brief at 6.
However, Petitioner hasn’t explained what that alleged carelessness consisted of, nor has
it shown that the alleged carelessness has prejudiced it.

My authority to hear these cases is de novo, of course, and that includes addressing or
correcting errors that were made either during the initial determination or reconsideration
of this case. Whatever “carelessness” may have occurred during prior reviews is,
therefore, no longer relevant in the de novo hearing before me.

CMS has provided no detailed explanation of why there is a basis to revoke Petitioner’s
Medicare enrollment under 42 C.F.R. § 424.535(a)(5)(ii). However, the language of the
section is self-explanatory, allowing for revocation where a supplier has “failed to satisfy
any or all of the Medicare enrollment requirements ... .” Here, Petitioner plainly failed
to comply with the DMEPOS Medicare enrollment requirement at 42 C.F.R.

§ 424.57(c)(7) and that certainly satisfies the quoted language of 42 C.F.R.

§ 424.535(a)(5)(ii).

However, I decline to find that a basis exists to revoke Petitioner’s enrollment pursuant to
42 CER. § 424.535(a)(5)(ii). Although CMS’s initial determination in this case cited to
both 42 C.F.R. §§ 424.57(c)(7) and 424.535(a)(5) as grounds for its action, the
reconsideration determination cited only to 42 C.F.R. § 424.57(c)(7) as a basis for
affirming the determination. CMS Ex. 1; CMS Ex. 3. I am sure that the omission in the
reconsideration determination was one of oversight because that determination was based
on the identical documents and evidence as was the initial determination and, also
because there is not an iota of explanation in the reconsideration determination for the
failure to discuss 42 C.F.R. § 424.535(a)(5). In other words, the reconsideration officer
almost certainly erred in limiting the scope of his analysis.

I would not normally consider that to be a problem because, as I have stated, my
authority to hear and decide issues is de novo and there is absolutely nothing in the
regulations governing hearings that even hints that the administrative law judge’s
authority is so limited as to preclude him or her from correcting oversights or failures to
address issues at reconsideration.

However, in a series of recent decisions, appellate panels of the Departmental Appeals
Board have held that administrative law judges are limited to addressing only the issues
that were resolved at reconsideration in cases involving CMS. The Board has effectively
taken the position that the scope of an administrative law judge’s review in these cases is
narrower than the Board’s scope of review on appeal, inasmuch as the Board regularly
takes up issues that were never raised by the parties below. I believe that the Board is
wrong in this analysis.’

That said, I see no benefit in issuing a decision that would be overturned on appeal given
the Board’s current mindset. I therefore decide that the issue of whether CMS may
revoke Petitioner’s billing privileges is not before me by virtue of the fact that this issue
was not addressed at reconsideration and also by virtue of the Board’s evident
determination to limit the administrative hearing only to what was decided at
reconsideration?

My decision has substantive effect in this case. In its initial determination CMS
determined that the effective date of Petitioner’s loss of billing privileges was October 4,
2013. That date is based on 42 C.F.R. § 424.535(g), which states that the effective date
of revocation is the date when CMS or its contractor determines that a supplier such as
Petitioner is “no longer operational.” October 4, 2013 would be that date because that is
the date of the last inspection of Petitioner’s facility at which it was determined that
Petitioner was not operational.

However, this regulation is no longer a basis for deciding this case because it was not
cited in the reconsideration determination. Therefore, the effective date of Petitioner’s

> Administrative Law Judge Hughes discusses these decisions in depth in two recent
decisions, Kimberly Bergeron, NP, DAB CR3438 (2014), and Gibraltar Healthcare
Supplies, LLC, DAB CR3422 (2014). Her decisions do not bind me, but I cannot improve
on her history and analysis, so I adopt them as my own.

> As Judge Hughes observed in Bergeron, sometimes reconsideration determinations are
so poorly written as to be gibberish. In that situation the Board would leave the
administrative law judge with no choice but to throw out the reconsideration
determination entirely, whatever the merits of the case.
loss of billing privileges is that stated at 42 C.F.R. § 424.57(d), 15 days after Petitioner
was sent notice of revocation. The notice was sent on October 28, 2013 and, therefore,
the effective date of revocation is November 12, 2013.4

/s/
Steven T. Kessel
Administrative Law Judge

* Thave been advised that, in some of their decisions, Board panels have held that the
effective date of loss of billing privileges should be 30 days rather than 15 days after the
date of notice of revocation. Apparently, the authority that these panels rely on for their
actions is 42 C.F.R. § 424.57(e). However, the current version of that section says
nothing whatsoever about the effective date of loss of billing privileges. It is a section
that sets criteria for revalidation of billing privileges. The current language governing
effective date of revocation is, as I have stated, at 42 C.F.R. § 424.57(d), and that
subsection unequivocally sets the effective date at 15 days from the notice.


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.

Bi-Lo, LLC
d/b/a Bi-Lo 5153,

Respondent.

Docket No. C-14- 1764
FDA Docket No. FDA-2014-H-1245

Decision No. CR3454

Date: November 13, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint)
against Respondent, Bi-Lo, LLC d/b/a Bi-Lo 5153 that alleges facts and legal authority
sufficient to justify the imposition of a civil money penalty of $250. Respondent did not
answer the Complaint, nor did Respondent request an extension of time within which to
file an answer. Therefore, I enter a default judgment against Respondent and assess a
civil money penalty of $250.

CTP began this case by serving the Complaint on Respondent and filing a copy of the
Complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The Complaint alleges that Respondent impermissibly sold cigarettes to
minors, thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C.
§ 301 et seq., and its implementing regulations, Cigarettes and Smokeless Tobacco,

21 CFR. pt. 1140 (2013). CTP seeks a civil money penalty of $250.
On September 11, 2014, CTP served the Complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and accompanying
cover letter, CTP explained that within 30 days, Respondent should pay the proposed
penalty, file an answer, or request an extension of time within which to file an answer.
CTP warned Respondent that if it failed to take one of these actions within 30 days, an
Administrative Law Judge could, pursuant to 21 C.F.R. § 17.11, issue an initial decision
ordering Respondent to pay the full amount of the proposed penalty.

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

Specifically, CTP alleges the following facts in its Complaint:

e Respondent owns Bi-Lo 5153, an establishment that sells tobacco products and is
located at 3125 Bees Ferry Road, Charleston, South Carolina 29414. Complaint
g3.

e During an inspection of Respondent’s establishment on October 2, 2013, at
approximately 6:47 PM, an FDA-commissioned inspector observed that “a person
younger than 18 years of age was able to purchase a package of Newport Box
100s cigarettes . . . [.]” Complaint § 10.

e¢ On December 5, 2013, CTP issued a Warning Letter to Respondent regarding the
inspector’s observations from October 2, 2013. The letter explained that the
observation constituted a violation of regulations found at 21 C.F.R.
§ 1140.14(a) and that the named violation was not necessarily intended to be an
exhaustive list of all violations at the establishment. The Warning Letter went on
to state that if Respondent failed to correct the violation, regulatory action by the
FDA or a civil money penalty action could occur and that Respondent is
responsible for complying with the law. Complaint § 10.

e Jennifer Belda, identifying herself as the service area manager, responded to the
Warning Letter on behalf of Respondent in a January 30, 2014 letter. “Ms. Belda
stated that Respondent trains all cash register operators on the sale of tobacco
products, and strongly urges cashiers to enter the date of birth from identifications
into the cash register.” Ms. Belda further stated that, “Respondent’s updated
systems now allow cashiers to scan the back of identifications to verify age.”
Complaint § 11.
e During a subsequent inspection of Respondent’s establishment on February 21,
2014, at approximately 6:58 PM, FDA-commissioned inspectors documented that
“a person younger than 18 years of age was able to purchase a package of Grizzly
Fine Cut Premium Wintergreen smokeless tobacco... .” Complaint § 1.

These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is misbranded
if distributed or offered for sale in any state in violation of regulations issued under
section 906(d) of the Act. 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b). The
Secretary of the U.S. Department of Health and Human Services issued the regulations at
21 CFR. pt. 1140 under section 906(d) of the Act. 21 U.S.C. § 387a-1; see 21 U.S.C.

§ 387£(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). The regulations prohibit the
sale of cigarettes to any person younger than 18 years of age. 21 C.F.R. § 1140.14(a).

Taking the above alleged facts as true, Respondent also violated the prohibition against
selling cigarettes to persons younger than 18 years of age, 21 C.F.R. § 1140.14(a) on
October 2, 2013 and February 21, 2014. Therefore, Respondent’s actions constitute
violations of law that merit a civil money penalty.

CTP has requested a fine of $250, which is a permissible fine under the regulations.
21 C.F.R. § 17.2. Therefore, I find that a civil money penalty of $250 is warranted and so
order one imposed.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.
Big Charlies Truck Plaza, Inc.,
Respondent.

Docket No. C-14-1850
FDA Docket No. FDA-2014-H-1335

Decision No. CR3453

Date: November 12, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint)
against Respondent, Big Charlies Truck Plaza, Inc., alleging facts and legal authority
sufficient to justify imposing a civil money penalty of $500. Respondent did not timely
answer the Complaint, nor did Respondent request an extension of time within which to
file an Answer. Therefore, I enter a default judgment against Respondent and order that
Respondent pay a civil money penalty in the amount of $500.

CTP began this case by serving a Complaint on Respondent and filing a copy of the
Complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The Complaint alleges that Respondent’s staff unlawfully sold tobacco
products to minors, and failed to verify, by means of photo identification containing a
date of birth, that a tobacco purchaser was 18 years of age or older, thereby violating the
Federal Food, Drug, and Cosmetic Act (Act) and its implementing regulations, found at
21 CFR. pt. 1140. CTP seeks a civil money penalty of $500.
On September 16, 2014, CTP served the Complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and accompanying
cover letter, CTP explained that within 30 days Respondent should pay the penalty, file
an answer, or request an extension of time within which to file an answer. CTP warned
Respondent that if it failed to take one of these actions within 30 days an Administrative
Law Judge could issue an initial decision by default ordering Respondent to pay the full
amount of the proposed penalty. 21 C.F.R. § 17.11.

Respondent has not filed an answer within the time provided by regulation, nor has it
requested an extension. Therefore, pursuant to 21 C.F.R. § 17.11(a), 1 am required to
issue an initial decision by default if the Complaint is sufficient to justify a penalty.
Accordingly, I must determine whether the allegations in the Complaint establish
violations of the Act.

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

e Respondent owns Big Charlies Truck Plaza, Inc., an establishment that sells
tobacco products and is located at 5792 Northampton Boulevard, Virginia Beach,
Virginia 23455. Complaint § 3.

e During an inspection of Respondent’s establishment on September 26, 2013, at
approximately 6:00 PM, an FDA-commissioned inspector observed that “‘a person
younger than 18 years of age was able to purchase a package of Newport Box
cigarettes ....” Complaint § 10.

e Ina Warning Letter dated December 5, 2013, CTP informed Respondent of the
inspector’s September 26, 2013 observation, and that such an action violates
federal law, 21 C.F.R. § 1140.14(a). The letter further warned that Respondent’s
failure to correct its violation could result in a civil money penalty or other
regulatory action. Complaint J 10.

¢ CTP received a letter from Maggie Tucker, Respondent’s general manager, dated
December 16, 2013, responding to the Warning Letter on Respondent’s behalf.
“Ms. Tucker stated that Respondent took disciplinary action against the employee
who was on duty when the minor purchased the tobacco product.” Ms. Tucker
went on to state that “Respondent met with all employees to discuss the
establishment’s ‘absolute requirement to ask for ID’... .” Complaint § 11.

e During a subsequent inspection of Respondent’s establishment conducted on
March 11, 2014, FDA-commissioned inspectors documented that “a person
younger than 18 years of age was able to purchase a package of Newport Box
cigarettes . . . at approximately 8:05 PM.” The inspectors also documented that
“the minor’s identification was not verified before the sale ....” Complaint § 1.

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

21 U.S.C. § 387c(a)(7)(B); 21 C.F.R § 1140.1(b). The regulations prohibit the sale of
cigarettes to any person younger than 18 years of age. 21 C.F.R. § 1140.14(a). The
regulations also require the verification, by means of photo identification containing a
purchaser’s date of birth, that no tobacco product purchasers are younger than 18 years of
age. 21 CFR. § 1140.14(b)(1).

Taking the above alleged facts as true, Respondent violated the prohibition against selling
cigarettes to persons younger than 18 years of age, 21 C.F.R. § 1140.14(a), on September
26, 2013 and March 11, 2014. Additionally, on March 11, 2014, Respondent violated the
requirement that retailers verify, by means of photo identification containing a
purchaser’s date of birth, that no tobacco product purchasers are younger than 18 years of
age. 21 C.F.R. § 1140.14(b)(1). Therefore, Respondent’s actions constitute violations of
law that merit a civil money penalty.

CTP has requested a fine of $500, which is a permissible fine under the regulations.
21 C.F.R. § 17.2. Therefore, I find that a civil money penalty of $500 is warranted and so
order one imposed.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.

Nunez Supermarket Corp. / Evelyn Nunez
d/b/a Sanford Supermarket,

Respondent.

Docket No. C-14-1833
FDA Docket No. FDA-2014-H-1325

Decision No. CR3451

Date: November 10, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint)
against Respondent, Nunez Supermarket Corp. / Evelyn Nunez d/b/a Sanford
Supermarket that alleges facts and legal authority sufficient to justify the imposition of a
civil money penalty of $500. Respondent did not answer the Complaint, nor did
Respondent request an extension of time within which to file an answer. Therefore, I
enter a default judgment against Respondent and assess a civil money penalty of $500.

CTP began this case by serving the Complaint on Respondent and filing a copy of the
Complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The Complaint alleges that Respondent impermissibly sold cigarettes to
minors, failed to verify that cigarette purchasers were 18 years of age or older, and sold
individual cigarettes thereby violating the Federal Food, Drug, and Cosmetic Act (Act),
21 USC. § 301 et seq., and its implementing regulations, Cigarettes and Smokeless
Tobacco, 21 C.F.R. pt. 1140 (2013). CTP seeks a civil money penalty of $500.
On September 10, 2014, CTP served the Complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and accompanying
cover letter, CTP explained that within 30 days, Respondent should pay the proposed
penalty, file an answer, or request an extension of time within which to file an answer.
CTP warned Respondent that if it failed to take one of these actions within 30 days, an
Administrative Law Judge could, pursuant to 21 C.F.R. § 17.11, issue an initial decision
ordering Respondent to pay the full amount of the proposed penalty.

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

Specifically, CTP alleges the following facts in its Complaint:

e¢ Respondent owns Sanford Supermarket, an establishment that sells tobacco
products and is located at 159 Sanford Street, East Orange, New Jersey 07018.
Complaint § 3.

e During an inspection of Respondent’s establishment on July 4, 2013, at
approximately 11:17 AM CT, an FDA-commissioned inspector observed that “a
person younger than 18 years of age was able to purchase a single cigarette . . . [.]”
The inspector also observed that “the minor’s identification was not verified
before the sale... .” Complaint § 10.

e On August 15,2013, CTP issued a Warning Letter to Respondent regarding the
inspector’s observations from July 4, 2013. The letter explained that the
observations constituted violations of regulations found at 21 C.F.R. § 1140.14(a)
(b)(1), and (d), and that the named violations were not necessarily intended to be
an exhaustive list of all violations at the establishment. The Warning Letter went
on to state that if Respondent failed to correct the violations, regulatory action by
the FDA or a civil money penalty action could occur and that Respondent is
responsible for complying with the law. Complaint § 10.

e Andres Montero, identifying himself as the site manager, responded to the
Warning Letter on behalf of Respondent in a September 4, 2013 letter. “Mr.
Montero stated that the employee who made the sale was issued a discipline
letter.” He further stated that, “employees are instructed to check the identification
of anyone under 27 years old who attempts to purchase tobacco, not to sell
tobacco to minors, and not to sell individual cigarettes.” Complaint J 11.
e During a subsequent inspection of Respondent’s establishment on May 25, 2014,
at approximately 10:27 AM, FDA-commissioned inspectors documented that “a
person younger than 18 years of age was able to purchase a package of Newport
cigarettes .. .[.]” The inspectors also documented that “the minor’s identification
was not verified before the sale... .” Complaint § 1.

These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is misbranded
if distributed or offered for sale in any state in violation of regulations issued under
section 906(d) of the Act. 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b). The
Secretary of the U.S. Department of Health and Human Services issued the regulations at
21 CFR. 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). The regulations prohibit the
sale of cigarettes to any person younger than 18 years of age. 21 C.F.R. § 1140.14(a).
The regulations also require retailers to verify, by means of photo identification
containing a purchaser’s date of birth, that no cigarette purchasers are younger than

18 years of age. 21 C.F.R. § 1140.14(b)(1). Additionally, the regulations prohibit the
sale of individual cigarettes. 21 C.F.R. § 1140.14(d).

Taking the above alleged facts as true, Respondent violated the prohibition against selling
individual cigarettes, 21 C.F.R. § 1140.14(d) on July 4, 2013. On July 4, 2013, and May
25, 2014, the Respondent also violated the prohibition against selling cigarettes to
persons younger than 18 years of age, 21 C.F.R. § 1140.14(a); and the requirement that
retailers verify, by means of photo identification containing a purchaser’s date of birth,
that no cigarette purchasers are younger than 18 years of age. 21 C.F.R. § 1140.14(b)(1).
Therefore, Respondent’s actions constitute violations of law that merit a civil money
penalty.

CTP has requested a fine of $500, which is a permissible fine under the regulations.
21 C.F.R. § 17.2. Therefore, I find that a civil money penalty of $500 is warranted and so
order one imposed.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.
China Royal LLC / Juan Chen Zhu,
Respondent.

Docket No. C-14-1884
FDA Docket No. FDA-2014-H-1371

Decision No. CR3450

Date: November 10, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint)
against Respondent, China Royal LLC / Juan Chen Zhu, alleging facts and legal authority
sufficient to justify imposing a civil money penalty of $2,000. 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 $2,000.

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’s staff unlawfully sold tobacco
products to minors, failed to verify, by means of photo identification containing a date of
birth, that tobacco purchasers were 18 years of age or older, and sold individual cigarettes
on two occasions, thereby violating the Federal Food, Drug, and Cosmetic Act (Act) and
its implementing regulations, found at 21 C.F.R. pt. 1140. CTP seeks a civil money
penalty of $2,000.
On September 17, 2014, CTP served the Complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and accompanying
cover letter, CTP explained that within 30 days Respondent should pay the penalty, file
an answer, or request an extension of time within which to file an answer. CTP warned
Respondent that if it failed to take one of these actions within 30 days an Administrative
Law Judge could issue an initial decision by default ordering Respondent to pay the full
amount of the proposed penalty. 21 C.F.R. § 17.11.

Respondent has not filed an answer within the time provided by regulation, nor has it
requested an extension. Therefore, pursuant to 21 C.F.R. § 17.11(a), 1 am required to
issue an initial decision by default if the Complaint is sufficient to justify a penalty.
Accordingly, I must determine whether the allegations in the Complaint establish
violations of the Act.

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

e Respondent owns China Royal LLC / Juan Chen Zhu, an establishment that sells
tobacco products and is located at 713 Frelinghuysen Avenue, Newark, New
Jersey 07114. Complaint § 3.

e During an inspection of Respondent’s establishment on September 22, 2013, at
approximately 1:52 PM, an FDA-commissioned inspector observed that “a person
younger than 18 years of age was able to purchase one individual Newport
cigarette .. .[ .]” The inspector also observed that “the minor’s identification was
not verified before the sale... .” Complaint J 10.

e¢ On January 16,2014, CTP issued a Warning Letter to Respondent regarding the
inspector’s observations from September 22, 2013. The letter explained that the
observations constituted a violation of regulations found at 21 C.F.R.
§ 1140.14(a), (b)(1), and (d), and that the named violations were not necessarily
intended to be an exhaustive list of all violations at the establishment. The
Warning Letter went on to state that if Respondent failed to correct the violations,
regulatory action by the FDA or a civil money penalty action could occur and that
Respondent is responsible for complying with the law. Complaint J 10.

e Although United Parcel Service records indicate that an individual named “Yia”
received the warning letter, FDA never received a response. Complaint § 11.

e During a subsequent inspection of Respondent’s establishment conducted on April
5, 2014, FDA-commissioned inspectors documented that “a person younger than
18 years of age was able to purchase two individual cigarettes . . . at
approximately 11:40 AM[.]” The inspectors also documented that “the minor’s
identification was not verified before the sale... .” Complaint § 1.

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

21 U.S.C. § 387c(a)(7)(B); 21 C.F.R § 1140.1(b). The regulations prohibit the sale of
cigarettes or smokeless tobacco to any person younger than 18 years of age. 21 C.F.R.

§ 1140.14(a). The regulations also require retailers to verify, by means of photo
identification containing a purchaser’s date of birth, that no tobacco purchasers are
younger than 18 years of age. 21 C.F.R. § 1140.14(b)(1). Finally, the regulations
prohibit retailers from “break[ing] or otherwise open[ing] any cigarette or smokeless
tobacco package to sell or distribute individual cigarettes... .” 21 C.F.R. § 1140.14(d).

Taking the above alleged facts as true, Respondent had six violations of regulations
contained in 21 C.F.R. Part 1140 within a twenty-four month period. Specifically,
Respondent had three violations on September 22, 2013, and three violations on April 5,
2014. Respondent’s actions violated the prohibition against selling cigarettes or
smokeless tobacco to persons younger than 18 years of age. 21 C.F.R. § 1140.14(a).
Respondent’s actions also violated the requirement that retailers verify, by means of
photo identification containing a purchaser’s date of birth, that no purchaser of cigarettes
or smokeless tobacco is younger than 18 years of age. 21 C.F.R. § 1140.14(b)(1).
Finally, Respondent’s actions violated the prohibition against selling individual
cigarettes. 21 C.F.R. § 1140.14(d). Therefore, Respondent’s actions constitute violations
of law for which a civil money penalty is merited.

CTP has requested a fine of $2,000, which is a permissible fine under the regulations.
21 C.F.R. § 17.2. Therefore, I find that a civil money penalty of $2,000 is warranted and
so order one imposed.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Angelica Sanchez
d/b/a Deli Latino,

Respondent.

Docket No. C-14-1887
FDA Docket No. FDA-2014-H-1374

Decision No. CR3449

Date: November 10, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

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

CTP began this case by serving a Complaint on Respondent and filing a copy of the
Complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The Complaint alleges that Respondent’s staff unlawfully sold cigarettes
to a minor, thereby violating the Federal Food, Drug, and Cosmetic Act (Act) and its
implementing regulations, found at 21 C.F.R. pt. 1140. CTP seeks a civil money penalty
of $500.
On September 17, 2014, CTP served the Complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and accompanying
cover letter, CTP explained that within 30 days Respondent should pay the penalty, file
an answer, or request an extension of time within which to file an answer. CTP warned
Respondent that if it failed to take one of these actions within 30 days an Administrative
Law Judge could issue an initial decision by default ordering Respondent to pay the full
amount of the proposed penalty. 21 C.F.R. § 17.11.

Respondent has not filed an answer within the time provided by regulation, nor has it
requested an extension. Therefore, pursuant to 21 C.F.R. § 17.11(a), 1am required to
issue an initial decision by default if the Complaint is sufficient to justify a penalty.
Accordingly, I must determine whether the allegations in the Complaint establish
violations of the Act.

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

e Respondent owns Deli Latino, an establishment that sells tobacco products and is
located at 3133 Eastern Avenue, Baltimore, MD 21224. Complaint § 3.

¢ CTP previously initiated a civil money penalty action, CRD Docket Number C-14-
415, FDA Docket Number FDA-2013-H-1627, against Respondent for two
violations of 21 C.F.R. pt. 1140 within a 12-month period. Specifically, those
violations included an unspecified violation on February 6, 2013, and a violation
on June 3, 2013, when Respondent sold tobacco products to a minor. Complaint
g 10.

e The previous civil money penalty action concluded when Angelica Sanchez,
Respondent’s authorized representative, settled the action with CTP on
Respondent’s behalf. On January 13, 2014, Ms. Sanchez signed an
Acknowledgment Form in which she “‘admitt[ed] that the violations . . . occurred,
waiv[ed] Respondent’s ability to contest the violations in the future, and stat[ed]
that she understood that the violations may be counted in determining the total
number of violations for purposes of future enforcement actions against
Respondent.” The Administrative Law Judge closed the case on February 24,
2013. Complaint § 11.

e During a subsequent inspection of Respondent’s establishment conducted on
March 13, 2014, FDA-commissioned inspectors documented that “a person
younger than 18 years of age was able to purchase a package of Marlboro 100’s
cigarettes . . . at approximately 1:11 PM. Complaint § 1.
These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is misbranded
if sold or distributed in violation of regulations issued under section 906(d) of the Act.

21 USC. § 387c(a)(7)(B); 21 C.F.R § 1140.1(b). The regulations prohibit the sale of
cigarettes or smokeless tobacco to any person younger than 18 years of age. 21 C.F.R.

§ 1140.14(a).

Here, Respondent had three violations of regulations found at 21 C.F.R. pt. 1140 within a
24-month period. Respondent acknowledged that two violations occurred when its
representative settled the previous civil money penalty action. Most recently, on March
13, 2013, Respondent sold cigarettes to a person younger than 18 years of age, in
violation of 21 C.F.R. § 1140.14(a). Therefore, Respondent’s actions constitute
violations of law that merit a civil money penalty.

CTP has requested a fine of $500, which is a permissible fine for three violations of the
regulations found at 21 C.F.R. pt. 1140. 21 C.F.R. § 17.2. Therefore, I find that a civil
money penalty of $500 is warranted and so order one imposed.

/s/
Steven T. Kessel
Administrative Law Judge