Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division

Sharad Jaitly, M.D.,
(OI File No. H-13-43064-9),

Petitioner,
v.

The Inspector General,
Department of Health & Human Services.

Docket No. C-14-1258
Decision No. CR3543
Date: December 30, 2014
DECISION

Petitioner, Sharad Jaitly, M.D., is excluded from participating in Medicare, Medicaid, and
all federal health care programs pursuant to section 1128(b)(1)(A)(ii) of the Social
Security Act (Act) (42 U.S.C. § 1320a-7(b)(1)(A)(ii)), effective May 20, 2014. There is a
proper basis for Petitioner’s exclusion based upon his conviction of a misdemeanor
criminal offense, committed after August 21, 1996, related to fraud with respect to an act
or omission other than the delivery of a health care item or service, in a health care
program operated by the federal, state, or local government. Petitioner’s exclusion for a
three-year period is not unreasonable. Act § 1128(c)(3)(D) (42 U.S.C. § 1320a-
1(c)(3)(D)).’

' 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 (1.G.) for the Department of Health and Human Services notified
Petitioner by letter dated April 30, 2014, that he was being excluded from participation in
Medicare, Medicaid, and all federal health care programs for a period of three years. The
1G. cited section 1128(b)(1) of the Act as the basis for Petitioner’s exclusion and stated
that the exclusion was based upon his conviction in the Albany City Court of the State of
New York.’

Petitioner timely requested a hearing on May 27, 2014. On June 6, 2014, the case was
assigned to me to hear and decide. I convened a telephone prehearing conference on July
1, 2014, the substance of which is memorialized in my Prehearing Conference Order and
Schedule for Filing Briefs and Documentary Evidence (Prehearing Order) issued on July
1,2014. On August 15, 2014, the I.G. filed a motion for summary judgment, a brief in
support of summary judgment (I.G. Br.), and I.G. Exs. 1 through 3. Petitioner filed a
brief in opposition (P. Br.) on October 6, 2014, with no exhibits. The LG. filed a reply
brief on November 4, 2014 (I.G. Reply). Petitioner did not object to my consideration of
1G. Exs. | through 3 and they are admitted as evidence.

II. Discussion
A. Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) establishes Petitioner’s right to a
hearing by an administrative law judge (ALJ) and judicial review of the final action of
the Secretary of Health and Human Services (the Secretary).

Pursuant to section 1128(b)(1)(A) of the Act, the Secretary may exclude from
participation in any federal health care program an individual convicted under federal or
state law of a misdemeanor criminal offense committed after August 21, 1996, related to
fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial
misconduct in connection with the delivery of any health care item or service or with
respect to any act or omission in a health care program not subject to section 1128(a)(1),
operated by or financed in whole or part by any federal, state, or local government.
Pursuant to section 1128(b)(1)(B), the Secretary may exclude from participation in any

> Petitioner did not file a copy of the April 30, 2014, I.G. notice with its request for
hearing. On June 30, 2014, counsel for the I.G. uploaded a copy of the April 30 I.G.
notice to the Departmental Appeal Board’s Electronic Filing System (DAB e-File) Item
No. 4.
federal health care program an individual convicted under federal or state law of a
misdemeanor criminal offense committed after August 21, 1996, related to fraud, theft,
embezzlement, breach of fiduciary responsibility, or other financial misconduct with
respect to any act or omission in a program other than a health care program operated or
financed by a federal, state or local government. The Secretary has promulgated
regulations implementing these provisions of the Act. 42 C.F.R. § 1001.201(a) 3

Section 1128(c)(3)(D) of the Act provides that an exclusion imposed under section
1128(b)(1) of the Act will be for a period of three years, unless the Secretary determines
in accordance with published regulations that a shorter period is appropriate because of
mitigating circumstances or that a longer period is appropriate because of aggravating
circumstances. 42 C.F.R. § 1001.201(b). Recognized aggravating and mitigating factors
are those listed in 42 C.F.R. § 1001.201(b)(2) and (3).

The standard of proof is a preponderance of the evidence, and there may be no collateral
attack of the conviction that provides the basis of the exclusion. 42 C.F.R.

§ 1001.2007(c), (d). Petitioner bears the burden of proof and the burden of persuasion on
any affirmative defenses or mitigating factors, and the I.G. bears the burden on all other
issues. 42 C.F.R. § 1005.15(b).

B. Issues

The Secretary has by regulation limited my scope of review to two issues:
Whether the I.G. has a basis for excluding an individual or entity from
participating in Medicare, Medicaid, and all other federal health care programs;
and

Whether the length of the proposed exclusion is unreasonable.

42 CFR. § 1001.2007(a)(1).

3 References are to the 2013 revision of the Code of Federal Regulations (C.F.R.), unless
otherwise indicated.
C. Findings of Fact, Conclusions of Law, and Analysis

My conclusions of law are set forth in bold followed by the pertinent findings of fact and
analysis.

1. Petitioner timely filed his request for hearing, and I have
jurisdiction.

2. Summary judgment is appropriate.

There is no dispute that Petitioner timely requested a hearing and that I have jurisdiction
pursuant to section 1128(f) of the Act and 42 C.F.R. pt. 1005.

Pursuant to section 1128(f) of the Act, a person subject to exclusion has a right to
reasonable notice and an opportunity for a hearing. The Secretary has provided by
regulation that a sanctioned party has the right to hearing before an ALJ, and both the
sanctioned party and the I.G. have a right to participate in the hearing. 42 C.F.R.

§§ 1005.2-.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 which, if true, would
refute the facts relied upon by the moving party. Deciding a case on summary judgment
differs from deciding a case on the merits after a hearing. An ALJ does not assess
credibility or weigh conflicting evidence when deciding a case on summary judgment.
Bartley Healthcare Nursing and Rehab., DAB No. 2539 at 2-3 (2013); Senior Rehab. &
Skilled Nursing Ctr., DAB No. 2300 at 3 (2010); Holy Cross Village at Notre Dame, Inc.,
DAB No. 2291 at 5 (2009).

There are no genuine issues of material fact in dispute in this case. Petitioner does not
deny that he entered a guilty plea in Albany City Court of a misdemeanor offense of
Obstructing Governmental Administration. P. Br. at 1,3. Petitioner argues that his
conviction did not relate to fraud, theft, embezzlement, breach of fiduciary responsibility,
or other financial misconduct and that his conviction was not in connection with the
delivery of any health care item or service. All the issues raised by Petitioner must be
resolved against him as a matter of law. Accordingly, summary judgment is appropriate.
3. Section 1128(b)(1)(A)(ii) of the Act permits Petitioner’s exclusion
from participation in Medicare, Medicaid, and all other federal health
care programs.

The I.G. notice of exclusion dated April 30, 2014 cited section 1128(b)(1) of the Act as
the basis for Petitioner’s exclusion. DAB e-File Item No. 4. The LG. also cites section
1128(b)(1) as the basis for exclusion in its brief. I.G. Br. at 3-6; I.G. Reply. Because the
offense to which Petitioner entered a guilty plea was related to Medicaid, a state health
care program, only section 1128(b)(1)(A) is applicable in this case, because

section 1128(b)(1)(B) does not apply to government health care programs.

IL also conclude that section 1128(b)(1)(A)(ii) is the applicable provision of the Act in this
case. My analysis is as follows. Section 1128(b)(1)(A)(ii) states that it applies to
misdemeanor convictions for offenses other than those offenses covered by section
1128(a)(1), that is, felony or misdemeanor offenses related to the delivery of a health care
item or service under Medicare or a state health care program. Because Petitioner’s
offense was related to the New York Medicaid program, Petitioner would have been
subject to mandatory exclusion under section 1128(a)(1) of the Act if his offense was
related to the delivery of an item or service under Medicaid. Section 1128(a)(1) of the
Act mandates exclusion of one convicted of an offense, felony or misdemeanor, related to
delivery of an item or service under Medicare or a state healthcare program such as New
York Medicaid. Therefore, while the I.G. notice of exclusion and the I.G. brief are not
precise as to the basis for Petitioner’s discretionary exclusion, only if section
1128(b)(1)(A)(ii) of the Act applies, does the Secretary have the discretion to impose a
permissive exclusion rather than a mandatory exclusion for a minimum of five years. I
presume that the Secretary and her delegate, the I.G., act in accordance with their lawful
authority. The pertinent provision of section 1128(b)(1)(A)(ii) of the Act is:

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

(1) CONVICTION RELATING TO FRAUD. — Any
individual or entity that has been convicted for an offense
which occurred after [August 21, 1996] the date of the
enactment of the Health Insurance Portability and
Accountability Act of 1996, under Federal or State law —

(A) of a criminal offense consisting of a misdemeanor
relating to fraud, theft, embezzlement, breach of fiduciary
responsibility, or other financial misconduct —
(ii) with respect to any act or omission in a health care
program (other than those specifically described in
subsection (a)(1)) operated by or financed in whole or
in part by any Federal, State, or local government
agency;...

Thus, the elements for exclusion pursuant to section 1128(b)(1)(A)(ii) are: (1) conviction
in a state or federal court; (2) conviction is of a misdemeanor offense relating to fraud,
theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct;
and (3) the offense is related to any act or omission in a health care program operated by
the federal, state, or local government, other than the delivery of a health care item or
service.

On April 5, 2013, a Special Assistant Attorney General in the Medicaid Fraud Control
Unit filed an Information in Albany City Court, County of Albany, New York, charging
Petitioner with one count of Obstructing Governmental Administration in the second
degree, in violation of N.Y. Penal Law § 195.05. I.G. Ex. 3. The Information alleged
that Petitioner:

[I]ntentionally obstructed or impaired a governmental
function of the New York State Department of Health to
accurately process and approve Medicaid provider enrollment
requests by means of the independently unlawful act of filing
a Medicaid Provider Enrollment Application with New York
State Department of Health containing false statements as to
his prior restriction from the Medicaid program and prior
enrollment denials.

* Petitioner may complain that the I.G. notice of exclusion was insufficient to give
Petitioner notice of the legal basis for his exclusion. I agree that the I.G. notice should
have been more precise. However, I find no prejudice to Petitioner. The I.G.’s citation
to section 1128(b)(1) of the Act gave Petitioner notice that it was necessary for him to
defend all possible bases for permissive exclusion under that section. In his request for
hearing and his brief, Petitioner does not argue he is not subject to permissive exclusion
under section 1128(b)(1)(A)(ii) of the Act, even though the I.G. notice clearly did not
limit the basis for exclusion to either section 1128(b)(1)(A)(i) or (ii). I presume counsel
is competent and, therefore, conclude that the omission of any discussion of section
1128(b)(1)(A)(ii) was a reasoned tactical judgment and not a strategic error.
1G. Ex. 3 at 2. On April 4, 2013, Petitioner waived his right to a jury trial, signed a plea
agreement, and entered a guilty plea to the single count contained in the Information.
1G. Ex. 2. The plea agreement states that Petitioner understood that by pleading guilty,
the plea “will operate just like a conviction of guilty after a jury trial.” IG. Ex. 2 at 2
§4g. Petitioner also indicated that he understood that a condition of his plea agreement
was “a prohibition from applying to become a Medicaid or Medicaid Managed Care
provider in New York State.” [.G. Ex. 2 at 3 §7. Petitioner admits in his plea agreement
that:

[B]etween about November 1, 2010 and February 8, 2011, as
a duly licensed physician in the State of New York, [he]
intentionally obstructed or impaired a governmental function
of the New York State Department of Health to accurately
process and approve Medicaid provider enrollment requests
by means of the independently unlawful act of filing a
Medicaid Provider Enrollment Application with New York
State Department of Health containing false statements as to
[his] prior restriction from the Medicaid program and prior
enrollment denials and such application was filed with the
New York State Department of Health in order to become a
Medicaid eligible provider in the State of New York.

1G. Ex. 2 at 3-4 914. The court entered a Certificate of Conviction, convicting Petitioner
of a violation of N.Y. Penal Law § 195.05 and imposing a sentence of a fine and court
surcharge on April 9, 2013. LG. Ex. 1.

Petitioner does not dispute that he was convicted of an offense for purposes of section
1128(b). An individual or entity is considered to have been “convicted” of an offense if,
among other things, “there has been a finding of guilt against the individual or entity by a
Federal, State, or local court,” or “when a plea of guilty or nolo contendere by the
individual or entity has been accepted by a Federal, State, or local court” Act

§ 1128(4)(2), (3) (42 U.S.C. § 1320a-7(i)(2), (3)). Petitioner’s guilty plea was accepted
by the state court and he was found guilty pursuant to his guilty plea. Accordingly, I
conclude that Petitioner was convicted within the meaning of section 1128(b)(1) of the
Act.

Petitioner disputes that his misdemeanor conviction for Obstructing Governmental
Administration in the second degree is a conviction for an offense relating to fraud, theft,
embezzlement, breach of fiduciary responsibility, or other financial misconduct.
Petitioner argues that he did not omit information from his Medicare enrollment
application with the intent to harm or injure any person or health care program. P. Br. at
3-4. Petitioner contends he did not intend to harm the New York Medicaid program, but
“he was merely trying to comply with his employer’s requirement that all employees
involved in the supervision of medical services to Medicaid patients be enrolled in the
Medicaid program . . . he did not even intend to bill Medicaid for services that were
covered by Medicaid.” P. Br. at 4. Thus, Petitioner believes his misdemeanor conviction
was not related to fraud or other financial misconduct.

“Fraud” is “a knowing misrepresentation of the truth or concealment of a material fact to
induce another to act to his or her detriment.” Black’s Law Dictionary 685 (8th ed.
2004). Petitioner pled guilty to Obstructing Governmental Administration, and his plea
agreement states that he intentionally obstructed or impaired a governmental function to
process and approve Medicaid enrollment applications by filing an application containing
false statements as to his prior restrictions and Medicaid enrollment denials, in order to
become a Medicaid eligible provider in New York. I.G. Ex. 2 at 3-4. Thus, Petitioner
admitted to making intentional misrepresentations and false statements in his enrollment
application in order to induce the New York Medicaid program to approve his application
so he could become eligible to provide Medicaid services. Petitioner argues that when
withholding material information on his Medicaid enrollment application, he did not
intend to harm the Medicaid program and he only intended to comply with his
employer’s requirements. However, whether or not Petitioner intended to bill Medicaid
or whether he made the false statements in his Medicaid enrollment application only to
comply with his employer’s requirements is not determinative. What is determinative is
that Petitioner signed a plea agreement indicating that he submitted a Medicaid
enrollment application containing false statements for the purpose of becoming a
Medicaid eligible provider in the State of New York. After review of the underlying
facts, I conclude that the misdemeanor offense of Obstructing Governmental
Administration is related to fraud. Thus, Petitioner was convicted of an offense relating
to fraud which is subject to 1128(b)(1)(A) of the Act.

Petitioner also disputes that his conviction for Obstructing Governmental Administration
was related to the delivery of a health care item or service under a state health care
program because Petitioner never “delivered any health care items or services in any way
in relation to the application.” P. Br. at 4. Iagree. As already discussed, if Petitioner’s
offense had been related to the delivery of an item or service under New York Medicaid,
his exclusion would have been mandatory pursuant to section 1128(a)(1) of the Act and
for the minimum period of five years under section 1128(c)(3)(b). The offense Petitioner
admitted to was intentionally obstructing or impairing processing and approval of
Medicaid enrollment applications by filing a Medicaid application that contained false
statements about his prior restrictions and Medicaid enrollment denials. Petitioner’s
offense clearly falls within the scope of section 1128(b)(1)(A)(ii) not section
1128(b)(1)(A)(i). Petitioner does not address section 1128(b)(1)(A)(ii) or deny its
application in this case as a basis for his exclusion.

Accordingly, I conclude that all three elements of section 1128(b)(1)(A)(ii) of the Act
have been met and there is a basis for Petitioner’s exclusion.

4. Petitioner’s exclusion for three years is not unreasonable.

The period of exclusion under section 1128(b)(1) is three years, unless aggravating or
mitigating factors justify lengthening or shortening that period. Act § 1128(c)(3)(D);
42 CFR. § 1001.201(b)(1). Only the mitigating factors authorized by 42 C.F.R.

§ 1001.201(b)(3) may be considered to reduce the period of exclusion. The notice letter
states that the I.G. considered one aggravating and one mitigating factor in determining
the length of Petitioner’s exclusion for three years. The notice indicates that the I.G.
considered as an aggravating circumstance that Petitioner has been the subject of an
adverse action, as the New York Office of the Medicaid Inspector General excluded
Petitioner from participation in the Medicaid program. The I.G. also considered as a
mitigating circumstance that Petitioner was convicted of three of fewer misdemeanor
offenses and the entire amount of financial loss to a Government program or to other
individuals due to acts that resulted from the conviction is less than $1,500. DAB e-File
Item No. 4.

Petitioner does not argue that any other mitigating factors listed in 42 C.F.R.

§ 1001.201(b)(3) existed that the I.G. did not consider when determining the length of
Petitioner’s exclusion. I am limited to considering only the mitigating factors in

42 C.F.R. § 1001.201(b)(3) to determine whether a downward adjustment from a three-
year exclusion may be made. 42 C.F.R. § 1005.4(c)(6). The I.G. appropriately
considered one aggravating and one mitigating factor when determining the length of
Petitioner’s exclusion for three years. Petitioner has failed to show by a preponderance
of the evidence that there are mitigating factors that may be grounds for shortening
Petitioner’s exclusion to less than the minimum three-year period of exclusion required
by section 1128(c)(3)(D) of the Act. Accordingly, I conclude that Petitioner’s exclusion
for a period of three years is not unreasonable.

III. Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare,
Medicaid, and all other federal health care programs for a period of three years, effective
May 20, 2014.

/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.

Fenkell Gas and Go, LLC
d/b/a Citgo,

Respondent.

Docket No. C-15-332
FDA Docket No. FDA-2014-H-1860

Decision No. CR3542

Date: December 30, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

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

CTP began this case by serving the Complaint on Respondent and filing a copy of the
Complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The Complaint alleges that Respondent impermissibly sold cigarettes to
minors and failed to verify that cigarette purchasers were 18 years of age or older,
thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et
seq., and its implementing regulations, Cigarettes and Smokeless Tobacco, 21 C.F.R. pt.
1140 (2013). CTP seeks a $500 civil money penalty.
On November 17, 2014, CTP served the Complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and accompanying
cover letter, CTP explained that within 30 days, Respondent should pay the proposed
penalty, file an answer, or request an extension of time within which to file an answer.
CTP warned Respondent that if it failed to take one of these actions within 30 days, an
Administrative Law Judge could, pursuant to 21 C.F.R. § 17.11, issue an initial decision
ordering Respondent to pay the full amount of the proposed penalty.

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

Specifically, CTP alleges the following facts in its Complaint:

e Respondent owns Citgo, an establishment that sells tobacco products and is
located at 20001 Fenkell Street, Detroit, Michigan 48223. Complaint 3.

e During an inspection of Respondent’s establishment on December 1, 2013, at
approximately 3:14 PM, an FDA-commissioned inspector observed that “‘a person
younger than 18 years of age was able to purchase a package of Newport Box
100s cigarettes . . . [.]” The inspector also observed that “the minor’s
identification was not verified before the sale... .” Complaint § 10.

¢ On February 12, 2014, CTP issued a Warning Letter to Respondent regarding the
inspector’s observations from December 1, 2013. The letter explained that the
observations constituted violations of regulations found at 21 C.F.R. § 1140.14(a)
and (b)(1), and that the named violations were not necessarily intended to be an
exhaustive list of all violations at the establishment. The Warning Letter went on
to state that if Respondent failed to correct the violations, regulatory action by the
FDA or a civil money penalty action could occur and that Respondent is
responsible for complying with the law. Complaint § 10.

e Although UPS records indicate that an individual named “John” received the
Warning Letter on February 13, 2014, CTP did not receive a response to the
Warning Letter. Complaint § 11.

e During a subsequent inspection of Respondent’s establishment on May 10, 2014,
at approximately 5:16 PM, FDA-commissioned inspectors documented that “a
person younger than 18 years of age was able to purchase a package of Newport
Box 100s cigarettes . . . [.]” The inspectors also documented that “the minor’s
identification was not verified before the sale... .” Complaint § 1.

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

§ 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). The regulations prohibit the
sale of cigarettes to any person younger than 18 years of age. 21 C.F.R. § 1140.14(a).
The regulations also require retailers to verify, by means of photo identification
containing a purchaser’s date of birth, that no cigarette purchasers are younger than

18 years of age. 21 C.F.R. § 1140.14(b)(1).

Taking the above alleged facts as true, Respondent violated the prohibition against selling
cigarettes to persons younger than 18 years of age, 21 C.F.R. § 1140.14(a), on December
1, 2013, and May 10, 2014. On those same dates, Respondent also violated the
requirement that retailers verify, by means of photo identification containing a
purchaser’s date of birth, that no cigarette purchasers are younger than 18 years of age.

21 C.F.R. § 1140.14(b)(1). Therefore, Respondent’s actions constitute violations of law
that merit a civil money penalty.

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

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2014-H-1701)

Complainant,
v.

Bryant Convenience, Inc.,
Respondent.
Docket No. C-15-185
Decision No. CR3540

Date: December 29, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Bryant Convenience, Inc., 510 Bryant Street, Denver,
Colorado 80204, and by filing a copy of the complaint with the Food and Drug
Administration’s (FDA) Division of Dockets Management. The complaint alleges that,
Bryant Convenience, Inc. unlawfully sold cigarettes to minors and failed to verify that the
cigarette purchasers were 18 years of age or older, thereby violating the Federal Food,
Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its implementing regulations,
Cigarettes and Smokeless Tobacco, 21 C.F.R. pt. 1140. CTP seeks to impose a $500
civil money penalty against Respondent, Bryant Convenience, Inc.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on October 29, 2014, CTP served the
complaint on Respondent, Bryant Convenience, Inc. by United Parcel Service. In the
complaint and accompanying cover letter, CTP explained that, within 30 days,
Respondent should pay the penalty, file an answer, or request an extension of time in
which to file an answer.
CTP warned Respondent that, if it failed to take one of these actions within 30 days, the
Administrative Law Judge could, pursuant to 21 C.F.R. § 17.11, issue an initial decision
ordering it to pay the full amount of the proposed penalty.

Respondent, Bryant Convenience, Inc. has neither filed an answer within the time
prescribed, nor requested an extension of time within which to file an answer. Pursuant
to 21 C.F.R. § 17.11, l assume that the facts alleged in the complaint (but not its
conclusory statements) are true. Specifically:

e At approximately 1:47 p.m. on March 13, 2013, at Respondent’s business
establishment, 510 Bryant Street, Denver, Colorado 80204, an
FDA-commissioned inspector observed that a person younger than 18 years of age
was able to purchase a package of Camel Blue cigarettes. The inspector also
documented that staff failed to verify, by means of photographic identification
containing a date of birth, that the purchaser was 18 years of age or older;

e Ina warning letter dated April 4, 2013, CTP informed Respondent of the
inspector’s March 13, 2013 observations, and that such actions violate federal law,
21 C.F.R. § 1140.14(a) and (b)(1). The letter further warned that Respondent’s
failure to correct its violations could result in a civil money penalty or other
regulatory action;

e At approximately 6:08 p.m. on April 24, 2014, at Respondent’s business
establishment, 510 Bryant Street, Denver, Colorado 80204, FDA-commissioned
inspectors observed that a person younger than 18 years of age was able to
purchase a package of Camel Blue cigarettes. The inspectors also documented
that staff failed to verify, by means of photographic identification containing a
date of birth, that the purchaser was 18 years of age or older.

These facts establish Respondent, Bryant Convenience, Inc.’s liability under the Act.

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

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

21 C.F.R. § 1140.14(a). The regulations also require retailers to verify, by means of
photo identification containing a purchaser’s date of birth, that no cigarette purchasers are
younger than 18 years of age. 21 C.F.R. § 1140.14(b)(1).

A $500 civil money penalty is permissible under 21 C.F.R. § 17.2.
Order

For these reasons, I enter default judgment in the amount of $500 against Respondent,
Bryant Convenience, Inc. Pursuant to 21 C.F.R. § 17.11(b), this order becomes final and
binding upon both parties after 30 days of the date of its issuance.

/s/
Catherine Ravinski
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2014-H-1719)

Complainant
v.

K.O.K. Limited Company /
Karry Out Korner 1, Inc.
d/b/a Karry Out Korner,

Respondent.
Docket No. C-15-198
Decision No. CR3536

Date: December 29, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, K.O.K. Limited Company / Karry Out Korner 1, Inc. d/b/a
Karry Out Korner, at 302 South Washington Street, Ardmore, Oklahoma 73401 , and by
filing a copy of the complaint with the Food and Drug Administration’s (FDA) Division
of Dockets Management. The complaint alleges that Karry Out Korner impermissibly
sold tobacco products to minors and failed to verify, by means of photo identification
containing a date of birth, that the purchasers were 18 years of age or older, thereby
violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and
its implementing regulations, 21 C.F.R. pt. 1140. CTP seeks to impose a $500 civil
money penalty against Respondent Karry Out Korner.

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

Respondent Karry Out Korner has neither filed an answer within the time prescribed, nor
requested an extension of time within which to file an answer. Pursuant to 21 C.F.R. §
17.11, I assume that the facts alleged in the complaint (but not its conclusory statements)
are true. Specifically:

At approximately 4:26 p.m. on November 7, 2013, at Respondent’s business
establishment, 302 South Washington Street, Ardmore, Oklahoma 73401, an
FDA-commissioned inspector observed Respondent’s staff selling a package of
Grizzly Long Cut Premium Wintergreen smokeless tobacco to a person younger
than 18 years of age. The inspector also observed that staff failed to verify, by
means of photographic identification containing a date of birth, that the purchaser
was 18 years of age or older;

In a warning letter dated January 16, 2014, CTP informed Respondent of the
inspector’s November 7, 2013 observations, and that such actions violate federal
law, 21 C.F.R. § 1140.14(a) and (b)(1). The letter further warned that
Respondent’s failure to correct its violations could result in a civil money penalty
or other regulatory action;

At approximately 8:22 p.m. on April 24, 2014, at Respondent’s business
establishment, 302 South Washington Street, Ardmore, Oklahoma 73401, FDA-
commissioned inspectors documented Respondent’s staff selling a package of
Marlboro cigarettes to a person younger than 18 years of age. The inspectors also
documented that staff failed to verify, by means of photographic identification
containing a date of birth, that the purchaser was 18 years of age or older.

These facts establish Respondent Karry Out Korner’s liability under the Act. The Act
prohibits misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is
misbranded if sold or distributed in violation of regulations issued under section 906(d)
of the Act. 21 U.S.C. § 387£(d); see 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b).
The Secretary of the U.S. Department of Health and Human Services issued the
regulations at 21 C.F.R. pt. 1140 under section 906(d) of the Act. 21 U.S.C. § 387a-1;
see 21 U.S.C. § 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). Under 21
C.F.R. § 1140.14(a), no retailer may sell tobacco products to any person younger than
18 years of age.
Under 21 C.F.R. § 1140.14(b)(1), retailers must verify, by means of photographic
identification containing a purchaser’s date of birth, that no tobacco purchasers are
younger than 18 years of age.

A $500 civil money penalty is permissible under 21 C.F.R. § 17.2.
Order

For these reasons, I enter default judgment in the amount of $500 against Respondent
K.O.K. Limited Company / Karry Out Korner 1, Inc. d/b/a Karry Out Korner. Pursuant
to 21 C.F.R. § 17.11(b), this order becomes final and binding upon both parties after 30
days of the date of its issuance.

/s/
Catherine Ravinski
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2014-H-1716)

Complainant
v.

James Woodham
d/b/a Ashland Mini Mart,

Respondent.
Docket No. C-15-195
Decision No. CR3535

Date: December 29, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, James Woodham d/b/a Ashland Mini Mart, at 3276 Kelly
Bridge Road East, Bishopville, South Carolina, 29010 and by filing a copy of the
complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The complaint alleges that Ashland Mini Mart impermissibly sold
cigarettes to a minor, thereby violating the Federal Food, Drug, and Cosmetic Act (Act),
21 U.S.C. § 301 et seq., and its implementing regulations, 21 C.F.R. pt. 1140. CTP seeks
to impose a $250 civil money penalty against Respondent Ashland Mini Mart.

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

Respondent Ashland Mini Mart has neither filed an answer within the time prescribed,
nor requested an extension of time within which to file an answer. Pursuant to 21 C.F.R.
§ 17.11, Lassume that the facts alleged in the complaint (but not its conclusory
statements) are true. Specifically:

e At approximately 12:10 p.m. on December 4, 2013, at Respondent’s business
establishment, 3276 Kelly Bridge Road East, Bishopville, South Carolina 29010,
an FDA-commissioned inspector observed Respondent’s staff selling a package of
Newport Kings cigarettes to a person younger than 18 years of age;

e Ina warning letter dated February 20, 2014, CTP informed Respondent of the
inspector’s December 4, 2013 observation, and that such an action violates federal
law, 21 C.F.R. § 1140.14(a). The letter further warned that Respondent’s failure
to correct its violation could result in a civil money penalty or other regulatory
action;

e At approximately 10:45 a.m. on May 1, 2014, at Respondent’s business
establishment, 3276 Kelly Bridge Road East, Bishopville, South Carolina 29010 ,
FDA-commissioned inspectors documented Respondent’s staff selling a package
of Newport Box cigarettes to a person younger than 18 years of age.

These facts establish Respondent Ashland Mini Mart’s liability under the Act. The Act
prohibits misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is
misbranded if sold or distributed in violation of regulations issued under section 906(d)
of the Act. 21 U.S.C. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b).
The Secretary of the U.S. Department of Health and Human Services issued the
regulations at 21 C.F.R. pt. 1140 under section 906(d) of the Act. 21 U.S.C. § 387a-1;
see 21 U.S.C. § 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). Under 21
C.F.R. § 1140.14(a), no retailer may sell cigarettes to any person younger than 18 years
of age.

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

For these reasons, I enter default judgment in the amount of $250 against Respondent
James Woodham d/b/a Ashland Mini Mart. Pursuant to 21 C.F.R. § 17.11(b), this order
becomes final and binding upon both parties after 30 days of the date of its issuance.

/s/
Catherine Ravinski
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division

Linda Kittle,
(O.1. File Number H-13-42745-9),

Petitioner,
v.
The Inspector General,
Respondent.
Docket No. C-14-1592
Decision No. CR3534
Date: December 24, 2014
DECISION
Petitioner, Linda Kittle, is excluded from participation in Medicare, Medicaid, and all
federal health care programs pursuant to section 1128(a)(3) of the Social Security Act
(Act) (42 U.S.C. § 1320a-7(a)(3)), effective June 19,2014. There is a proper basis for
exclusion. Petitioner’s exclusion for the minimum period of five years is mandatory
pursuant to section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)).!

I. Background

The Inspector General of the Department of Health and Human Services (1.G.) notified
Petitioner by letter dated May 30, 2014, that she was being excluded from participation in

' 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. References to the Code of Federal Regulations (C.F.R.) are to the

2013 revision, unless otherwise stated.
Medicare, Medicaid, and all federal health care programs for the minimum statutory
period of five years pursuant to section 1128(a)(3) of the Act. The basis for Petitioner’s
exclusion is her felony conviction in the Circuit Court of Bolivar County, Mississippi, of
a criminal offense related to fraud, theft, embezzlement, breach of fiduciary duty, or other
financial misconduct in connection with the delivery of a health care item or service, or
with respect to any act or omission in a health care program (other than Medicare and a
state health care program) operated by or financed in whole or in part by, any federal
state, or local government agency. I.G. Exhibit (Ex.) 1.

Petitioner timely requested a hearing (RFH) on July 29, 2014. Petitioner filed three
exhibits with her RFH (RFH Exs.): RFH Ex. A, the I.G.’s May 30, 2014 notice of
exclusion letter; RFH Ex. B, a Non-Adjudication Order from her criminal proceedings;
and RFH Ex. C, Petitioner’s affidavit” The case was assigned to me on August 1, 2014,
for hearing and decision. On August 21, 2014, I convened a prehearing conference by
telephone, the substance of which is memorialized in my Prehearing Conference Order
and Schedule for Filing Briefs and Documentary Evidence (Prehearing Order) issued on
August 21,2014. Petitioner did not waive an oral hearing. The I.G. requested to file a
motion for summary judgment prior to further development of the case for hearing and I
set a briefing schedule.

On September 22, 2014, the I.G. filed a motion for summary judgment and supporting
brief with I.G. Exs. 1 through 4. On October 22, 2014, Petitioner filed a response in
opposition to the I.G.’s motion for summary judgment with a supporting memorandum
(P. Br.) and P. Exs. | through 4.7 The LG. filed a reply brief (1.G. Reply) on November
4, 2014.

> RFH Ex. A is the I.G. notice of exclusion that has also been submitted as I.G. Ex. 1.
RFH Ex. B is the Non-Adjudication Order also submitted as I.G. Ex. 4. RFH Ex. C is
Petitioner’s affidavit dated July 29,2014. References in this decision are to the I.G.’s or
Petitioner’s exhibits rather to the exhibits submitted with the RFH.

> Petitioner’s memorandum in support of its opposition to the motion for summary
judgment was marked and submitted as P. Ex. 4 pages | through 9. P. Ex. 4, pages 10
and 11, is a copy of the May 30, 2014 I.G. notice of exclusion also offered as I.G. Ex. 1.
P. Ex. 4, pages 12 through 14, is Petitioner’s affidavit dated October 16, 2014; P. Ex. 4,
pages 15 and 16, is the affidavit of Charles Brock, M.D., dated October 16, 2014, which
is also offered as P. Ex. 2. P. Ex. 4, pages 17 and 18, is the affidavit of Steven Clark,
M.D., dated October 16, 2014, which is also offered as P. Ex. 3. Petitioner’s
memorandum marked as P. Ex. 4, pages 1 through 9, is argument in support of
Petitioner’s position and not evidence. The remainder of P. Ex. 4 is evidence.

References to Petitioner’s memorandum are to P. Br. at the appropriate page number.
(Footnote continued next page.)
Petitioner objected to I.G. Exs. 1 through 4 as hearsay and not self-authenticating
documents. P. Br. at 4. Petitioner’s objections are overruled. I am not bound in this
proceeding by the Federal Rules of Evidence (Fed. R. Evid.). 42. C.F.R. § 1005.17(b).
Evidence that is authentic and relevant is admissible; immaterial, irrelevant, privileged,
and unduly prejudicial material is subject to exclusion. 42 C.F.R. § 1005.17(c)-(g). I.G.
Ex. | is the I.G. notice of exclusion which was also submitted as RFH Ex. A and P. Ex. 4
at 10-11. Not only did Petitioner waive any objection to I.G. Ex. | by offering the
document herself, the notice of exclusion fits the exception to the rule against hearsay
established by Fed. R. Evid. 803(8)(A)(iii). 1G. Ex. 2 is the indictment against Petitioner
that is signed by both the foreman of the grand jury and the circuit court/deputy clerk,
witnessed, and has the court seal on it. I.G. Ex. 2 is self-authenticating under Fed. R.
Evid. 901(7) and it is relevant as it sets forth the charge against Petitioner. Petitioner also
admitted to Count 2 set out in I.G. Ex. 2 by entering a guilty plea. 1G. Ex. 3. 1G. Ex. 3
is self-authenticating under Fed. R. Evid. 901(7) and it is a statement of Petitioner and as
such is not hearsay. Fed. R. Evid. 801 (d)(2)(A)-(B). I.G. Ex. 4, the non-adjudication
order in Petitioner’s case, is self-authenticating under Fed. R. Evid. 901(7); Petitioner
waived any objection by offering a copy of the same order as RFH Ex. B; and the
document fits the hearsay exception of Fed. R. Evid. 803(22). The I.G. argues that the
affidavits offered as P. Exs. 2 and 3 and included in P. Ex. 4 are irrelevant and should be
given no weight. I.G. Reply at 4. Petitioner’s affidavits (RFH Ex. C and P. Ex. 4 at 12-
14) are clearly relevant. The physician affidavits offered as P. Ex. 2, P. Ex. 3, and P. Ex.
4 at 15-18 are not relevant to any issue I may decide and are not admissible as evidence
in this proceeding and must be excluded. 42 C.F.R. § 1005.17(c). LG. Exs. 1 through 4;
P. Exs. | and 4, except P. Ex. 4 at 15-18; and RFH Exs. A, B, and C are all admitted
despite the fact that some of the documents are cumulative.

II. Discussion

A. Applicable Law
Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) establishes Petitioner’s rights to a
hearing by an administrative law judge (ALJ) and judicial review of the final action of

the Secretary of Health and Human Services (the Secretary).

Pursuant to section 1128(a)(3) of the Act, the Secretary must exclude from participation
in any federal health care program:

(Footnote continued.)

The evidentiary portion of P. Ex. 4 is referred to as P. Ex. 4 at the appropriate page
number.
Any individual or entity that has been convicted for an
offense which occurred after . . . [August 21, 1996], under
Federal or State law, in connection with the delivery of a
health care item or service or with respect to any act or
omission in a health care program (other than those
specifically described in [section 1128(a)(1)] operated by or
financed in whole or in part by any Federal, State, or local
government agency, of a criminal offense consisting of a
felony relating to fraud, theft, embezzlement, breach of
fiduciary responsibility, or other financial misconduct.

The Secretary has promulgated regulations implementing these provisions of the Act.
42 CFR. § 1001.101(c).

Pursuant to section 1128(i) of the Act, an individual is “convicted” of a criminal offense
when a judgment of conviction has been entered by a federal, state, or local court whether
or not an appeal is pending or the record has been expunged; or when there has been a
finding of guilt in a federal, state, or local court; or when a plea of guilty or no contest
has been accepted in a federal, state, or local court; or when an accused individual enters
a first offender program, deferred adjudication program, or other arrangement where a
judgment of conviction has been withheld. 42 U.S.C. § 1320a-7(i)(1)-(4); 42 C.F.R.

§ 1001.2.

An exclusion imposed under section 1128(a) will be for a period of not less than five
years. Act § 1128(c)(3)(B); 42 C.F.R. § 1001.102(a). The period of exclusion may be
extended based on the presence of specified aggravating factors. 42 C.F.R.

§ 1001.102(b). Only if the aggravating factors justify an exclusion of longer than five
years are mitigating factors considered as a basis for reducing the period of exclusion to
no less than five years. 42 C.F.R. § 1001.102(c).

The standard of proof in a hearing before an ALJ is a preponderance of the evidence.
42 CFR. § 1001.2007(c). Petitioner may not collaterally attack the conviction that
provides the basis for the exclusion. 42 C.F.R. § 1001.2007(d). Petitioner bears the
burden of proof and the burden of persuasion on any affirmative defenses or mitigating
factors, and the I.G. bears the burden on all other issues. 42 C.F.R. § 1005.15(b).

B. Issues

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). If the I.G. imposes the minimum authorized five-year
period for exclusion under section 1128(a) of the Act, there is no issue as of whether or
not the period of exclusion is unreasonable. 42 C.F.R. § 1001.2007(a)(2).

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

My conclusions of law are set forth in bold followed by the pertinent findings of fact and
analysis.

1. Petitioner’s request for hearing was 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
pursuant to section 1128(f) of the Act and 42 C.F.R. pt. 1005.

Pursuant to section 1128(f) of the Act, a person subject to exclusion has a right to
reasonable notice and an opportunity for a hearing. The Secretary has provided by
regulation that a sanctioned party has the right to hearing before an ALJ, and both the
sanctioned party and the I.G. have a right to participate in the hearing. 42 C.F.R.

§§ 1005.2-3. 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 which, if true, would
refute the facts relied upon by the moving party. Deciding a case on summary judgment
differs from deciding a case on the merits after a hearing. An ALJ does not assess
credibility or weigh conflicting evidence when deciding a case on summary judgment.
Bartley Healthcare Nursing and Rehab., DAB No. 2539 at 2-3 (2013); Senior Rehab. &
Skilled Nursing Ctr., DAB No. 2300, at 3 (2010); Holy Cross Village at Notre Dame,
Inc., DAB No. 2291 at 5 (2009); see Fed. R. Civ. Pro. 56.

Petitioner argues that the facts used as the basis for her conviction are incorrect.
Petitioner is attempting to collaterally attack her conviction. However, if exclusion is
based on a conviction, the conviction is not subject to collateral attack in this forum either
on substantive or procedural grounds. 42 C.F.R. § 1001.2007(d). Petitioner does not

dispute that: she was convicted within the meaning of section 1128(i) of the Act; she
pled guilty to the crimes alleged in the two-count indictment; she was convicted of
obtaining a controlled substance by means of fraud, misrepresentation or subterfuge; and
her conviction occurred after August 21, 1996. RFH; P. Br. at 2. Petitioner opposes
summary judgment arguing that there are material facts in dispute regarding whether or
not her conviction was related to the delivery of a health care item or service. P. Br. at 2,
6. I conclude that summary judgment is appropriate as there are no genuine disputes as
to any material facts related to the nexus issue, as more fully discussed hereafter. The
1G. prevails as a matter of law on the issue of whether there is a basis for exclusion based
on the facts conceded by Petitioner. The five-year period of exclusion is not
unreasonable as a matter of law, because the period is the minimum authorized by
Congress for exclusion pursuant to section 1128(a) of the Act.

3. Petitioner’s exclusion is required by section 1128(a)(3) of the Act.
a. Facts

Petitioner was a registered nurse at Grace Community Hospice in Mississippi. P. Ex. 4

at 12; RFH Ex. C; 1.G. Ex. 2. On April 15, 2013, in the Circuit Court of the Second
Judicial District of Bolivar County, Mississippi, Petitioner pled guilty to two felony
counts of obtaining a controlled substance on September 16 and 22, 2011, by means of
fraud, misrepresentation or subterfuge, in violation of Miss. Code Ann. § 41-29-144
(1972) as alleged in the two count indictment. I.G. Exs. 3,4; RFH Ex. B. On July 24,
2014, the Circuit Court judge withheld acceptance of Petitioner’s plea and adjudication of
guilt and placed her in a non-adjudication program for a period of three years. I.G. Ex. 4;
RFH Exs. B, C; P. Br. at 2-3. Petitioner admitted by her guilty pleas two instances of
unlawfully obtaining possession of 60 tablets of oxycodone that had been prescribed for a
patient in the hospice where she worked. I.G. Exs. 2,3, 4; RFH Ex. B. Petitioner
obtained the prescriptions in the name of the patient and filled the prescriptions at the
South Street Pharmacy in Cleveland, Mississippi. Petitioner then retained possession of
the tablets of oxycodone in each instance and converted the oxycodone to her own use.
IG. Ex. 2; P. Ex. 4 at 12-13; P. Br. at 1-2.

b. Analysis

The elements necessary for exclusion pursuant to section 1128(a)(3) of the Act are
derived from the language of that section. The I.G. is required to exclude an individual
or entity pursuant to section 1128(a)(3) of the Act when the following elements are
satisfied:

1. The individual or entity was convicted for an offense under
federal or state law;
2. The offense occurred after August 21, 1996 (the date of
enactment of the Health Insurance Portability and Accountability
Act of 1996);

3. The offense was committed in connection with the delivery of a
health care item or service or with respect to any act or omission in a
health care program (other than those specifically described in
section 1128(a)(1) of the Act, i.e. Medicare and Medicaid) operated
by or financed in whole or in part by any federal, state, or local
government agency;

4. The crime was a felony offense; and

5. The offense was related to fraud, theft, embezzlement, breach of
fiduciary responsibility, or other financial misconduct.

All the elements are satisfied in this case. Petitioner does not dispute that she was
convicted of offenses under state law within the meaning of section 1128(i) of the Act
when she entered a plea of guilty on April 15, 2013, and the judge withheld acceptance of
her plea and adjudication of guilt and placed her in a non-adjudication program for three
years. 1.G. Exs. 2,3,4. Petitioner does not dispute that the offenses of which she was
convicted were committed after August 21, 1996. Petitioner does not dispute that she
was convicted of felony offenses. Petitioner does not dispute that she was convicted of
offenses that involved fraud, misrepresentation or subterfuge. The only element that
Petitioner disputes is whether or not her offenses were connected with the delivery of a
health care item or service. P. Br. at 2-3, 5. I conclude that the undisputed facts establish
the required connection, rational link, or nexus between Petitioner’s criminal offenses
and the delivery of a health care item or service.

My decision is guided by the decision of the Departmental Appeals Board (the Board) in
W. Scott Harkonen, M.D., DAB No. 2485 (2012), aff’d, Harkonen v. Sebelius, No. C13-
0071 PJH, 2013 WL 5734918 (N.D. Cal. Oct. 22, 2013). In Harkonen, an appellate panel
of the Board discussed in detail the element of section 1128(a)(3) of the Act which
requires that the offense of which one is convicted have been committed in connection
with the delivery of a health care item or service. The Board discusses that in prior cases
it has interpreted the language “in connection with” to require a common sense
connection or nexus, also characterized as a “rational link,” between the criminal offense
and the delivery of a health care item or service. Harkonen at 7. The Board notes that in
Erik D. DeSimone, R.Ph., DAB No. 1932 (2004), it found the required nexus in a case
where a pharmacist, in the guise of performing his professional duties, took controlled
substances for his own use. Harkonen at 7. In Kenneth M. Behr, DAB No. 1997 (2005),
the Board found the nexus where a pharmacist who had access to drugs due to his
position attempted to embezzle those drugs, rejecting the argument that the underlying

criminal offense must involve actual delivery of a health care item or service. Harkonen
at 8. In Ellen L. Morand, DAB No. 2436 (2012), the Board concluded that the
petitioner’s theft from the evening deposit of the pharmacy that employed her had the
requisite nexus considering that the evening deposit included revenue from the sale of
health care items and that the Petitioner diverted those funds to her use. The Board
summarized its prior holdings to be that “frauds or thefts that are linked in a rational way
to the delivery of a health care item or service do fall within the ambit” of section
1128(a)(3). Harkonen at 8. The Board further notes that its interpretation is consistent
with the interpretation of similar language found in section 1128(a)(1). The Board points
out that its interpretations of the language of section 1128(a) “effectuate the twin
purposes of section 1128(a): 1) to protect federal health care programs and their
beneficiaries from individuals who have been shown to be untrustworthy; and 2) to deter
health care fraud.” Id. at 9 (citations omitted). In Harkonen, the Board states that section
1128(a)(3) does not require proof of an actual impact or effect upon the delivery of a
health care item or service, rather, the ALJ must consider all the evidence of
circumstances underlying the criminal offense, including evidence extrinsic to the
criminal proceedings if reliable and credible, to find the rational link between the
criminal offense and the delivery of a health care item or service. Id. at 10.

In this case the undisputed facts establish the rational link, that is, the nexus, between
Petitioner’s criminal offenses and the delivery of a health care item or service. The facts
admitted by Petitioner that establish the nexus between Petitioner’s offenses of obtaining
a controlled substance by means of fraud, misrepresentation or subterfuge in the context
of her employment and the delivery of a health care item or service are:

1. Petitioner was a registered nurse. P. Br. at 1-2; P. Ex. 4 at 12; LG. Ex. 2.

2. At the time of her offenses in September 2011, Petitioner was employed as a
registered nurse with Grace Community Hospice. P. Br. at 1-2; P. Ex. 4 at 2; LG.
Ex. 2.

3. Due to her employment as a registered nurse, Petitioner had possession of a
blank physician signed prescription pad; she added the name of a home health
patient of Grace Community Hospice; she filled the prescriptions at South Street
Pharmacy in Cleveland under the guise that it was part of her official duties; and,
when she received the oxycodone, she did not deliver it to anyone for which it was
prescribed but retained possession and ultimately used it herself. P. Br. at 2; P.
Ex. 4 at 12-13; LG. Exs. 2,3.

The foregoing facts establish the rational link between Petitioner’s criminal offenses and
the delivery of a health care item or service, because they also show that Petitioner used

her position as a registered nurse to perpetrate her crimes. Thus, it is consistent with the
purposes of section 1128(a)(3) to apply that section to exclude Petitioner to protect
federal health care programs and their beneficiaries from Petitioner, who is shown to be
untrustworthy based on the abuse of her position to commit fraud in the context of her
employment.

Petitioner asserts that her crimes did not cause direct harm to any health care program
(RFH; P. Br. at 2); the oxycodone she obtained was not ordered for any of her patients
(P. Br. at 2; P. Ex. 4 at 13); she paid for the oxycodone with her own personal funds and
the oxycodone was not charged to any of her own patients in a Medicare, Medicaid or
any federally funded health care program (RFH; P. Br. at 2; P. Ex. 4 at 12); no patient
ever went without their medications or treatments as a result of her actions (P. Br. at 2;
P. Ex. 4 at 12); the patient whose name was used on the prescriptions was not Petitioner’s
patient (P. Br. at 2; P. Ex. 4 at 12); and Petitioner never prevented the delivery of a
prescribed drug or health care item to any of her patients or any patient at Grace
Community Hospice (P. Br. at 6; P. Ex. 4 at 12). Even if I accepted these assertions as
true for purposes of summary judgment, these facts do not rebut or negate the nexus
between Petitioner’s crimes and the delivery of a health care item or service, which is
established by the admitted facts that show she used her position as a nurse to obtain the
oxycodone.

Petitioner argues that exclusion under section 1128(a)(3) is only applicable to convictions
concerning financial misconduct. RFH at 2. Petitioner asserts that Petitioner’s actions
that were the basis on her conviction are not related to any type of financial misconduct
as contemplated by section 1128(a)(3) and there is no basis for her exclusion. Petitioner
is in error. The term fraud as used in section 1128(a)(3) of the Act is not limited to
financial misconduct. Breton Lee Morgan, M.D., DAB No. 2264 (2009).

Petitioner argues that I must consider whether, if she is allowed to continue to participate
in federal health care programs, she would threaten beneficiaries of those programs. She
claims she has worked in the health care field for 40 years. She has successfully
completed detoxification. She submitted affidavits of two physicians who oversaw her
detoxification program and outpatient treatment. The physicians attest that Petitioner
poses no threat to the health care community, federal or state health care programs or any
of the beneficiaries of those programs. P. Exs. 2,3. Petitioner’s exclusion is mandatory
and the assertions made in the physicians’ affidavits, even if true, are irrelevant to
whether there is a legal basis for Petitioner’s exclusion.

I conclude that the elements of section 1128(a)(3) of the Act are satisfied, including the
required nexus between Petitioner’s criminal offenses and the delivery of a health care
item or service. Accordingly, I conclude that there is a basis for Petitioner’s exclusion
pursuant to section 1128(a)(3) of the Act.
10

4. Petitioner’s exclusion for five years is not unreasonable as a matter
of law.

I have concluded that there is a basis for Petitioner’s exclusion pursuant to section
1128(a)(3) of the Act, and the five-year exclusion is not unreasonable as a matter of law.
Act § 1128(c)(3)(B); 42 C.F.R. § 1001.102(a).

Exclusion is effective 20 days from the date of the I.G.’s written notice of exclusion to
the affected individual or entity. 42 C.F.R. § 1001.2002(b). The Secretary’s regulations
do not give me discretion to change the effective date of Petitioner’s exclusion and I may
not refuse to follow the Secretary’s regulations. 42 C.F.R. § 1005.4(c)(1); Thomas
Edward Musial, R.Ph., DAB No. 1991 (2005). Consequently, the effective date of
Petitioner’s exclusion is June 19, 2014, twenty days after the I.G.’s May 30, 2014 notice
of exclusion.

III. Conclusion

For all of the foregoing reasons, Petitioner is excluded from participation in Medicare,
Medicaid, and all federal health care programs for the minimum statutory period of five
years, effective June 19, 2014.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Stanley Beekman, D.P.M.,
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-1531
Decision No. CR3532

Date: December 23, 2014

DECISION

CGS Administrators LLC (CGS), an administrative contractor for the Centers for
Medicare & Medicaid Services (CMS), revoked the Medicare enrollment and billing
privileges of Stanley Beekman, D.P.M. (Petitioner) on the basis of a felony conviction,
the suspension of his medical license, and his failure to report his conviction and the
suspension of his medical license within 30 days. In its reconsidered determination, CGS
affirmed the revocation. Petitioner appealed. Both parties now move for summary
judgment. I find the material facts surrounding Petitioner’s conviction undisputed and
that CMS had a basis for the revocation. Therefore, I grant summary judgment in favor
of CMS.

I. Case Background and Procedural History

On March 9, 2011, the United States Attorney for the Northern District of Ohio filed an
information charging Petitioner with conspiracy to submit false information and
documents, bank fraud, mail fraud, and wire fraud. CMS Exhibit (Ex.) 1. The
information alleged that Petitioner:
[U]nlawfully, willfully, and knowingly did conspire,
confederate and agree ... to violate the laws of the United
States, to wit: submission of false information and documents
to a bank in applying for a loan, in violation of Title 18
United States Code, Section 1014; bank fraud, in violation of
Title 18, United States Code, Section 1344; mail fraud, in
violation of Title 18, United States Code, Section 1341; and
wire fraud, in violation of Title 18, United States Code,
Section 1343.

CMS Ex. 1, at 1-2.

Petitioner entered a guilty plea on April 6, 2011, to count one of the information for
conspiring to commit bank fraud, mail fraud, wire fraud and making false statements to a
bank in applying for a loan. CMS Ex. 2, at 2,6. On May 14, 2013, the United States
District Court for the Northern District of Ohio (District Court) sentenced Petitioner to
ive years of probation and ordered him to pay $976,533 in restitution. CMS Ex. 3, at 2,
4.

In a notice letter dated February 18, 2014, CGS revoked Petitioner’s Medicare billing
privileges effective May 23, 2013, imposed a three year re-enrollment bar, and assessed
an overpayment of $52,126.08. CMS Ex. 7. The notice letter cited 42 C.F.R.

§ 424.535(a)(1), (a)(3), and (a)(9) as the bases for the revocation. Specifically, the notice
letter stated that Petitioner was no longer eligible to practice medicine because his license
was suspended; Petitioner was convicted of conspiracy to commit bank fraud, false
statements to influence a bank to make a loan, mail fraud, and wire fraud; and Petitioner
ailed to report his license suspension and felony conviction within 30 days. CMS Ex. 7,
at 1.

Petitioner requested reconsideration in an April 2, 2014 request. CMS Ex. 8. On May
21, 2014, CGS denied Petitioner’s request for reconsideration and upheld the revocation
based on 42 C.F.R. § 424.535(a)(1), (a)(3), and (a)(9). CMS Ex. 11. CGS again cited 42
C.F.R. § 424.535(a)(1), (a)(3), and (a)(9) as the bases for the revocation and sustained the
revocation because Petitioner was “convicted of a felony, [his] Ohio medical license was
suspended and [he] failed to notify CGS timely.” CMS Ex. 11, at 2.

Petitioner timely requested a hearing (RFH) before an Administrative Law Judge (ALJ),
and I issued an Acknowledgment and Pre-Hearing Order (Pre-Hearing Order) to the
parties. In accordance with the terms of the Pre-Hearing Order, CMS submitted its
motion for summary judgment and supporting brief (CMS Br.), and eleven proposed
exhibits (CMS Exs. 1-11). After reviewing CMS’s exchange, Petitioner filed a cross-
motion for summary judgment and a supporting brief (P. Br.). Petitioner did not submit
any additional exhibits. Absent objections, I enter all proposed exhibits into the record.
II. Discussion
A. Issues
1. Whether summary judgment is appropriate; and

2. Whether CMS had a legal basis to revoke Petitioner’s Medicare enrollment and
billing privileges.

B. Findings of Fact and Conclusions of Law
1. Summary judgment in favor of CMS is appropriate.

Summary judgment is appropriate if “the record shows that there is no genuine issue as to
any material fact, and the moving party is entitled to judgment as a matter of law.”

Senior Rehab. & Skilled Nursing Ctr., DAB No. 2300, at 3 (2010) (citations omitted).
The moving party must show that there are no genuine issues of material fact requiring an
evidentiary hearing and that it is entitled to judgment as a matter of law. Id. If the
moving party meets its initial burden, the non-moving party must “come forward with
“specific facts showing that there is a genuine issue for trial... .’” Matsushita Elec.
Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986). “To defeat an adequately
supported summary judgment motion, the non-moving party may not rely on the denials
in its pleadings or briefs, but must furnish evidence of a dispute concerning a material
fact — a fact that, if proven, would affect the outcome of the case under governing law.”
Senior Rehab., DAB No. 2300, at 3. To determine whether there are genuine issues of
material fact for hearing, an ALJ must view the evidence in the light most favorable to
the non-moving party, drawing all reasonable inferences in that party’s favor. Id.

Here, CMS moved for summary judgment and provided documentary evidence that
sufficiently establishes the material facts of the case. CMS Br. at 1; CMS Exs. 1-11.
CMS proffered documentary evidence showing Petitioner pled guilty to a felony financial
crime and that the felony financial crime was similar to other felony financial crimes that
CMS has determined are detrimental to the best interests of the Medicare program and its
beneficiaries. CMS Exs. 1-3.

Petitioner does not dispute that he pled guilty to conspiracy to commit bank fraud, wire
fraud, mail fraud, and making false statements to a bank. See RFH at 3; CMS Ex. 8, at 4-
5 (“...Dr. Beekman . . . entered into an agreement on April 7, 2011 to plead guilty to
charges of Conspiracy to Commit Bank Fraud, False Statements to Influence a Bank to
Make a Loan, Mail Fraud, and Wire Fraud[.]”). Petitioner has filed a cross-motion for
summary judgment and has argued that his felony conviction does not constitute a
financial crime under 42 C.F.R. § 424.535(a)(3) for which CMS may revoke his
4

Medicare participation.’ P. Br. at 5. Thus, I find that there is no genuine issue of
disputed material fact. The only issue I need to resolve in this case is a matter of law,
which, as discussed below, I must decide in CMS’s favor. Summary judgment is
therefore appropriate.

2. Petitioner does not dispute that he pled guilty to a felony for conspiring to
commit bank fraud, mail fraud, wire fraud, and making false statements to a
bank in applying for a loan and that his guilty plea was within ten years of
his Medicare revalidation.

Petitioner concedes that he pled guilty to a felony in April of 2011. RFH at 3. CMS has
established, and Petitioner does not contest, that Petitioner pled guilty to a conspiracy to
commit bank fraud, making false statements to influence a bank to make a loan, mail
fraud, and wire fraud, all in violation of 18 U.S.C. § 371. See CMS Exs. 1-3. The facts
underlying Petitioner’s guilty plea demonstrate that he knowingly took part in a
“mortgage fraud scheme” with an “economic predator.” CMS Ex. 8, at 8. Petitioner
engaged in a conspiracy to act as a “straw buyer” by executing loan applications in which
he inflated his income and other financial information, falsely asserted that he would be
responsible for mortgage payments, and falsely asserted that the properties in question
would serve as his second residences. CMS Ex. 1, at 2-5. The District Court accepted
Petitioner’s plea on April 6, 2011, and entered judgment against him on May 23, 2013.
CMS Ex. 2, at 3, 6.

Petitioner does not contest that his guilty plea occurred within the ten years preceding
revalidation of his Medicare enrollment. Petitioner submitted CMS Form 855] on
December 19, 2012, in order to revalidate his Medicare enrollment. CMS Ex. 4, at 27.
CMS acknowledged receiving Petitioner’s enrollment application on February 20, 2013.
CMS Ex. 5, at 3. Because Petitioner pled guilty to a felony offense on April 6, 2011, and
sought revalidation of his Medicare billing privileges on December 19, 2012, his guilty
plea fell within the ten years preceding his revalidation.

3. CMS was authorized to revoke Petitioner’s enrollment under 42 C.F.R.
§ 424.535(a)(3).

CMS may revoke a currently enrolled provider or supplier’s Medicare billing privileges
and any corresponding provider agreement or supplier agreement for several enumerated
reasons, including:

' Petitioner also challenges CMS’s authority to revoke his Medicare participation under
42 CFR. § 424.535(a)(1) and (a)(9). P. Br. at 5, 8-9. Because I find CMS properly
revoked Petitioner’s Medicare billing privileges pursuant to 42 C.F.R. § 424.535(a)(3), I
need not reach the issues of whether 42 C.F.R. § 424.535(a)(1) and (a)(9) also authorized
CMS to revoke Petitioner’s Medicare billing privileges.
(3) Felonies. The provider, supplier, or any owner of the
provider or supplier, within the 10 years preceding enrollment
or revalidation of enrollment, was convicted of a Federal or
State felony offense that CMS has determined to be
detrimental to the best interests of the [Medicare] program
and its beneficiaries.

(i) Offenses include—

* OK Rk

(B) Financial crimes, such as_ extortion,
embezzlement, income tax evasion, insurance fraud
and other similar crimes for which the individual was
convicted, including guilty pleas and adjudicated
pretrial diversion.

42 CFR. § 424.535(a)(3)(i)(B); see also Social Security Act (Act) § 1842(h)(8)
(authorizing the Secretary of Health and Human Services to revoke the enrollment of a
physician or supplier convicted of a federal or state felony offense the Secretary
“determines is detrimental to the best interests of the program or program beneficiaries”).
Revocation based on a felony conviction is effective on the date of the conviction. 42
C.F.R. § 424.535(g). After CMS revokes provider or supplier billing privileges, the
provider or supplier cannot participate in Medicare from the effective date of the
revocation until the end of the re-enrollment bar. The re-enrollment bar must last for a
minimum of one year but cannot exceed three years. 42 C.F.R. § 424.535(c).

a. Petitioner’s felony conviction was a financial crime within the plain
meaning of 42 CFR. § 424.535(a)(3)(G)(B).

The undisputed facts of Petitioner’s conviction support CMS’s determination that
Petitioner pled guilty to a felony “financial crime” covered by section
424.535(a)(3)(i)(B). In reaching this conclusion, I need to examine the conduct and
circumstances underlying Petitioner’s offense and consider whether it is similar to a
named crime. Abdul Razzaque Ahmed, M.D., DAB No. 2261, at 7 (2009), aff'd, Anmed
v. Sibelius, 710 F. Supp. 2d 167 (D. Mass 2010).

In perpetrating his crimes, Petitioner sought to “become financially independent” by
participating in a mortgage fraud scheme. CMS Ex. 8, at 3. He conspired with an
“economic predator.” CMS Ex. 8, at 8. Petitioner executed false loan applications in
order to secure mortgage loans in the amounts of $540,000, $612,000, and $364,000.
CMS Ex. 1, at 3-4. He “inflated [his] income, bank account balances, and assets” on

mortgage loan applications. CMS Ex. 1, at 5. Petitioner’s felony created a total loss in
the amount of $976,533, and the District Court ordered him to make restitution in that
amount. CMS Exs. 1, at 6; 3, at 4.

Petitioner also concedes that his offense was a “financial crime.” P. Br. at 4. However,
Petitioner argues that because the crime was not related to the practice of medicine,
Medicare, or his patients, it is not detrimental to Medicare and cannot be a basis to revoke
his billing privileges. P. Br. at 7. For purposes of summary judgment, I will assume that
the facts surrounding Petitioner’s conviction do not relate to his practice of medicine,
Medicare, or his patients. Nonetheless, Petitioner’s felony conviction, perpetrated to
enrich himself and causing a significant monetary loss, plainly constitutes a “financial
crime” within the meaning of 42 C.F.R. § 424.535(a)(3)(i)(B). See Lorrie Laurel, PT,
DAB No. 2524, at 4-5 (2013) (finding that an individual’s guilty plea to felony grand
theft constitutes a “financial crime” that can be used as a basis to revoke enrollment and
billing privileges regardless of a direct relation to the Medicare program).

b. Petitioner’s felony conviction was similar to insurance fraud, an
offense CMS has determined is detrimental to the best interests of the
Medicare program and its beneficiaries pursuant to 42 C.F.R.

§ 424.535(a)(3).

Petitioner pled guilty to an offense similar to insurance fraud, one of the offenses listed in
42 CER. § 424.535(a)(3)(i)(B). CMS has already determined that “financial crimes,
such as . . . insurance fraud and other similar crimes” are detrimental per se to the
Medicare program. Dinesh Patel, M.D., DAB No. 2551, at 5-6 (2013) (emphasis added)
(citations omitted).

“Insurance fraud involves a false statement or misrepresentation in connection with a
claim or application for insurance or insurance benefits.” Ahmed, DAB No. 2261, at 9.
Insurance fraud generally includes offenses where an individual, “with an intent to
defraud an insurance company, present[s] a written or oral statement in support of a claim
for payment knowing that the statement contains false, incomplete, or misleading
information concerning a fact material to such claim... .” 44A Am. Jur. 2d Insurance

§ 2060 (2014). Several elements of insurance fraud are present in the facts the
government alleged and to which Petitioner pled guilty. Petitioner submitted numerous
false statements on mortgage loan applications. CMS Ex. 1, at 3-5. Petitioner
misrepresented his income, bank account balances, and assets in order to induce banks to
approve mortgage loans. He likewise misrepresented to these banks that certain
properties would be his second residences, though he had no plans to live in the
properties. CMS Ex. 1, at 5. In short, Petitioner knowingly made false written
statements of material fact regarding his financial situation and intent with respect to

properties for which he sought mortgage loans in order to induce certain banks to make
those loans. Therefore, his offense was similar to insurance fraud. See Anmed, DAB No.
2261, at 9-10.

Petitioner argues that CMS erred in revoking his billing privileges pursuant to 42 C.F.R.
§ 424.535(a)(3)(i)(B) because his offense is not one of the offenses the regulation
specifically names, and therefore it is not detrimental per se to the Medicare program. P.
Br. at 6. Asa result, he argues, CMS was required to find that his offense was
detrimental to Medicare and similar to one of the offenses listed in section
424.535(a)(3)(i)(B). He argues that CMS failed to find that his offense was detrimental
to the Medicare program and that, in fact, his offense was not detrimental to the Medicare
program. P. Br. at 6-7.

I do not find Petitioner’s argument persuasive. Where, as here, CMS establishes that
Petitioner committed a felony and that the felony is similar to one of the offenses listed in
section 424.535(a)(3)(i)(B), then it may revoke his billing privileges. Ahmed, DAB No.
2261, at 13-14. CMS was within its discretion, and I may not review its decision to
exercise its authority to revoke Petitioner’s billing privileges. Id. at 18.

Petitioner argues that CMS has only deemed “extortion, embezzlement, income tax
evasion, [and] insurance fraud” to be detrimental to the Medicare program. P. Br. at 6.
Petitioner omits, however, a crucial clause to the complete list of offenses CMS has
deemed to be detrimental to the Medicare program: “[f]inancial crimes, such as
extortion, embezzlement, income tax evasion, insurance fraud, and other similar
offenses.” 42 C.F.R. § 424.535(a)(3)(i)(B) (emphasis added); see also Patel, DAB No.
2551, at 11 (observing that subparagraph (B) of section 424.535(a)(3)(i) specifies
“certain felonies . . . that the Secretary has determined are per se detrimental to the best
interest of the Medicare program and its beneficiaries). CMS has deemed not only the
four named offenses to be detrimental, but it has deemed all financial crimes, including
the four named offenses and other similar offenses, to be detrimental to the Medicare
program and its beneficiaries. Here, Petitioner was convicted of a crime similar to one of
the offenses listed in section 424.535(a)(3)(i)(B), and therefore of an offense CMS has
deemed detrimental to the Medicare program. I must reject his argument that his offense
was not detrimental in fact to the Medicare program. P. Br. at 6-7.

Petitioner also makes several arguments that are outside my review authority. He argues
that CMS did not provide him with sufficient notice when it imposed an overpayment
assessment of $52,126.08. P. Br. at 10. He argues that the sanctions that CMS has
imposed on him are disproportionate to his offense. He also argues that CMS lacked
authority to impose an overpayment assessment on him because it lacked a basis on
which to revoke his billing privileges. P. Br. at 10-11. Finally, Petitioner asserts that
CMS failed to take into consideration several equitable factors, including that Petitioner
took responsibility for his crime, cooperated with law enforcement, self-reported his

offense to the Ohio Medical Board, and that Petitioner’s revocation will negatively
impact his patients. P. Br. at 11-12.

My review authority is limited to reviewing initial determinations “to deny or revoke a
provider or supplier’s Medicare enrollment in accordance with ... § 424.535.” 42 C.F.R.
§ 498.3(b)(17). I may only review whether CMS has established a legal basis for its
determination to deny Petitioner’s enrollment. Letantia Bussell, M.D., DAB No. 2196, at
12-13 (2008) (concluding that an ALJ review of revocation of enrollment for felony
offenses under section 1842(h) of the Act is “limited to whether CMS had established a
legal basis for its actions.”). I also do not have the ability to consider retroactive payment
consequences that CMS takes into consideration when exercising its discretion. Lorrie
Laurel, DAB No. 2524, at 7-8. Petitioner cites no authority permitting me to reverse a re-
enrollment bar or overpayment assessment.” Where CMS proves that Petitioner was
convicted of an offense applicable to 42 C.F.R. § 424.535(a)(3)(i)(B), I must sustain the
revocation. I must do so “regardless of other factors, such as the scope or seriousness of
the supplier’s criminal conduct and the potential impact of revocation on Medicare
beneficiaries, that CMS might reasonably have weighed in exercising its discretion.”
Fady Fayad, M.D., DAB No. 2266, at 16 (2009), aff'd, 803 F. Supp. 2d 699 (E.D. Mich.
2011).

III. Conclusion

Based upon the undisputed facts, CMS was authorized under 42 C.F.R.

§ 424.535(a)(3)(i)(B) to revoke Petitioner’s billing privileges effective May 23, 2013, and
Iam required to sustain CMS’s determination. Petitioner is barred from re-enrolling in
the Medicare program for three years from the date of the revocation. Petitioner must
submit a new enrollment application after the termination of the enrollment bar in order
to request re-enrollment. 42 C.F.R. § 424.535(d)(1).

/s/
Joseph Grow
Administrative Law Judge

> Even if I could review the re-enrollment bar and overpayment assessment, Petitioner
has not presented any arguments or facts to show that CMS acted outside the plain
language of 42 C.F.R. § 424.535(c) (requiring CMS to impose a re-enrollment bar of
between one and three years on any individual whose billing privileges it revokes) and 42
CFR. § 424.565 (requiring CMS to impose an overpayment “back to the date of the final
adverse action,” in this case, Petitioner’s conviction on May 23, 2013).


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2014-H-1632)

Complainant,
v.

New Liquor Doctor, Inc.
d/b/a Liquor Doctor,

Respondent.
Docket No. C-15-123
Decision No. CR3529
Date: December 22, 2014
INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, New Liquor Doctor, Inc. d/b/a Liquor Doctor, at 2442 East
Monument Street, Baltimore, Maryland 21205 and by filing a copy of the complaint with
the Food and Drug Administration’s (FDA) Division of Dockets Management. The
complaint alleges that Liquor Doctor unlawfully sold cigarettes to minors and failed to
verify, by means of photo identification containing a date of birth, that cigarette
purchasers were 18 years of age or older, thereby violating the Federal Food, Drug, and
Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its implementing regulations, 21 C.F.R.
pt. 1140. CTP seeks to impose a $500 civil money penalty against Respondent Liquor
Doctor.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on October 22, 2014, CTP served the
complaint on Respondent Liquor Doctor by United Parcel Service. In the complaint and
accompanying cover letter, CTP explained that, within 30 days, Respondent should pay
the penalty, file an answer, or request an extension of time in which to file an answer.
CTP warned Respondent that, if it failed to take one of these actions within 30 days, the
Administrative Law Judge could, pursuant to 21 C.F.R. § 17.11, issue an initial decision

ordering it to pay the full amount of the proposed penalty.

Respondent Liquor Doctor has neither filed an answer within the time prescribed, nor
requested an extension of time within which to file an answer. Pursuant to 21 C.F.R.

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

At Respondent’s business establishment, 2442 East Monument Street, Baltimore,
Maryland 21205, on July 22, 2013, at approximately 2:05 PM, an FDA-
commissioned inspector observed Respondent’s staff sell a package of Newport
100s cigarettes to a person younger than 18 years of age. The inspector also
observed that Respondent’s staff failed to verify, by means of photo identification
containing the bearer’s date of birth, that the cigarette purchaser was 18 years of
age or older;

In a warning letter issued on August 29, 2013, CTP informed Respondent of the
inspector’s observations from July 22, 2013, and that such actions violate federal
law, 21 C.F.R. § 1140.14(a) and (b)(1). The letter further warned that if
Respondent failed to correct its violations, the FDA could impose a civil money
penalty or take other regulatory action;

At Respondent’s business establishment, 2442 East Monument Street, Baltimore,
Maryland 21205, on April 17, 2014, at approximately 1:51 PM, FDA-
commissioned inspectors documented Respondent’s staff selling a package of
Newport Kings cigarettes to a person younger than 18 years of age. The
inspectors also observed that Respondent’s staff failed to verify, by means of
photo identification containing the bearer’s date of birth, that the cigarette
purchaser was 18 years of age or older;

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

21 U.S.C. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b). The
Secretary of the U.S. Department of Health and Human Services issued the regulations at
21 CFR. pt. 1140 under section 906(d) of the Act. 21 U.S.C. § 387a-1; see 21 U.S.C.

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

§ 1140.14(a), no retailer may sell cigarettes or smokeless tobacco to any person younger
than 18 years of age.
Under 21 C.F.R. § 1140.14(b)(1), retailers must verify, by means of photo identification
containing the bearer’s date of birth, that no cigarette or smokeless tobacco purchaser is
younger than 18 years of age.

A $500 civil money penalty is permissible under 21 C.F.R. § 17.2.

Order

For these reasons, I enter default judgment in the amount of $500 against Respondent
New Liquor Doctor, Inc. d/b/a Liquor Doctor. Pursuant to 21 C.F.R. § 17.11(b), this
order becomes final and binding upon both parties after 30 days of the date of its
issuance.

/s/
Catherine Ravinski
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2014-H-1631)

Complainant,
v.

Massa Corporation Company / Abdallah
Alkasasbeh
d/b/a Grocery and Deli / D Town Market,

Respondent.
Docket No. C-15-122
Decision No. CR3527

Date: December 22, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Massa Corporation Company / Abdallah Alkasasbeh d/b/a
Grocery and Deli / D Town Market, 751 South Commerce Street, Tacoma, Washington
98402, and by filing a copy of the complaint with the Food and Drug Administration’s
(FDA) Division of Dockets Management. The complaint alleges that Grocery and Deli /
D Town Market unlawfully sold cigarettes to minors and failed to verify that the cigarette
purchasers were 18 years of age or older, thereby violating the Federal Food, Drug, and
Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its implementing regulations, Cigarettes
and Smokeless Tobacco, 21 C.F.R. pt. 1140. CTP seeks to impose a $500 civil money
penalty against Respondent Grocery and Deli / D Town Market.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on October 22, 2014, CTP served the
complaint on Respondent Grocery and Deli / D Town Market by United Parcel Service.
In the complaint and accompanying cover letter, CTP explained that, within 30 days,
Respondent should pay the penalty, file an answer, or request an extension of time in
which to file an answer. CTP warned Respondent that, if it failed to take one of these
actions within 30 days, the Administrative Law Judge could, pursuant to 21 C.F.R.

§ 17.11, issue an initial decision ordering it to pay the full amount of the proposed
penalty.

Respondent Grocery and Deli / D Town Market has neither filed an answer within the
time prescribed, nor requested an extension of time within which to file an answer.
Pursuant to 21 C.F.R. § 17.11, I assume that the facts alleged in the complaint (but not its
conclusory statements) are true. Specifically:

At approximately 5:25 p.m. on June 17, 2013, at Respondent’s business
establishment, 751 South Commerce Street, Tacoma, Washington 98402, an FDA-
commissioned inspector observed that a person younger than 18 years of age was
able to purchase a package of Marlboro 100’s cigarettes. The inspector also
documented that staff failed to verify, by means of photographic identification
containing a date of birth, that the purchaser was 18 years of age or older;

In a warning letter dated July 11, 2013, CTP informed Respondent of the
inspector’s June 17, 2013 observations, and that such actions violate federal law,
21 CFR. § 1140.14(a) and (b)(1). The letter further warned that Respondent’s
failure to correct its violations could result in a civil money penalty or other
regulatory action;

At approximately 4:14 p.m. on April 17, 2014, at Respondent’s business
establishment, 751 South Commerce Street, Tacoma, Washington 98402,
FDA-commissioned inspectors observed that a person younger than 18 years of
age was able to purchase a package of Marlboro cigarettes. The inspectors also
documented that staff failed to verify, by means of photographic identification
containing a date of birth, that the purchaser was 18 years of age or older.

These facts establish Respondent Grocery and Deli / D Town Market’s liability under the
Act. The Act prohibits misbranding of a tobacco product. 21 U.S.C. § 331(k). A
tobacco product is misbranded if sold or distributed in violation of regulations issued
under section 906(d) of the Act. 21 U.S.C. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B);

21 CFR. § 1140.1(b). The Secretary of the U.S. Department of Health and Human
Services issued the regulations at 21 C.F.R. pt. 1140 under section 906(d) of the Act.

21 U.S.C. § 387a-1; see 21 U.S.C. § 387£(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19,
2010). The regulations prohibit the sale of cigarettes to any person younger than 18 years
of age. 21 C.F.R. § 1140.14(a).
The regulations also require retailers to verify, by means of photo identification
containing a purchaser’s date of birth, that no cigarette purchasers are younger than 18
years of age. 21 C.F.R. § 1140.14(b)(1). A $500 civil money penalty is permissible under
21 C.F.R. § 17.2.

Order

For these reasons, I enter default judgment in the amount of $500 against Respondent
Massa Corporation Company / Abdallah Alkasasbeh d/b/a Grocery and Deli / D Town
Market. Pursuant to 21 C.F.R. § 17.11(b), this order becomes final and binding upon
both parties after 30 days of the date of its issuance.

/s/
Catherine Ravinski
Administrative Law Judge