Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Burlington House Nursing Home,
(CCN: 36-5892),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-13-518
Decision No. CR4599

Date: May 3, 2016

DECISION

Burlington House Nursing Home (Burlington or Petitioner) challenges the Centers for
Medicare & Medicaid Services’ (CMS) determination that it was not in substantial
compliance with the Medicare program participation requirements that a skilled nursing
facility (SNF) immediately report to its administrator and the state survey agency the
mistreatment, neglect, or abuse of a resident. 42 C.F.R. § 483.13(c). Burlington also
challenges CMS’s imposition of a $55,200 civil money penalty (CMP). For the reasons
discussed below, I affirm CMS’s determination.

I. Background

The Social Security Act (Act) sets forth requirements for a SNF’s participation in the
Medicare program and authorizes the Secretary of Health and Human Services (the
Secretary) to promulgate regulations implementing those statutory provisions. 42 U.S.C.
§ 1395i-3. The Secretary’s regulations are found at 42 C.F.R. Parts 483 and 488. To
participate in the Medicare program, a SNF must maintain substantial compliance with
program participation requirements. To be in substantial compliance, a SNF’s
deficiencies may “pose no greater risk to resident health or safety than the potential for
causing minimal harm.” 42 C.F.R. § 488.301. “Noncompliance” means “any deficiency
that causes a facility to not be in substantial compliance.” Jd.

The Secretary contracts with state agencies to conduct periodic surveys to determine
whether SNFs are in substantial compliance. 42 U.S.C. § 1395aa(a); 42 C.F.R. § 488.10.
The Act also authorizes the Secretary to impose enforcement remedies against SNFs that
are not in substantial compliance with the program participation requirements. 42 U.S.C.
§ 1395i-3(h)(2). The regulations specify the enforcement remedies that CMS may
impose. 42 C.F.R. § 488.406. Among other enforcement remedies, CMS may impose a
per-day CMP for the number of days a SNF is not in substantial compliance or a per-
instance CMP for each instance of the SNF’s noncompliance. 42 C.F.R. § 488.430(a).
A per-day CMP may range from either $50 to $3,000 per day for less serious
noncompliance, or $3,050 to $10,000 per day for more serious noncompliance that poses
immediate jeopardy to the health and safety of residents. 42 C.F.R. § 488.438(a).
“Immediate jeopardy” exists when “the provider’s noncompliance with one or more
requirements of participation has caused, or is likely to cause, serious injury, harm,
impairment, or death to a resident.” 42 C.F.R. § 488.301. The authorized range for a
per-instance CMP is $1,000 to $10,000. 42 C.F.R. § 488.438(a)(2). If CMS imposes a
CMP based on a noncompliance determination, then the facility may request a hearing
before an Administrative Law Judge (ALJ) to challenge the noncompliance finding and
enforcement remedy. 42 U.S.C. §§ 1320a-7a(c)(2), 1395i(h)(2)(B)(ii)); 42 C.F.R.

§§ 488.408(g), 488.434(a)(2)(viii), 498.3(b)(13).

Burlington is a SNF located in Cincinnati, Ohio, that participates in the Medicare
program. On August 19, 2012, while assisting Resident 98 with toileting, one of
Burlington’s State tested nurse aides (STNA) noticed that Resident 98 was bleeding from
her vaginal area. Several licensed practical nurses (LPNs) assessed Resident 98 and
contacted a physician who, based on the LPNs’ observations, diagnosed boils and ordered
treatment consistent with that diagnosis. On August 21, 2012, Burlington had a wound
care physician examine Resident 98. The wound care physician determined that Resident
98’s vaginal area appeared to have been subject to trauma and ordered Resident 98
transported to a hospital. CMS Exhibit (Ex.) 12 at 100. Later on August 21, 2012,
Burlington reported this diagnosis to the Ohio Department of Health.

In response to Burlington’s report, three registered nurses (RN) from the Ohio
Department of Health (survey agency) conducted a complaint survey of the facility,
which was completed on September 13, 2012. CMS Exs. 4, 19-21. The survey included
reviewing records, interviewing staff, and observing residents at the facility. CMS Exs.
9-11, 19-21. The surveyors completed a Statement of Deficiencies (Form CMS-2567) in
which they determined that Burlington did not meet the requirements in 42 C.F.R.

§ 483.13(c). CMS Exs. 4, 9-11.

The surveyors concluded:

Based on medical record review, review of the hospital
records, interviews with facility staff, the wound care
physician, and hospital sexual assault nurse examiner
(SANE), and review of the facility’s abuse policy, the facility
failed to immediately identify an injury of unknown source
located on the genitals of one resident (#98) with severe
cognitive impairment. The facility also failed to immediately:
report the injury of unknown source to the administrator and
the State survey agency; initiate an investigation; and take
action to protect the facility’s residents during the
investigation. This resulted in immediate jeopardy for one
(#98) of nine cognitively impaired residents reviewed for
injuries of unknown source/abuse. All 98 residents in the
facility were placed in immediate jeopardy from the risk of
abuse because immediate action was not taken when staff
found injuries of unknown source to Resident #98’s genitals.

. . . Immediate Jeopardy began on 08/19/12 at 10:00 P.M.
when State Tested Nurse Aide (STNA) #10 observed blood
and bruising on Resident #98’s genitals during toileting.
STNA # 10 reported the blood and bruising to Licensed
Practical Nurse (LPN) # 16 at the time of discovery. LPN #
16 failed to recognize and immediately report the abrasion
with bruising and bleeding as an injury of unknown source
that was suspicious in nature. On 08/21/12 at 7:00 A.M.,
Wound Physician #99 assessed Resident #98 and suspected
the identified areas were caused by blunt force trauma. At
that time, Resident #98 was put on one-on-one supervision
until she was transferred to the hospital at 9:35 A.M.
accompanied by Wound Care Nurse # 17.

The Immediate Jeopardy was removed on 08/30/2012 when
all staff were re-educated on the abuse policy with testing,
residents were assessed for signs of abuse and staff
monitoring was in place. The deficiency remained at Severity
Level 2 (no actual harm with potential for more than minimal
harm that is not immediate jeopardy) until the deficiency was
corrected on 09/11/12...

CMS Ex. 4 at 2-3. The surveyors identified the following as corrective actions taken
between August 21, 2012, and September 11, 2012: 1) a “Wound Physician” examined
Resident #98; the facility notified Resident 98’s physician and family of her injury; 2) the
facility notified the police department and implemented its Abuse Policy and Procedure;
3) the facility started taking statements from all staff who worked from August 17-21,
2012; 4) the facility staff and the Wound Physician completed a “skin audit” of the
facility’s residents to ensure that none of the other residents had injuries; 5) the facility
initiated management monitoring of staff without prior notice to staff and scheduled a
member of management staff to be in the facility 24 hours a day; 6) the facility instructed
all night shift STNAs and nurses to sit in the middle of hallways between rounds to
increase observation of the resident population; 7) the facility’s social worker completed
questionnaires with all of the facility’s cognitively aware residents about resident abuse
and none of the residents reported abuse; 8) the facility commenced new criminal
background checks on its employees; 9) the facility educated staff on the facility’s abuse
policy, which included competency testing; and 10) the Wound Physician conducted
training for all nursing staff on assessing skin conditions. CMS Ex. 4 at 3-6.

In a January 8, 2013 initial determination, CMS stated that, based on the September 13,
2012 survey, it found Petitioner was not in substantial compliance with 42 C.F.R.

§ 483.13(c) (F225) (Resident Behavior and Facility Practices) at the scope and severity
level of “L,” (immediate jeopardy) from August 19, 2012, through August 29, 2012.!
CMS also found that immediate jeopardy no longer existed on August 30, 2012;
however, Petitioner did not fully return to substantial compliance until September 11,
2012. CMS imposed a $4,900 per-day CMP for 11 days from August 19, 2012, through
August 29, 2012, and a $100 per-day CMP for 13 days from August 30, 2012, through
September 11, 2012. Further, CMS prohibited Petitioner from conducting in-house
Nurse Aid Training and/ or Competency Evaluations for two years. CMS Ex. | at 1-3.

' Scope and severity levels are used by CMS and state survey agencies when selecting
remedies. The scope and severity level is designated by letters A through L, selected by
CMS or the state agency from the scope and severity matrix published in the State
Operations Manual, chap. 7, § 7400.5 (Sep. 10, 2010). A scope and severity level of A,
B, or C indicates a deficiency that presents no actual harm but has the potential for
minimal harm, which is an insufficient basis for imposing an enforcement remedy.
Facilities with deficiencies of a level no greater than C remain in substantial compliance.
42 C.F.R. § 488.301. A scope and severity level of D, E, or F indicates a deficiency that
presents no actual harm but has the potential for more than minimal harm that does not
amount to immediate jeopardy. A scope and severity level of G, H, or I indicates a
deficiency that involves actual harm that does not amount to immediate jeopardy. Scope
and severity levels J, K, and L are deficiencies that constitute immediate jeopardy to
resident health or safety. The matrix, which is based on 42 C.F.R. § 488.408, specifies
which remedies are required and optional at each level based upon the frequency of the
deficiency.
Petitioner timely requested a hearing before an ALJ to dispute CMS’s findings.
Following receipt of Petitioner’s hearing request, I issued an Acknowledgment and Initial
Prehearing Order. In that order, I directed the parties to file written direct testimony for
all witnesses they wanted to present.

In compliance with my prehearing order, CMS filed a prehearing brief (CMS Br.) and 22
proposed exhibits (CMS Exs. 1-22). Three of the proposed exhibits were the written
direct testimony for CMS’s witnesses (CMS Exs. 19-21), all of whom were members of
the state survey team who conducted the survey that ended on September 13, 2012.
Petitioner then filed its prehearing brief (P. Br.) along with seven proposed exhibits (P.
Exs. 1-7). Four of the proposed exhibits were the written direct testimony for Petitioner’s
witnesses (P. Exs. 1, 4-6). CMS requested to cross-examine one of Petitioner’s witnesses
and Petitioner requested to cross-examine all of CMS’s witnesses.

On April 28, 2015, I held a video hearing at which I heard testimony on cross-
examination from the facility’s medical director, Dr. Moqeeth (P. Ex. 1), two Long-Term
Care Surveyors from the Ohio Department of Health (CMS Exs. 20, 21), and a Field
Manager from the Ohio Department of Health (CMS Ex. 19). At the hearing, I admitted
all of the parties’ proposed exhibits. Hearing Transcript (Tr.) at 10. After the hearing
CMS and Petitioner filed post hearing briefs (CMS Post Hearing Br. and P. Post Hearing
Br.) and reply briefs (CMS Reply Br. and P. Reply Br.)

IL. Issues
The issues presented are:

1. Whether Petitioner was in substantial compliance with Medicare participation
requirements at 42 C.F.R. § 483.13(c) from August 19, 2012, until September
11, 2012.

2. If Petitioner was not in substantial compliance with Medicare program
requirements, did the deficiencies pose immediate jeopardy to resident health
and safety from August 19, 2012, through August 29, 2012.

3. If Petitioner was not in substantial compliance with Medicare participation
requirements, are the CMP amounts imposed on Petitioner reasonable.

Ill. Jurisdiction

I have jurisdiction to hear and decide this case. 42 U.S.C. §§ 1320a-7a(c)(2),
1395i(h)(2)(B)(ii)); 42 C.F.R. §§ 488.408(g), 488.434(a)(2)(viii), 498.3(b)(13).
IV. Findings of Fact

1.

2.

Resident 98 is female and was born on August 25, 1932. CMS Ex. 12 at 1,5.

Resident 98 was admitted to Burlington on January 12, 2011, and had an admitting
diagnosis that included Alzheimer’s Disease. CMS Ex. 12 at 5.

By August 2012, Resident 98 had advanced dementia, was unable to communicate
with Burlington’s staff, and needed assistance with essentially all activities of
daily living. CMS Ex. 12 at 3, 14, 21; P. Ex. 1 § 4; Tr. 13.

On August 17, 2012, and August 18, 2012, Burlington staff who assisted Resident
98 did not notice any skin issues or bruising on Resident 98’s body. CMS Ex. 12
at 121, 147, 151. On August 18, 2012, staff observed Resident 98 to exhibit
behavior that they considered normal for her. CMS Ex. 12 at 127, 129.

. On the night of August 19, 2012, STNA Amanda Snyder was assisting Resident

98 with using the toilet when STNA Snyder noticed blood coming from Resident
98’s vaginal area. CMS Ex. 12 at 6, 144, 147; P. Ex. 6 4.

. STNA Snyder called LPN Heather Bates, who assessed Resident 98 and “noted

both sides of her labia having a boil like appearance. The left was larger in size
and had what appeared to be a small area of purpura. This is where the blood was
coming from. No blood was present to vagina. Skin was natural in color besides
the small area on [left] labia.” CMS Ex. 12 at 144. STNA Snyder similarly
observed that the “area was [a] little swollen and red, little blue like a small bruise
....” CMS Ex. 12 at 147.

Ms. Bates asked LPN Earle Brown and LPN Lisa Prentovik, to assess Resident 98
and provide their opinions. CMS Ex. 12 at 103, 144, 147; P. Ex. 5 9§ 3-4.

. While examining Resident 98, LPN Brown observed that her labia was enlarged,

with the left labium larger than the right and “[a] small abrasion was noted on the
left labium, about the size of nickel — scant serosanguinous drainage noted — there
was bruising around the area of abrasion.” CMS Ex. 12 at 103.

. While examining Resident 98, LPN Prentovik saw on the right side of the labia “a

hard area . . . with a small purpura below it . . . no other bruising noted to pelvic
area or buttocks.” CMS Ex. 12 at 148. She also observed “small red raised areas
and there was what looked like a % cm tear in one spot.” P. Ex. 5 §§ 4-5.

10. The three LPNs believed that Resident 98’s labia area probably had boils. CMS

Ex. 12 at 103, 144, 147; P. Ex. 5 6.
11. LPN Bates contacted the on call physician, who ordered administration of Bactrim
and the application of warm compresses to the affected area. CMS Ex. 12 at 6,
144. Burlington’s Director of Nursing was informed of this matter shortly after
LPN Bates contacted the physician. CMS Ex. 12 at 144.

12.On August 20, 2012, Burlington’s staff did not observe Resident 98 to behave
abnormally. CMS Ex. 12 at 124, 126, 130, 133.

13. At about 11:00 a.m. on August 20, 2012, RN Tasha Rosenzweig assessed Resident
98, and noted that Resident 98’s labia were “boil like . . . on both sides of the area,
areas were reddened & inflamed no bruises noted.” RN Rosenweig also noted that
Resident 98 did not complain of pain or discomfort. CMS Ex. 12 at 136.
However, at 3:16 p.m., RN Rosenzweig reported that the left side of Resident 98’s
labia did in fact have purpura. CMS Ex. 12 at 6.

14. On the night of August 20, 2012, STNA Gladys Veal noticed two purple spots on
Resident 98’s vagina and one on the left side of her buttocks. STNA Veal
informed LPN Bates of this bruising. CMS Ex. 12 at 146; see also CMS Ex. 10 at
24; CMS Ex. 11 at 19.

15. On the night of August 20, 2012, LPN Bates assessed Resident 98 due to the
previous diagnosis of boils and noted that boil like areas on the labia had
decreased in size and were almost resolved. However, “[b]oth sides of her labia
were bruised, deep purple in color. The bruising had covered the pubic region.”
CMS Ex. 12 at 145. At 1:04 a.m. on August 21, 2012, LPN Bates entered a
clinical note that “[a]reas noted with increased bruising upon assessment this
evening.” CMS Ex. 12 at 6. LPN Bates informed Burlington’s Director of
Nursing. LPN Bates sent a text message at about | a.m. on August 21, 2012, to
LPN Heather Beahan, the wound care nurse, that both she and the wound care
physician should assess Resident 98 in the morning due to bruising on Resident
98. CMS Ex. 12 at 102, 145.

16. On the morning of August 21, 2012, STNA Kristine Huebener, while assisting
Resident 98 to get up and change for breakfast, noticed that Resident 98 had
bruises around the upper pubic region, labia, and buttock. Ms. Huebener did not
observe those bruises when she had previously assisted Resident 98 on August 18,
2012. CMS Ex. 12 at 121.

17. Michael Dooley, an LPN and Assistant Director of Nursing, was called to
Resident 98’s room and noted bruising in Resident 98’s “peri area.” CMS Ex. 12
at 102, 134.
18. At some time after 7:15 a.m., LPN Beahan and Dr. Isaac Shaw assessed Resident
98 and “both agreed that she needed to be sent out [to] the ER for evaluation for
possible trauma, infection or neoplasm.” CMS Ex. 12 at 102; see also CMS Ex.
12 at 99-100. LPN Beahan informed Burlington’s Director of Nursing of this.
CMS Ex. 12 at 102.

19. At approximately 9:30 a.m., Burlington’s Director of Nursing entered a clinical
note that Resident 98 was being sent to the hospital for x-rays “due to increased
bruising in her pelvic region.” CMS Ex. 12 at 6.

20. On August 21, 2012, Resident 98 was admitted to the hospital with an admission
diagnosis of labia bruising of the vagina. CMS Ex. 12 at 42. A sexual assault
nurse examiner conducted a pelvic examination in which the nurse noted
intravaginal mucosal tears and diagnosed a sexual assault. CMS Ex. 12 at 39.
Resident 98 had to be sedated for the pelvic examination. CMS Ex. 12 at 41, 102.
The Emergency Room Physician Report stated that a pelvic examination of
Resident 98 “revealed significant vaginal trauma consistent with penile or foreign
object penetration as well as anal trauma . . . it is not possible that [Resident 98]
sustained these injuries accidently.” CMS Ex. 12 at 41. Resident 98 received a
discharge diagnosis of “sexual assault.” CMS Ex. 12 at 41-42.

21.On August 21, 2012, Burlington completed an Ohio Department of Health “Self
Report Incident Form,” on which Burlington indicated that staff identified an
injury of unknown source and that abuse, neglect, or misappropriation is
suspected. CMS Ex. 12 at 154-55; see also P. Ex. 4 § 10.

22.On August 21, 2012, Burlington: initiated an investigation; conducted a “skin
audit” of all of the residents at Burlington; initiated training to STNAs and nurses
on Burlington’s abuse policy and abuse scenarios; instructed STNAs and nurses to
sit in hallways between rounds to increase observation at Burlington’s facility; and
initiated a procedure where a Burlington management team members enters the
facility without warning to staff. CMS Ex. 7 at 4-5; CMS Ex. 12 at 101-149; CMS
Ex. 13 at 1-2; CMS Ex. 15; CMS Ex. 17; Tr. 35.

23.On August 23, 2012, Burlington staff interviewed cognitively aware residents and
none of them alleged they were subject to abuse. CMS Ex. 7 at 5; CMS Ex. 16;
CMS Ex. 13 at 2.

24. On August 30, 2012, Burlington completed retraining staff on abuse policy and
with competency testing, commenced criminal background checks for Burlington
staff; and Burlington management members were in the facility 24 hours a day
actively checking the halls. CMS Ex. 7 at 5-6; CMS Ex. 13 at 2; CMS Ex. 18.
25.On September 11, 2012, Burlington provided training by Dr. Shaw, the wound
care physician, on assessing skin conditions. CMS Ex. 7 at 6; CMS Ex. 18 at 2.

26. There is no evidence in the record that the police found the perpetrator of the
sexual assault on Resident 98. Tr. 44.

V. Conclusions of Law and Analysis
My conclusions of law are in italics and bold.

I. Burlington was not in substantial compliance with 42 C.F.R. § 483.13(c)
because Burlington’s staff failed to immediately inform Burlington’s
Administrator and the Ohio Department of Health that Resident 98 had an
injury from an unknown source and/or was subject to abuse.

Residents of a SNF have “the right to be free from . . . sexual .. . abuse.” 42 C.F.R.
§ 483.13(b). As a result, SNFs

Must ensure that all alleged violations involving
mistreatment, neglect, or abuse, including injuries of an
unknown source . . . are reported immediately to the
administrator of the facility and to other officials in
accordance with State law through established procedures
(including to the State survey and certification agency).

42 C.F.R. § 483.13(c)(2) (emphasis added). The regulations do not define the phrase
“injuries of unknown source” or the word “immediately.” However, CMS issued an
interpretive guideline for section 483.13(c)(2) in the State Operations Manual. The State
Operations Manual provides the following test for determining whether an injury is from
an unknown source:

The source of the injury was not observed by any person or
the source of the injury could not be explained by the
resident; and

The injury is suspicious because of the extent of the injury or
the location of the injury (e.g., the injury is located in an area
not generally vulnerable to trauma) or the number of injuries
observed at one particular point in time or the incidence of
injuries over time.

State Operations Manual, Appendix PP (emphasis in original). Further, “immediately”
means as soon as possible, but not more than 24 hours since the discovery of a reportable
10

incident. /d. Although the State Operations Manual is not binding on me, I will apply
the interpretations above in this case because they are reasonable and Petitioner had
notice of them, as can be seen by Petitioner’s adoption of these interpretations into its
Polices and Standard Procedures related to resident abuse (CMS Ex. 14 at 1-2, 5). Baylor
Cnty. Hosp. Dist. d/b/a Seymour Hosp., DAB No. 2617, at 4 (2015).

Most of the facts in this case are not in dispute; however, CMS and Petitioner disagree as
to when Petitioner’s staff observed an injury of unknown origin. P. Post Hearing Br. at
12 (“The primary issue in this case centers around whether or not Resident #98 had an
injury of unknown origin on August 19 and 20, 2012. There is no dispute that she had an
injury of unknown origin on August 21, 2012.”). If it was on August 19, 2012, when
STNA Snyder first noticed that Resident 98 was bleeding, as CMS urges, then
Petitioner’s staff failed to immediately report (i.e., within 24 hours) the injury of
unknown origin to Petitioner’s Administrator and the Ohio Department of Health in
violation of 42 C.F.R. § 483.13(c)(2). If it was not until the morning of August 21, 2012,
as Petitioner asserts, then Petitioner complied with the notice requirements in 42 C.F.R.

§ 483.13(c)(2). Based on the facts in this case, I conclude that CMS is correct.

Petitioner argues that on the evening of August 19, 2012, after STNA Snyder informed
LPN Bates that Resident 98 was bleeding from her vaginal area, the facility reasonably
believed that Resident 98 was merely suffering from boils because: three LPNs
immediately assessed Resident 98 as having boils; LPN Bates phoned the on-call
physician, who ordered that Resident 98 receive care for boils; and Petitioner’s Director
of Nursing, who is an RN, assessed Resident 98 on the morning of August 20, 2012, and
continued to believe Resident 98 had boils. P. Post Hearing Br. at 12-13; P. Reply Br. at
2. Petitioner asserts that its staff did not discover an injury of unknown origin until the
early morning hours of August 21, 2012, when bruising appeared on Resident 98. P. Post
Hearing Br. at 14; P. Reply Br. at 2. Petitioner points out that bruising goes through
stages and often only becomes visible between 24 to 48 hours following an injury and
that only bruising was sufficient to cause Petitioner’s staff to believe that Resident 98 had
received an injury of unknown origin. P. Post Hearing Brief at 14; P. Reply Br. 2; P. Ex.
199; P. Ex. 2 at 1; Tr. at 23, 40-41.

Based on the record in this case, I do not agree that it was reasonable for Petitioner’s staff
to fail to notify the Administrator within 24 hours of the evening of August 19, 2012, that
Resident 98 appeared to have an injury of unknown origin. STNA Snyder noticed that
Resident 98 was bleeding from her vaginal area. The three LPNs who examined
Resident 98 each noticed purpura or bruising, one noted a 4 centimeter tear, and another
a nickel-sized abrasion. The LPNs thought Resident 98 had boils and LPN Bates
informed the on-call physician of this, which led to an order to provide Resident 98 with
care for boils. Although Petitioner asserts that a diagnosis for boils was not unwarranted
(P. Reply at 3), Petitioner provides no argument as to why Petitioner’s staff did not
inform its Administrator immediately of the bruising that its staff found. Indeed,
11

Petitioner’s policy and procedures concerning resident abuse directed Petitioner’s staff to
immediately report “[e]ach occurrence of resident incident, bruise, abrasion, or injury of
unknown etiology” in writing so it can be ultimately be reported to the Director of
Nursing and the Administrator. CMS Ex. 14 at 5. Treating Resident 98 for boils did not
preclude further action on the part of Petitioner’s staff from reporting a possible injury to
Resident 98.

I am also unpersuaded by Petitioner’s argument that because bruising generally occurs 24
to 48 hours after an injury, it was not possible for Petitioner’s staff to realize, on August
19, 2012, that Resident 98 had an injury of unknown origin. Although Petitioner’s
Medical Director testified that bruising only becomes visible 24-48 hours after an injury,
e could not categorically state that bruising could appear earlier. P. Ex. 1 49 (“It is
extremely rare for bruising to appear immediately.”). Based on Dr. Shaw’s examination
of Resident 98 shortly after 7:00 a.m. on August 21, 2012, Dr. Shaw estimated that
Resident 98’s injury occurred two days earlier. CMS Ex. 11 at 18; see also CMS Ex. 21
4 5 (stating that CMS Ex. 11 at 18 misidentifies Dr. Shaw as Dr. Swan). That means that
Resident 98 was sexually assaulted in the morning of August 19, thus leaving at least 12
ours for some bruising to become apparent. Given that all three LPNs who examined
Resident 98 on August 19 noted bruising, it seems more likely than not that Resident 98
showed bruising earlier than the average individual.

Finally, although Petitioner asserts that its Director of Nursing examined Resident 98 on
the morning of August 20, 2012, and that the Director of Nursing concurred with the
diagnosis of boils, there is no contemporaneous or testimonial evidence in the record to
corroborate these assertions.

Using the State Operational Manuals two-part test to determine an injury of unknown
origin, it is clear that Resident 98 had such an injury on the night of August 19, 2012.
CMS established the first prong of the test by showing that LPNs noted that Resident 98
had bruising, an abrasion, and a tear in her vaginal area, but none of Petitioner’s staff had
observed the source of the injury and Resident 98, in an advanced state of dementia, was
unable to communicate what had happened. CMS also established the second prong of
the test because the location of the injury, Resident 98’s vaginal area, is one that is not
generally vulnerable to trauma. Therefore, I conclude that Petitioner’s staff became
aware that Resident 98 had an injury of unknown origin on the evening of August 19,
2012, but staff failed to notify Petitioner’s Administrator and the Ohio Department of
Health immediately in violation of 42 C.F.R. § 483.13(c)(2).

2. CMS’s determination that Petitioner’s deficiencies posed immediate jeopardy
was not clearly erroneous.

Immediate jeopardy exists when a facility’s noncompliance “has caused, or is likely to
cause, serious injury, harm, impairment, or death to a resident.” 42 C.F.R. § 488.301.
12

An ALJ must affirm an “immediate jeopardy” determination unless Petitioner shows that
it is clearly erroneous. 42 C.F.R. § 498.60(c)(2). The “clearly erroneous” standard
imposes a heavy burden on SNFs and CMS may prevail where CMS presented evidence
“from which ‘[o]ne could reasonably conclude’ that immediate jeopardy exists.” See
Barbourville Nursing Home, DAB No. 1962, at 11 (2005) (citing Florence Park Care
Ctr., DAB No. 1931, at 27-28 (2004). The regulation does not require that a resident
actually be harmed. See Lakeport Skilled Nursing Ctr., DAB No. 2435, at 8 (2012).

Petitioner asserts that while Resident 98 suffered actual harm due to the sexual assault
that occurred, CMS has made no allegation that Burlington failed to prevent the sexual
assault or contributed to the likelihood of the sexual assault. Petitioner argues in the
alternative that even if there was immediate jeopardy, Burlington’s extensive corrective
actions on August 21, 2012, means that the immediate jeopardy finding should not last
beyond that day. P. Post Hearing Br. at 15.

CMS contends that its immediate jeopardy finding is appropriate because Petitioner’s
staff failed to follow Petitioner’s abuse policy, resulting in the loss of time to investigate
Resident 98’s injury and implement changes to ensure the safety of all residents. CMS
Post Hearing Br. at 21. CMS argues that it was proper to extend immediate jeopardy
through August 29, 2012, because it was not until then that the facility re-educated all
staff on Petitioner’s abuse policy with testing. CMS Post Hearing Br. at 22.

There is no doubt that Petitioner placed Resident 98 and other residents in immediate
jeopardy. Although CMS did not hold Petitioner responsible for the actual sexual assault
on Resident 98, Petitioner’s staff was unprepared to respond when a cognitively impaired
resident was sexually assaulted. Despite observing bleeding, bruising, an abrasion, and a
tear in the vaginal area, the three LPNs who assessed Resident 98 on August 19, 2012,
did not consider the possibility of abuse. As testified to by one of the nurse surveyors:

Q Were other residents besides R-98 in immediate danger of
serious injury or harm?

A Yes.

Q How so?

A By failing to identify the injury of unknown origin it put
the other residents at risk had any other resident shown a sign.
There were three nurses that did not identify the fact that
there was any injury of unknown origin, and they were caring

for the other residents.

Tr. at 26-27.
13

In fact, despite Petitioner’s abuse procedures, facility staff did not notify the
Administrator that Resident 98 had an injury of unknown origin. Such a lack of
familiarity with the procedures caused Resident 98 to receive delayed care at the hospital
for an assault that ultimately caused massive bruising throughout her pelvic area. It also
likely contributed to the police’s inability to determine who committed this heinous
crime. Finally, it delayed changes Petitioner ultimately instituted to make Petitioner’s
facility more secure (i.e., nurses and STNAs to sit in hallways when not on rounds,
management team members present 24 hours a day to walk around the hall).

The evidence in the record shows that Petitioner’s conduct commencing August 19, 2012,
had caused, or was likely to cause, serious injury, harm, impairment, or death to a
resident. 42 C.F.R. § 488.301. Therefore, CMS’s immediate jeopardy determination is
not clearly erroneous. Further, the evidence shows that Petitioner’s staff was not re-
trained and tested on Petitioner’s abuse policy until at least August 30, 2012 (CMS Ex.
18); therefore, CMS’s determination that immediate jeopardy lasted through August 29,
2012, is not clearly erroneous.

3. CMS’s determination of the amount of CMP is reasonable.

In determining whether the per-instance CMP amounts imposed against Petitioner are
reasonable, I apply the factors listed in 42 C.F.R. § 488.438(f). 42 C.F.R.

§ 488.438(e)(3). These factors include: (1) the facility’s history of compliance; (2) the
facility’s financial condition; (3) the factors specified at 42 C.F.R. § 488.404; and (4) the
facility’s degree of culpability, which includes neglect, indifference, or disregard for
resident care, comfort, or safety. The absence of culpability is not a mitigating factor.
The factors at 42 C.F.R. § 488.404 include: (1) the scope and severity of the deficiency;
(2) the relationship of the deficiency to other deficiencies resulting in noncompliance;
and (3) the facility’s prior history of noncompliance in general and specifically with
reference to the cited deficiencies. Unless a facility contends that a particular regulatory
factor does not support the CMP amount, the ALJ must sustain it. Coquina Ctr., DAB
No. 1860, at 32 (2002).

In the present case, CMS imposed a CMP of $4,900 per day from August 19, 2012,
through August 29, 2012, and a $100 per-day CMP from August 30, 2012, through
September 11, 2012. CMS Ex. 1 at 1. The total CMP amount imposed was $55,200.
Despite imposing the CMP, CMS provided Petitioner with 15 days to submit evidence
related to the regulatory factors for calculating the CMP. In particular, CMS provided
detailed instructions for Petitioner if Petitioner wanted to assert it could not pay the CMP
due to its financial circumstances. CMS Ex. | at 2.

Petitioner argues that CMS failed to consider the regulatory factors when determining the
CMP amount. In particular, Petitioner avers that CMS did not meet its burden to
consider the facility’s financial condition. P. Post Hearing Br. at 16-17; P. Reply Br. at 3.
14

Petitioner also disputes CMS’s consideration, as part of Petitioner’s history of
compliance, of a 2010 “D” level deficiency for which no CMP was imposed and, thus, no
appeal by Petitioner was possible. P. Br. at 7; P. Post Hearing Br. at 16.

After considering the factors in the regulations, I conclude that the CMP amounts
imposed in this case are reasonable. Petitioner does have a history of noncompliance as
can be seen by the deficiency cited in 2010, and it did involve a failure to report to the
Ohio Department of Health and investigate a resident’s claim of theft, resulting in a
deficiency cited for the same regulations at issue in this case, 42 C.F.R. § 483.13(c).
However, the deficiency was at a “D” level, i.e., the lowest level of noncompliance;
therefore, it provides only modest support for the CMP.

In regard to consideration of Petitioner’s financial condition, I cannot conclude that this is
a reason to reduce the penalty amount in this case. The record contains no information
about Petitioner’s financial condition, despite the fact that CMS, in its initial
determination, provided Petitioner with extensive instructions on the documentation to
file. Further, Petitioner was free to file evidence of its financial condition with its
prehearing exchange in this case. However, Petitioner did not do so.

I consider Petitioner to have a fairly high degree of culpability in this case. As indicated
above, Petitioner’s staff did not appear to consider the possibility that Resident 98 was
sexually assaulted, despite the nature and location of Resident 98’s injury. Had Resident
98 not exhibited significant bruising by August 21, 2012, she would likely not have
received any care for her traumatic injuries. Further, Petitioner would not have instituted
greater security measures and training. Resident 98 was completely dependent on
Petitioner to keep her safe and, barring that, to care for her injuries. She could not
communicate the horrible wrong done to her. Petitioner’s staff needed to be especially
careful to respond to any potential injury with such a resident.

In regard to the scope and severity of the deficiency, as indicated above, I agree that CMS
properly determined that Petitioner’s deficiency was at the immediate jeopardy level. I
also believe that CMS properly continued to penalize Petitioner at a non-immediate
jeopardy level from August 30, 2012, until September 11, 2012, because it was not until
September 11, 2012, that Petitioner trained its staff on assessing skin conditions. CMS
Ex. 18 at 2. Such training was clearly necessary due to the failure by Petitioner’s staff to
identify Resident 98’s injury.

Based on the factors above, I conclude that $4,900 per-day CMP during the immediate
jeopardy period is reasonable and a $100 per-day CMP is reasonable for the period below
the immediate jeopardy level. The $4,900 is in the lower range for immediate jeopardy
matters (i.e., per-day CMPs for immediate jeopardy can be from $3,050 to $10,000).

42 C.F.R. § 488.438(a)(1)(i). The $100 per-day amount is only $50 more than minimum
amount that the regulations require to be imposed. 42 C.F.R. § 488.438(a)(1)(ii).
15

VI. Conclusion

I conclude that Petitioner was not in substantial compliance with 42 C.F.R. § 483.13(c).
Further, I conclude that a $4,900 per-day CMP from August 19, 2012, through August

29, 2012, and a $100 per-day CMP from August 30, 2012, through September 11, 2012,
is reasonable.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Layne R. Christensen, OD,
(PTAN: ZZZ04978Z),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-16-275
Decision No.CR4597
Date: May 2, 2016
DECISION

I sustain the determination of a Medicare contractor, as affirmed on reconsideration and
ratified by the Centers for Medicare & Medicaid Services (CMS), to assign an effective
date of August 4, 2015 for reactivation of Medicare billing privileges to Layne R.
Christensen Optometric Corporation (“the Corporation”).

I. Background

Petitioner Layne R. Christensen, OD, filed a hearing request on behalf of the Corporation
in order to challenge the effective date of reactivation of billing privileges assigned to it
by a Medicare contractor. CMS filed a motion for summary judgment and, with its
motion, it filed eight exhibits that are identified as CMS Ex. 1-CMS Ex. 8. Petitioner
opposed the motion (P. Statement). Petitioner filed no exhibits. However, he attached to
his statement opposing the motion an alleged chronology of events and communications
between the Corporation and CMS. The alleged chronology is not offered under oath nor
did Petitioner file any documents that corroborated it. I receive CMS Ex. 1-CMS Ex. 8
into evidence. I do not accept Petitioner’s alleged chronology as evidence because
Petitioner neither offered it as testimony under oath nor did he offer documentary
corroboration for it. I note that the pre-hearing order issued in this case explicitly
directed Petitioner to file any statement in the nature of testimony as either an affidavit or
as a sworn written declaration.

Although CMS styled its motion as a motion for summary judgment it is unnecessary to
decide here whether the criteria for summary judgment are met. Neither side offered
testimony and, therefore, there would be no purpose in convening an in-person hearing. I
decide this case based on the written record.

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

The issue is whether the Medicare contractor properly assigned an effective participation
date of August 4, 2015 to the Corporation.

B. Findings of Fact and Conclusions of Law

This case is governed by a regulation, 42 C.F.R. § 424.540. In relevant part the
regulation states:

(a) Reasons for deactivation. CMS may deactivate the Medicare billing
privileges of a provider or supplier for any of the following reasons: .. .
(3) The provider or supplier does not furnish complete and accurate
information and all supporting documentation within 90 calendar
days of receipt of notification from CMS to submit an enrollment
application and supporting documentation, or resubmit and certify to
the accuracy of its enrollment information.
(b) Reactivation of billing privileges. (1) When deactivated for any reason
other than nonsubmission of a claim, the provider or supplier must
complete and submit a new enrollment application to reactivate its
Medicare billing privileges or, when deemed appropriate, at a minimum,
recertify that the enrollment information currently on file with Medicare is
correct.....

The regulation plainly tells a provider or supplier that it will be deactivated by CMS if
CMS directs it to submit an enrollment application and the provider or supplier fails to do
so within 90 calendar days. Additionally, it puts the onus on the deactivated provider or
supplier to submit a new Medicare enrollment application if it desires to reactivate its
participation.

CMS has published guidance to its contractors concerning what effective participation
date to assign to a supplier or provider that seeks to reactivate its participation. That date
shall be the date when the contractor receives a re-enrollment application that it processes
to completion. Medicare Program Integrity Manual (MPIM), § 15.27.1.2. That guidance
is consistent with regulatory requirements governing the effective date of participation of
newly participating suppliers and providers. 42 C.F.R. § 424.520(d).

The contractor and CMS acted appropriately to assign an effective reactivation date to the
Corporation consistent with the regulatory requirements and with the facts of this case.
The evidence establishes that on November 3, 2014, the contractor sent to the
Corporation a request for Medicare enrollment revalidation. CMS Ex. 1. Neither
Petitioner, acting on behalf of the Corporation, nor the Corporation, responded to this
request. Therefore, the contractor deactivated the Corporation’s enrollment as of March
25, 2015. CMS Ex. 2.

On May 8, 2015, Petitioner filed a revalidation application for his individual enrollment.
CMS Ex. 3. On June 23, 2015, the contractor rejected this application as an application
to reactivate the Corporation’s participation because it was not an application on the
Corporation’s behalf but rather an application by Petitioner for himself as an individual.
In rejecting the application the contractor advised Petitioner and the Corporation that an
appropriate application needed to be submitted on behalf of the Corporation. CMS Ex. 4.

On August 4, 2015, the contractor received an application to reactivate the Corporation’s
participation. CMS Ex. 5. The contractor subsequently approved this application with an
effective date of August 4, 2015, the date when the application was received.

The evidence establishes that the only effective reactivation date that the contractor could
have granted to the Corporation was August 4, 2015. The Corporation failed to respond
to the contractor’s original request that it submit an application for Medicare enrollment
revalidation. The contractor then did exactly what the regulation directed it to do: it
deactivated the Corporation’s participation, thus suspending its Medicare billing
privileges. The Corporation could not reactivate its enrollment until it submitted an
application that the contractor could process and approve. Petitioner’s submission of an
application on his own behalf was unacceptable and rejected because it was not an
application on behalf of the Corporation. That application wasn’t filed with the
contractor until August 4, 2015, and the contractor then assigned that date as an effective
reactivation date to the Corporation.

Petitioner makes a series of arguments asserting that the contractor provided him and the
Corporation with misleading information and requests, causing them to “jump through
hoops” to accommodate the contractor’s demands. P. Statement at 1. At bottom,
according to Petitioner, the Corporation’s failure to have its participation revalidated in
2014 was the contractor’s fault. He contends, essentially, that he and the Corporation
should be found blameless.
This argument doesn’t comport with the evidence. First, Petitioner does not deny
credibly receiving the contractor’s November 3, 2014 request. He asserts that he and the
Corporation’s “first” notification from the contractor was a phone message on February
2, 2015. But, Petitioner hasn’t explicitly denied receiving the November 3, 2014 request
and he hasn’t provided any proof of the alleged February 11, 2015 phone message.

Petitioner then recites all of the hurdles that he allegedly attempted to surmount between
February 18, 2015 and May 12, 2015 in order to satisfy the contractor. Again, Petitioner
has offered no corroboration of any sort to show that alleged communications between
him or the Corporation and the contractor took place. He merely alleges that there were
communications without providing proof that they occurred.

Thus, and notwithstanding Petitioner’s assertions, there is no record of any
communications between him or the Corporation and the contractor other than the
evidence furnished by CMS. I find that evidence to be credible and I do not accept
Petitioner’s unsourced and uncorroborated assertions of additional communications.

Moreover, Petitioner’s arguments would be unavailing even if the alleged
communications had occurred. His assertions boil down to equitable claims that the
contractor misled him and the Corporation or that he and the Corporation failed to receive
credit from the contractor for the good faith efforts that they made to satisfy the
contractor’s demands. I have no authority to grant relief to Petitioner or the Corporation
based on these equitable arguments. US Ultrasound, DAB No. 2302, at 8 (2010).

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Yahya Hedvat, M.D.,

(OI File No. H-15-40389-9),
Petitioner,

v.

The Inspector General.

Docket No. C-16-89
Decision Number CR4595

Date: April 27, 2016

DECISION

I sustain the determination of the Inspector General (I.G.) to exclude Petitioner, Yahya
Hedvat, M.D., from participating in Medicare, Medicaid, and all other federally funded
health care programs for a period of at least five years. Sections 1128(a)(4) and (c)(3)(B)
of the Social Security Act (Act) mandate the I.G.’s exclusion determination.

I. Background

Petitioner, a physician, requested a hearing in order to challenge the I.G.’s exclusion
determination. The I.G. filed a brief and a reply brief in support of his determination,
along with three exhibits that are identified as I.G. Ex. 1 —1.G. Ex. 3. Petitioner filed a
written statement in opposition to the I.G.’s determination. Neither the I.G. nor Petitioner
offered the proposed testimony of any witness. I receive I.G. Ex. 1 — L.G. Ex. 3 into the
record.
II. Issues, Findings of Fact and Conclusions of Law
A. Issue

The issue is whether sections 1128(a)(4) and (c)(3)(B) of the Act mandate exclusion of
Petitioner for a period of at least five years.

B. Findings of Fact and Conclusions of Law

Section 1128(a)(4) of the Act mandates exclusion of any person who is convicted of a
felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a
controlled substance. Section 1128(c)(3)(B) directs exclusion for at least five years of
any individual who is excluded pursuant to section 1128(a)(4).

The evidence establishes that, on November 3, 2014, the Superior Court of California,
County of Los Angeles (Superior Court) found Petitioner guilty of eight counts of
violating section 11153(a) of the California Health and Safety Code. I.G. Ex. 3 at 8.
This section makes it a felony for an individual who, when prescribing a controlled
substance, knowingly fails to issue the prescription for a legitimate medical purpose
while acting in the usual course of his or her professional practice. I.G. Ex. 2; Cal.
Health & Safety Code § 11153(a) (West 2014). On that same date, the Superior Court
found Petitioner guilty of one additional felony count for a violation of section 11352(a)
of the California Health and Safety Code. I.G. Ex. 3 at 8. This section imposes criminal
penalties for the unlawful transport, import, sale, furnishing, administering, or giving
away of a controlled substance. I.G. Ex. 2; Cal. Health & Safety Code § 11352(a) (West
2014). The court also found Petitioner guilty of an additional felony consisting of
violating section 11375(b)(1) of the California Health and Safety Code. I.G. Ex. 3 at 8.
This section imposes criminal penalties for the sale or possession for sale of certain
controlled substances. Cal. Health & Safety Code § 11375(b)(1) (West 2014).

Petitioner was “convicted” within the meaning of the Act for each of the above offenses
because the Superior Court entered a finding of guilt against him for each. Act

§ 1128(4)(2). Petitioner’s convictions were, on their face, convictions for the unlawful
prescription and distribution of controlled substances. That brings his convictions within
the reach of section 1128(a)(4) of the Act. Consequently, the I.G. must exclude
Petitioner for at least five years. Act § 1128(c)(3)(B).

Petitioner argues that he is not really guilty of the crimes of which he was convicted. He
asserts that he was the victim of a scheme that transpired without his knowledge, in

' Section 1128(a)(4) of the Act applies to convictions occurring after August 21, 1996.
Petitioner’s convictions obviously occurred after that date.
which one of his patients offered to sell controlled substances to another one of his
patients. Petitioner’s statement.

Petitioner’s argument is an impermissible collateral attack on his convictions. I have no
authority to consider the merits of that argument. If Petitioner desires to challenge his
convictions he might do so in an appropriate appellate forum. He may not do so here. 42
C.F.R. § 1001.2007(d); Timothy Wayne Hensley, DAB No. 2044, at 3, 18 n.8 (2006).

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

William Britt Morris, D.M.D.
(OI File No. H-15-40033-9),

Petitioner,
v.
The Inspector General.
Docket No. C-15-3575
Decision No. CR4594

Date: April 28,2016

DECISION

The Inspector General (IG) of the United States Department of Health and Human
Services excluded Petitioner, William Britt Morris, D.M.D., from participation in
Medicare, Medicaid, and all other federal health care programs based on Petitioner’s
conviction of a criminal offense related to the delivery of a health care item or service
under Medicare or a state health care program. For the reasons discussed below, I
conclude that the IG has a basis for excluding Petitioner because he was convicted of
attempting to file a false claim with the Alabama Medicaid Agency and thereby was
convicted of a criminal offense in connection with the delivery of an item or service
under a state health care program. I affirm the 10-year exclusion period because the IG
has proven one aggravating factor, and there are no mitigating factors present. I also
affirm that the effective date of Petitioner’s exclusion is June 18, 2015.

I. Background

By letter dated May 29, 2015, the IG notified Petitioner that, pursuant to section
1128(a)(1) of the Social Security Act, 42 U.S.C. § 1320a-7(a)(1), he was being excluded
from participation in Medicare, Medicaid, and all federal health care programs for a
minimum period of 10 years, effective 20 days from the date of the letter. IG Exhibit
(Ex.) 1 at 1. In the letter, the IG informed Petitioner of the factual basis for the exclusion,
stating:

This exclusion is due to your conviction as defined in section 1128(i) (42
U.S.C. 1320a-7(i)), in the Circuit Court of Montgomery County, Alabama,
of a criminal offense related to the delivery of an item or service under the
Medicare or a State health care program, including the performance of
management or administrative services relating to the delivery of items or
services, under any such programs.

IG Ex. | at 1. The IG extended the exclusion period from the statutory minimum of five
years to 10 years based on the presence of one aggravating factor. IG Ex. 1 at 1-2. As
or the aggravating factor, the IG found that “[t]he acts resulting in the conviction, or
similar acts, that caused, or were intended to cause, a financial loss to a Government
program or to one or more entities of $5,000 or more.” IG Ex. | at 1; 42 C.FR.

§ 1001.102(b)(1). The IG did not consider any mitigating factors. IG Ex. 1; see 42
CFR. § 1001.102(c).

Petitioner, through counsel, timely filed a request for hearing before an administrative
law judge on July 31,2015. On October 7, 2015, Administrative Law Judge Joseph
Grow convened a prehearing conference by telephone pursuant to 42 C.F.R. § 1005.6,
during which he clarified the issues of the case and established a schedule for the
submission of prehearing briefs and exhibits.! The schedule and summary of the
prehearing conference was memorialized in an Order and Schedule for Filing Briefs and
Documentary Evidence (Order), dated October 8, 2015.

Pursuant to the Order, the IG filed an Informal Brief (IG Br.) along with four proposed
exhibits (IG Exs. 1-4). Petitioner thereafter filed his Informal Brief (P. Br.) and seven
proposed exhibits (P. Exs. 1-7). The IG then filed a reply brief (IG Reply). In an Order
dated January 21, 2016, Judge Grow granted Petitioner leave to file written direct
testimony in lieu of in-person testimony, and Petitioner subsequently, on February 8,
2016, filed an affidavit containing his written direct testimony (P. Affidavit). On
February 23, 2016, the IG submitted an objection to Petitioner’s testimony, arguing that
the testimony is immaterial and cumulative, and consisted of a collateral attack on the
underlying criminal conviction. Petitioner filed a response to the objection on March 7,
2016. As Judge Grow recognized that the expected testimony “may raise an issue as to
the loss amounts” and did not otherwise limit the content of the testimony, I conclude it is

' This case was reassigned to me on February 25, 2016.

? Petitioner also filed informal briefs on July 31,2015 in conjunction with his request for
hearing.
appropriate to admit Petitioner’s written direct testimony. I also admit the
aforementioned exhibits and briefs, along with the parties’ filings related to the January
21,2016 Order. CMS has not requested the opportunity to cross-examine Petitioner;
therefore, I will decide this case based on the written submissions and documentary
evidence. See Order § V.

II. Issues

The regulations limit the issues in this case to whether there is a basis for exclusion, and,
if so, whether the length of the exclusion that the IG has imposed is unreasonable.
42 C.F.R. § 1001.2007(a)(1)-(2).

III. Jurisdiction
Ihave jurisdiction to decide this case. 42 U.S.C. § 1320a-7(f)(1); 42 C.F.R. § 1005.2.
IV. Findings of Fact, Conclusions of Law, and Analysis®

1. Petitioner’s conviction of the offense of attempting to file a false claim
with the Alabama Medicaid Agency is a conviction of a criminal
offense related to the delivery of an item or service under a State
health care program and requires an exclusion from Medicare,
Medicaid, and all other federal health care programs for a minimum
of five years.

The Social Security Act (Act) requires the exclusion of any individual or entity from
participation in all federal health programs based on four types of criminal convictions.
42 U.S.C. § 1320a-7(a). In this case, the IG relied on section 1320a-7(a)(1) as the legal
basis to exclude Petitioner, which states:

(a) Mandatory exclusion —

The Secretary shall exclude the following individuals and entities
from participation in any Federal health care program (as defined in section
1128B(f)):

(1) Conviction of program-related crimes.—

Any individual or entity that has been convicted of a criminal

offense related to the delivery of an item or service under title XVIII
or under any State health care program.

5 My findings of fact and conclusions of law are set forth in italics and bold font.
Id. § 1320a-7(a)(1).

The IG argues that, pursuant to 42 U.S.C. § 1320a-7(a)(1), Petitioner’s exclusion is
required based on his conviction for the offense of attempting to file a false claim with
the Alabama Medicaid Agency. IG Br. at 2-5. Petitioner, in the final of the three
informal briefs he submitted, did not dispute that exclusion is warranted or that his
conviction was for a criminal offense related to the delivery of an item or service under
Medicare.* P. Br. 1-3; see 42 U.S.C. § 1320a-7(a)(1). In fact, Petitioner stated that he
“admits that a five (5) year exclusion is warranted, that is what he agreed to and has no
issue with that length of time.” P. Br. at 7. Petitioner goes on to explain that while he
agrees that the five-year exclusion is warranted, “[h]e does, however, believe that the
additional five (5) year enlargement is not reasonable.” P. Br. at 7. As discussed below,
I agree with the parties that exclusion is mandated.

In June 2014, the State of Alabama presented a 59-count indictment to a grand jury
charging that Petitioner had committed 58 counts in violation of section 22-1-11(a) of the
Alabama Code and one count in violation of section 13A-8-3 of the Alabama Code.”®

* Petitioner filed two informal briefs on July 31, 2015 in conjunction with his request for
hearing.

> While the indictment is signed by an Assistant Attorney General, the document
submitted, on its face, does not indicate that a grand jury returned a true bill of
indictment. However, the evidence otherwise demonstrates that Petitioner was indicted
on all 59 counts. See IG Ex. 3.

® A violation of section 22-1-11(a) is a felony under Alabama law, regardless of the
amount of money at issue, and is considered to be a Class C Felony based on the potential
term of incarceration. Ala. Code §§ 22-1-11(a) (1975) and 13A-5-6(a)(3) (1975).
Section 22-1-11(a) pertains to “[a]ny person who, with intent to defraud or deceive,
makes, or causes to be made or assists in the preparation of any false statement,
representation, or omission of a material fact in any claim or application for any payment,
regardless of amount, from the Medicaid Agency, knowing the same to be false; or with
intent to defraud or deceive, makes, or causes to be made, or assists in the preparation of
any false statement, representation, or omission of a material fact in any claim or
application for medical benefits from the Medicaid Agency, knowing the same to be
false.” A violation of section 13A-8-3, theft of property in the first degree, is a class B
felony under Alabama law. Ala. Code. § 13A-8-3(d) (1975). Petitioner pleaded guilty to
an attempt to commit the offense of filing a false claim with the Alabama Medicaid
Agency, and an attempt to commit a Class C felony is a Class A misdemeanor in the
State of Alabama. Ala. Code § 13A-4-2(d)(4) (1975).
Petitioner entered into an undated plea agreement with the State of Alabama, with the
signatories including Petitioner’s counsel, along with a prosecuting attorney and the
Acting Alabama Medicaid Commissioner. P. Ex. 1. The plea agreement indicated that
Petitioner had agreed to plead guilty to a single count of “Attempting to File a False
Claim with the Alabama Medicaid Agency in violation of Ala. Code 1975 § 22-1-11,a
Class A misdemeanor,” and that the State of Alabama would make a motion for nolle
prosequi as to the remaining counts alleged in the indictment.’ P. Ex. 1. at 1. The plea
agreement specified that “[rJestitution in the amount of $360,000.00 will be paid prior to
the sentencing date of October 30, 2014 and will be paid by check drawn on the trust
account of counsel for the defendant or by certified bank check and made payable to the
Alabama Medicaid Agency.” P. Ex. | at 1. The agreement further stated that the
“Alabama Medicaid Agency agrees that the restitution amount stated above satisfies all
claims that the Agency has for overpayments due from the defendant, as identified in the
Agency’s November 6, 2013 demand letter to the defendant.” P. Ex. 1 at 1. On
September 11, 2014, Petitioner appeared in the Circuit Court of Montgomery County,
Alabama (Circuit Court) and entered a plea of guilty to the charge of attempting to file a
false claim with the Alabama Medicaid Agency. IG Ex. 3. On October 23, 2014, the
Circuit Court ordered Petitioner to pay $360,000 in restitution to the Alabama Medicaid
Agency no later than October 31, 2014, and the Alabama Medicaid Agency was listed as
a “victim” on the same document. IG Ex. 4 at 1-2. Subsequently, on October 30, 2014,
the Circuit Court sentenced Petitioner to pay $360,000 in restitution, which had already
been paid in full, along with a 12-month period of incarceration, which was suspended,
and a two-year term of probation.” P. Ex. 2 at 1.

Petitioner, in his most recent brief that was filed in response to the IG’s brief, did not
dispute that his conviction mandates exclusion pursuant to section 1128(a)(1) and did not

7 While the plea agreement references an “amended indictment,” neither party has
submitted a proposed exhibit containing an amended indictment that pertains to the
charge to which Petitioner ultimately pleaded guilty.

® Petitioner submitted a plea agreement that indicates that the restitution amount was
based on a November 6, 2013 letter from the Alabama Medicaid Agency. He has
contended that the November 6, 2013 letter involved an “audit” rather than any criminal
wrongdoing. Petitioner has not submitted a copy of this letter as a proposed exhibit.

° Despite his criminal conviction, the Board of Dental Examiners of Alabama allowed
Petitioner to retain his dental license but placed him on probation for five years and
required that he pay a fine of $100,000 along with administrative costs of $5,000. P. Ex.
7. Petitioner’s violations of the Alabama Dental Practice Act, as found by the Alabama
Board of Dental Examiners, included the performance of various procedures on minor
patients that were not indicated or were improperly performed. P. Ex. 7 at 1.
disagree that his “conviction was of a criminal offense related to the delivery of an item
or service under Medicare or a State Medicaid program.” P. Br. at 2. Petitioner was
convicted of attempting to file a false claim with the Alabama Medicaid Agency, which
is a state Medicaid program, and he was therefore undoubtedly convicted of a criminal
offense related to the delivery of a health care item or service. 42 U.S.C. § 1320a-
T(a)(1); see 18 U.S.C. § 1035(a)(2).

2. A 10-year minimum exclusion is not unreasonable based on the presence of
one aggravating factor and no mitigating factors.

As previously discussed, the Act requires a minimum exclusion period of five years when
the exclusion is mandated under section 1320a-7(a). 42 U.S.C. § 1320a-7(c)(3)(B). In
this case, the IG increased the minimum exclusion period from five years to 10 years
based on the existence of one aggravating factor. IG Ex. 1 at 1-2. The IG has the
discretion to impose an exclusion longer than the minimum period when there are
aggravating factors present. See 42 C.F.R. § 1001.102. Neither the IG nor Petitioner has
argued that there are any mitigating factors as set forth in 42 C.F.R. § 1001.102(c) that
may be considered as a basis for reducing the period of exclusion to no less than five
years. The aggravating factor established in this case is that the loss to a Government
program or other entity as a result of Petitioner’s criminal conduct was $5,000 or more.
Id. § 1001.102(b)(1); IG Br. at 5.

Petitioner argues that “the ten (10) year exclusion is not reasonable” and disputes the
amount of financial loss attributable to his criminal conduct. P. Br. at 3-7; P. Affidavit.
Petitioner explained that the indictment was based on three types of procedures:

“crowns, frenectomies, and operculectomies.” P. Br. at 5. With respect to the indictment
that charged him with submitting false claims with respect to these three types of
procedures, Petitioner stated:

Significantly, the amount of these three (3) procedures is a rather modest
part of the total of $360,000, approximately 20 to 25%. And, Dr. Morris
was never charged with any fraud or misrepresentation as to the majority of
the $360,000 recoupment amount.

P. Br. at 5. Petitioner further argues that “the creative math of the IG . . . of 72 times the
regulatory threshold is plainly erroneous and emphasizes ‘unreasonableness’ rather than
‘reasonableness.”” P. Br. at 5. Thus, in his brief, Petitioner concedes that up to 25%, or
$90,000 of the restitution, was a result of the criminal conduct charged in the indictment.

Petitioner took seemingly inconsistent positions regarding his restitution in his written
direct testimony filed on February 8, 2016. In his affidavit, he denied that any of the
restitution was related to his criminal conduct, stating:
Consequently, it is my position that the amount paid in restitution had
nothing to do with the criminal charges and would have been due in any
event.

P. Affidavit at 3. Yet, on the same page of his written direct testimony, Petitioner also
stated:

The procedures set out in the indictment involved crowns, operculectomies,
and frenulectomies, all of which were actually performed and those
procedures were included as part of the audit and a part of the claimed
recoupment amount. Therefore, I would have been required to pay this
amount whether criminal charges were brought or not.

P. Affidavit at 3. Petitioner also argued, through his written direct testimony, that the
“only act resulting in that conviction was . . . an attempt to file a false claim form
involving three (3) crowns” and that the amount at issue was “well under Five Thousand
Dollars.” P. Affidavit at 4-5.

Petitioner’s arguments are not persuasive. First, while Petitioner ultimately pleaded
guilty to a single misdemeanor count, the plea agreement clearly indicated that restitution
in an amount of $360,000 was mandated. P. Ex. 1. While Petitioner feels the amount of
loss is only the cost of the three crowns that were the subject of his guilty plea to a single
count of attempting to file a false claim, he fails to recognize that he agreed to pay, and
the Circuit Court imposed, $360,000 in restitution.

Petitioner has conceded that “20 to 25%,” or up to $90,000 of the recoupment amount of
$360,000 involves conduct that was detailed in the indictment. While Petitioner feels
that up to $90,000 of claims that were the subject of a 59-felony count indictment
amounts to a “rather modest” portion of the amount he was ordered to pay in restitution, I
disagree that up to $90,000 is a “modest” amount of loss. P. Br. at 5. In fact, $90,000 is
18 times the threshold amount listed for consideration as an aggravating factor. 42
C.F.R. § 1001.102(b)(1); see Robert Seung-Bok Lee, DAB No. 2614 (2015), Jeremy
Robinson, DAB No. 1905 (2004), Donald A. Burstein, Ph.D., DAB No. 1865 (2003) (all
stating that loss amounts substantially greater than the $5,000 statutory threshold is an
“exceptional aggravating factor.”) While the total amount of restitution was $360,000, as
I will address more fully below, I conclude that even based on a loss of up to $90,000 to
the Alabama Medicaid Agency, an agency that oversees medical care for low-income
beneficiaries, a 10-year exclusion is warranted.

I recognize that the IG increased the exclusion period to 10 years based on an aggravating
factor involving the full $360,000 amount of restitution. It is well-established that an
amount ordered as restitution is a recognized measure of the amount of program loss. See
e.g., Juan de Leon, Jr., DAB No. 2533 at 5 (2013); Craig Richard Wilder, DAB No.
2416 at 9 (2011). The IG thus properly considered the full amount of $360,000 as an
aggravating factor. Petitioner contends, however, in his testimony that “it is my position
that the amount paid in restitution had nothing to do with the criminal charges and would
have been due in any event.” P. Affidavit at 3. Petitioner contends that the “majority” of
the $360,000 restitution amount resulted from an “audit” rather than his criminal activity.
P. Br. at 5-6; see P. Affidavit at 2. Petitioner argues that the recoupment of $360,000
“involved documentation issues or process issues and never did I receive any information
or communication during the audit process where it was determined that I made a claim
for a dental service that was not provided.” P. Affidavit at 3. While Petitioner
vigorously disputes the basis for restitution and argues that he agreed to pay restitution
for overpayments resulting from poor documentation and other non-criminal reasons, he
has not provided any evidence in support of his bald assertions, other than his
unsupported testimony. For instance, Petitioner spoke at length about the Alabama
Medicaid Agency’s audit of his procedures that formed the basis of the restitution
amount, yet he quizzically did not submit a copy of the audit or the November 6, 2013
demand letter that is referenced in both his written direct testimony and in the plea
agreement. P. Affidavit at 2-3 and P. Ex. | at 1.

Restitution is addressed in the Alabama Code, Section 15-18-65, and that section states
that “it is essential to be fair and impartial in the administration of justice, that all
perpetrators of criminal activity or conduct be required to fully compensate all victims of
such conduct or activity for any pecuniary loss, damage or injury as a direct or indirect
result thereof.” The term “restitution” is defined in the Alabama Code as “[fJull, partial
or nominal payment of pecuniary damages to the victim,” and the term “criminal
activities,” as it pertains to restitution, is defined in the Alabama Code as “[a]ny offense
with respect to which the defendant is convicted or any other criminal conduct admitted
by the defendant.” Ala. Code § 15-18-66(1) and (3) (1975). There is no provision in the
Alabama Code that contemplates an imposition of restitution in excess of an amount that
“fully” compensates a “victim” of “criminal activity or conduct.” Ala. Code §§ 15-18-65
and 15-18-66(1) and (3). While Petitioner alleges that his agreement to pay restitution
was based on non-criminal reasons outlined in a November 2013 demand letter and audit
report, such an agreement, absent any documentary evidence of the basis for restitution,
establishes that the amount of restitution ordered was presumed to have fully
compensated the victim of Petitioner’s criminal activity, i.e. the Alabama Medicaid
Agency, for the pecuniary loss or damage it suffered “as a direct or indirect result” of
Petitioner’s criminal conduct.” Ala. Code § 15-18-65 (1975).

While Petitioner disputes that the $360,000 he agreed to pay, and was ordered to pay,
represents the amount of loss attributed to his criminal conduct and activity, he has not
explained why he agreed to pay $360,000 in restitution as “[fJull, partial or nominal
payment of pecuniary damages” to the Alabama Medicaid Agency as a result of his
criminal “conduct or activity” if he believes the “vast majority” of that amount of money
was a result of “documentation issues or process issues” and not criminal activity. P.
Affidavit at 3. Petitioner was represented by counsel at the time of his plea agreement,
and his counsel adeptly assisted him in successfully negotiating a guilty plea to a single
misdemeanor offense in the face of an indictment of 59 felony counts. P. Ex. 1; IG Ex. 2.
The sentencing order and plea agreement clearly stated that the restitution amount was
$360,000. P. Exs. 1 and 2; see IG Ex. 4. Petitioner has not alleged that his agreement to
pay $360,000 in restitution (P. Ex. 1), and the Circuit Court’s imposition of $360,000 in
restitution (IG Ex. 4 at 1), was contrary to law. While Petitioner now avers that only “20
to 25%” of the $360,000 amount of restitution was related to the criminal conduct that
was charged in the indictment and the remaining amount was not in any way due to the
charged criminal conduct, he has submitted no probative evidence demonstrating that
$360,000 in restitution was ordered for a purpose other than full compensation of
damages to the victim of his crimes, the Alabama Medicaid Agency." IG Ex. 4 at 2.

As the IG points out, the amount of financial loss to the Medicare program was 72 times
the $5,000 minimum loss amount that triggers consideration of the aggravating factor.
IG Br. at 6. While Petitioner argues that only a portion of the restitution was attributable
to the offenses that were charged in the indictment (P. Br. at 5), he also argues, in his
reply to the IG’s objection to his written direct testimony (P. Reply), that the “the only
acts resulting in his conviction were the attempt to file a false claim for services, while
performed by another, [that] totaled far less than One Thousand Five Hundred Dollars
($1,500).” P. Reply at 4. The $360,000 in restitution ordered clearly supports that the
large amount of loss is a significant aggravating factor. See Robinson, DAB No. 1905
(determining that a restitution amount of $205,000, 41 times the minimum amount
required for the aggravating factor, together with other aggravating factors, supported a
15-year exclusion); Juan de Leon, Jr., DAB No. 2533 (sustaining a 20-year exclusion
based on three aggravating factors including financial loss to federal and state programs
of $750,000, criminal conduct over 20 months, and sentence including incarceration, as

'° T note that the payment of restitution may be ordered to be made within a specified
period of time “as a condition of suspension of execution of sentence or as a condition of
probation.” Ala. Code § 15-18-70 (1975). Furthermore, “[w]hen a defendant whose
sentence has been suspended and placed on probation by the court, and ordered to make
restitution, defaults in the payment thereof or of any installment, the court on motion of
the victim or the district attorney or upon its own motion shall require the defendant to
show cause why his default should not be treated as violation of a condition of his
probation.” Ala. Code 15-18-72(a) (1975). Thus, Petitioner’s agreement that he would
pay $360,000 in restitution to the Alabama Medicaid Agency, which was listed as a
victim on the sentencing order, exposed him to the potential for incarceration if he did not
pay the restitution as directed. I point this out because, if Petitioner felt a majority of the
$360,000 amount due to the Alabama Medicaid Agency did not relate to his criminal
activity, he simply could have paid the amount listed in the November 6, 2013 demand
etter in lieu of agreeing to pay that amount through a restitution payment.

10

well as one mitigating factor of government cooperation); but see Eugene Goldman,
M.LD., DAB No. 2635 at 8 (2015) (stating that determining the period of exclusion is
case-specific and based on an evaluation of the aggravating and mitigating factors in the
case); Paul D. Goldenheim, M.D., DAB No. 2268 at 29 (2009) (stating that comparisons
with other cases are not controlling and are of “limited utility”). While I recognize that
the amount ordered in restitution creates only a presumption that the State of Alabama
sentenced Petitioner in accordance with its law and the restitution amount served as full
compensation to the victim of pecuniary damages resulting from Petitioner’s criminal
conduct, Petitioner has failed to provide any probative evidence rebutting that restitution
was ordered as a result of criminal conduct that victimized the Alabama Medicaid
Agency. Furthermore, Petitioner has not refuted the IG’s assertion that the $360,000 in
restitution was based on his charged criminal conduct and “similar acts,” as is permitted
by law. 42 C.F.R. § 1001.102(b)(1); see Michael D. Miran, DAB No. 2469 at 5 (2012)
(noting both that the amount of restitution provided in a plea agreement “has long been
considered a reasonable measure of program loss” and that an attempt to contest the
restitution figure agreed to in a plea agreement is an impermissible collateral attack under
42 CFR. § 1001.2007(d)).

The IG did not consider any mitigating factors in this case, and Petitioner has not
contended in his brief in response to the IG’s brief that any of the regulatory mitigating
factors are present.'! See 42 C.F.R. § 1001.102(c). Therefore, there is no basis to
mitigate the aggravating factor that the IG considered.

In summary, the 10-year period of Petitioner’s exclusion is not unreasonable based on the
aggravating factor present in this case. The amount of loss caused by Petitioner’s
criminal conduct is more than 70 times the threshold loss amount of $5,000 necessary to
trigger consideration of this aggravating factor. Petitioner’s criminal conduct resulted in
a loss of $360,000 to the Alabama Medicaid program and demonstrates his
untrustworthiness and lack of integrity in dealing with health care programs. I therefore
conclude that the 10-year period of exclusion is not unreasonable. See Robinson, DAB
No. 1905 at 3 (ALJ review must reflect the deference accorded to the IG by the
Secretary).

V. Effective Date of Exclusion

The effective date of the exclusion, June 18, 2015, is established by regulation, and I am
bound by that provision. 42 C.F.R. §§ 1001.2002(b), 1005.4(c)(1).

'" Petitioner raised a mitigating factor based on 42 C.F.R. § 1001.102(c)(1) in
conjunction with his request for hearing, but as previously discussed, the financial loss
due to the acts that resulted in his conviction was greater than $1,500. Therefore, section
1001.102(c)(1) is not applicable.
11

VI. Conclusion

For the foregoing reasons, I affirm the IG’s decision to exclude Petitioner from
participation in Medicare, Medicaid, and all other federal health care programs for a
minimum period of 10 years, effective June 18, 2015.

/s/
Leslie C. Rogall
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Vasudevay LLC
d/b/a Town News and Tobacco,

Respondent.
Docket No. C-15-3873
FDA Docket No. FDA-2015-H-3077
Decision No. CR4593

Date: April 26, 2016

INITIAL DECISION

I sustain the determination of the Centers for Tobacco Products of the United
States Food and Drug Administration (CTP) to impose a civil money penalty of
$5,000 against Respondent, Vasudevay LLC, d/b/a Town News and Tobacco.

I. Background

Respondent requested a hearing in order to challenge CTP’s determination to
impose a $5,000 civil money penalty against it. The parties rested their cases
based on written submissions. CTP filed a brief and three proposed exhibits that
are identified as CTP Ex. 1-CTP Ex. 3. Respondent filed a brief. I receive CTP
Ex. 1-CTP Ex. 3 into the record.
II. Issues, Findings of Fact and Conclusions of Law
A. Issues
The issues are whether:

1. Respondent marketed and sold tobacco products in violation of
federal law;
2. Acivil money penalty of $5,000 is reasonable.

B. Findings of Fact and Conclusions of Law

CTP determined to impose a civil money penalty against Respondent pursuant to
the authority conferred by the Federal Food, Drug, and Cosmetic Act (Act) and
implementing regulations at Part 21 of the Code of Federal Regulations (C.F.R.).
The Act prohibits the misbranding of tobacco products while they are held for sale
after shipment in interstate commerce. 21 U.S.C. § 331(k). The Food and Drug
Administration and its agency, CTP, may seek civil money penalties from any
person who violates the Act’s requirements as they relate to the sale of tobacco
products. 21 U.S.C. § 331(f)(9). The sale of tobacco products to an individual
who is under the age of 18 and the failure to verify the photographic identification
of an individual who is not over the age of 26 are violations of implementing
regulations. 21 C.F.R. §§ 1140.14(a), (b)(1). Additionally, having a self-service
display of tobacco products in a facility that allows access to minors is a violation
of implementing regulations. 21 C.F.R.§ 1140.16(c).

CTP alleges that Respondent committed multiple violations of the Act and
implementing regulations and Respondent does not dispute CTP’s allegations of
noncompliance. CTP asserts, and Respondent admits, that Respondent sold
tobacco products to minors on two occasions, failed to verify the purchaser’s
identification on one occasion, and maintained a self-service display of tobacco
products in its facility on two occasions. Respondent’s Answer; CTP Ex. 1.
Specifically, on March 10, 2014 and again on May 6, 2015, Respondent sold
tobacco products (cigarettes) to minor purchasers and, on March 10, 2014 failed to
verify the minor’s identification. CTP Complaint; CTP Ex. 2 at 1-2. Respondent
had a self-service tobacco display in its facility on March 11, 2014, and October 9,
2013. CTP Ex. 2 at 2-4. The admitted violations add up to a total of five
violations of the Act and implementing regulations over a period of about 19
months.

CTP bases its civil money penalty determination of $5,000 on several factors.
First, it argues that Respondent’s noncompliance was egregious; constituting
multiple violations of the Act and regulations over a sustained period of time
notwithstanding the fact that Respondent had been warned explicitly against
violating the law. Second, CTP asserts that Respondent’s violations were serious
because they involved selling a highly addictive and medically dangerous product
to minors. Finally, CTP contends that the penalty of $5,000 is not so large as to
comprise an unduly onerous burden on Respondent. CTP points out that
Respondent earned substantial profits in 2013 and 2014 (gg and
respectively). CTP Brief at 8.

Respondent’s only argument is to assert that a penalty of $5,000 would have a
substantial adverse financial impact on Respondent and its proprietor.
Respondent’s owner, Darshan Bhatt, acknowledges that his business made a profit
but argues that all of the profits earned by Respondent go to pay his personal bills
and expenses.

I do not find Respondent’s argument to be a sufficient basis for reducing the civil
money penalty amount. The undisputed facts are that Respondent egregiously
violated the law and did so despite being warned not to. They show also that
Respondent put the health and safety of minors at risk with its multiple violations.
And, they show that Respondent has the wherewithal to pay the penalty amount
despite its protestations to the contrary. Respondent earned substantial income in
2013 and 2014. It has not proven that its assets and financial resources are
insufficient to pay the penalty amount.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Harton Clinic Company, LLC
(NPI: 1699168195),

Petitioner,

Vv.

Centers for Medicare & Medicaid Services.

Docket

No. C-16-105

Decision No. CR4592

Date: April 25,2016

DE

CISION

The Centers for Medicare & Medicaid Services (CMS), through its administrative
contractor, Cahaba, determined that the effective date for Medicare billing privileges for
Harton Clinic Company, LLC (Harton or Petitioner) was June 10, 2015, and that Harton
could retrospectively bill Medicare for services provided on or after May 11, 2015.
Harton requested a hearing to obtain authorization to bill Medicare for services provided

on and after April 1, 2015. Because Cahal

ba received Harton’s enrollment application on

June 10, 2015, and Cahaba approved that application, Cahaba properly determined that

June 10, 2015, was the effective date of Hi
Cahaba provided Harton with the maximu:
regulations applicable to this case. There:

arton’s Medicare billing privileges. Further,
m retrospective billing period permitted under
ore, I affirm CMS’s determination.

I. Case Background and Procedural History

On July 15, 2015, Cahaba issued an initial

determination in which it approved Harton’s

enrollment application (CMS-855B) as a multispeciality clinic or group practice in the
Medicare program. The initial determination also indicated that the effective date of
Harton’s enrollment was May 11, 2015. CMS Exhibit (Ex.) 7.
Harton disagreed with the initial determination and requested that Cahaba permit it to bill
Medicare for services provided on and after April 1, 2015. Harton explained that it had
acquired Internal Medicine Associates, a preexisting medical practice, on April 1, 2015,
and that the physicians in that practice continued to provide services to Medicare
beneficiaries on and after April 1, 2015. Harton further stated that it had needed to obtain
a taxpayer identification number for the newly acquired practice, but that by April 22,
2015, it submitted multiple Medicare enrollment applications to Cahaba. Apparently,
Harton submitted a CMS-855B enrollment application for the practice and CMS-855R
applications for the reassignment of Medicare benefits from the physicians in the newly
acquired practice to Harton. In June 2015, Harton received correspondence from Cahaba,
“which prompted [Harton] to believe that [Cahaba] did not receive the 855B. Thus, on
6/8/15 the 855B was resubmitted.” CMS Ex. 8.

On October 16, 2015, a Cahaba hearing officer issued an unfavorable reconsidered
determination. The hearing officer found that Cahaba received Harton’s CMS-855B on
June 10, 2015, and that “[t]he application was reviewed, developed for missing/additional
information, and subsequently approved establishing the effective date of enrollment as
June 10, 2015 with a retrospective billing date of May 11, 2015.” CMS Ex. 12 at 2. The
Cahaba hearing officer concluded that under 42 C.F.R. § 424.550(c), Harton needed to
file an enrollment application because Harton changed the taxpayer identification number
of the practice it acquired. The Cahaba hearing officer then applied 42 C.F.R.

§ 424.520(d) to uphold the June 10, 2015 effective date of billing privileges based on the
date Cahaba received the CMS-855B enrollment application. Further, the Cahaba
hearing officer applied 42 C.F.R. § 424.521(a)(1) and upheld Cahaba’s decision to grant
Harton a 30-day retrospective billing period back to May 11,2015. CMS Ex. 12.

By letter dated November 9, 2015, Petitioner timely requested a hearing in order to obtain
an April 1, 2015 effective date for billing privileges. Following the issuance of my
November 16, 2015 Acknowledgment and Pre-hearing Order (Order), CMS filed a
motion for summary judgment, a prehearing brief, and 19 exhibits (CMS Exs. 1-19).
Petitioner failed to timely file a prehearing exchange in accordance with the Order;
therefore, I issued an order to show cause why I should not dismiss Petitioner’s hearing
request for abandonment. Petitioner, now represented by counsel, filed a brief (P. Br.) in
opposition to summary judgment and one exhibit (P. Ex. 1.). In its brief, Petitioner
explained that it was delayed in filing its prehearing exchange by the unavailability of
individuals who had information pertinent to the submission of the enrollment
applications in question. P. Br. at 5.

II. Decision on the Record

I accept that Petitioner did not intend to abandon its hearing request. Therefore, I will not
dismiss the hearing request.
Because neither party objected to the opposing party’s proposed exhibits, I admit CMS
Exs. 1-19 and P. Ex. 1. into the record. See Order § 7; Civil Remedies Division
Procedures (CRDP) § 14(e).

My Order stated that the parties must submit written direct testimony for each proposed
witness and that I would only hold an in-person hearing if the opposing party requested
an opportunity to cross-examine a witness. Order §§ 8-10; CRDP § 16(b). CMS and
Petitioner each submitted written direct testimony from one witness (CMS Ex. 19; P. Ex.
1). However, neither party requested to cross-examine the opposing party’s witness.
Therefore, I issue this decision based on the written record. Order § 11; CRDP § 19(d).

III. Issue

Whether CMS had a legitimate basis to determine that June 10, 2015, was the effective
date for Petitioner’s Medicare billing privileges and that Petitioner could retrospectively
bill for services rendered to Medicare beneficiaries on or after May 11, 2015.

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

The Social Security Act authorizes the Secretary of Health and Human Services
(Secretary) to promulgate regulations governing the enrollment process for providers and
suppliers in the Medicare program.” 42 USC. §§ 1302, 1395cc(j). The terms
“Enroll/Enrollment means the process that Medicare uses to establish eligibility to submit
claims for Medicare covered services and supplies.” 42 C.F.R. § 424.502. Under the
Secretary’s regulations, a provider or supplier who seeks billing privileges under
Medicare must “submit enrollment information on the applicable enrollment application.
Once the provider or supplier successfully completes the enrollment process ... CMS
enrolls the provider or supplier into the Medicare program.” 42 C.F.R. § 424.510(a).

1. Cahaba received Petitioner’s enrollment application (CMS-855B) on
June 10, 2015, and Cahaba approved that application.

CMS’s exhibits show Cahaba received Harton’s CMS-855B enrollment application on
June 10,2015. CMS Ex. 1; CMS Ex. 4; CMS Ex. 19 § 8. Further, the record
demonstrates that after receiving the CMS-855B on June 10, 2015, Cahaba took action to
process that application, ultimately approving it on July 15,2015. CMS Exs. 2, 4-7.

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

> A “supplier” furnishes services under Medicare, and the term supplier applies to
physicians and other nonphysician practitioners and facilities that are not included within
the definition of the phrase “provider of services.” 42 U.S.C. § 1395x(d).
Although Petitioner does not dispute that it mailed a CMS-855B enrollment application
to Cahaba in June 2015, Petitioner asserts that it was merely resubmitting the application
and that it had previously submitted the application on April 22, 2015. Hearing Request
at 1; CMS Ex. 8 at 2. Petitioner supports this earlier submission date by pointing out that
it submitted to Cahaba on April 22, 2015, several CMS-855I and/or CMS-855R
applications related to the reassignment of Medicare benefits from the physicians in the
newly acquired practice to Petitioner (CMS Ex. 13 at 3, 13; CMS Ex. 14 at 3, 13; CMS
Ex. 15 at 4, 14; CMS Ex. 16 at 8, 20; CMS Ex. 17 at 7). Petitioner asserts its normal
business practice was to submit all enrollment and reassignment applications together.

P. Br. at 2; P. Ex. 1 9§ 7-8, 10.

Contrary to Petitioner’s position, CMS presented testimony that Cahaba did not receive a
CMS-855B from Petitioner before June 10, 2015. CMS Ex. 19 § 12. The witness, a
Cahaba employee, conducted a search of its electronic and paper records to reach this
conclusion. CMS Ex. 19 §§ 8-11. The witness also testified that her search uncovered
records indicating that Petitioner had not submitted a CMS-855B to Cahaba until June
2015. Specifically, the witness testified that a Cahaba employee noted that on June 9,
2015, one of Petitioner’s employees indicated to the Cahaba employee that Petitioner had
not decided yet whether to file a CMS-855B. CMS Ex. 18 at 2; CMS Ex. 199 12.
Further, CMS’s witness stated that Petitioner’s June 9, 2015 cover letter accompanying
the CMS-855B explicitly stated that the Petitioner’s CMS-855R reassignment
applications were previously completed on-line. CMS Ex. | at 78; CMS Ex. 19 § 13.
This letter is significant for the fact that it does not state that Petitioner previously filed a
CMS-855B. I find CMS’s witness’ testimony to be compelling because it is based on her
extensive inquiry into Cahaba’s records.

I do not find the testimony of Petitioner’s witness to be as detailed or reliable as the CMS
witness. Petitioner’s witness is only able to testify about the general business practice
that Petitioner engages in when filing enrollment applications. P. Ex. 1 §§ 7-9. However,
Petitioner’s employees who had direct knowledge of the submission of the enrollment
application in this case could not testify because one is deceased and the other is no
longer Petitioner’s employee. P. Ex. 1§ 9. Therefore, the testimony Petitioner offers is
insufficient to prove it mailed the CMS-855B to Cahaba on April 22, 2015, and even
weaker to prove that Cahaba received the CMS-855B allegedly mailed on April 22, 2015.

Based on the evidence of record, I find that Cahaba received Petitioner’s CMS-855B
enrollment application on June 10, 2015, and that Cahaba later approved that application.

2. Cahaba properly concluded that Petitioner’s enrollment was effective
on June 10, 2015, and that Cahaba could establish a retrospective
billing period commencing on May 11, 2015.
In its initial determination, Cahaba stated that the effective date for Petitioner’s Medicare
billing privileges was May 11,2015. CMS Ex.7 at |. In its reconsidered determination,
the Cahaba hearing officer explained that the effective date for Medicare billing
privileges was June 10, 2015, with a retrospective billing period commencing May 11,
2015. CMS Ex. 12 at 2.

The Secretary’s regulations provide that the effective date of enrollment of physicians,
non-physician practitioners, and physician or non-physician practitioner organizations is
the later of the “date of filing” or the date the supplier first began furnishing services at a
new practice location. 42 C.F.R. § 424.520(d). The “date of filing” is the date that the
Medicare contractor “receives” a signed provider/supplier enrollment application that the
Medicare contractor is able to process to approval. 73 Fed. Reg. 69,726, 69,769 (Nov.
19, 2008); see also Caroline Lott Douglas, PA, DAB CR2406, at 5-7 (2011); Rizwan
Sadiq, M.D., DAB CR2401, at 5 (2011). Because Cahaba received the CMS-855B
enrollment application on June 10, 2015, and Cahaba ultimately approved that
application, Cahaba properly determined June 10, 2015, as Petitioner’s effective date.

The regulations applicable to this case permit CMS to grant retrospective billing for
physician or non-physician practitioner services provided up to 30 days before the
effective date of enrollment. 42 C.F.R. § 424.521(a)(1). Thus, Cahaba correctly
determined, based on a June 10, 2015 date of receipt of Petitioner’s CMS-855B
enrollment application, that Petitioner could retrospectively bill for services provided to
beneficiaries beginning on May 11, 2015.

V. Conclusion

I affirm CMS’s determination that Petitioner’s effective date of enrollment is June 10,
2015, with a 30-day retrospective billing period commencing on May 11, 2015.

/s/
Scott Anderson
Administrative Law Judge