Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Keokuk Area Hospital,
(CCN: 16-0008),

Petitioner,
v.
Centers for Medicare and Medicaid Services.
Docket No. C-12-1087
Decision No. CR2697

Date: January 23, 2013

DECISION

Petitioner, Keokuk Area Hospital (Petitioner or Keokuk Hospital), appeals a
determination by the Centers for Medicare and Medicaid Services (CMS) that denied
Petitioner’s request to participate as a “critical access hospital” (CAH) under the
Medicare Rural Hospital Flexibility Program. CMS now moves for summary judgment,
which Petitioner opposes.

For the reasons set forth below, I find that this case presents no genuine dispute of
material facts and that CMS is entitled to judgment as a matter of law. I therefore grant
CMS’s motion for summary judgment.

I. Background

Section 1820 of the Social Security Act (Act) establishes the Medicare Rural Hospital
Flexibility Program, which requires participating states to develop at least one rural
health network and to have at least one facility in the state designated as a CAH. Act

§ 1820(c)(1). A CAH is eligible for higher levels of reimbursement and funding to which
other facilities are not entitled. See Act §§ 1814(1)(1), 1820(g)(1)(D), 1834(1), 1861(v).
Regulations implementing those statutory provisions are found at 42 C.F.R. Part 485,
subpart F. To be designated a CAH, a hospital must meet all statutory and regulatory
requirements. 42 C.F.R. § 485.601(b).

Petitioner is a 49-bed hospital in Keokuk, Iowa.! By letter dated March 14, 2012, anda
CMS-855A enrollment application form, it sought to change its designation from an
“acute hospital” toa CAH. Wisconsin Physician Services (WPS), a CMS contractor,
denied Petitioner’s request, and Petitioner sought reconsideration. By letter dated May
25, 2012, CMS denied Petitioner’s request, finding that the Keokuk Hospital did not
satisfy the proximity requirements for a CAH because it is within a 35-mile drive from
two other hospitals.

Petitioner timely requested a hearing before an administrative law judge (ALJ). With its
hearing request (RFH), Petitioner submitted a 103-page attachment (RFH Attach.).
CMS has moved for summary disposition and filed a brief in support (CMS Br.).
Petitioner responded with a brief opposing summary disposition (P. Br.) and three
additional exhibits (P. Exs. 1-3).

IL. Issues
I consider whether summary judgment is appropriate.
On the merits, the sole issue before me is whether Petitioner qualifies as a CAH.
III. Discussion
1. CMS is entitled to summary judgment because the undisputed facts establish
that Keokuk Hospital is less than a 35-mile drive from other hospitals and

therefore does not meet the proximity requirement for a CAH. 42 C.F.R.
§ 485.610(c).>

' A CAH cannot have more than 25 inpatient beds. Act § 1820(c)(2)(B)(iii); 42 C.F.R.
§ 485.620(a). Petitioner told CMS, and CMS accepted, that Petitioner would reduce its
inpatient bed size to 25 if CMS granted it CAH status. Therefore, whether Petitioner
complied with this participation standard is not at issue before me.

> Petitioner labeled certain documents in its attachment as Exhibits 1-7, but numbered all
of the attached pages consecutively. For example, page 67 is part of “Exhibit 1” while
page 68 is part of “Exhibit 2.” For clarity, I refer to the documents in this attachment by
their consecutive numbers (e.g., RFH Attach. at 68) rather than by the “exhibit” numbers.

> My findings of fact/conclusions of law are set forth, in italics and bold, in the
discussion captions of this decision.
Summary judgment is appropriate if a case presents no genuine issue of material fact, and
the moving party is entitled to judgment as a matter of law. Senior Rehab. & Skilled
Nursing Ctr., DAB No. 2300 at 3 (2010).

CMS denied Keokuk Hospital CAH status because of its proximity to other hospitals.
RFH Attach. at 68-69. Unless the drive is over “mountainous terrain” or in areas with
only “secondary roads,” a CAH must be at least a 35-mile drive from another hospital or
CAH. Act § 1820(c)(2)(B)(i)(D; 42 C.F.R. § 485.610(c).*

The parties agree that Keokuk Hospital is within a 35-mile drive of two other hospitals:
it is 18.77 driving miles from Fort Madison Community Hospital in Fort Madison, Iowa,
and 15.27 driving miles from Memorial Hospital in Carthage, Illinois. The parties also
agree that that the drives are not over “mountainous terrain” or in areas with only
“secondary roads” available. RFH at 2, 4; RFH Attach. at 43. Thus, Petitioner does not
meet the proximity requirements of the statute and regulations and cannot be certified as
aCAH. Act § 1820(c)(2)(B)(i)(D; 42 C.F.R. § 485.610(c); see Cibola General Hospital,
DAB No. 2387 (2011).

2. “Legislative goals” do not override the plain language of the statute and
regulations.

Based on the plain language of the statute and regulations, it seems that CMS must deny
Keokuk Hospital’s request for CAH status. Petitioner nevertheless argues that CMS’s
actions are inconsistent with the legislative goal of “maintaining hospital-level services in
rural communities, thereby ensuring access to care.” RFH at 3. While I agree that
Congress intended to preserve access to hospital services for Medicare beneficiaries in
rural areas, it did so in a more limited way than Petitioner suggests. As the Departmental
Appeals Board pointed out in Cibola, the statute does not provide enhanced
reimbursement for all rural hospitals; rather, it imposes proximity constraints in order “to
identify those hospitals that are critical to maintaining access to hospital services.”
Cibola, DAB No. 2387 at 10.

Further, where, as here, the statutory language is unambiguous, I may not use legislative
history to modify its plain meaning. See Burlington N. R.R. Co. v. Okla. Tax Comm’n,
481 U.S. 454, 461 (1987) (holding that where, as here, the language of a statute is
unambiguous, considering the legislative history to add to the statutory language, is not
appropriate absent “rare and exceptional circumstances”).

* Over mountainous terrain or in areas with secondary roads, the driving distance must
be at least 15 miles. Act § 1820(c)(2)(B)(i)(D); 42 C.F.R. § 485.610(c).
3. Even assuming CMS had the discretion to approve Keokuk Hospital’s CAH
status without regard to the proximity requirements of the statute and
regulation, an ALJ may not substitute his/her own discretion for that of
CMS.

Petitioner also insists that CMS has granted CAH status to at least one other hospital that
did not meet the proximity requirements, which, in Petitioner’s view, means that CMS
may determine that other criteria — e.g., the hospital’s unique location, the municipal need
for access to emergency services — override the proximity requirements. P. Br. at 2-3.°
Whether CMS has such discretion is highly questionable. Even if it has such discretion,
however, my authority is limited to determining whether CMS has a legal basis for its
action, which it plainly had. I may not substitute my own discretion for that of CMS.
Letantia Bussell, M.D., DAB No. 2196 at 12-13 (2008)

Moreover, an ALJ has no authority to disregard the plain language of the statute and
regulations, no matter how compelling the equitable considerations. See Pepper Hill
Nursing & Rehab. Ctr., LLC, DAB No. 2395 at 10-11 (2011) (holding that an ALJ and
the Departmental Appeals Board are bound by the applicable statute and regulations and
not authorized to provide “equitable relief” by enrolling a supplier that does not meet
Medicare statutory and regulatory requirements); /866/CPayday.com, L.L.C., DAB No.
2289 at 14 (2009) (“An ALJ is bound by applicable laws and regulations and may not
invalidate either a law or regulation on any ground.”).

4. That, in 2005, the State of Iowa designated Keokuk Hospital a “necessary
provider” does not entitle it to CAH status.

The Iowa Department of Public Health recognized Petitioner as a “necessary provider”
on September 16, 2005. Prior to the Medicare Prescription Drug, Improvement, and
Modernization Act (MMA) of 2003 (Pub. L. No. 108-173), states such as Iowa that
participated in the Medicare Rural Hospital Flexibility Program could override the

* Petitioner claims that CMS granted CAH status to West Shore Medical Center in
Manistee, Michigan, even though it lies just 28.24 driving miles from another hospital.
P. Br. at 2. Because I find that West Shore Medical’s CAH status is irrelevant here, I do
not consider its eligibility. I note, however, that hospitals within 35 driving miles of
other hospitals may nevertheless qualify as CAHs. See, e.g., 42 C.F.R. § 485.610(c);
State Operations Manual, ch. 2 § 2556A (“A CAH may qualify for application of the
“secondary roads only” criterion if there is a combination of primary and secondary roads
between it and any hospital . . . so long as more than 15 of the total miles from the
ospital . . . consists of areas in which only secondary roads are available.”); Cibola
(finding that close proximity to an Indian Health Service hospital did not disqualify the
applicant).

proximity requirements by deeming the hospital a “necessary provider” of health care
services. The MMA, however, revoked that authority effective January 1, 2006, and
required that all hospitals seeking CAH status be at least a 35-mile drive from the next
closest hospital regardless of whether its state deems it a “necessary provider.” See Pub.
L. 108-173, § 405(h). The preamble to the regulation implementing that amendment
explained:

Section 405(h) of Public Law 108-173 amended section 1820(c)(B)(i)(II) of
the Act by adding language that terminates a State’s authority to waive the
location requirement for a CAH by designating the CAH as a necessary
provider, effective January 1, 2006. Currently, a CAH is required to be
located more than a 35-mile drive (or in the case of mountainous terrain or
secondary roads, a 15-mile drive) from a hospital or another CAH, unless the
CAH is certified by the State as a necessary provider of health care services
to residents in the area. Under this provision, after January 1, 2006, States
will no longer be able to designate a CAH based upon a determination that it
is a necessary provider of health care.

69 Fed. Reg. 48,916, 49,220 (Aug. 11, 2004). Congress excepted from the proximity
requirements those hospitals that, prior to January 1, 2006, had been identified as
“necessary providers” by their states and had already been designated CAHs. See Act

§ 1820(h); Pub. L. 108-173, § 405(h); 69 Fed. Reg. at 49,220. Because Keokuk Hospital
had not been designated a CAH, it does not fall within this exception.

Thus, the undisputed evidence establishes that Keokuk Hospital does not meet CAH
statutory requirements and CMS is therefore entitled to judgment as a matter of law.

IV. Conclusion

I find that this case presents no genuine dispute of material facts, and that CMS is entitled
to judgment as a matter of law. I therefore grant CMS’s motion for summary disposition.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Kulwinder Kaur
d/b/a 7-Eleven #19092,

Respondent.

Docket No. C-13-155
FDA Docket No. FDA-2012-H-1177

Decision No. CR2696

Date: January 23, 2013

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint
(Complaint) against Respondent, Kulwinder Kaur d/b/a 7-Eleven #19092, alleging
facts and legal authority sufficient to justify the imposition of a civil money
penalty of $500. Respondent did not timely answer the Complaint, nor did
Respondent request an extension of time within which to file an Answer.
Therefore, I enter a default judgment against Respondent and assess a civil money
penalty of $500.

CTP began this case by serving a Complaint on Respondent and filing a copy of
the Complaint with the Food and Drug Administration’s (FDA) Division of
Dockets Management. The Complaint alleges that Respondent impermissibly and
repeatedly sold tobacco products to a minor, thereby violating the Federal Food,
Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its implementing
regulations, Cigarettes and Smokeless Tobacco, 21 C.F.R. Part 1140 (2012). CTP
seeks a civil money penalty of $500.

On December 12, 2012, CTP served the Complaint on Respondent by United
Parcel Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and
accompanying cover letter, CTP explained that within 30 days, Respondent should
pay the proposed penalty, file an answer, or request an extension of time within
which to file an Answer. CTP warned Respondent that if it failed to take one of
these actions within 30 days, an Administrative Law Judge could, pursuant to 21
C.F.R. § 17.11, issue an initial decision ordering Respondent to pay the full
amount of the proposed penalty.

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

Specifically, CTP alleges the following facts in its complaint:

e Respondent owns 7-Eleven #19092, an establishment that sells tobacco
products and is located at 3501 West Bethany Home Road, Phoenix, AZ
85019. Complaint { 3.

e¢ On November 8, 2011, an FDA-commissioned inspector observed a
violation of 21 C.F.R. § 1140.14(a), a regulation prohibiting the sale of
cigarettes or smokeless tobacco to a person younger than 18 years of age, at
Respondent’s establishment. Complaint § 12.

e On January 19, 2012, CTP issued a Warning Letter to Respondent
regarding the inspector’s observations from November 8, 2011. The letter
explained that the observations constituted a violation of a regulation found
at 21 C.F.R. § 1140.14(a), that this regulation prohibits the sale of tobacco
products to individuals under the age of 18, and that the named violation
was not necessarily intended to be an exhaustive list of all violations at the
establishment. The Warning Letter went on to state that failure to correct
the violation could result in the imposition of a civil money penalty or other
regulatory action by the FDA and that Respondent is responsible for
complying with the law. Jd.

e Kulwinder “Kelly” Kaur contacted CTP by telephone on February 14,
2012, on Respondent’s behalf. Ms. Kaur described herself as the owner of

7-Eleven #19092 and “stated that it is 7-Eleven's policy to card everyone
under 27 years of age and to not sell tobacco products to anyone under 18.”
She further stated that she would remind staff of this policy. Complaint J
13.

e CTP responded to Ms. Kaur with a letter dated February 21, 2012, in which
it acknowledged receiving Ms. Kaur’s phone call and reminded her of 7-
Eleven, Inc. d/b/a 7-Eleven #19092’s continued obligation to comply with
the Act and its implementing regulations. Jd.

¢ On March 29, 2012, an inspection documented another violation by
Respondent of 21 C.F.R. § 1140.14(a), when Respondent sold “a package
of Newport Box cigarettes” to a person younger than 18 years of age at
approximately 10:38 AM. Complaint 4 10.

e CTP initiated a civil money penalty action on August 7, 2012, against
Respondent as a result of the March 29, 2012 violation. The action
“concluded with Kulwinder Kaur, d/b/a 7-Eleven #19092 paying the
penalty and the court closing the case on October 1, 2012.” Complaint §
ll.

e¢ On November 2, 2012, CTP issued a Notice of Compliance Check
Inspection to Respondent’s establishment due to a minor’s purchase of a
regulated tobacco product, “a package of Natural American Spirit
cigarettes,” at the establishment on October 25, 2012, at approximately
12:06 PM. The Notice stated that the violation described was not
necessarily the only violation reported. Complaint { 2.

These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is
misbranded if distributed or offered for sale in any state in violation of regulations
issued under section 906(d) of the Act. 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R §
1140.1(b). The Secretary issued the regulations at 21 C.F.R. Part 1140 under
section 906(d) of the Act. 21 U.S.C. 387(a); 21 U.S.C. § 387f(d)(1); 75 Fed. Reg.
13,229 (Mar. 10, 2010). The regulations prohibit the sale of cigarettes or
smokeless tobacco to any person younger than 18 years of age. 21 C.F.R. §
1140.14(a).

Taking the above alleged facts as true, Respondent had three violations of
regulations contained in 21 C.F.R. Part 1140 within a twelve month period.
Specifically, Respondent had a violation on November 8, 2011, a violation on
March 29, 2012, and a violation on October 25, 2012. Respondent’s actions on
each occasion violated the prohibition on retailers’ sales of cigarettes or smokeless
tobacco to individuals less than 18 years of age. 21 C.F.R. § 1140.14(a).
Therefore, Respondent’s actions constitute violations of law for which a civil
money penalty is merited. The regulations require the imposition of a civil money
penalty in the amount that is either the maximum provided for by law or the
amount sought in the complaint, whichever is smaller. 21 C.F.R. § 17.11(a)(1)-
(2). Accordingly, I find that a civil money penalty of $500 is warranted and so
order one imposed.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Jennifer Lynn Dohl
(O.I. File No. H-12-40408-9),

Petitioner
v.
The Inspector General.
Docket No. C-12-1188
Decision No. CR2695
Date: January 22, 2013
DECISION

Petitioner, Jennifer Lynn Dohl, is excluded from participation in Medicare, Medicaid,
and all other federal health care programs pursuant to section 1128(b)(4) of the Social
Security Act (Act) (42 U.S.C. § 1320a-7(b)(4)), effective July 19, 2012. Petitioner is
excluded because her license to practice nursing was suspended by the Wisconsin Board
of Nursing in the Wisconsin Department of Safety and Professional Services (Wisconsin
Board of Nursing) for reasons bearing on her professional competence or professional
performance. There is a proper basis for the exclusion. The Act requires Petitioner’s
exclusion for not less than the period during which her state license is suspended.' Act
§ 1128(c)(3)(E) (42 U.S.C. § 1320a-7(c)(3)(E)).

' Pursuant to 42 C.F.R. § 1001.3001, Petitioner may apply for reinstatement only after
the period of exclusion expires. Reinstatement is not automatic upon completion of the
period of exclusion.
I. Background

The Inspector General for the Department of Health and Human Services (L.G.) notified
Petitioner by letter dated June 29, 2012, that she was being excluded from participation in
Medicare, Medicaid, and all federal health care programs pursuant to section 1128(b)(4)
of the Act, until she regains her license as a registered nurse in the State of Wisconsin and
is reinstated in the program by the I.G. Petitioner requested a hearing pursuant to 42
C.F.R. §1005.2, by letter dated July 5, 2012, which was received by the Civil Remedies
Division on August 17, 2012. The case was assigned to me for hearing and decision on
August 24, 2012. On September 21, 2012, I convened a telephonic prehearing
conference, the substance of which is memorialized in my Order dated September 21,
2012. During the conference, Petitioner did not waive an oral hearing and the L.G.
requested an opportunity to file a motion for summary judgment.

The LG. filed a motion for summary judgment on October 19, 2012 (1.G. Brief), with I.G.
Exhibits (1.G. Exs.) 1 through 3. Petitioner filed her response (P. Brief) on November 20,
2012, with Petitioner’s affidavit and three exhibits (P. Exs.) | through 3.” The LG. filed
a reply (1.G. Reply) on December 4, 2012. No objection has been made to my
consideration of I.G. Exs. | through 3 and they are admitted as evidence. The I.G.
objects to my consideration of Petitioner’s proposed exhibits and argues that they should
be excluded. The I.G. contends that Petitioner’s exhibits are not admissible because they
are not marked as required by the CRDP. Petitioner corrected the error by filing its
amended exhibit list and exhibits properly marked on December 7, 2012, and the exhibits
are not excluded on that basis. The I.G. also objects to the admission of P. Ex. 2 and P.
Ex. 3, arguing that the exhibits are irrelevant and have no bearing on the issue of whether
the I.G. is authorized to exclude Petitioner based on Petitioner’s loss of her nursing
license in Wisconsin for reasons bearing on her professional competence and professional
performance; or the issue of the reasonableness of the period of exclusion. LG. Reply at
2. P. Ex. 2 and P. Ex. 3 are not relevant because they do not help me resolve any issue in
dispute before me. P. Ex. 2 and P. Ex. 3 are also not relevant as evidence reflecting
Petitioner’s credibility or character as Petitioner’s credibility and her character are not in
issue. Petitioner’s P. Ex. 2 and P. Ex. 3 are not relevant and not admitted as evidence.
Although P. Ex. 1 seems to support the Wisconsin Board of Nursing’s action, that action
is not subject to my review and P. Ex. | is not relevant to any issue I may decide. I do

> Petitioner originally submitted exhibits which were not marked in accordance with my
September 21, 2012 Prehearing Order and the Civil Remedies Division Procedures
(CRDP). Petitioner’s exhibits were not returned to Petitioner for correct marking as the
exhibits are distinguishable despite the incorrect marking. On December 7, 2012,
Petitioner filed an amended exhibit list and P. Exs. 1 through 3 marked correctly.
consider Petitioner’s affidavit (P. Aff.) submitted in support of her opposition to the I.G.
motion for summary judgment.

II. Discussion
A. Issues

The Secretary of Health and Human Services (the Secretary) has by regulation limited
my scope of review to two issues:

Whether there is a basis for the imposition of the exclusion; and
Whether the length of the exclusion is unreasonable.

42 CFR. § 1001.2007(a)(1).
B. Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) provides Petitioner’s right to
reasonable notice and an opportunity for a hearing before an administrative law judge
(ALJ) and judicial review of the final action of the Secretary.

Pursuant to section 1128(b)(4)(A) of the Act, the Secretary may exclude from
participation in Medicare, Medicaid, and all federal health care programs, any individual
whose license to provide health care is revoked or suspended by any state licensing
authority for reasons bearing upon the individual’s professional competence, professional
performance, or financial integrity. 42 C.F.R. § 1001.501(a)(

LS

The standard of proof is a preponderance of the evidence, and the state agency
determination revoking Petitioner’s state license is not subject to my review. 42 C.F.R.
§ 1001.2007(c), (d). Petitioner bears the burden of proof and persuasion on any
affirmative defenses or mitigation factors, and the I.G. bears the burden on all other
issues. 42 C.F.R. § 1005.15(b) and (c).

C. Analysis

My conclusions of law are in bold followed by my findings of fact and analysis.
1. Petitioner’s request for hearing is timely, and I have jurisdiction.
2. Summary judgment is appropriate in this case.

There is no dispute that Petitioner timely requested a hearing and that I have jurisdiction.
The right to hearing before an ALJ is accorded to a sanctioned party by 42 C.F.R.

§§ 1001.2007(a) and 1005.2, and the rights of both the sanctioned party and the LG. to
participate in a hearing are specified by 42 C.F.R. § 1005.3. Either or both parties may
choose to waive appearance at an oral hearing and to submit only documentary evidence
and written argument for my consideration. 42 C.F.R. § 1005.6(b)(5). An ALJ may also
resolve a case, in whole or in part, by summary judgment. 42 C.F.R. § 1005.4(b)(12).
Summary judgment is appropriate, and no hearing is required, where either: there are no
disputed issues of material fact, and the only questions that must be decided involve
application of law to the undisputed facts; or the moving party prevails as a matter of law,
even if all disputed facts are resolved in favor of the party against whom the motion is
made. A party opposing summary judgment must allege facts that, if true, would refute
the facts that the moving party relied upon. See, e.g., Fed. R. Civ. P. 56(c); Garden City
Med. Clinic, DAB No. 1763 (2001); Everett Rehab. and Med. Ctr., DAB No. 1628, at 3
(1997) (finding in-person hearing required where non-movant shows there are material
facts in dispute that require testimony); Thelma Walley, DAB No. 1367 (1992); see also
New Life Plus Ctr., DAB CR700 (2000); New Millennium CMHC, Inc., DAB CR672
(2000).

Summary judgment is appropriate in this case. There is no dispute that Petitioner’s
Wisconsin nursing license was suspended for an indefinite period. 1.G. Ex. 3; P. Aff.; P.
Br. at 2. There is also no genuine dispute as to any material issue of fact related to the
issue of whether Petitioner’s nursing license was suspended for reasons bearing upon her
professional competence, professional performance, or financial integrity as discussed
hereafter. Whether the I.G. has authority to exclude Petitioner pursuant to 1128(a)(4) is
an issue that must be resolved against Petitioner as a matter of law based upon the
undisputed facts. The issue of the reasonableness of the period of exclusion must also be
resolved against Petitioner as the period of exclusion is specified by section
1128(c)(3)(E) of the Act. Accordingly, summary judgment is appropriate.

3. There is a basis for Petitioner’s exclusion pursuant to section
1128(b)(4) of the Act.

The LG. cites section 1128(b)(4) of the Act as the basis for Petitioner’s permissive
exclusion. I.G. Ex. 1. The statute provides:

(b) PERMISSIVE EXCLUSION. — The Secretary may
exclude the following individuals and entities from
participation in any Federal health care program (as defined
in section 1128(f):

ek KK
(4) LICENSE REVOCATION OR SUSPENSION. —- ANY
INDIVIDUAL OR ENTITY —
(A) whose license to provide health care has been revoked or
suspended by any State licensing authority, or who has
otherwise lost such a license or the right to apply for or renew
such a license, for reasons bearing on the individual’s or
entity’s professional competence, professional performance,
or financial integrity.

Thus, the elements that must be proven for exclusion pursuant to section 1128(b)(4) are:
(1) the individual’s state license to provide health care has been suspended or revoked by
a state licensing authority, and (2) the revocation or suspension is for reasons bearing on
the individual’s professional competence, professional performance, or financial
integrity.

Petitioner held a nursing license in Wisconsin. In January 2012, the Wisconsin Board of
Nursing brought formal disciplinary proceedings against Petitioner. P. Br. at 2; P. Aff.;
1.G. Ex. 3. Petitioner admits that she developed an addiction to prescription drugs, due to
pain resulting from surgeries, and that her nursing license was suspended by the
Wisconsin Board of Nursing based on facts to which she stipulated. P. Br. at 2; P. Aff.
The Wisconsin Board of Nursing made findings of fact based on Petitioner’s stipulations
of fact. The findings of fact included that:

[Petitioner] was working as a home health care nurse . . . in
Fond du Lac, Wisconsin.

On September 2, 2011 and September 3, 2011, a patient
reported that [Petitioner] diverted approximately 100
Morphine tablets from her home. The tablets varied in
strength from 15mg to 60mg.

On September 6, 2011, [Petitioner] was admitted, voluntarily,
to a treatment center in Florida for opioid, benzodiazepine,
and alcohol dependency. [Petitioner] left the treatment
facility on September 27, 2011 against doctor
recommendation.

[Petitioner] disclosed that she uses approximately ten (10)
opioid tablets per day, stolen from patient prescriptions, and
three (3) benzodiazepine tablets per day, which she obtained
from her mother’s prescription.”

1.G. Ex. 3 at 2. The Wisconsin Board of Nursing concluded that Petitioner used drugs to
an extent that such use impaired her ability to safely or reliably perform her nursing
duties. P. Br. at 2-3; I.G. Ex. 3 at 1-2; Wis. Admin. Code § 7.03(2).
Petitioner does not deny that her nursing license was suspended by the Wisconsin Board
of Nursing. P. Brief at 2; P. Aff.; LG. Ex. 3. Thus, the first element under section
1128(b)(4) of the Act is satisfied.

The L.G. argues regarding the second element that the suspension of Petitioner’s license
by the Wisconsin Board of Nursing was for reasons bearing on her professional
competence and professional performance. Petitioner disputes the I.G.’s conclusion and
argues that the I.G. should not exercise a permissive exclusion in this case. Petitioner
contends that her nursing license was not suspended for reasons bearing on her
professional competence and professional performance. Petitioner argues that the
suspension of her “nursing license was for reasons that her addiction impaired her ability
to safely and reliably perform her nursing duties” and “there was no finding that she
actually put any patient in harm’s way or underperformed in her actual job.” P. Br. at 4.
Petitioner also argues that the Wisconsin Board of Nursing did not use the terms
“professional competence” or “professional performance” in the findings of fact in its
enforcement action. P. Br. at 4. Thus, Petitioner contends that there are issues of
material fact in dispute which impact the I.G.’s authority to exclude Petitioner from
participation in Medicare, Medicaid, and all other federal health care programs. P. Br. at
4.

The L.G. argues that the plain meaning of the terms “professional competence” and
“professional performance” encompasses the ability to practice a licensed service with
reasonable skill and safety. I.G. Br. at 8. The I.G. points out that the Wisconsin
Administrative Code provision under which the Wisconsin Board of Nursing reviewed
Petitioner’s conduct and the statute under which the Wisconsin Board of Nursing
suspended Petitioner’s nursing license relate to issues of “professional competence” and
“professional performance”. Wis. Stat. § 441.07(1)(c) (Wisconsin Nursing Board may
revoke, limit, or suspend nursing license for acts that show nurse is “unfit or incompetent
by reason of negligence, abuse of alcohol or other drugs or mental incompetency.”); Wis.
Admin. Code § 7.03(2) (“‘[a]buse of alcohol or other drugs’ is the use of alcohol or any
drug to an extent that such use impairs the ability of the licensee to safely or reliably
practice”). The I.G. contends that although the Wisconsin Board of Nursing did not
explicitly use the terms “professional competence” and “professional performance” the
underlying basis for the Wisconsin Board of Nursing’s action related to Petitioner’s
professional competence and professional performance. I.G. Br. at 8. The I.G. argues
that section 1128(b)(4) of the Act does not require that the state agency make specific
findings regarding an individual’s professional competence or professional performance
as a prerequisite to the I.G. exercising authority to exclude an individual. The I.G.’s
position is that the statute only requires that a formal disciplinary proceeding concern the
individuals’ professional competence or professional performance. I.G. Br. at 8-9.

The facts are not in dispute. Petitioner’s license to practice nursing was suspended by the
Wisconsin Board of Nursing on January 26, 2012. I.G. Ex. 3. The Wisconsin Board of
Nursing found, based upon Petitioner’s stipulations, that Petitioner stole narcotics from
patient prescriptions for her personal use and that she was admitted to a treatment facility
for opioid, benzodiazepine, and alcohol dependency. 1.G. Ex. 3 at 2. The Wisconsin
Board of Nursing decided to suspend Petitioner’s nursing license pursuant to Wis. Stat. §
441.07(1)(c) based upon the conclusion that Petitioner was unfit or incompetent by
reason of abuse of alcohol or other drugs within the meaning of Wis. Stat. § 441.07(1)(c).
The Board of Nursing found that Petitioner used alcohol and drugs to such an extent that
er usage had impaired her ability to safely or reliably practice nursing. I.G. Ex. 3 at 2.
The specific findings of facts and conclusions of law of the Wisconsin Board of Nursing
show that the Wisconsin Board of Nursing suspended Petitioner’s Wisconsin nursing
icense, as well as Petitioner’s privilege to practice as a nurse under the authority of
another state’s license pursuant to the Nurse Licensure Compact. I conclude as a matter
of law based on the stipulated facts and the language of the Wisconsin statute and
administrative code that the suspension was for reasons related to Petitioner’s
professional competence and professional performance. I.G. Ex. 3. Section 1128(b)(4)
does not require that any patient suffer deficient care or actual harm at the hands of
Petitioner. Furthermore, Petitioner cannot attack in this proceeding and I may not review
the findings and conclusions of the Wisconsin Board of Nursing. 42 C.F.R. §
1001.2007(d). Accordingly, I conclude that the second element required for exclusion
pursuant to 1128(b)(4) of the Act is satisfied, and the I.G. has a legal basis to exclude
Petitioner.

Petitioner urges me to review the I.G.’s decision to exercise the discretion to exclude
Petitioner from all healthcare fields. My authority is limited to determining whether there
is a basis for exclusion. I have no authority to review the I.G.’s exercise of discretion to
exclude Petitioner once I conclude that there is a legal basis for exclusion. 42 C.F.R.

§ 1005.4(c)(5); Keith Michael Everman, D.C., DAB No. 1880 (2003).

4. The period of exclusion is reasonable as a matter of law.

Petitioner argues that the length of her exclusion is not reasonable. Petitioner argues that
it is unreasonable for the I.G. to require that Petitioner’s nursing licensing be reinstated
by the Wisconsin Nursing Board as a requisite for Petitioner’s reinstatement in Medicare.
Petitioner does not read section 1128(c)(3)(E) of the Act to require that the health care
license suspended or revoked be reinstated. Rather, Petitioner argues that 1128(c)(3)(E)
of the Act should be construed to provide that the duration of the period of exclusion
under section 1128(b)(4) is only until Petitioner obtains a license to provide healthcare.
P. Br. at 4. Petitioner hopes to obtain a health care license as an Alcohol and Other Drug
Abuse (AODA) counselor. Petitioner argues that if she is able “to obtain a license to
provide health care treatment as an AODA counselor, this should be appropriate to
terminate the exclusion.” P. Br. at 5. Petitioner contends that “the duration of her
exclusion should not be concurrent with the period of her suspension from the practice of
nursing in Wisconsin, it should be until she obtains another health care license in the
Medical area, such as an AODA counselor’s license, at which point she should then be
permitted to participate in Medicare, Medicaid, and all other federal health care
programs.” P. Br. at 5.

The LG. argues that as long as Petitioner’s license to practice nursing in Wisconsin is
suspended, she is excluded from participation in all federal health care programs. The
1.G. states that “[i]t is plain from the language of the 1996 amendment of section
1128(c)(3) of the Act that the minimum length of the exclusion must be coterminous with
the term of revocation or suspension” and that “Petitioner is required to obtain the same
type of license that she lost before she can be considered for reinstatement as a
participant in Medicare Medicaid, and other federal health care programs.” I.G. Reply at
3. The I.G. cites to cases of other ALJ’s such John C. Cheek, M.D., DAB CR665 (2000),
Jordan Sterns, M.D., DAB CR669 (2000) and Mary E. Groten, DAB CR518 (1998) to
support the I.G.’s position. The I.G. also contends that “Congress has determined that the
licensing authority taking action against an individual’s license is in the best position to
determine whether or not the reasons for the disciplinary action have been remediated”
and cites to section 1128(b)(4) of the Act and Manuel Roque Carranto, DAB CR1412
(2006). I.G. Reply at 3-4.

Petitioner’s license to deliver health care as a nurse remains suspended and there is a
basis for Petitioner’s exclusion from the federal Medicare program. Pursuant to section
1128(c)(3)(E) of the Act, the period of exclusion “shall not be less than the period during
which the individual’s or entity’s license to provide health care is revoked, suspended, or
surrendered, or the individual is excluded or suspended from a Federal or State health
care program.” Petitioner has not been reinstated as a nurse and she has not received a
license as an AODA counselor. I may not issue an advisory opinion or a decision based
on hypothetical facts. Accordingly, I conclude that there are currently no facts that raise
an active issue before me requiring interpretation of section 1128(c)(3)(E) of the Act or
its application. I conclude that the period of exclusion is reasonable as a matter of law
under section 1128(c)(3)(E) of the Act on the facts before me.

III. Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare,
Medicaid, and all federal health care programs effective July 19, 2012, for the period
specified by the regulations.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Keun Hee Lee
d/b/a Sun Market,

Respondent.
Docket No. C-13-171
FDA Docket No. FDA-2012-H-1194
Decision No. CR2693

Date: January 22, 2013

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for To
Respondent that al

bacco Products (CTP) filed an administrative complaint against
leges facts and legal authority sufficient to justify the

imposition of a $250 civil money penalty. Respondent did not timely answer the

complaint, nor di

Respondent request an extension of time within which to file an

answer. Therefore, I enter a default judgment against Respondent, Keun Hee Lee

d/b/a Sun Market,

and assess a civil money penalty of $250.

CTP began this case by serving a complaint on Respondent and filing a copy of

the complaint wit

the Food and Drug Administration’s (FDA) Division of

Dockets Management. The complaint alleges that Respondent impermissibly sold
tobacco products to a minor on two separate occasions and failed to verify the age

of the purchaser t!

rough photographic identification on one occasion, thereby

violating the Federal Food, Drug, and Cosmetic Act (Act) and its implementing
regulations found at 21 C.F.R. Part 1140. CTP seeks a civil money penalty of
$250 for these three violations.

On December 14, 2012, CTP served the complaint on Respondent by United
Parcel Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the complaint and
accompanying cover letter, CTP explained that, within 30 days, Respondent
should pay the penalty, file an answer, or request an extension of time within
which to file an answer. CTP warned Respondent that, if it failed to take one of
these actions within 30 days, the Administrative Law Judge could issue an initial
decision ordering Respondent to pay the full amount of the proposed penalty,
pursuant to 21 C.F.R. § 17.11.

Respondent has not filed an answer within the time provided by regulation or
timely requested an extension. Pursuant to 21 C.F.R. § 17.11(a), 1am required to
“assume the facts alleged in the complaint to be true, and, if such facts establish
liability under [the Act],” issue a default judgment and impose a civil money
penalty. Accordingly, I must determine whether the allegations in the complaint
establish violations of the Act.

Specifically, CTP alleges that:

Respondent owns Sun Market, an establishment that sells tobacco products
and is located at 11101 West Buckeye Road, Cashion, Arizona 85329.

On January 4, 2012, an FDA-commissioned inspector performed an
inspection of Sun Market and noted two violations. First, the inspector
observed the “[s]ale of cigarettes or smokeless tobacco to a person younger
than 18 years of age, in violation of 21 C.F.R. § 1140.14(a)[.]” Complaint
49.a. The inspector also observed the “[fJailure to verify by means of
photographic identification, containing the bearer’s date of birth, that no
person purchasing cigarettes or smokeless tobacco is younger than 18 years
of age, as required by 21 C.F.R. § 1140.14(b)(1).” Complaint { 9.b.

CTP then issued a warning letter to Sun Market on March 1, 2012,
informing Respondent of the violations that the FDA-commissioned
inspector had observed on January 4, 2012. The letter advised that it was
not intended to provide an exhaustive list of violations and that the failure
to correct violations could result in the imposition of a civil money penalty
or other regulatory action. Moreover, the letter informed that Sun Market
maintained the responsibility to ensure that it complied with the law.

On March 11, 2012, Respondent replied to CTP’s warning letter in writing
and through representatives. Respondent “apologized for the sale and
stated the establishment would check identification with the sale of every
tobacco product.” Complaint § 10.

e Pursuant to a two-part inspection performed on May 31, and June 8, 2012,
FDA-commissioned inspectors noted that “a person younger than 18 years
of age was able to purchase a package of Marlboro cigarettes on May 31,
2012, at approximately 12:16 PM[,]” in violation of 21 C.F.R. §
1140.14(a). Complaint § 1.

Taking these facts as true, I must find pursuant to 21 C.F.R. § 17.11(a) that
Respondent is liable under the Act. The Act prohibits misbranding of a tobacco
product. 21 U.S.C. § 331(k). A tobacco product is misbranded if sold or
distributed in violation of regulations issued under section 906(d) of the Act,
codified at 21 U.S.C. § 387f(d). 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R § 1140.1(b).
The regulations prohibit the sale of cigarettes or smokeless tobacco to any person
younger than 18 years of age. 21 C.F.R. § 1140.14(a). The regulations also
require a retailer to “verify by means of photographic identification containing the
bearer’s date of birth that no person purchasing the product is younger than 18
years of age[,]” 21 C.F.R. § 1140.14(b)(1), though “[n]Jo such verification is
required for any person over the age of 26[,]” 21 C.F.R. § 1140.14(b)(2).

Here, Respondent sold tobacco products to a minor on two separate occasions and
failed to verify the age of the purchaser on one of those occasions in violation of
the foregoing regulations. Respondent’s actions and omission constitute violations
of law for which a civil money penalty is merited. The regulations require the
imposition of a civil money penalty in the amount that is either the maximum
provided for by law or the amount sought in the complaint, whichever is smaller.
21 C.F.R. § 17.11(a)(1)-(2). Respondent has committed three violations within a
24-month period, the maximum penalty for which is $500. 21 C.F.R. § 17.2;
Guidance for FDA and Tobacco Retailers, Civil Money Penalties and No-
Tobacco-Sale Orders For Tobacco Retailers (Revised), November 2012,
(available at
http://www.fda.gov/downloads/TobaccoProducts/GuidanceCompliance
RegulatoryInformation/UCM252955.pdf). CTP, however, has requested a civil
money penalty in the amount of $250, which is the maximum penalty for the
second violation committed within a 12-month period. Therefore, I impose a civil
money penalty in the amount of $250.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Donna M. Jolley, LCSW
(PTAN: 0010084003),

Petitioner,
v.
Centers for Medicare and Medicaid Services.
Docket No. C-12-1245
Decision No. CR2692

Date: January 17, 2013

DECISION

Wisconsin Physicians Service Insurance Corporation (WPS), an administrative contractor
acting on behalf of the Centers for Medicare and Medicaid Services (CMS), determined
that Petitioner did not meet Medicare enrollment criteria to enroll as a clinical social
worker. Petitioner appealed. For the reasons stated below, I affirm the determination to
deny Petitioner’s June 15, 2012 enrollment application.

I. Background and Procedural History

On June 15, 2012, Petitioner applied to enroll in Medicare as a clinical social worker.
CMS Exhibit (Ex.) 1. On July 9, 2012, WPS denied Petitioner’s application stating she
“d[id] not meet the conditions of enrollment or meet the requirements to qualify as a
Clinical Social Worker.” CMS Ex. 5, at 1. Petitioner requested reconsideration and
indicated that Petitioner had been previously enrolled as a clinical social worker. CMS
Ex. 6. WPS issued an unfavorable reconsidered determination on September 6, 2012,
stating that, under 42 C.F.R. § 410.73, “a Clinical Social Worker is an individual who
possesses a master’s or doctor’s degree in social work,” and concluding that Petitioner
“does not meet the compliance requirements” for enrollment because “[o]ur records
indicate that the diploma states Masters in Science and the transcripts only indicate
counseling classes and counseling as the major.” CMS Ex. 7.

On September 11, 2012, Petitioner filed a request for a hearing. I was assigned to hear
and decide this case. In response to my September 21, 2012 Acknowledgment and Pre-
hearing Order (Order), CMS timely filed a motion for summary disposition and brief and
seven proposed exhibits. Petitioner filed an untimely response and five proposed exhibits
on January 4, 2013. However, because neither party objects to any of the exhibits, I
admit CMS Exs. | through 7 and Petitioner’s Exhibits (P. Exs.) 1 through 5 into the
record.' Neither party offered any witnesses. Accordingly, the record is closed and I
issue this decision based on the written record. See Order § 12.

II. Discussion

In order to participate in the Medicare program as a supplier,’ individuals and entities
must meet certain criteria to enroll and receive billing privileges. 42 C.F.R. §§ 424.505,
424.510. For Medicare purposes, a clinical social worker is an individual who: (1)
possesses a master’s degree or doctor’s degree in social work; (2) has performed at least
two years of supervised clinical social work after receiving the degree; and (3) as
applicable here, is licensed or certified in the state in which the services are performed.
42 U.S.C. § 1395x(hh)(1)(A); 42 C.F.R. § 410.73(a).

A. Issue

Whether CMS had a legitimate basis to deny Petitioner enrollment in the Medicare
program as a clinical social worker.

B. Finding of Fact, Conclusion of Law, and Analysis*

1. Petitioner possesses a Master of Science degree with a concentration
in counseling and does not possess a master’s or doctor’s degree in
social work,

Petitioner admits that she does not possess a master’s degree or doctor’s degree in social
work. P. Br. at 2. The evidence of record supports Petitioner’s admission, showing that
Petitioner possesses a Master of Science degree with a major in counseling and a

' Petitioner has titled her exhibits “DMJ” exhibits. I refer to them as P. Exs.

> A “supplier” is “a physician or other practitioner, a facility, or other entity (other than a
provider of services) that furnishes items or services.” 42 U.S.C. § 1395x(d).

* My findings of fact and conclusions of law are set forth in italics and bold font.
Wisconsin license as a clinical social worker, but no master’s degree or doctor’s degree
in social work. CMS Ex. 2, at 1, 5; P. Exs. 2-4.

2. Petitioner is ineligible to enroll in the Medicare program as a clinical
social worker because she does not have a master’s degree or doctor’s
degree in social work, as required by the applicable statute and
regulations.

To enroll in Medicare as a clinical social worker, the statute and regulations are clear that
an individual must possess at least a master’s degree or a doctor’s degree in social work.
42 U.S.C. § 1395x(hh)(1)(A); 42 C.F.R. § 410.73(a)(1). Nothing in the statute or the
regulations provides that an individual may qualify to provide clinical social work
services with a degree that fails to precisely satisfy the criteria to participate as a clinical
social worker. Individuals have been consistently denied enrollment in Medicare when
their credentials do not satisfy the statutory and regulatory criteria. Sheldon Pinsky,
Ph.D., LICSW, DAB No. 2412 (2011); Vikki L. Green, LMSW, DAB CR2318 (2011);
Jeanne E. Daly-McIntee, DAB CR2073 (2010); Sherry K. Jose, LICSW, DAB CR1750
(2008); Dorothy Rose Hrynvk, DAB CR1444 (2006).

In her brief, Petitioner asks that she be allowed to continue to participate in Medicare as a
clinical social worker. She states that she was enrolled in Medicare as a clinical social
worker on December 17, 2007, and that she filed her June 15, 2012 enrollment
application simply due to a change in employment. Petitioner argues that precedent has
thus been established to grant her participation based on the same credentials she had
when she was previously enrolled as a clinical social worker. Petitioner also asserts that
she provides her services in a poor rural area where 14% of her clinic’s clients have
Medicare as their primary insurance. Petitioner asserts that CMS’s determination has
adversely affected the lives of her clients because there are only two female enrolled
clinicians within 31.8 miles of her location.

Nothing in the statute or regulations permits me to accept another degree as functionally
equivalent to a master’s or doctor’s degree in social work. See 42 U.S.C.

§ 1395x(hh)(1)(A); Pinsky, DAB No. 2412, at 3; Daly-McIntee, DAB CR2073, at 4-5;
see also 1866I1CPayday.com, L.L.C., DAB No. 2289, at 14 (2009) (an administrative law
judge is bound by a law or regulation); Elizabeth M. Prokay, DAB CR1860, at 3-4 (2008)
(holding statute does not allow for a “functional equivalent” exception to participation
criteria); Rosalyn L. Olian, DAB CR1472 (2006) (rejecting equivalency argument).
While I recognize that Petitioner was previously enrolled in Medicare as a clinical social
worker and understand her expectation that she should be re-enrolled in Medicare as a
clinical social worker because nothing has changed in her status, I am unable to provide
Petitioner the equitable relief she seeks. CMS has the authority to deny Medicare
enrollment to an individual or entity at any time, without regard to CMS’s prior actions,
where the individual or entity does not meet applicable enrollment requirements.
42 C.F.R. § 424.530(a)(1); Pepper Hill Nursing & Rehab. Ctr., LLC, DAB No. 2395, at
10-11 (2011); U.S. Ultrasound, DAB No. 2302, at 6-8 (2010).

III. Conclusion

Because Petitioner does not meet the statutory or regulatory requirements to enroll in
Medicare as a clinical social worker, CMS’s denial of Petitioner’s June 15, 2012
application to enroll as a supplier in the Medicare program is affirmed.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Hope May
Petitioner,
v.
The Inspector General.
Docket No. C-12-1106
Decision No. CR2689
Date: January 16, 2013
DECISION

This matter is before me on the Inspector General’s (1.G.’s) Motion for Summary
Disposition affirming the I.G.’s determination to exclude Petitioner pro se Hope May
from participation in Medicare, Medicaid, and all other federal health care programs for a
period of five years. The I.G.’s Motion and determination to exclude Petitioner are based
on section 1128(a)(1) of the Social Security Act (Act), 42 U.S.C. § 1320a-7(a)(1). The
undisputed material facts in this case require the imposition of a five-year exclusion.
Accordingly, I grant the 1.G.’s Motion for Summary Disposition.

I. Procedural Background

On November 22, 2011, in the Circuit Court of the State of Oregon for Lane County, the
Special Appointed Deputy District Attorney filed an Information charging Petitioner with
two Class C felonies, Unlawfully Obtaining Public Assistance, in violation of OR. REV.
STAT. § 411.630, and Unlawfully Using Supplemental Nutritional Assistance, in
violation of OR. REV. STAT. § 411.840. Petitioner appeared with counsel in the Circuit
Court and pleaded guilty to those charges on December 15, 2011, at which time the
Circuit Court accepted Petitioner’s guilty pleas, found her guilty on those pleas, and
entered its judgment of conviction and sentence. Petitioner was placed on probation for
2

one year, was ordered to perform 100 hours of community service, and was required to
pay restitution and costs in the total sum of $12,529.60. The Circuit Court further
ordered that the two convictions be treated as misdemeanors, and not as the Class C
felonies charged in the Information.

Section 1128(a)(1) of the Act mandates the exclusion of “[a]ny individual or entity that
has been convicted of a criminal offense related to the delivery of an item or service
under . . . any State health care program” for a period of not less than five years. On June
29, 2012, the I.G. notified Petitioner that she was to be excluded pursuant to the terms of
section 1128(a)(1) of the Act for a period of five years.

Acting pro se, Petitioner timely sought review of the I.G.’s action on July 9, 2012.

I held a prehearing conference by telephone on September 5, 2012, pursuant to 42 C.F.R.
§ 1005.6, to discuss procedures for addressing the issues presented by this case. By
Order of that date I established procedures and a schedule for the submission of
documents and briefs. The record in this case closed for purposes of 42 C.F.R.

§ 1005.20(c) on January 3, 2013, in circumstances set out in my January 9, 2013 Order.

The evidentiary record on which I decide the issues before me contains five exhibits
proffered by the I.G. marked I.G. Exhibits 1-5 (1.G. Exs. 1-5). Petitioner proffered nine
exhibits (P. Exs. 1-9) with her Answer Brief, and proffered an additional six letters of
reference with her Response Brief. I have marked those six letters P. Exs. 10-15. In the
absence of objection, I have admitted all proffered exhibits, I.G. Exs. 1-5 and P. Exs. 1-
15.

IL. Issues

The legal issues before me are limited to those set out at 42 C.F.R.
§ 1001.2007(a)(1). In the context of this record, they are:

a. Whether the LG. has a basis for excluding Petitioner from participating
in Medicare, Medicaid, and all other federal health care programs pursuant
to section 1128(a)(1) of the Act; and
3

b. Whether the five-year length of the proposed period of exclusion is
unreasonable.

The controlling authorities require that these issues be resolved in favor of the I.G.’s
position. Section 1128(a)(1) of the Act mandates Petitioner’s exclusion, for her predicate
conviction has been established. A five-year period of exclusion is the minimum period
established by section 1128(c)(3)(B) of the Act, 42 U.S.C. § 1320a-7(c)(3)(B), and is
therefore as a matter of law not unreasonable

III. Controlling Statutes and Regulations

Section 1128(a)(1) of the Act, 42 U.S.C. § 1320a-7(a)(1), requires the exclusion from
participation in Medicare, Medicaid, and all other federal health care programs of any
individual or entity convicted of a criminal offense related to the delivery of an item or
service under title XVIII of the Act (the Medicare program) or any state health care
program such as Medicaid. The terms of section 1128(a)(1) are restated in similar
language at 42 C.F.R. § 1001.101(a). Section 1128(a)(1) does not distinguish between
felonies and misdemeanors as predicates for mandatory exclusion.

The Act defines “conviction” as including those circumstances “when a judgment of
conviction has been entered against the individual or entity... bya... State... court,
regardless of... whether the judgment of conviction or other record relating to criminal
conduct has been expunged,” section 1128(i)(1) of the Act; “when there has been a
finding of guilt against the individual or entity... bya... State... court,” section
1128(i)(2) of the Act; “when a plea of guilty or nolo contendere by the individual . . . has
been accepted by a... State. . . court,” section 1128(i)(3) of the Act; or “when the
individual . . . has entered into participation in a first offender, deferred adjudication, or
other arrangement or program where judgment of conviction has been withheld,” section
1128(i)(4) of the Act, 42 U.S.C. §§ 1320a-7(i)(1)-(4). These definitions are repeated at
42 C.F.R. § 1001.2.

An exclusion based on section 1128(a)(1) is mandatory and the I.G. must impose it for a
minimum period of five years. Section 1128(c)(3)(B) of the Act, 42 U.S.C. § 1320a-
7(c)(3)(B). The regulatory language of 42 C.F.R. § 1001.102(a) affirms the statutory
provision.
IV. Findings and Conclusions
I find and conclude as follows:

1. Ina Judgment entered December 15, 2011 in the Circuit Court of the State of Oregon
for Lane County, Petitioner pro se Hope May was found guilty, on her accepted pleas of
guilty, of two misdemeanor criminal offenses to-wit: Unlawfully Obtaining Public
Assistance, in violation of OR. REV. STAT. § 411.630, and Unlawfully Using

Supplemental Nutritional Assistance, in violation of OR. REV. STAT. § 411.840. P. Exs.
1, 9; LG. Exs. 3, 4, 5.

2. The accepted pleas of guilty, findings of guilt, and Judgment described above
constitute a “conviction” within the meaning of sections 1128(a)(1) and 1128(i)(1),
1128(i)(2), and 1128(i)(3) of the Act, and 42 C.F.R. § 1001.2.

3. A nexus and a common-sense connection exist between the criminal offenses of which
Petitioner was convicted, as noted above in Findings | and 2, and the delivery of an item
or service under the Medicaid program. 1.G. Ex. 2; Berton Siegel, D.O., DAB No. 1467
(1994).

4. Petitioner’s conviction constitutes a basis for the I.G.’s exclusion of Petitioner from
participation in Medicare, Medicaid, and all other federal health care programs, pursuant
to section 1128(a)(1) of the Act, 42 U.S.C. § 1320a-7(a)(1).

5. Because the five-year period of Petitioner’s exclusion is the mandatory minimum
period provided by law, it is as a matter of law not unreasonable. Section 1128(c)(3)(B)
of the Act; 42 C.F.R. §§ 1001.102(a) and 1001.2007(a)(2).

6. There are no disputed issues of material fact and summary disposition is
appropriate in this matter. Michael J. Rosen, M.D., DAB No. 2096 (2007); Thelma
Walley, DAB No. 1367 (1992); 42 C.F.R. § 1005.4(b)(12).

V. Discussion

The essential elements necessary to support an exclusion based on section 1128(a)(1) of
the Act are: (1) the individual to be excluded must have been convicted of a criminal
offense; and (2) the criminal offense must have been related to the delivery of an item or
service under Title XVIII of the Act (Medicare) or any state health care program.
Tamara Brown, DAB No. 2195 (2008); Thelma Walley, DAB No. 1367; Boris Lipovsky,
M._D., DAB No. 1363 (1992); Lyle Kai, R.Ph., DAB CR1262 (2004), rev'd on other
grounds, DAB No. 1979 (2005); see also Russell Mark Posner, DAB No. 2033, at 5-6
(2006).

This record provides objective proof of both essential elements. Court records of
Petitioner’s conviction and its procedural history are before me as I.G. Exs. 3, 4, and 5,
and P. Exs 1, 9. Those exhibits establish the first essential element. The relation of
Petitioner’s crime to the Medicaid program is elaborated by the investigator who
developed the case against Petitioner in I.G. Ex. 2. In summary, Petitioner was at
relevant times paid a monthly stipend as the adult foster care provider of food, care, and
housing to her disabled brother under a state program funded by Medicaid. The
investigation disclosed that she received the monthly stipend but did not provide the food
stamps and housing as she was obliged to do by her Adult Foster Home Contract. Those
facts establish the nexus or common-sense connection to the Medicaid program defined
in Berton Siegel, D.O., DAB No. 1467.

Once an individual’s conviction is found to have been “related to the delivery of an item
or service under Medicare or a State health care program,” and thus to lie within the
terms of section 1128(a)(1), the imposition of the five-year minimum exclusion
established by section 1128(c)(3)(B) of the Act is mandatory and beyond the authority of
the I.G. or an Administrative Law Judge (ALJ) to reduce, modify, or suspend. The
Departmental Appeals Board (Board) has used unmistakable language to make this point:
“Petitioner’s exclusion was mandatory under the Act once the nexus was established
between her offense and the delivery of an item or service under the Medicare program.
The ALJ had no discretion to impose a lesser remedy.” Salvacion Lee, M.D., DAB No.
1850, at 4 (2002); Lorna Fay Gardner, DAB No. 1733, at 6 (2000); Douglas Schram,
R.Ph., DAB No. 1372 (1992); Napoleon S. Maminta, M.D., DAB No. 1135 (1990).

In contesting the proposed exclusion, Petitioner argues several variations on the single
claim that she is innocent of the crimes she admitted in the Circuit Court. She complains
that the criminal proceedings against her were flawed and reached an invalid result
because of inaccurate, misunderstood, or disregarded evidence. Petitioner accuses her
own attorney of improprieties that she now asserts deprived her of the chance to defend
herself against charges of which she now stalwartly denies guilt. She also contends that
she did not understand the consequences of her guilty pleas, but noticeably does not
complain that the plea agreement reduced her crimes to misdemeanors instead of Class C
felonies as charged. P. Ex. 1. The components of that claim all share this characteristic:
they are all collateral attacks on her two guilty pleas and her resulting conviction, and the
settled rule is that such collateral attacks on the validity of a conviction are simply
impermissible in this forum. I cannot look behind Petitioner’s counseled, voluntary, and
negotiated guilty pleas and the criminal conviction based on those two pleas. An
apposite regulation and the well-settled law of this forum explicitly preclude such
collateral attacks. 42 C.F.R. § 1001.2007(d); Joann Fletcher Cash, DAB No. 1725
(2000); Chander Kachoria, R.Ph., DAB No. 1380, at 8 (1993); see also Donna Rogers,
DAB No. 2381 (2011); Marvin L. Gibbs, Jr., M.D., DAB No. 2279 (2009). Those cases
and the regulation govern this situation, and Petitioner’s conviction is not open to
collateral challenge in this forum now.

Petitioner asserts her desire to support her family by working, and states that “[i]f I am
excluded, I am at risk of losing my job... .” P. Response Br. at 1. This record does not
establish whether Petitioner is now employed in a protected health care program, but if it
did, her argument would fail when confronted with the mandatory operation of the
exclusion and the equally-mandatory minimum period for which it must be imposed. As
the Board observed in Joann Fletcher Cash, DAB No. 1725, the precise point of the
exclusion mechanism is to prevent untrustworthy individuals from involvement with
protected health care programs. That this exclusion may have a limiting effect on an
excluded individual’s future employment is a natural and predictable consequence of any
such exclusion, including this one. The substantial closing of certain occupations to
Petitioner for five years and the probable loss of earnings from those occupations are no
bar to the mandatory imposition of this exclusion. Henry L. Gupton, DAB No. 2058
(2007); Salvacion Lee, M.D., DAB No. 1850.

Because the I.G. has established a basis for Petitioner’s exclusion pursuant to section
1128(a)(1), the five-year period of her exclusion is also the mandatory minimum period
allowed by section 1128(c)(3)(B) of the Act. 42 U.S.C. § 1320a-7(c)(3)(B). That period
is reasonable as a matter of law.

I note once more that Petitioner appears here pro se. I have taken additional care in
reading her submissions, guided by the Board’s reminders that pro se litigants should be
offered “some extra measure of consideration” in developing their records and their
cases. Louis Mathews, DAB No. 1574 (1996); Edward J. Petrus, Jr., M.D., et al., DAB
No. 1264 (1991). Ihave searched Petitioner’s submissions for any arguments or
contentions that might raise a valid, relevant defense to the proposed exclusion and have
found nothing that could be so construed. It is clear that Petitioner enjoys the high regard
and trust of her family and friends. P. Exs. 10-15. But as I have pointed out above, the
operation of this exclusion process based on section 1128(a)(1) is mandatory, and so is
the mandatory minimum five-year period of exclusion.

Summary disposition is authorized by the terms of 42 C.F.R. § 1005.4(b)(12). Resolution
of a case by summary disposition is particularly fitting when settled law can be applied to
undisputed material facts. Marvin L. Gibbs, Jr., M.D., DAB No. 2279; Michael J.
Rosen, M.D., DAB No. 2096. The material facts in this case are undisputed and
unambiguous. They support summary disposition as a matter of law, and this Decision
issues accordingly.

VI. Conclusion

For the reasons set forth above, the I.G.’s Motion for Summary Disposition must be, and
itis, GRANTED. The I.G.’s exclusion of Petitioner pro se Hope May from participation
in Medicare, Medicaid, and all other federal health care programs for a period of five
years pursuant to the terms of section 1128(a)(1) of the Act, 42 U.S.C. § 1320a-7(a)(1),
is sustained.

/s/
Richard J. Smith
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Mason Round Rock OP LLC, d/b/a
San Gabriel Rehabilitation and Care Center,

Petitioner,
v.
Centers for Medicare and Medicaid Services.
Docket No. C-12-1041
Decision No. CR2688

Date: January 14, 2013

DECISION

Petitioner, Mason Round Rock OP LLC, d/b/a San Gabriel Rehabilitation and Care
Center, appeals the Centers for Medicare and Medicaid Services (CMS) contractor
reconsideration decision issued on June 28, 2012. For the reasons stated below, I affirm
CMS’s determination and find CMS had a legitimate basis to enroll Petitioner in the
Medicare program effective February 8, 2012, the date it determined Petitioner met all
federal requirements.

I. Background and Procedural History

On December 21, 2011, Petitioner, a long-term care facility, filed a Medicare enrollment
application, CMS Form 855A, with TrailBlazer Health Enterprises, LLC (TrailBlazer),
the administrative contractor acting on behalf of CMS. CMS Ex. 1; P. Ex. 2. Petitioner
sought certification as a skilled nursing facility for Medicare reimbursement purposes and
recognized in its cover letter that additional supporting documents might be needed to
complete the application. Jd. On December 30, 2011, TrailBlazer faxed a letter to
Petitioner acknowledging its receipt of the application and requested clarifications and
further documentation. CMS Ex. 2. On January 30, 2012, Petitioner faxed a letter to
TrailBlazer and attached responses to TrailBlazer’s requests from its December 30, 2011
letter. CMS Ex. 3. On January 31, 2012, TrailBlazer sent an e-mail acknowledging its
receipt of the January 30, 2012 fax submission and Trailblazer requested additional
information about the identity of an owner listed on the application as “M. Craig Kelly.”
CMS Ex. 4. On February 2, 2012, TrailBlazer sent a follow-up e-mail to Petitioner,
asking if Petitioner had submitted the requested documentation for Mr. Kelly. CMS Ex.
4, at 1. The next day, February 3, 2012, Petitioner faxed the requested information to
Trailblazer. CMS Ex. 5. On February 8, 2012, TrailBlazer sent a letter to the Texas
Department of Health, Health Facility Compliance Division, recommending approval of
Petitioner’s application and requesting an on-site visit or survey. CMS Ex. 6.

On May 7, 2012, CMS notified Petitioner that its Medicare enrollment application had
been approved and determined that February 8, 2012 would be the effective date of its
provider agreement. CMS Exs. 7, 8. On May 17, 2012, Petitioner requested
reconsideration of this determination and asked that its effective date be changed to
January 13, 2012, the date of Petitioner’s state licensure and Medicaid certification,
which is 26 days earlier. CMS Ex. 9; P. Br. at 1. On June 28, 2012, CMS issued an
unfavorable reconsideration determination that confirmed February 8, 2012, as the
effective date of Petitioner’s Medicare provider agreement because that was the date
TrailBlazer determined Petitioner met all enrollment requirements. CMS Ex. 10.

On July 6, 2012, Petitioner filed a hearing request with the Civil Remedies Division of
the Departmental Appeals Board before receiving any reconsideration determination.
After actually receiving CMS’s June 28, 2012 reconsideration determination, Petitioner
filed a second hearing request on July 17, 2012. Both appeals were docketed as C-12-
1041, and the case was assigned to me for hearing and decision.

In accordance with my Acknowledgment and Pre-hearing Order (Order) issued on
August 1, 2012, CMS timely filed its pre-hearing exchange, incorporating a motion for
summary judgment and brief (CMS Br.), with ten exhibits (CMS Exs. 1-10), on
September 5, 2012. Petitioner filed a pre-hearing brief/response to CMS’s motion for
summary judgment, as well as a cross-motion for summary judgment (P. Br.), on
September 20, 2012. Petitioner timely filed its pre-hearing exchange, including 13
exhibits (P. Exs. 1-13) on October 4, 2012. CMS filed a reply (CMS Reply). In the
absence of any objection, I admit CMS Exs. | through 10 and P. Exs. | through 13 into
the record.

My Order stated that the parties must submit as a proposed exhibit the written direct
testimony of each proposed witness and that an in-person hearing would only be
necessary if the opposing party requested an opportunity to cross-examine a witness.
Order {ff 8-11. CMS did not provide a list of proposed witnesses or written direct
testimony. Petitioner submitted the Declaration of Eva Digman. P. Ex. 1. CMS has not

requested an opportunity to cross-examine Ms. Digman. Consequently, I will not hold an
in-person hearing in this case. The record is closed, and I decide this matter, including
complete factual findings, based on the written record. Order § 12.

Il. Issue

The issue in this case is whether CMS’s contractor and CMS had a legitimate basis to
determine February 8, 2012 as the effective date of Petitioner’s Medicare provider
agreement.

Ill. Findings of Fact and Conclusions of Law

A. Petitioner’s effective date may not be earlier than the date that CMS
determined Petitioner satisfied its enrollment requirements.

Section 1866(j) of the Social Security Act provides that the Secretary of the U.S.
Department of Health and Human Services “shall establish by regulation a process for the
enrollment of providers of services and suppliers under this title.” Title 42 C.F.R. Part
424, subpart P, governs the process for enrollment of all providers and suppliers in the
Medicare program. Subpart P describes completion of the enrollment process as a
prerequisite for a provider or supplier “to bill” and “to receive payment” for Medicare
covered services. 42 C.F.R. §§ 424.500, 424.505.

The effective date for Medicare participation for a skilled nursing facility is regulated
such that:

The agreement is effective on the date the State agency, CMS, or the CMS
contractor survey (including Life Safety Code survey, if applicable) is
completed, . . . if on that date the provider or supplier meets all applicable
Federal requirements . . . However, the effective date of the agreement or
approval may not be earlier than the latest of the dates on which CMS
letermines that each applicable Federal requirement is met. Federal
requirements include, but are not limited to—

(1) Enrollment requirements established in part 424, subpart
P, of this chapter. CMS determines, based upon its review
and verification of the prospective provider’s or supplier’s
enrollment application, the date on which enrollment
requirements have been met;

42 C.F.R. § 489.13(b)(1) (emphasis added).

CMS explained the following in the Federal Register:
We believe that the intent of [42 C.F.R. § 489.13] is to
require that all applicable Federal requirements, including a
determination of whether the enrollment requirements have
been satisfied, must be met before a provider agreement or
supplier approval may be effective. Any other reading of the
regulations could result in a provider or supplier being
permitted to bill the Medicare program for services provided
at a time when its compliance with Medicare’s requirements
is unknown and possibly deficient. ... It would not be
consistent with our duty to protect the Medicare Trust Funds
from unsupported claims against it to permit payment for
services furnished by a health care facility after it has passed
a State survey or been accredited, but before it has satisfied
all other Medicare participation requirements, including
enrollment requirements.

75 Fed. Reg. 23,852, at 24,048 (May 4, 2010).

Thus, a CMS contractor must verify that a prospective provider has met all enrollment
requirements before a provider agreement will take effect. To permit a provider to bill
the Medicare program before it has satisfied all Medicare participation requirements,
including enrollment requirements, would put the Medicare Trust Funds at risk.

To be enrolled in the Medicare program, a provider or supplier must meet the
“enrollment requirements” relating to applications, including:

(a) Providers and suppliers must submit enrollment information on the
applicable enrollment application. Once the provider or supplier
successfully completes the enrollment process, including, if applicable, a
State survey and certification or accreditation process, CMS enrolls the
provider or supplier into the Medicare program. To be enrolled, a provider
or supplier must meet enrollment requirements specified in paragraph (d) of
this section.

RK OK ok KR
(d) Providers and suppliers must meet the following enrollment requirements:
(1) Submittal of the enrollment application. A provider or supplier

must submit a complete enrollment application and supporting
documentation to the designated Medicare fee-for-service contractor.
(2) Content of the enrollment application. Each submitted enrollment
application must include the following:

(i) Complete, accurate, and truthful responses to all
information requested within each section as
applicable to the provider or supplier type.

42 CFR. § 424.510(a), (d)(1) and (d)(2)(i).

B. CMS did not determine that Petitioner provided complete and accurate
responses to the questions on its enrollment application until February 8,
2012.

TrailBlazer informed Petitioner, by letter dated December 30, 2011, that it had received
Petitioner’s application for enrollment in the Medicare program. TrailBlazer stated, “[a]
required data element is omitted from the CMS-855A application, and/or supporting
documentation is incomplete or missing. See the enclosed document to identify the
information that must be submitted.” CMS Ex. 2. TrailBlazer included a separate
document with its December 30, 2011 letter showing “Additional Information Needed to
Complete Processing” and listed the following items:

Section 2A4 (page 10) — Please check a box.

Section 4A (page 20) — For initial enrollment the ADD box need [sic] to be
checked with effective date, unless there is a medicare number in place and you
are requesting a change. Please confirm and submit corrections.

Section 5A (page 29) — For organizations: Mason Health, LLC; Mason Capital
Asset 1, LP; AJJ Health, LLC; DLP Health Strategies, LLC; 2009RCWDALLAS,
LLC, Please check the ADD box and effective date.

Section 6A (page 34) — For individuals: L. Gage; M. Kelly; D. Prince; M. Minor
and R. Cramer, Please check the ADD box and provide effective date.

Section 4B (page 21) — Please check the ADD box and effective date, on initial
enrollment, unless there is an [sic] medicare number in place. Please confirm and
submit corrections.

Section 15B (page 38)! — A new signed and dated certification page must be
submitted with the corrected pages.

' The reference to page 38 of Petitioner’s application appears to be incorrect. The
apparent correct page reference is page 49.
Section 15C (page 49) — Please check the ADD box and provide effective date.
CMS Ex. 2, at 5.

I have examined these sections of Petitioner’s application that TrailBlazer found to be
incomplete or inaccurate. Specifically, Section 2A4 on the application asked the question
“Ts the provider a physician-owned hospital (as defined in the Special Enrollment Notes
on page 9)?” P. Ex. 2, at 8. Petitioner had not originally provided an answer to this
question on the application.

Section 4A (‘Practice Location Information”) requests the applicant to report all practice
locations where services will be furnished and contains the statement, “[i]f you are
changing, adding, or deleting information, check the applicable box, furnish the effective
date, and complete the appropriate fields in this section.” In this Section, Petitioner had
checked the “CHANGE” box and stated an effective date of “12/20/2011.” P. Ex. 2, at
15.

Section 4B asks “Where do you Want Remittance Notices or Special Payments Sent?”
Again, the applicant is prompted to indicate whether the applicant is “changing, adding,
or deleting information, check the applicable box, furnish the effective date, and
complete the appropriate fields in this section.” Under this Section, Petitioner had
checked the “CHANGE” box and stated an effective date of “12/20/2011.” P. Ex. 2, at
16.

Section 5A requests information about corporate entities that have ownership interest or
managing control of the applying entity, and Section 6A requires the names of
individuals who have ownership interest or managing control of the applying entity.
Both Section 5A and Section 6A contain the statement, “[i]f you are changing, adding, or
deleting information, check the applicable box, furnish the effective date, and complete
the appropriate fields in this section.” On its application, Petitioner listed five corporate
entities in Section 5A and five individuals in Section 6A, and, in connection with each of
these responses, Petitioner indicated this was a “CHANGE” of information with an
effective date of “12/20/2011.” P. Ex. 2, at 21-65.

Section 15 is the “Certification Statement” page and requires the signatures of authorized
officials. In this Section, two authorized officials of Petitioner had signed the
certification and indicated there was a “CHANGE” of information effective
“12/20/2011.” P. Ex. 2, at 71.

On January 30, 2012, Petitioner responded to Trailblazer’s December 30, 2011 requests
for clarifications by sending a facsimile along with a copy of its facility license showing a
license effective date of January 13, 2012. CMS Ex. 3; P. Ex. 5.
After further review of Petitioner’s application, TrailBlazer requested additional
information regarding the identity of M. Craig Kelly. Specifically, in an e-mail dated
January 31, 2012 to Petitioner, a representative from TrailBlazer stated, in relevant part:

Section 6a (page 34) M. Craig Kelly is listed on the 855a application, but Michael
Kelly is listed in our system. Can you please provide documentation of
individuals [sic] correct name along with the corrected Section 6a (page 34).

Section 15 (page 49) new “signature page” needs to be sent as well to validate
corrections.

CMS Ex. 4; P. Ex. 6.

That same day, January 31, 2012, Petitioner’s representative responded via e-mail, stating
that she believed “Mr. Kelly’s proper name is Michael Craig Kelly” and that she would
“ask him for official documentation to confirm this and submit it as soon as possible.”

On February 2, 2012, the TrailBlazer representative sent a follow-up e-mail to her request
for documentation on Mr. Kelly’s name. CMS Ex. 4; P. Ex. 6. On February 3, 2012,
Petitioner responded by faxing the following documents to TrailBlazer: a revised Section
6A, spelling out Michael Craig Kelly’s name; a new Section 15 certification statement;
Mr. Kelly’s driver’s license; and Petitioner’s license certificate. CMS Ex. 5; P. Ex. 7.

After receiving and reviewing the requested information, TrailBlazer sent a letter to the
Texas Department of Health, Health Facility Compliance Division, on February 8, 2012,
recommending approval of Petitioner’s application and requesting a site visit or survey to
ensure compliance with the conditions of participation for the provider type. CMS Ex. 6;
P. Ex. 8. Nonetheless, CMS did not base Petitioner’s Medicare enrollment effective date
on any further compliance action occurring after its February 8, 2012 determination.

Petitioner argues that its enrollment application, as originally submitted, was complete,
accurate, and truthful. P. Br. at 13. Petitioner contends that the corrections TrailBlazer
requested in its December 30, 2011 letter did not constitute substantive changes to the
application information and contradicted what TrailBlazer required in the past. With
respect to the clarification of Mr. Kelly’s name, Petitioner asserts that TrailBlazer made
this request “not less than 41 days after it received the application packet” and that
“Ts]pelling out [Mr. Kelly’s] name was yet another clerical correction . . . in order to
delay processing of the application.” P. Br. at 14, 15.

Regardless of how Petitioner characterizes the corrections, I find Trailblazer was acting
in good faith to obtain clarifications to incomplete or inaccurate information.
Petitioner first failed to answer a question — “Is the provider a physician-owned hospital .
. . 2” —and also responded inaccurately in several sections by checking the “CHANGE”
box instead of the “ADD” box. Although Petitioner characterizes the request to respond
to the hospital question as “nonsensical” because it had already identified itself as a non-
hospital provider in the previous section, it nevertheless does not dispute that it omitted
this information.

Moreover, while checking a “CHANGE” box versus an “ADD” box may appear to be
merely clerical and administrative to Petitioner, I find it reasonable for Trailblazer to
want to clarify whether this was a new application or a modification of existing
information, especially because Petitioner appears to have created the confusion by
consistently indicating that Petitioner was changing information rather than adding it.

Petitioner’s witness provided vague, and unchallenged, testimony that in the past
Trailblazer approved an initial provider application she prepared, after October 2010,
where she was not required to check any boxes regarding hospital-affiliated facility
status, and the boxes for “CHANGE” were checked instead of boxes for “ADD.” P. Ex.
1. Based on the scant information the witness provided, I am not able to reasonably
explain any possible discrepancy, nor am I required to do so considering I must consider
the application appealed before me now. Further, the clarification that ultimately affected
the February 8, 2012 effective date centered on Trailblazer’s request for more
information regarding one of Petitioner’s owners, not those other application sections that
Trailblazer appears to have reconciled a bit earlier in the process.

With respect to this discrepancy concerning Mr. Kelly’s name, Petitioner does not dispute
that it originally only provided an initial instead of Mr. Kelly’s first name as requested,
but Petitioner minimizes its significance because TrailBlazer’s system contained personal
identifying information for a “Michael Kelly,” with the same birth date and Social
Security Number, which Petitioner claims should have clearly indicated to Trailblazer
that this was the same individual, “regardless of the abbreviation.” P. Br. at 14-15.
However, I find it was reasonable for Trailblazer to clarify Petitioner’s incomplete
original application response. I accept CMS’s justification that it uses the full name to
check applicable exclusion databases and that it should not have to take extra steps
because the applicant is not careful. See CMS Reply at 4.

C. Trailblazer did not unreasonably delay the approval of Petitioner’s
enrollment application.

Petitioner contends that TrailBlazer and CMS delayed processing its application.
Petitioner specifically argues that TrailBlazer requested clarification of Mr. Kelly’s name
on January 31, 2012, which was 41 days after it received Petitioner’s application packet
and 33 days after TrailBlazer sent its December 2011 fax requesting corrections.
However, I find that the timeline of events surrounding Petitioner’s application does not

show any undue delay in processing, and, in fact, shows that Petitioner contributed to a
longer processing time due to its own inaction.

After receiving Petitioner’s application packet on December 22, 2011, TrailBlazer
reviewed it and faxed a letter to Petitioner on December 30, 2011, requesting corrections.
Considering that December 26, 2011 was a holiday, it took TrailBlazer only five business
lays to review and respond to Petitioner’s application. Petitioner then waited 30 days,
until January 30, 2012, to fax its corrections to TrailBlazer. The next day, via e-mail
lated January 31, 2012, TrailBlazer sought clarification from Petitioner regarding Mr.
Kelly’s name. TrailBlazer followed up this request in another e-mail on February 2,
2012, and the next day, on February 3, 2012, Petitioner submitted the information.
TrailBlazer reviewed the documents and three business days later, on February 8, 2012,
verified the enrollment application and sent a letter to the state agency recommending
approval of Petitioner’s application and requesting an on-site visit or survey.

To further support its contention that Petitioner’s application was processed without any
lelay, CMS cites a provision of the Medicare Program Integrity Manual (MPIM)’:

The contractor shall process 80 percent of all Form CMS-
855A initial applications within 60 calendar days of receipt,
process 90 percent of all Form CMS-855A initial applications
within 120 calendar days of receipt, and process 99 percent of
all Form CMS 855A initial applications within 180 calendar
days of receipt.

MPIM, CMS Pub. 100-08, Chap. 15, Section 15.6.1.1.1. Given that CMS notified
Petitioner on May 7, 2012, that its Medicare enrollment application had been approved as
of February 8, 2012, I find that TrailBlazer processed and approved Petitioner’s
application in accordance with the timeframe the MPIM anticipated.

IV. Conclusion

CMS’s contractor did not determine that Petitioner met all federal requirements until after
Petitioner submitted clarifications to its CMS 855A enrollment application. Thus, in

> The MPIM is CMS’s guidance for its affiliated contractors. It does not have the force
and effect of binding law.
10

accordance with the effective date provisions of 42 C.F.R. § 489.13(b), CMS had a
legitimate reason to grant Petitioner’s provider agreement an effective date of February 8,
2012, and I affirm that decision.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

James Leach and Ina Leach
d/b/a Livonia Mini Mall,

Respondent.
Docket No. C-13-152
FDA Docket No. FDA-2012-H-1175
Decision No. CR2685

Date: January 11, 2013

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for To
Respondent that al
imposition of a $5
complaint, nor di

bacco Products (CTP) filed an administrative complaint against
leges facts and legal authority that are sufficient to justify the
00 civil money penalty. Respondent did not timely answer the
Respondent request an extension of time within which to file an

answer. Therefore, I enter a default judgment against Respondent, James Leach
and Ina Leach d/b/a Livonia Mini Mall, and assess a civil money penalty of $500.

CTP began this case by serving a complaint on Respondent and filing a copy of

the complaint wit

the Food and Drug Administration’s (FDA) Division of

Dockets Management. The complaint alleges that Respondent impermissibly
utilized methods of sale other than direct, face-to-face exchanges; failed to ensure

that all non-comp

iant self-service displays and other items were removed or

brought into compliance with the regulations; impermissibly sold tobacco products
to a minor; and failed to verify the age of a person purchasing tobacco products.
The complaint further alleges that these actions and omissions violated the Federal
Food, Drug, and Cosmetic Act (Act) and its implementing regulations found at 21
C.F.R. Part 1140. CTP seeks a civil money penalty of $500.

On December 5, 2012, CTP served the complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the complaint and
accompanying cover letter, CTP explained that, within 30 days, Respondent
should pay the penalty, file an answer, or request an extension of time within
which to file an answer. CTP warned Respondent that, if it failed to take one of
these actions within 30 days, the Administrative Law Judge could, pursuant to 21
C.F.R. § 17.11, issue an initial decision ordering Respondent to pay the full
amount of the proposed penalty.

Respondent has not filed an answer within the time provided by regulation or
timely requested an extension. Pursuant to 21 C.F.R. § 17.11(a), 1am required to
“assume the facts alleged in the complaint to be true, and, if such facts establish
liability under [the Act],” issue a default judgment and impose a civil money
penalty. Accordingly, I must determine whether the allegations establish
violations of the Act.

Specifically, CTP alleges that:

e Respondent owns Livonia Mini Mall, an establishment that sells tobacco
products and is located at 202 South Main Street, Livonia, Missouri.

e On January 4, 2012, an FDA-commissioned inspector observed violations
at Livonia Mini Mall that included: the failure to sell cigarettes or
smokeless tobacco only in a direct, face-to-face sale in a non-exempt
establishment, in violation of 21 C.F.R. § 1140.16(c)(1) and
1140.16(c)(2)(ii); and the failure to either remove or bring into compliance
all non-compliant items, such as self-service displays, advertising, and
labeling, in violation of 21 C.F.R. § 1140.14(e).

e CTP issued a warning letter to Respondent on February 16, 2012,
informing Respondent of the violations observed on January 4, 2012. The
letter advised that the failure to correct the violations could result in the
imposition of a civil money penalty or other regulatory action, that it was
not intended to provide an exhaustive list of violations, and that Livonia
Mini Mall had the responsibility to ensure it complied with the law.

e The warning letter was delivered via United Parcel Service on February 17,
2012, to “Hines,” but CTP receive no response.
e On June 7 and 11, 2012, FDA-commissioned inspectors conducted a two-
part inspection and noted additional violations. The inspectors documented
that “a person younger than 18 years of age was able to purchase a package
of Copenhagen Long Cut smokeless tobacco on June 7, 2012, at
approximately 12:52 PM CT[,]” a violation of 21 C.F.R. § 1140.14(a).
Complaint § 1.a. The inspectors further documented a violation of 21
C.F.R. § 1140.14(b)(1) because “the minor’s identification was not verified
before the sale[.]” Complaint  1.b.

e CTP notified Livonia Mini Mall on June 15, 2012, of the violations
documented on June 7, 2012, through a Notice of Compliance Check
Inspection. CTP warned that the inspectors may have observed other
violations and, if violations had occurred, the establishment would be
informed that the FDA was seeking a fine.

Taking these facts as true, I must find pursuant to 21 C.F.R. § 17.11(a) that
Respondent is liable under the Act. The Act prohibits misbranding of a tobacco
product. 21 U.S.C. § 331(k). A tobacco product is misbranded if sold or
distributed in violation of regulations issued under section 906(d) of the Act,
codified at 21 U.S.C. § 387f(d). 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R § 1140.1(b).
Those regulations prohibit the sale of cigarettes or smokeless tobacco to any
person younger than 18 years of age. 21 C.F.R. § 1140.14(a). The regulations
also require a retailer to “verify by means of photographic identification
containing the bearer’s date of birth that no person purchasing the product is
younger than 18 years of age[,]” 21 C.F.R. § 1140.14(b)(1), though “[n]o such
verification is required for any person over the age of 26[,]” 21 C.F.R. §
1140.14(b)(2). The regulations further prohibit the sale of tobacco products other
than through face-to-face exchanges, 21 C.F.R. § 1140.16(c)(1), except “in
facilities where the retailer ensures that no person younger than 18 years of age is
present, or permitted to enter, at any time[,]” 21 C.F.R. § 1140.16(c)(2)(ii). In
addition, the regulations require retailers to remove or bring into compliance all
non-compliant “self-service displays, advertising, labeling, and other items, that
are located in the retailer’s establishment.” 21 C.F.R. § 1140.14(e).

Here, Respondent sold tobacco products in violation of each of the foregoing
regulations. These actions and omissions by Respondent constitute violations of
law for which a civil money penalty is merited. The regulations require me to
impose a civil money penalty in the amount that is either the maximum provided
for by law or the amount sought in the complaint, whichever is smaller. 21 C.F.R.
§ 17.11(a). Respondent has committed four violations within a 24-month period,
the maximum penalty for which is $2,000. 21 C.F.R. § 17.2; Guidance for FDA
and Tobacco Retailers, Civil Money Penalties and No-Tobacco-Sale Orders For
Tobacco Retailers (Revised), November 2012, (available at
http://www.fda.gov/downloads/TobaccoProducts/GuidanceCompliance
RegulatoryInformation/UCM252955.pdf). CTP, in its Complaint, however,
requested a civil money penalty in the amount of $500, the penalty for the third
violation committed within a 24-month period. Therefore, I impose a civil money
penalty in the amount of $500.

/s/
Steven T. Kessel
Administrative Law Judge