Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

1& S Home Health Agency, Inc.
(NPI No.: 1740310341)
(PTAN: 10-9079),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-855
ALJ Ruling No. 2014-44

Date: September 16, 2014

ORDER OF REMAND

The Centers for Medicare & Medicaid Services (CMS) revoked the Medicare billing
privileges of Petitioner, I & S Home Health Agency, Inc., because Petitioner failed to
comply with Medicare enrollment requirements. Petitioner disputed the revocation and
requested a hearing. Because CMS has raised new issues and facts related to Petitioner’s
compliance with Medicare enrollment requirements in its submission to me, I remand this
case to CMS to provide Petitioner with an opportunity to respond to those new issues and
render a new determination. If Petitioner is unsatisfied with the new determination,
Petitioner may file a new request for an administrative law judge hearing.

Petitioner, a home health agency (HHA), has been enrolled in the Medicare program as a
provider. By letter dated January 30, 2014, a CMS administrative contactor informed
Petitioner that it was revoking Petitioner’s Medicare billing privileges and terminating its
provider agreement effective February 12, 2014. This initial determination indicated that
revocation was based on a review of the records of five Medicare beneficiaries who all
had Frances Glicksman, M.D.., as their attending physician. The review showed that Dr.
Glicksman had not signed orders, prescriptions, and plans of care related to Petitioner’s
bills for HHA services. The initial determination concluded that Petitioner “failed to
abide by the Medicare laws, regulations, and program instructions by submitting claims
for Medicare patients for home health services without a valid order from a physician
when it submitted claims using Dr. Frances Glicksman’s NPI for Medicare patients from
January 1, 2012 through December 1, 2013.” Petitioner Exhibit (P. Ex.) 12.

In response to the initial determination, Petitioner submitted a corrective action plan
(CAP) and a request for reconsideration. In a March 11, 2014 document, which appears
to serve as both a CAP decision and reconsidered determination, CMS upheld the
decision to revoke based on failure to comply with enrollment requirements located in the
Form CMS-855A enrollment application that Petitioner submitted to CMS, see 42 C.F.R.
§ 424.535(a)(1), and refused to reinstate Petitioner based on the CAP. CMS Ex. 1.

Petitioner filed a timely request for hearing before an administrative law judge to dispute
the revocation of billing privileges. Petitioner disputed the facts and law related tothe
basis for revocation as stated in the initial determination and upheld in the reconsidered
determination. On April 4, 2014, I issued an Acknowledgment and Pre-hearing Order
(Order). In response to the Order, CMS filed a motion for summary judgment (CMS
Mot.) and 14 exhibits (CMS Exs. 1-14) as its pre-hearing exchange. Petitioner filed both
an opposition to summary judgment and a brief, and 18 exhibits (P. Exs. 1-18) as its pre-
earing exchange. CMS subsequently filed a reply brief (CMS Reply).

In its exchange, CMS significantly changed its basis for revocation. Although CMS still
generally premised revocation on a failure to comply with enrollment requirements (i.e.,
42 C.F.R. § 424.535(a)(1)), CMS’s argument changed from its original premise that Dr.
Glicksman failed to sign various necessary documents related to home health services to
an assertion that Dr. Glicksman could not properly sign these documents to order home
health services because she was not the treating physician of Medicare beneficiaries for
whom Petitioner had billed Medicare. CMS Mot. at 10, 14-15. Further, CMS’s
argument involved 11 beneficiaries, rather than five as indicated in the initial
determination. CMS Mot. at 10-12, 14. Further, a comparison of documents submitted
in this case shows that claims involving only two of the original five beneficiaries
apparently were included among the new group of 11 beneficiaries in CMS’s summary
judgment motion. Compare CMS Mot. Appendix with CMS Ex. 10 and P. Ex. 16. In
addition, CMS added arguments in support of revocation that involved doctors other than
Dr. Glicksman. CMS Mot. at 13.

Although CMS raised a new theory for revocation in its exchange, Petitioner properly
identified as the issue in this case as the original basis for the initial determination, which
was upheld in the reconsidered determination. P. Br. at 2. Petitioner’s exchange in this
case provides documentation regarding the claims involving the original five
beneficiaries. P. Exs. 14, 15.
CMS, in a somewhat minimalistic way, acknowledged that it was changing the basis for
revocation in its motion, but cited Green Hills Enterprises, LLC, DAB No. 2199 (2008)
for the position that CMS is permitted to modify its basis for revocation at the
administrative law judge level of appeal. CMS Mot. at 3 n.2. Although CMS is correct
that this was true, recent cases have, in effect, overruled Green Hills Enterprises.
Specifically, those decisions indicate that an administrative law judge may only consider
the basis for revocation stated in the reconsidered determination when deciding whether
to affirm or reverse the revocation. Ortho Rehab Designs Prosthetics and Orthotics, Inc.,
DAB No. 2591, at 8 (2014); Keller Orthotics, Inc., DAB No. 2588, at 7 (2014); Neb
Group of Arizona LLC, DAB No. 2573, at 7 (2014); see also Cornerstone Medical Inc.,
DAB No. 2585 (2014); Norpro Orthotics & Prosthetics, Inc., DAB No. 2577 (2014);
Benson Ejindu, d/b/a Joy Medical Supply, DAB No. 2572, at 8-9 (2014). In the present
case, where CMS is raising a new basis and providing new facts not included in either the
initial or reconsidered determinations, this prohibition on considering new issues is
consistent with the regulations, which prohibit new issues from being considered by an
administrative law judge in provider/supplier denial and revocation cases. See 42 C.F.R.
§ 498.56(a)(2); Improving Life Home Care, LLC, DAB CR3076, at 5 (2014). However,
even though an administrative law judge may not consider new issues in
provider/supplier enrollment cases, the regulations expressly permit an administrative law
judge to remand a case for CMS to consider new issues and to render a new
determination. See 42 C.F.R. § 498.56(d).

Therefore, because CMS has raised a new basis for revocation and new facts to support
such revocation, and I am not able to consider such issues, as once I would have been
able to do, I remand this case to CMS. On remand, CMS will:

1) Provide Petitioner an opportunity to respond to the new reason for revocation;

2) Consider that response and all documents submitted by Petitioner; and

3) Issue a new determination setting out the specific factual and legal basis or bases
for revocation (or for reversing the revocation).

If Petitioner is unsatisfied with the new determination on remand, then Petitioner may
again request a hearing before an administrative law judge.

It is so ordered.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

The Villas of Mount Pleasant,
(CCN: 67-6241),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-13-139
Decision No. CR3370
Date: September 12, 2014
DECISION

Petitioner, The Villas of Mount Pleasant (Petitioner or facility), is a long-term care
facility located in Mount Pleasant, Texas, that participates in the Medicare program.
Based on the findings of two complaint surveys completed on September 19 and October
22, 2012, the Centers for Medicare & Medicaid Services (CMS) determined that
Petitioner was not in substantial compliance with Medicare participation requirements.
CMS imposed against Petitioner four per instance civil monetary penalties (PICMPs) in
the amounts of $1,950, $2,500, $4,500, and $6,000, and a denial of payment for new
Medicare admissions (DPNA) for the period of noncompliance, which CMS determined
to be October 18, 2012 through December 8, 2012. CMS Exhibit (Ex.) 1, at 3-6, 10.
Petitioner appealed, and CMS moved for summary judgment. I grant summary judgment
in favor of CMS because the undisputed evidence establishes that the facility was not in
substantial compliance with Medicare requirements. I also find that the penalties CMS
imposed are reasonable, and Petitioner did not effectively dispute that it was not in
substantial compliance during the period of the DPNA that CMS imposed.

I. Background

The Social Security Act (Act) sets forth requirements for nursing facilities’ participation
in the Medicare program and authorizes the Secretary of the U.S. Department of Health
and Human Services (Secretary) to promulgate regulations implementing those statutory
provisions. Act § 1819 (42 U.S.C. § 1395i-3). The Secretary’s regulations are found at
42 C.F.R. Part 483. To participate in the Medicare program, a facility must maintain
substantial compliance with program requirements. To be in substantial compliance, a
facility’s deficiencies may “pose no greater risk to resident health or safety than the
potential for causing minimal harm.” 42 C.F.R. § 488.301.

The Secretary contracts with state agencies to conduct periodic surveys to determine
whether skilled nursing facilities are in substantial compliance. Act § 1864(a) (42 U.S.C.
§ 1395aa(a)); 42 C.F.R. § 488.10. Each facility must be surveyed once every 12 months,
and more often if necessary, to ensure it corrects identified deficiencies. Act

§ 1819(g)(2)(A) (42 U.S.C. § 1395i-3(g)(2)(A)); 42 C.F.R. §§ 488.20(a), 488.308.

Surveyors from the Texas Department of Aging and Disability Services (state survey
agency) conducted a recertification survey and incident investigation of Petitioner on
September 19, 2012. Based on their findings, CMS determined that the facility was not
in substantial compliance with 14 participation requirements, but only two of the
deficiencies from the September survey resulted in the imposition of PICMPs.' The state
survey agency conducted a revisit and complaint survey on October 22, 2012, and it
found Petitioner to be still out of compliance and also cited Petitioner for noncompliance
with two additional participation requirements.”

CMS provided notice that it would be imposing a PICMP of $1,950 for Tag F226 and a
PICMP of $4,500 for Tag F309 from the September 19, 2012 survey; a PICMP in the
amount of $2,500 for Tag F281 and a PICMP of $6,000 for Tag F309 from the October

' The two findings of noncompliance resulting from the September 2012 survey at issue
in this case are 42 C.F.R. §§ 483.13(c) (Tag F226), relating to abuse prevention, at a
scope and severity of “F,” indicating no actual harm with the potential for more than
minimal harm; and 483.25 (Tag F309), relating to the quality of care for Resident 18, at a
scope and severity of “H,” indicating a pattern of actual harm that is not immediate
jeopardy. CMS Ex. 1, at 4.

> The two findings of noncompliance resulting from the October 2012 survey at issue in
this case are 42 C.F.R. §§ 483.20(k)(3)(i) (Tag F281), relating to the quality of
comprehensive care plans; and 483.25 (Tag F309), relating to the quality of care for
Resident 6, both at a scope and severity level of “J,” indicating isolated immediate
jeopardy to resident health and safety. CMS Ex. 1, at 4.
22, 2012 survey; and a DPNA for the period of noncompliance, October 18, 2012
through December 8, 2012. CMS Ex. 1, at 4-6, 10.

On November 19, 2012, Petitioner timely requested a hearing to contest CMS’s findings
of noncompliance and the proposed remedies. The case was assigned to me for hearing
and decision. On November 28, 2012, I issued an Acknowledgment and Initial Pre-
hearing Order establishing a briefing schedule. In accordance with that schedule, CMS
submitted its prehearing exchange, consisting of a motion for summary judgment and
brief in support of the motion (CMS Br.), exhibit and witness lists, and 53 exhibits (CMS
Exs. 1-53). Petitioner responded with its prehearing exchange, consisting of its response
to CMS’s motion for summary judgment and prehearing brief (P. Br.), exhibit and
witness lists, and 5 exhibits (P. Exs. 1-5).

IL. Issues
The issues in this case are:
A. Whether summary judgment is appropriate;

B. Whether Petitioner was in substantial compliance with 42 C.F.R.
§§ 483.13(c) (Tag F226) and 483.25 (Tag F309) with regard to Resident 18; and
483.20(k)(3)(i) (Tag F281) and 483.25 (Tag F309) with regard to Resident 6;

C. Whether Petitioner is entitled to a hearing with regard to the duration of its
DPNA; and

D. Whether the PICMPs that CMS imposed are reasonable.
III. Findings of Fact and Conclusions of Law
A, 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. Jd. 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. Jd. As discussed
more specifically below, this case presents no genuine disputes of material fact and
therefore may be decided as a matter of law. Although Petitioner disputes some facts,
they are not material to the outcome of this decision.

CMS maintains that for the September survey findings there are no material facts in
dispute that Petitioner did not conduct criminal history and background checks on several
identified employees prior to their employment at Petitioner’s facility. CMS Br. at 17.
CMS claims that these undisputed facts support that Petitioner was not acting in
accordance with its own abuse policy and procedures, and these actions violate 42 C.F.R.
§ 483.13(c) (Tag F226). CMS Br. at 17. CMS claims further that there is no dispute that
Petitioner failed to properly assess and monitor Resident (R)18’s mouth pain that resulted
from several tooth extractions, in violation of 42 C.F.R. § 483.25 (Tag F309). CMS Br.
at 17.

As for the October survey findings, CMS maintains that there is no dispute that Petitioner
failed to provide the care and services to R6 that met professional standards of care, in
violation of 42 C.F.R. § 483.20(k)(3)(i) (Tag F281). CMS Br. at 17. CMS also
maintains there is no dispute that Petitioner failed to provide this resident with the quality
of care that 42 C.F.R. § 483.25 (Tag F309) required. CMS Br. at 17-18.

I conclude that summary judgment for CMS is appropriate as Petitioner has shown no
genuine issue of a disputed material fact, and application of the law to the undisputed
material facts establishes that CMS must prevail as a matter of law on the issues of
Petitioner’s noncompliance with 42 C.F.R. §§ 483.13(c), 483.25, and 483.20(k)(3)(i).
My specific findings of undisputed facts and conclusions of law are set forth in the bold
italicized headings and supported by the discussions in the sections below.

B. The undisputed evidence establishes Petitioner was not in substantial
compliance with 42 C.F.R. § 483.13(c) (Tag F226) because Petitioner’s
employee files did not contain documentation that Petitioner performed
criminal background and reference checks on all its employees prior to
hiring.

A facility must not employ individuals whom a court of law has found guilty of abusing,
neglecting, or mistreating residents nor employ individuals who have had a finding
entered into the State nurse aide registry concerning abuse, neglect, mistreatment of
residents or misappropriation of their property. 42 C.F.R. § 483.13(c)(ii)(A), (B). A
facility must also “develop and implement written policies and procedures that prohibit
mistreatment, neglect, and abuse of residents and misappropriation of resident property.”
42 C.F.R. § 483.13(c). Accordingly, Petitioner’s “Abuse Policy” required that “[w]hen
an employee is being considered for employment, previous work places and references
will be checked. Documentation will be maintained either separately or the information
will be documented on the application.” Petitioner’s policy also instructs that “[b]efore a
person can be hired the facility will conduct a criminal history check within 24 hours by
accessing the Texas Department of Public Safety web site . . .” and “[a] copy of the
findings will be printed from the web site and will be maintained by the facility to verify
that the facility did request the criminal background screening for the appropriate
employees.” CMS Ex. 31, at 57.

CMS argues Petitioner violated the requirements of 42 C.F.R. § 483.13(c) when 11 of the
19 facility employee files the surveyors reviewed, from the period January through
August 2012, did not contain documentation that Petitioner conducted criminal history
checks and reference checks prior to their hiring. CMS Br. at 4; CMS Ex. 4, at 1-3. The
positions of these employees were: the Director of Nursing, Occupational Therapist,
Speech Therapist, Dietician, Activity Director, Certified Nurse Aides, and Licensed
Vocational Nurses (LVNs). CMS Ex. 4, at 2. CMS maintains that Petitioner’s “Abuse
Policy” requires that “references and a criminal history check” occur “prior to
employment.” CMS Br. at 4, 8; CMS Exs. 31, at 56-58; 46, at 2-3. According to CMS,
Petitioner failed to adhere to its own policy and procedures in screening potential
employees. CMS Br. at 4, 8.

Petitioner concedes to the lack of documented criminal background checks in the
employee files. P. Br. at 4. Petitioner argues, however, that its staff completed them, but
they had not been properly documented in the employee files. P. Br. at 4. An undisputed
lack of documentation still violates Petitioner’s policy though. Further, I do not assume
for purposes of summary judgment that Petitioner completed, but did not document, the
background checks because Petitioner did not come forward with any evidence to
support its assertions.’ To defeat CMS’s motion for summary judgment, Petitioner must
do more than make assertions or bold denials. Matsushita Elec. Indus. Co., 475 U.S.
574, 586 (finding the opposing party must do more than show that there is “some
metaphysical doubt as to the material facts.”). Therefore, I do not accept Petitioner’s
unsupported assertions as true for summary judgment purposes. I find the inference
Petitioner is asking me to make is unreasonable and not supported by any evidence.

> A surveyor interviewed the facility business manager who was responsible for
conducting the background checks, and she reportedly stated that she was not aware that
the reference checks were required. CMS Ex. 4, at 3. She also reportedly stated that the
criminal background checks for the 11 employees were not done because she was off
from work when those employees were hired. CMS Ex. 4, at 3.
Cc The undisputed evidence shows Petitioner was not in substantial
compliance with 42 C.F.R. § 483.25 (Tag F309) because Petitioner did
not provide necessary care and services to R18 in accordance with her
comprehensive assessment and plan of care.

The quality of care regulation, 42 C.F.R. § 483.25, requires that “[e]ach resident must
receive and the facility must provide the necessary care and services to attain or maintain
the highest practicable physical, mental, and psychosocial well-being, in accordance with
the comprehensive assessment and plan of care.” The Board has held that failure to
follow a resident’s plan of care that is based on the comprehensive resident assessment is
a clear case of failing to meet the requirements of 42 C.F.R. § 483.25. Cedar Lake
Nursing Home, DAB No. 2288, at 6-7, 10 (2009), aff'd, Cedar Lake Nursing Home v.
U.S. Dep’t of Health & Human Servs., 619 F.3d 453 (5th Cir. 2010); Spring Meadows
Health Care Ctr., DAB No. 1966, at 17 (2005).

CMS maintains that R18 had a doctor’s order that required Petitioner’s staff to conduct a
weekly pain assessment and administer 50 mg. of Tramadol to R18 every 4-6 hours, as
needed, for pain. CMS Br. at 9; CMS Ex. 28, at 56. CMS maintains further that R18’s
plan of care provided interventions for her pain management. CMS Br. at 9; CMS Ex.
28, at 16. CMS states that R18 was not assessed for pain and did not receive any
interventions to relieve the pain, and this resulted in R18 suffering with unrelieved mouth
pain for an undetermined period during September 2012. CMS Br. at 10-11; CMS Ex.
28, at 10, 14-15. CMS argues further that Petitioner did not conduct weekly pain
assessments of R18 per Petitioner’s own policies. CMS Br. at 11.

The undisputed evidence shows that at the time of the September 2012 survey R18 was
93 years old. CMS Ex. 28, at 5. She had been admitted to Petitioner’s facility on May
18, 2010. CMS Ex. 28, at 5. From December 7, 2011 through July 10, 2012, R18 had
multiple teeth extractions and two debridement procedures. CMS Ex. 28, at 53-54. On
July 24, 2012, R18’s doctor ordered “weekly pain assessment on Tuesday r/t routine pain
rx using pain scale... .” CMS Ex. 28, at 56. Her September 7, 2012 plan of care noted
that she was at risk for pain related to arthritis and recent dental work. CMS Ex. 28, at
16. Some of the interventions listed in the plan of care to deal with R18’s pain required
that staff ensure the appropriate pain management flow sheet was used to determine
R18’s intensity of pain or discomfort, that a weekly pain assessment be completed, and
that the family and the resident’s doctor be made aware of changes that indicated pain.
CMS Ex. 28, at 16.

Further, Petitioner’s “Pain Assessment” policy required that for residents who were on
routine pain medications, as was R18, staff assess and rate the level of a resident’s pain
daily for the initial week and then weekly thereafter. CMS Ex. 28, at 8. The protocol
also required staff to document the results of the pain assessment rating on the resident’s
Medication Administration Record. CMS Ex. 28, at 8.
During the September survey, on September 17, 2012, while in the dining room during
lunch, R18 reported to a surveyor that she had difficulty chewing because of her teeth and
stated that the roof of her mouth “hurts so badly.” CMS Ex. 4, at 13. At the dinner meal,
R18 again complained to the surveyor that she was experiencing mouth pain. CMS Ex.
4, at 13. The surveyor intervened, and LVN C examined R18’s mouth and found an
ulcerated area on R18’s gum line, red and swollen lower gums, and teeth impacted with
food at her gum line. CMS Ex. 4, at 14. When the surveyor reviewed R18’s record later
that day, she noticed that the examination LVN C conducted was not documented, and
there also was an absence of documentation that R18 had expressed mouth pain. CMS
Ex. 4, at 14.

During an interview with the surveyor at 8:45 a.m. the following day, LVN B stated that
ie was not aware of R18’s mouth pain and that he would check the resident. CMS Exs.
4, at 14; 5, at 15. Later that day at 3:30 p.m., LVN B told the surveyor that he had not
assessed R18’s mouth but he was going to inform the charge nurse for the following shift.
CMS Exs. 4, at 14; 28, at 12. The surveyor then intervened and LVN K assessed R18’s
mouth at 3:35 p.m. LVN K found R18’s gumline to be red and swollen, and LVN K
reported to the surveyor that R18 had a broken tooth. CMS Exs. 4, at 14; 28, at 12.

R18’s nursing notes entered at 3:45 p.m. on September 18, 2012, document the
assessment, that bone spurs were noted on R18’s gumline, and that R18 reported that on a
scale of 1-10, her pain when chewing food was an 8. CMS Exs. 4, at 14-15; 28, at 6.
During an interview on September 19, a family member told the surveyor that for weeks
the resident had been complaining that her mouth hurt. He indicated that on September
18, Petitioner’s staff asked him if he wanted to have R18’s pain medication increased, but
he refused because he wanted R18’s teeth fixed and not just to have pain medication
administered to her. CMS Ex. 4, at 15. He also told the surveyor, however, that he
agreed that the resident should be receiving medication for pain and thought the
Tramadol would be helpful. CMS Ex. 4, at 15.

A review of R18’s record from September | through the survey date of September 19,
shows that her “Pain Management Flowsheet” for September 2012 does not contain any
staff entries documenting weekly pain assessments, nor is there any documentation on the
sheet showing any pain management interventions for R18. CMS Ex. 28, at 13. R18’s
September 2012 “Medication Sheet” and also her “PRN Medications” sheet have no
entries showing that R18 received any Tramadol for pain management. CMS Ex. 28, at
10, 14-15. Prior to surveyor intervention on September 18, R18’s nurses’ notes for
September 2012 show no entries were made regarding assessments or pain medication
being administered to R18 in September 2012. CMS Ex. 28, at 6. The first entry
showing an assessment of R18’s mouth was on September 18, after surveyor
intervention. CMS Ex. 28, at 6.
Petitioner argues that the evidence does not establish that facility staff ignored any
complaints of pain from R18 nor does it show that staff failed to provide pain medication
to R18 when indicated. P. Br. at 5. Petitioner states that staff whom surveyors
interviewed recounted that R18 had not reported to them that she suffered from any
mouth pain. P. Br. at 4, citing CMS Ex. 4, at 11-16. Petitioner states further that when
R18 was assessed on February 18, 2012, she “did not complain of pain” except when she
chewed food. P. Br. at 4, citing CMS Ex. 4, at 15. Petitioner states that the resident was
not provided with pain medication at the time because she did not complain. P. Br. at 5.

There is no dispute that in September 2012, facility staff was required to conduct weekly
pain assessments of R18’s mouth and teeth, and despite Petitioner’s assertions, Petitioner
has not come forward with evidence to dispute the evidence before me. R18’s plan of
care required, among other things, that Petitioner’s staff perform weekly pain
assessments using a pain assessment tool and using a pain management flow sheet in
order to “determine presence and intensity of pain/discomfort with documentation as
utilized.” CMS Ex. 28, at 16. Petitioner’s Pain Assessment policy specifically required
staff to document these assessments and for staff to notify R18’s family and her doctor of
any changes. CMS Ex. 28, at 8.

Petitioner also states that the resident’s family member admitted to the surveyor that
facility staff contacted him on September 18, and he refused to agree to the provision of
increased pain medication to R18. P. Br. at 5, citing CMS Ex. 4, at 15. Even if I were to
assume facility staff contacted a family member who then asked that R18 not receive pain
medication as ordered, which I do not after reviewing the cited exhibit upon which
Petitioner relies,’ Petitioner has not come forward with any specific evidence to show
what authority the family member might have to invalidate the doctor’s order.

I find the undisputed evidence establishes that Petitioner did not follow R18’s plan of
care interventions, in addition to her doctor’s order and the facility’s pain assessment
policy for pain assessment and pain management. I therefore conclude Petitioner did not
provide the quality of care necessary to R18 to comply with the regulatory requirements
of 42 CFR. § 483.25.

* Petitioner cited to the survey’s Statement of Deficiencies for support, “He said the
facility called him yesterday wanting to increase her pain medication and he refused. He
said he wanted the resident to get her teeth fixed not just get pain medication. He agreed
the resident should get something for pain and he thought the Tramadol would be
helpful.” CMS Ex. 4, at 15 (emphasis added).
Dz. The undisputed evidence establishes that Petitioner was not in substantial
compliance with 42 C.F.R. § 483.20(k)(3)(i) (Tag F281) because
Petitioner’s staff member did not provide R6 with an assessment and
necessary care and services that met professional standards of quality of
care.

The regulation at 42 C.F.R. § 483.20(k)(3)(i) requires that “[t]he services provided or
arranged by the facility must . . . [m]eet professional standards of quality.” Although the
regulation does not define the phrase “professional standards of quality,” CMS provides
guidance to surveyors, stating that this phrase means that services are provided according
to accepted standards of clinical practice which may be found in various sources. State
Operations Manual, pub. 100-07 (SOM), app. PP, F281 (iss. 05-21-04).

The material facts are undisputed here. R6, a 94-year-old female, was readmitted to
Petitioner’s facility from a hospital on October 8, 2012, at 3:09 p.m. with diagnoses of
pneumonia, congestive heart failure, and a possible heart attack. P. Ex. 2, at 5; CMS Ex.
43, at 13. Discharge instructions from the hospital directed that facility staff monitor R6
for worsening of congestive heart failure and to call her doctor or return her to the
emergency room if her symptoms worsened. CMS Ex. 43, at 7. The discharging
physician also ordered Petitioner to check R6 every two hours. CMS Ex. 43, at 11, 19.

R6’s plan of care notes that she had a history of falls and indicates the need for a
wheelchair and bed alarms to be in place. CMS Ex. 43 at 128. R6’s doctor’s order
required staff to ensure an alarm was on her wheelchair and that staff check every hour
that the alarm was in place and that it was operational. CMS Ex. 43, at 12. The facility
investigation shows that on the same day as her readmission, at approximately 4:09 p.m.,
R6 fell out of her wheelchair but did not sustain any injury. P. Ex. 2, at 4; CMS Ex. 43,
at 4, 46. Petitioner’s nurse did not use R6’s wheelchair alarm prior to R6’s fall. P. Ex. 2,
at 4,5, 6,9. Petitioner’s nurse also did not notify R6’s doctor and family about the fall.
P. Ex. 2, at 5.

Around 7:00 p.m. that evening R6 appeared to be in respiratory distress. P. Ex. 2, at 4.
R6 was noted as “breathing loud and heavy.” P. Ex. 2, at 10. LVN A stated that when
she arrived at R6’s room, she noticed R6 did not have a pulse and was not able to answer
questions. P. Ex. 2, at 14. R6’s change in condition related to her respiratory status, and
Petitioner’s staff did not report it to R6’s doctor. P. Ex. 2, at 5,9. An oxygen
concentrator was available in R6’s room, but Petitioner’s staff did not provide oxygen to
R6. P. Ex. 2, at 14. A hospital progress note dated October 5, 2012, states that R6 would
become confused when her oxygen was off. CMS Ex. 43, at 20. LVN A pronounced R6
dead after her respirations stopped for 2 minutes. CMS Ex. 36, at 2; see P. Ex. 2, at 14.
The record shows that R6 died on October 8, 2012, at 7:20 p.m. CMS Ex. 43, at 48.
There is no dispute that R6 died due to respiratory issues and not due to the fall she

10

experienced earlier that day. P. Ex. 2, at 4, 5. Petitioner self-reported the incident and
completed an internal investigation. P. Ex. 2.

According to CMS, the charge nurse on duty, LVN A, failed to follow R6’s hospital
discharge instructions by not monitoring R6, not contacting her doctor when her
symptoms worsened, and not returning her to the emergency room. CMS Br. at 16-17;
CMS Ex. 43, at 7, 11, 14. Specifically, CMS argues that LVN A did not assess R6’s
respiratory status, as ordered in the hospital discharge instructions, did not notify R6’s
physician when the resident’s respiratory status changed, and did not attempt to relieve
R6 when she was “gasping for air.” CMS Br. at 16. CMS maintains that there is no
documentation that facility staff assessed R6’s cardiac or respiratory status upon her
return to the facility from the hospital. CMS Ex. 36, at 6. According to CMS, R6’s
record contains a neurological assessment that LVN A completed dated October 8, 2012,
that shows she assessed R6 for changes every 15 minutes from 4:00 p.m. following her
fall until 10:00 p.m. that evening. CMS Ex. 36, at 7. CMS states that according to the
neurological assessment, R6’s vital signs remained consistent, she was alert and oriented,
and her pupils were equal and reactive. CMS Ex. 36, at 7 citing the Neurological
Assessment (CMS Ex. 43, at 70). The surveyor questioned the assessment, however,
because R6 reportedly stopped breathing at approximately 7:00 p.m. CMS Ex. 52, at 4.

The Assistant Director of Nursing stated to a surveyor that she believed the neurological
check values were “made up.” CMS Ex. 36, at 7-8, referring to the Neurological
Assessment (CMS Ex. 43, at 70). When R6 was reported as “gasping for air” in her
room, CMS states that LVN A did not assess oxygen saturation levels and did not apply
oxygen to R6. CMS Br. at 16; CMS Exs. 37, at 1; 43, at 71. CMS contends that LVN A
admitted in an interview that that she did not assess R6’s oxygen saturation levels and did
not apply oxygen to R6. CMS Ex. 43, at 71. CMS also alleges further that LVN A acted
outside the scope of her license in pronouncing the resident’s death. CMS Ex. 36, at 4.

Petitioner does not dispute any of the material facts regarding R6’s care. Petitioner
agrees that LVN A failed to follow facility policies and failed to follow good nursing
practices. P. Br. at 6. Petitioner states that it self-reported the death of R6 and conducted
an investigation of the incident the following day. P. Br. at 5. According to Petitioner,
its internal investigation concluded that LVN A “failed to use safety devices to prevent a
fall by Resident #6 and failed to report the fall to the Resident’s family and physician”
and when R6 experienced respiratory distress, LVN A did not notify the resident’s doctor
and “acted outside her license in pronouncing the resident’s death (though the resident
did have an out-of-hospital do-not-resuscitate order).” P. Br. at 5-6; P. Exs. 1, at 2; 2.

Petitioner avers that the investigation did not reveal a failure in its facility systems. P. Br.
at 6; P. Ex. 1, at 2. Petitioner states that LVN A was suspended from work during the
investigation, and it promptly terminated LVN A’s employment well before the October
22, 2012 survey. P. Br. at 6; P. Ex. 3, at 6. Petitioner also claims that immediately

11

following the investigation, it reviewed with nursing staff its policies and procedures on
dealing with changes in condition, requirements for nursing assessments, readmission
requirements, and the scope of a nurse’s license in pronouncing a resident’s death. P. Br.
at 7; P. Exs. 1, at 2; 4. Petitioner maintains that in March 2012, staff had been trained on
notifying family members and doctors of changes in condition. P. Br. at 7; P. Ex. 5.

There is no question that upon R6’s death, Petitioner acted appropriately in reporting and
investigating the incident, immediately suspending LVN A, and then terminating LVN A
based on the findings of its internal investigation. However, Petitioner is still responsible
for the actions of its employees. Petitioner cannot escape its culpability by disassociating
itself from the actions of LVN A here. See Gateway Nursing Ctr., DAB No. 2283, at 8
(2009) (concluding that a facility acts through its staff and cannot disown the
consequence of the actions of its employees). The undisputed evidence establishes that a
member of Petitioner’s staff did not properly assess and provide necessary care and
services to R6 in a manner that met professional standards of quality of care.

E. The undisputed evidence shows Petitioner was not in substantial
compliance with 42 C.F.R. § 483.25 (Tag F309) because staff failed to
provide care and services according to R6’s comprehensive assessment
and plan of care.

As discussed previously, the regulation at 42 C.F.R. § 483.25 requires that a facility
ensure each resident receive necessary care and services to attain or maintain the
resident’s highest practicable physical, mental, and psychosocial well-being, in
accordance with the resident’s comprehensive assessment and plan of care. The Board
has held that the language of 42 C.F.R. § 483.25 not only requires skilled nursing
facilities to furnish the care and services set forth in a resident’s care plan but also to
implement doctors’ orders, monitor and document the resident’s condition, and follow its
own policies. See, e.g., Alexandria Place, DAB No. 2245 (2009) (upholding this
deficiency when a petitioner did not provide care in accordance with a doctor’s order);
Oxford Manor, DAB No. 2167, at 5-6 (2008) (affirming an ALJ’s reliance on a facility’s
policy as evidence of the standard of care the facility expected its staff to provide, noting
“if facility staff exercise professional judgment in deciding not to follow facility policy
with respect to a particular resident, they document that judgment and give a reason why
not. In the absence of such contemporaneous documentation, it is certainly reasonable to
infer, when staff do not follow the policy, either they are not aware of it or that they are
simply disregarding it.”); Spring Meadows Health Care Ctr., DAB No. 1966, at 17
(“[T]he clearest case of failure to meet [section 483.25] is failure to provide one of the
specific services outlined in the subsections or failure otherwise to follow the plan of care
based on the comprehensive resident assessment. . .”).

CMS states that Petitioner’s noncompliance with Tag F309 is based on the same facts and
evidence as Tag F281. CMS Br. at 16. Specifically, CMS maintains that LVN A did not
12

properly assess R6’s respiratory status, did not provide R6 with oxygen when she was
determined to be gasping for air, did not notify R6’s doctor as to the change in her
respiratory status, did not provide interventions to address the change in her condition,
and did not follow hospital discharge instructions for assessing and returning R6 to the
emergency room when her respiratory status changed. CMS Br. at 16-17; CMS Exs. 36,
at 10-18; 43, at 11, 14; 52, at 5. According to CMS, these failures contributed to the
compromise of R6’s respiratory status. CMS Ex. 36, at 11.

Petitioner does not dispute LVN A did not notify R6’s doctor when the resident
experienced respiratory distress. P. Br. at 6; P. Ex. 2, at 4-5. Petitioner states that LVN
A did not follow facility policy and procedures and “failed to follow good nursing
practices” in regards to R6, and its October 10, 2012 internal investigation concluded that
LVN A “failed to confirm MD orders upon admission,” P. Br. at 6; P. Exs. 1, at 2; 2, at
4, 5. Petitioner also states that LVN A “acted outside her license in pronouncing the
resident’s death.” P. Br. at 6. Petitioner maintains that it terminated LVN A’s
employment the day after the incident, and all of its other staff who were involved with
R6’s care acted appropriately. P. Br. at 6, 7.

As explained previously, Petitioner is responsible for the actions of its employees and
cannot disassociate itself from their actions. The undisputed facts I rely upon as material
show that Petitioner did not comply with the requirements of 42 C.F.R. § 483.25 for
following doctor’s orders, care plan provisions, and facility policies. I find, therefore,
that as a matter of law, Petitioner was not in substantial compliance because it failed to
provide R6 with the requisite care.

F. Petitioner is not entitled to a hearing with regard to the duration of
the DPNA and the date upon which it achieved substantial
compliance.

CMS may impose an enforcement remedy against a facility for as long as the facility is
not in substantial compliance with participation requirements. 42 C.F.R. § 488.430(a).
The burden of persuasion regarding the duration of noncompliance is Petitioner’s.
Owensboro Place and Rehab. Ctr., DAB No. 2397, 12-13 (2011). Substantial
noncompliance with only one participation requirement is sufficient to support the
imposition of a penalty such as a DPNA. Beechwood Sanitarium, DAB No. 1824 (2002).

A DPNA continues until either “(1) [t]he facility has achieved substantial compliance, as
determined by CMS or the State based upon a revisit or after an examination of credible
written evidence that it can verify without an on-site visit” or “(2) CMS or the State
terminates the provider agreement.” 42 C.F.R. §§ 488.454(a), 488.417(d); Act §
1819(h)(3) (42 U.S.C. § 1395i-3(h)(2)).
13

Petitioner asserts that the only reason provided in the Statement of Deficiencies from the
October 2012 survey as to why it remained not in substantial compliance was because
Tag F309 from the September 2012 survey continued to exist. P. Br. at 9, citing CMS
Ex. 36 at 10, 18. Further, Petitioner argues, according to CMS records, Petitioner cleared
all deficiencies from that September 2012 survey on October 29, 2012. P. Br. at 9, citing
CMS Ex. 53, at 2. According to Petitioner, the DPNA should therefore not have
continued until December 8, 2012. P. Br. at 9. Petitioner argues that there is no
allegation that it remained out of compliance with alleged deficiencies from the October
22 survey. P. Br. at 11.

CMS actually bases the DPNA on all the deficiency tags cited during the September 19
survey, which include: 42 C.F.R. §§ 483.25 (Tag F309); 483.13(c) (Tag F226);
483.15(a) (Tag F241); 483.20(k)(3)(ii) (Tag F282); 483.25(a)(3) (Tag F312);
483.25(g)(2) (Tag F322); 483.25(h) (Tag F323); 483.35(d)(1)-(2) (Tag F364); 483.35(e)
(Tag F367); 483.35(f) (Tag F368); 483.65 (Tag F441); 483.70(h) (Tag F465); 483.75(f)
(Tag F498); and 483.70(a) (Life Safety Code Tags K27, K29, K51 and K144). CMS Ex.
1, at 3; CMS Br. at 1 n.1; CMS Br. at 3 n.2, 4. However, considering just one deficiency
finding is necessary to support a DPNA, CMS addressed only deficiency findings F226
and F309 from the September survey in its brief to support the DPNA remedy. CMS Br.
at 1-2 n.1. CMS determined the period of noncompliance to be October 18, 2012 through
December 8, 2012. CMS Ex. 1, at 4-6, 10.

The revisit survey that followed the September survey was conducted on October 30,
2012, and the state survey agency found all deficiencies related to the September survey
corrected as of October 29, 2012. CMS Ex. 53, at 2. However, the two October survey
deficiency findings related to R6, Tag F281 and Tag F309, were still pending. CMS Ex.
53, at 2. On December 10, a revisit survey was conducted at Petitioner’s facility to
determine whether Petitioner had corrected the October survey deficiency findings. CMS
Ex. 53, at 2. During the December 10 revisit survey, the surveyors determined that
Petitioner had corrected all deficiencies related to the October survey by December 9.
CMS Ex. 53, at 2. Therefore, the DPNA continued until a revisit survey verified
Petitioner had achieved substantial compliance. 42 C.F.R. §§ 488.454(a), 488.417(d).

Although Petitioner states that it was in compliance earlier than what CMS has
determined, Petitioner has not come forward with evidence relating to the October 2012
survey to suggest that it was in substantial compliance earlier than December 9, 2012.
Therefore, I conclude that Petitioner did not effectively dispute the duration of the
DPNA, October 18, 2012 through December 8, 2012.
14

G. The PICMPs that CMS imposed are reasonable.

CMS imposed PICMPs of $1,950 for Tag F226 and $4,500 for Tag F309 from the
September 19, 2012 survey. For the deficiency findings from the October 22, 2012
survey, CMS imposed PICMPs of $2,500 for Tag F281 and $6,000 for Tag F309.

CMS must consider several factors when determining the amount of a CMP (factors an
ALJ considers de novo when evaluating the reasonableness of the CMP that CMS
imposed): (1) the facility’s history of noncompliance; (2) the facility’s financial
condition, i.e., its ability to pay the CMP; (3) the severity and scope of the
noncompliance, the “relationship of the one deficiency to other deficiencies resulting in
noncompliance,” and the facility’s prior history of noncompliance; and (4) the facility’s
degree of culpability, which includes neglect, indifference, or disregard for resident care,
comfort or safety. 42 C.F.R. §§ 488.438(f), 488.404(b),(c).

In discussing the burden of proof regarding the regulatory factors, the Board has
repeatedly held that “an ALJ or the Board properly presumes that CMS considered the
regulatory factors and that those factors support the amount imposed.” See, e.g.,
Pinecrest Nursing & Rehab. Ctr., DAB No. 2446, at 23 (2012). Thus, the burden is on
Petitioner “to demonstrate, through argument and the submission of evidence addressing
the regulatory factors, that a reduction is necessary to make the CMP amount
reasonable.” Jd., quoting Oaks of Mid City Nursing & Rehab. Ctr., DAB No. 2375, at 26-
27 (2011). Petitioner does not challenge the PICMPs CMS imposed based on the
September survey findings, one in the amount of $1,950 for Tag F226 and another in the
amount of $4,500 for Tag F309. P. Br. at 9-10. Here, other than claiming in its brief
that it “disagrees” that the PICMPS of $2,500 for Tag F281 and $6,000 for Tag F309
from the October survey are reasonable, Petitioner has not otherwise come forward with
any evidence with respect to any of the regulatory factors that warrant a hearing on the
reduction of the PICMP amounts. P. Br. at 10.

As to Petitioner’s history of prior noncompliance, CMS claims that since May 2010, this
is the fourth survey cycle where Petitioner has been noncompliant with regulatory
requirements, and this is the second survey cycle where CMS has imposed enforcement
actions against Petitioner. CMS Ex. 53, at 9-10. CMS also states Petitioner was
previously cited for Tag F309 during an October 5, 2011 recertification survey when
CMS determined Petitioner failed to manage pain, indicating a pattern of actual harm.
CMS stated further that during a complaint survey on December 16, 2011, CMS found
Petitioner failed to assess and intervene timely to a resident’s change of condition,
indicating a pattern of actual harm. CMS Ex. 53, at 10. Petitioner does not dispute this
prior noncompliance. Petitioner also has not come forward with evidence or argument
regarding its financial condition or ability to pay the PICMPs.
15

Petitioner’s failure to follow its abuse policy and perform the required criminal
background and reference screening for 11 of the 19 employees it hired from January
through August of 2012 clearly placed the residents in its facility at serious risk.
Additionally, by not implementing R18’s plan of care interventions and not following its
own pain assessment policy, Petitioner caused R18 to experience severe pain
unnecessarily. I find these incidents to be egregious and Petitioner’s culpability to be
high.

As for the care provided to R6, I find the degree of Petitioner’s culpability to also be
high. It was Petitioner’s duty to provide care for R6 in accordance with the hospital
discharge instructions and with R6’s doctor’s orders. Petitioner failed to do this, and is
therefore culpable. R6 had just been discharged from the hospital with specific discharge
instructions, and it was Petitioner’s staff’s duty to carefully follow those instructions and
monitor R6’s respiratory status. Staff was also remiss in failing to ensure R6 had the
necessary safety alarm in her wheelchair as required by her plan of care. As explained
above, Petitioner cannot limit its culpability by separating itself from the actions of its
employee.

Given the seriousness of Petitioner’s noncompliance and its culpability, I find that the
PICMPs, which are in the lower to middle part of the allowable PICMP range ($1,000 to
$10,000) that CMS could impose for noncompliance, are reasonable for Petitioner’s
failure to comply substantially with Medicare requirements. See 42 C.F.R. §§
488.408(d)(iv), 488.438(a)(2).

IV. Conclusion

For the reasons set forth above, I grant summary judgment in favor of CMS. I find that
the undisputed evidence establishes Petitioner was not in substantial compliance with the
participation requirements of 42 C.F.R. §§ 483.13(c) and 483.25 cited from the
September 2012 survey; and 42 C.F.R. §§ 483.20(k)(3)(i) and 483.25 cited from the
October 2012 survey. I find as reasonable all of the PICMPs that CMS imposed against
Petitioner. I also find that Petitioner did not effectively dispute that it did not return to
substantial compliance until December 9, 2012, and therefore CMS had a basis to impose
a DPNA for the period of October 18, 2012 through December 8, 2012.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.

Montrose Gas and Grocery, LLC / Karla M. Everett
d/b/a Montrose Gas and Grocery,

Respondent.

Docket No. C-14-1413
FDA Docket No. FDA-2014-H-0923

Decision No. CR3369

Date: September 12, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

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

CTP began this case by serving a Complaint on Respondent and filing a copy of the
Complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The Complaint alleges that Respondent’s staff unlawfully sold tobacco
products to minors and failed to verify, by means of photo identification containing a date
of birth, that the purchasers were 18 years of age or older, thereby violating the Federal
Food, Drug, and Cosmetic Act (Act) and its implementing regulations, found at 21 C.F.R.
pt. 1140. CTP seeks a civil money penalty of $500.

On July 17, 2014, CTP served the Complaint on Respondent by United Parcel Service,
pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and accompanying cover letter,
CTP explained that within 30 days Respondent should pay the penalty, file an answer, or
request an extension of time within which to file an answer. CTP warned Respondent
that if it failed to take one of these actions within 30 days an Administrative Law Judge
could issue an initial decision by default ordering Respondent to pay the full amount of
the proposed penalty. 21 C.F.R. § 17.11.

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

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

e Respondent owns Montrose Gas and Grocery, an establishment that sells tobacco
products and is located at 5157 Highway 15, Louin, Mississippi 39338.
Complaint 3.

e During an inspection of Respondent’s establishment on October 29, 2012, at
approximately 5:29 PM CT, an FDA-commissioned inspector observed that “a
person younger than 18 years of age was able to purchase a package of Seneca
Full Flavor King Size cigarettes . . . [.]” The inspector also observed that “the
minor’s identification was not verified before the sale... .” Complaint § 10.

e On January 24, 2013, CTP issued a Warning Letter to Respondent regarding the
inspector’s observations from October 29, 2012. 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 Inan April 18, 2013 letter, Ms. Karla Everett, the Respondent’s owner, responded
to the Warning Letter on Respondent’s behalf. Ms. Everett “stated that she
discussed the importance of verifying the identification of all tobacco purchasers
with each employee . . . [and] she posted ‘we card’ signage at the establishment.”
Complaint § 11.

e During a subsequent inspection of Respondent’s establishment conducted on
November 25, 2013, FDA-commissioned inspectors documented that “a person
younger than 18 years of age was able to purchase a package of Grizzly Long Cut
Premium Wintergreen smokeless tobacco . . . at approximately 9:59 AM[.]” The
inspector also observed that “the minor’s identification was not verified before the
sale... .” Complaint § 1.

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

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

§ 1140.14(a). The regulations also require retailers to verify, by means of photo
identification containing a purchaser’s date of birth, that no 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 and smokeless tobacco to persons younger than 18 years of age, 21 C.F.R. §
1140.14(a), on October 29, 2012 and November 25, 2013. 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 tobacco product purchasers
are younger than 18 years of age. 21 C.F.R. § 1140.14(b)(1). Therefore, Respondent’s
actions constitute violations of law that merit a civil money penalty.

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

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Ricky Brown Sr.
d/b/a Morgan’s Grocery,

Respondent.

Docket No. C-14-1443
FDA Docket No. FDA-2014-H-0952

Decision No. CR3367

Date: September 12, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

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

CTP began this case by serving a Complaint on Respondent and filing a copy of the
Complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The Complaint alleges that Respondent’s staff unlawfully sold cigarettes
to 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) and its implementing regulations, found at 21 C.F.R.
pt. 1140. CTP seeks a civil money penalty of $500.
On July 14, 2014, CTP served the Complaint on Respondent by United Parcel Service,
pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and accompanying cover letter,
CTP explained that within 30 days Respondent should pay the penalty, file an answer, or
request an extension of time within which to file an answer. CTP warned Respondent
that if it failed to take one of these actions within 30 days an Administrative Law Judge
could issue an initial decision by default ordering Respondent to pay the full amount of
the proposed penalty. 21 C.F.R. § 17.11.

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

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

e Respondent owns Morgan’s Grocery, an establishment that sells tobacco products
and is located at 1193 Gershal Avenue, Elmer, New Jersey 08318'. Complaint

q3.

e During an inspection of Respondent’s establishment on July 11, 2013, at
approximately 3:28 PM, an FDA-commissioned inspector observed that “a person
younger than 18 years of age was able to purchase a package of Newport Box

00s cigarettes .. . [.]” The inspector also observed that “the minor’s
identification was not verified before the sale... .” Complaint § 10.

e¢ On August 15, 2013, CTP issued a Warning Letter to Respondent regarding the
inspector’s observations from July 11, 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

' My office sent an Initial Order Establishing Procedures to the Respondent twice at this
address indicating that it must respond to CTP’s Complaint within 30 days or the
Administrative Law Judge assigned to this case would decide this matter without a
hearing. The United States Postal Service returned both of our mailings as undeliverable.
However, CTP filed Proof of Service of their Complaint and cover letter, the latter of
which informed the Respondent that it must take action within 30 days after delivery of
the Complaint. Therefore, the Respondent has notice of the Complaint and is subject to
default.
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 “Morgan” received the
Warning Letter, CTP did not receive a response to the Warning Letter. Complaint

ql

e During a subsequent inspection of Respondent’s establishment conducted on
December 19, 2013, FDA-commissioned inspectors documented that “a person
younger than 18 years of age was able to purchase a package of Newport Box
cigarettes . . . at approximately 4:34 PM[.]” The inspector also observed that “the
minor’s identification was not verified before the sale... .” Complaint § 1.

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

21 U.S.C. § 387c(a)(7)(B); 21 C.F.R § 1140.1(b). The regulations prohibit the sale of
cigarettes or smokeless tobacco to any person younger than 18 years of age. 21 C.F.R. §
1140.14(a). The regulations also require retailers to verify, by means of photo
identification containing a purchaser’s date of birth, that no 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 July 11,
2013 and December 19, 2013. 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. Therefore, I find that a civil money penalty of $500 is warranted and so
order one imposed.

/s/
Steven T. Kessel
Administrative Law Judge


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

Center for Tobacco Products,
(FDA No. FDA-2014-H-0983)
Complainant
v.

Donglo Inc. / Donte Summer
d/b/a Red Door East,

Respondent.
Docket No. C-14-1473
Decision No. CR3366

Date: September 12, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Donglo Inc. / Donte Summer d/b/a Red Door East, at 625

North Glover Street, Baltimore, Maryland 21205, and by filing a copy of the comp
with the Food and Drug Administration’s (FDA) Division of Dockets Management

aint
. The

complaint alleges that Red Door East impermissibly sold cigarettes 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.

CTP seeks to impose a $500 civil money penalty against Respondent Red Door East.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on July 17, 2014, CTP served the

140.

complaint on Respondent Red Door East 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 Red Door East 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 11:32 a.m. on August 20, 2013, at Respondent’s business
establishment, 625 North Glover Street, Baltimore, Maryland 21205, an FDA-
commissioned inspector observed Respondent’s staff selling a package of
Newport 100s cigarettes 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 October 17, 2013, CTP informed Respondent of the
inspector’s August 20, 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 1:16 p.m. on January 9, 2014, at Respondent’s business
establishment, 625 North Glover Street, Baltimore, Maryland 21205, FDA-
commissioned inspectors documented Respondent’s staff selling a package of
Newport Box 100s 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 Red Door East’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. Under 21 C.F.R. § 1140.14(b)(1), retailers must verify, by means of photographic
identification containing a purchaser’s date of birth, that no cigarette purchasers are

younger than 18 years of age.

A $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
Donglo Inc. / Donte Summer d/b/a Red Door East. 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-0911)

Complainant
v.

Monroe Stop Shop, Inc.
d/b/a Valero,

Respondent.
Docket No. C-14-1405
Decision No. CR3364

Date: September 11, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Monroe Stop Shop, Inc. d/b/a Valero, at 3080 North Monroe
Street, Monroe, Michigan 48162, and by filing a copy of the complaint with the Food and
Drug Administration’s (FDA) Division of Dockets Management. The complaint alleges
that Valero impermissibly sold cigarettes to a minor, thereby violating the Federal Food,
Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seg., and its implementing regulations,
21 C.F.R. pt. 1140. The complaint likewise alleges that Respondent Valero previously
admitted to two violations of regulations found at 21 C.F.R. pt. 1140 and, therefore, CTP
seeks to impose a $500 civil money penalty against Respondent Valero.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on July 17, 2014, CTP served the
complaint on Respondent Valero 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 Valero 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, 1
assume that the facts alleged in the complaint (but not its conclusory statements) are true.
Specifically:

e CTP previously issued a warning letter to Respondent Valero on September 20,
2012, citing violations! of 21 C.F.R. pt. 1140 on July 13, 2012, at Respondent’s
business establishment, 3080 North Monroe Street, Monroe, Michigan 48162;

¢ On August 20, 2013, CTP initiated a previous civil money penalty action, CRD
Docket Number C-13-1150, FDA Docket Number FDA-2013-H-0941, against
Respondent for two violations of 21 C.F.R. pt. 1140 within a twelve-month period.
CTP alleged those violations to have occurred on July 13, 2012, and February 21,
2013;

e The previous action concluded when Ali Elsayed, Respondent’s authorized
representative, settled the claims on Respondent’s behalf. On September 4, 2013,
Mr. Elsayed signed an Acknowledgment Form in which he “admitt[ed] that the
violations . . . occurred, waiv[ed] his ability to contest the violations in the future,
and stat[ed] that he understood that that violations may be counted in determining
the total number of violations for purposes of future enforcement actions.” The
Administrative Law Judge closed the case on October 3, 2013;

e At approximately 10:19 a.m. on November 10, 2013, at Respondent’s business
establishment, 3080 North Monroe Street, Monroe, Michigan 48162, FDA-
commissioned inspectors documented Respondent’s staff selling a package of
Newport Box cigarettes to a person younger than 18 years of age.

' In the complaint, CTP describes the action or actions that took place at Respondent
Valero’s business establishment on July 13, 2012, as both “a violation” and as
“violations.” Complaint § 10. In a previous administrative complaint issued on August
9, 2013, and attached to the present complaint, CTP described two discrete violations at
Respondent Valero’s business establishment on July 13, 2012: a violation of 21 C.F.R. §
1140.14(a) and a violation of 21 C.F.R. § 1140.14(b)(1). Therefore, I will infer that
CTP’s description in the present complaint of “a violation” occurring on July 13, 2012,
was a typographical error.
These facts establish Respondent Valero’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 US.C. § 387£(d); see 21 U.S.C. § 387¢(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. §
387£(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). Under 21 C.F.R. § 1140.14(a),
no retailer may sell cigarettes to any person younger than 18 years of age.

Under 21 C.F.R. § 17.2, a $500 civil money penalty is permissible for three violations of the
regulations found at 21 C.F.R. pt. 1140.

Order

For these reasons, I enter default judgment in the amount of $500 against Respondent
Monroe Stop Shop, Inc. d/b/a Valero. 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

Kearney Regional

Medical Center, LLC

(CCN: 28-0134),!

Petitioner,

Vv.

Centers for Medicare & Medicaid Services.

Docket No. C-14-1016

Decision No. CR3362

Date: September 10, 2014

DECISION

The Centers for Medicare & Medicaid Services (CMS) denied the request of Kearney

Regional Medical Center, LLC (Petitioner)

to participate in the Medicare program as a

hospital because it was not primarily engaged in providing care to inpatients during an
accreditation survey. Petitioner disputes this determination and requested a hearing
before an administrative law judge. Both parties moved for summary judgment. Because

the application of the law to the undispute:

facts in this case supports CMS’s denial of

Petitioner’s participation in the Medicare program, I grant CMS’s motion for summary

judgment and affirm CMS’s reconsidered

I. Background and Procedural History

letermination.

Petitioner is a new hospital in Kearney, Nebraska. Petitioner Exhibit (P. Ex.) 1 1.

Petitioner’s facility took four years to build

and equip at a total cost of $38 million.

' The caption on the April 3, 2014 Acknowledgement and Pre-hearing Order in this case
did not include Petitioner’s Centers for Medicare & Medicaid Services Certification

Number (CCN) because Petitioner did not

ave a CCN until June 3, 2014. See Petitioner

Exhibit 5. I amend the caption in this case to include the CCN.
P. Ex. 195. Petitioner’s facility includes various medical equipment as well as “over
forty licensed patient beds.” P. Ex. 194. Petitioner obtained a Certificate of Occupancy
from the local government on September 27, 2013, and a state license to operate on
December 9, 2013. P. Ex. 1 §§ 6, 8. Since December 9, 2013, Petitioner has maintained
full nursing staff to care for inpatients at the hospital. P. Ex. 1 § 9. From December 9,
2013, through December 30, 2013, Petitioner admitted 21 inpatients. P. Ex. 1 J 11.

On December 18, 2013, Petitioner filed an application for the American Osteopathic
Association, Healthcare Facilities Accreditation Program (AOA) “to assist with its
Medicare Certification.” P. Ex. 1 §§ 13-15. An AOA team conducted an accreditation
survey of Petitioner’s facility from January 13-15, 2014. CMS Ex. 1, at 2; P. Ex. 1

§§ 17, 19. Although Petitioner was capable of admitting inpatients at the time of the
accreditation survey, it did not do so because Petitioner would not be able to bill
Medicare or other health insurers for the patients until CMS granted Petitioner’s request
to participate in the Medicare program. P. Ex. 1 §{] 16, 17. The head of the AOA survey
team told Petitioner’s staff that admitting inpatients was unnecessary. P. Ex. 1 fj 20, 21.
The AOA surveyors relied on a review of the inpatients admitted to Petitioner’s facility in
December 2013. P. Ex. 1 §§ 21, 23.

On January 24, 2014, AOA determined that Petitioner had a number of deficiencies.
CMS Ex. 1, at 5-12. However, Petitioner submitted an acceptable plan of correction and,
on February 7, 2014, AOA “granted Full Accreditation” to Petitioner and recommended
that CMS “approve deemed status” for Petitioner. CMS Ex. 1, at 1-4. AOA’s notice
informed Petitioner that CMS had to review the survey findings and determine if
Petitioner met all CMS requirements. CMS Ex. 1, at 1.

On April 9, 2014, CMS issued an initial determination in which it denied Petitioner’s
participation in the Medicare program because Petitioner failed to meet the statutory
definition of a hospital, i.e., “there were no inpatients at the time of the initial
certification survey and the last inpatient discharge prior to the survey occurred on
December 30, 2013.” CMS Ex. 2. Petitioner requested reconsideration asserting that it
met the statutory definition of a hospital because it was fully staffed and had cared for 21
inpatients in December 2013, as well as 67 inpatients from February 10-April 10, 2014.
CMS Ex. 3. Further, Petitioner stated that the AOA survey team leader indicated that
Petitioner did not need to admit patients for the January 13-15, 2014 survey, even though
Petitioner had been able and willing to do so. CMS Ex. 3, at 2.

On April 17, 2014, CMS issued a reconsidered determination in which it affirmed the
initial determination because Petitioner did not have any inpatients during the AOA
survey or “for a period of time prior to that survey.” CMS Ex. 4, at 1. AOA then
terminated its previous accreditation of Petitioner. CMS Ex. 5.
On April 22, 2014, Petitioner, through counsel, requested a hearing before an
administrative law judge with the Departmental Appeals Board (DAB). I issued an
Acknowledgment and Pre-hearing Order (Order) on April 30, 2014. In response, CMS
filed a motion for summary judgment and memorandum in support of that motion (CMS
Motion), and 6 exhibits (CMS Exs. 1-6). Petitioner filed a memorandum in opposition to
CMS’s summary judgment motion (P. Opposition) and five exhibits (P. Exs. 1-5).
Petitioner subsequently filed a motion for summary judgment and memorandum in
support of that motion (P. Motion), and | exhibit (P. Ex. 6). CMS did not respond to
Petitioner’s motion.

Il. Summary Judgment

The parties have filed cross motions for summary judgment. When appropriate,
administrative law judges may decide a case arising under 42 C.F.R. pt. 498 by summary
judgment. See Civil Remedies Division Procedures § 7; Livingston Care Ctr. v. U.S.
Dep't of Health & Human Servs., 388 F.3d 168, 172 (6th Cir. 2004) (citing Crestview
Parke Care Ctr. v. Thompson, 373 F.3d 743 (6th Cir. 2004). Summary judgment is
appropriate and an in-person hearing is not required if the record shows that there is no
genuine dispute of any material fact and the moving party is entitled to judgment as a
matter of law. Senior Rehab. & Skilled Nursing Ctr., DAB No. 2300, at 3 (2010).? To
determine whether there are genuine issues of material fact for an in-person hearing, the
administrative law judge must view the evidence in the light most favorable to the non-
moving party, drawing all reasonable inferences in that party’s favor. Jd.

The material facts on which this case turns are not in dispute. P. Opposition at 2-4.
Because Petitioner has asserted a number of material facts to which CMS has not
responded, I consider those facts in the light most favorable to Petitioner. P. Opposition
at 5-12; P. Motion at 3-10. I note that Petitioner’s facts are supported by P. Exs. 1-6.

III. Issue
Whether CMS had a legitimate basis for denying Petitioner’s participation in the

Medicare program as a provider (hospital) because Petitioner did not have any inpatients
at the time of its accreditation survey.

> DAB decisions cited in this decision are accessible on the Department of Health and
Human Services’ website at: http://www.hhs.gov/dab/decisions/index.html

> AOA conducted a second survey of Petitioner’s facility on April 28-30, 2014. P. Ex. 4.
On May 14, 2014, AOA again granted Petitioner full accreditation, effective May 8,
2014, and recommended CMS approval of deemed status. P. Ex. 4. On June 3, 2014,
CMS informed Petitioner that “[y]our agreement for participation as a deemed status
acute care hospital under the Medicare program has been accepted by [CMS],” and that
IV. Jurisdiction

I have jurisdiction to decide whether Petitioner qualifies as a provider for the Medicare
program. 42 U.S.C. § 1395ce(h)(1); 42 C.F.R. §§ 498.3(b)(1), 498.5(a)(2).

V. Findings of Fact, Conclusions of Law, and Analysis*

Petitioner sought to participate in the Medicare program as a hospital. Hospitals are
“providers” for Medicare program purposes. 42 C.F.R. §§ 400.202 (definition of
Provider), 488.1 (definition of Provider of services or provider). A hospital may request
to participate in the Medicare program, but must meet the conditions of participation in
the regulations. Jd. § 489.10(a). To determine compliance with the conditions of
participation, a survey of the hospital may be conducted by CMS, a state survey agency,
or a CMS approved accreditation organization. Jd. § 489.13(a)(1). AOA is a CMS
approved accreditation organization and hospitals surveyed and accredited by AOA are
deemed to meet all of the conditions of participation. Jd. § 488.5(a). However, CMS
may use information from AOA’s survey to determine that a hospital does not meet the
conditions of participation. Id. § 488.5(c)(2).

1. From December 9, 2013, until December 30, 2013, Petitioner cared
for 21 inpatients, and from February 10, 2014, to May 7, 2014,
Petitioner cared for 51 inpatients; however, during the AOA
accreditation survey from January 13, 2014, to January 15, 2014,
Petitioner did not have any inpatients at its facility.

Petitioner received a state license to operate as a hospital on December 9, 2013, and from
that date until December 30, 2013, Petitioner cared for inpatients that had been admitted
to Petitioner’s facility. P. Ex. 1 §§ 8, 11. Because Petitioner was not yet a provider in the
Medicare program and could not bill commercial health care payers, Petitioner decided
not to admit any inpatients until Petitioner was accepted into the Medicare program.

P. Ex. 1 J 12, 16. Petitioner informed the AOA survey team that it did not have any
inpatients, but could admit some patients if necessary; however, the head of the survey
team indicated that admitting patients for the survey was not necessary. P. Ex. 1 {J 20-

May 8, 2014, is Petitioner’s effective date of Medicare participation. P. Ex. 5. CMS’s
subsequent determination to permit Petitioner to participate in the Medicare program is
not an issue in this case. My jurisdiction over this case is based on Petitioner’s request
for hearing related to CMS’s April 17, 2014 reconsidered determination, see Denise A.
Hardy, D.P.M, DAB No. 2464, at 4 (2012), and my review is limited to the matters
addressed on reconsideration. Neb Group of Arizona LLC, DAB No. 2573, at 7 (2014).

+ My findings of fact and conclusions of law are set forth in italics and bold font.
21. Following AOA’s notice that it fully accredited Petitioner, Petitioner cared for 51
inpatients from February 10 to May 7, 2014. P. Ex. 1 §§ 25, 29.

2. CMS had a legitimate basis to deny Petitioner’s participation in the
Medicare program because Petitioner was not primarily engaged in
providing care to inpatients during the AOA January 2014 survey, as
required by 42 U.S.C. § 1395x(e)(1).

For purposes of the Medicare program, a hospital must be:

primarily engaged in providing, by or under the supervision
of physicians, to inpatients (A) diagnostic services and
therapeutic services for medical diagnosis, treatment, and care
of injured, disabled, or sick persons, or (B) rehabilitation
services for the rehabilitation of injured, disabled, or sick
persons.

42 U.S.C. § 1395x(e)(1). The regulations, under the heading “conditions of
participation,” state that a prospective provider must meet the applicable statutory
definition for its provider type in order for a prospective provider to be approved for
participation in the Medicare program. 42 C.F.R. § 488.3(a). This is consistent with the
statute, which authorizes CMS to refuse to approve a provider agreement when it “has
determined that the provider fails substantially to meet the applicable provisions of
section 1395x.” 42 U.S.C. § 1395cc(b)(2). Therefore, Petitioner must be able to show
that it was “primarily engaged” in providing care to inpatients or else CMS could
justifiably deny participation in the Medicare program. See Arizona Surgical Hospital
LLC, DAB No. 1890 (2003).

Petitioner asserts that it met the requirement of being primarily engaged in providing care
to inpatients because it had inpatients in December 2013 and from February to May 2014.
Further, Petitioner avers that at all times since December 9, 2013, it has had full nursing
staff present at the facility, and thus was ready and able to treat inpatients. P. Opposition
at 16-20; P. Motion at 12-16. CMS’s position is that AOA could not perform a proper
survey of Petitioner’s facility without the presence of inpatients. CMS Motion at 7-8.
CMS relies on the State Operations Manual.

As explained below, I disagree with Petitioner’s argument. Further, CMS’s argument
provides a justification for denial of Petitioner’s participation that does not appear in the
reconsidered determination. Therefore, I reject that argument. Neb Group of Arizona
LLC, DAB No. 2573, at 7.

CMS determined that Petitioner did not satisfy the statutory requirement that it be
“primarily engaged” in providing inpatient care. Based on the DAB’s decision quoted
below, I conclude that CMS permissibly made its determination because the statutory
requirement that a hospital be “primarily engaged” in providing inpatient care has been
narrowly interpreted.

Petitioner's resort to the dictionary definition of “primarily” to
show a dispute requiring evidentiary proceedings overlooks
the common meaning of the word that “primarily” modifies in
42 US.C. § 1395x(e)(1)]: “engaged.” “Engage” and
“engaged” have myriad definitions; those obviously
applicable here include, as a verb, “to involve oneself or
become occupied; participate,” and as an adjective,
“employed, occupied, or busy.” The American Heritage
Dictionary of the English Language, 4th ed., accessed via
dictionary.com. At the time of the March survey and the
termination, Petitioner was under a state sanction that
prevented it from accepting inpatients. Petitioner did not
dispute CMS’s findings that it had no inpatients and was not
engaged in providing inpatient services as of the dates of the
two Medicare complaint validation [surveys]. As of those
surveys, then, Petitioner was not employed, occupied, busy,
involved in or participating in providing services to
inpatients. We fail to see how Petitioner could have been
“primarily engaged” in providing services to inpatients when
it was not “engaged” in providing those services in the first
place .... The length of Petitioner's failure to engage in
providing services to inpatients, which included the March
survey and CMS's notice of termination, supports the ALJ's
conclusion that Petitioner failed substantially to meet the
provisions of [42 U.S.C. § 1395x(e)].

oe Rk

Petitioner offered evidence only to show that its policies,
istory and business model indicated an intent to operate as a
ospital.

Arizona Surgical Hospital, DAB No. 1890. In applying Arizona Surgical Hospital LLC,
to another case, the DAB stated:

It was undisputed that the hospital in question had not been
engaged in providing inpatient services in the 39-day period
between two Medicare complaint surveys. We concluded that
the “length of Petitioner’s failure to engage in providing
services to inpatients . . . support[ed] the ALJ’s conclusion
that Petitioner failed substantially to meet the provisions of
[42 U.S.C. § 1395x(e)].”

United Medical Home Care, Inc., DAB No. 2194, at 10 (2008) (internal citations
omitted).

In the present case, Petitioner admits that it did not have any inpatients from December
30, 2013, until February 10, 2014, which is 42 days.° Further, unlike Arizona Surgical
Hospital, Petitioner had no previous history of serving inpatients prior to December 9,
2013. See Arizona Surgical Hospital, DAB No. 1890 (“Petitioner stated that it had
functioned as a hospital, providing care to inpatients and outpatients, for more than 30
years, with the treatment of inpatients at all times its objective and practice”). Therefore,
I conclude that while Petitioner intended to operate as a hospital by having the capability
to accept inpatients, it was not actually “primarily engaged” in care for inpatients
immediately prior to or following the survey that took place in January 2014.

Petitioner relies on Boone County Hospital, DAB CR2526 (2012), for the proposition
that, considering the facts in this matter as a whole, Petitioner was plainly primarily
engaged in providing services to inpatients. P. Opposition at 2; P. Motion at 2.

However, as CMS argues, Boone County Hospital involved a provider who had already
initially demonstrated compliance with the conditions of participation based on an initial
survey, whereas this case involves Petitioner’s initial survey. CMS Motion at 9. Further,
Boone County Hospital appears to have considered the termination in Arizona Surgical
Hospital to have turned on the four-month period of state license suspension, and that this
was a long period of time in which no inpatients were admitted. DAB CR2526, at 18.
However, as quoted above, the DAB considered the 39 days when no inpatients were
admitted between two surveys at the Arizona Surgical Hospital as sufficient time to
conclude that it was no longer primarily engaged in providing care to inpatients. United
Medical Home Care, Inc., DAB No. 2194, at 10. That time frame is relevant to this
matter because Petitioner admits to a 42-day gap in the admission of patients.

Petitioner also argues that it could have admitted inpatients at the time of the survey;
however, Petitioner relied on the statement of the head of AOA’s survey team that no

> The affidavit that Petitioner submitted with its motion for summary judgment states
that Petitioner “also engaged in the care of patients in January 2014 by treating a patient
admitted on January 22, 2014, and following up with that patient by phone on January 24,
2014, to assess the patient’s condition.” P. Ex. 6 § 8. However, in its motion, Petitioner
did not rely on or refer to this statement to show compliance with 42 U.S.C.

§ 1395x(e)(1). In any event, this vague statement of a single admission, for no more than
one night to Petitioner’s facility, could not show that Petitioner was primarily engaged in
inpatient care.
such action was necessary. P. Opposition at 8-9; P. Motion at 7. Petitioner asserts that
CMS ought to be estopped from arguing that inpatients should have been required during
the survey. P. Opposition at 19 n. 5; P. Motion at 15 n.5. However, even if the
statements of an AOA employee could be considered those of a CMS agent, it is well
settled that such statements cannot be used to estop the government. See, e.g., Office of
Personnel Mgmt. v. Richmond, 496 U.S. 414 (1990); Heckler v. Cmty. Health Servs. of
Crawford County, Inc., 467 U.S. 51 (1984); Oklahoma Heart Hosp., DAB No. 2183, at
16 (2008); Wade Pediatrics, DAB No. 2153, at 22 n.9 (2008), aff'd, 567 F.3d 1202 (10th
Cir. 2009); U.S. Ultrasound, DAB No. 2302, at 8 (2010). Therefore, I must reject
Petitioner’s equitable estoppel argument.

VI. Conclusion

For the reasons stated above, I deny Petitioner’s motion for summary judgment, grant
CMS’s motion summary judgment, and affirm CMS’s determination to deny Petitioner’s
request to participate in the Medicare program.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2014-H-0951)

Complainant
v.

Yohana, Inc.
d/b/a 7-Eleven 23696,

Respondent.
Docket No. C-14-1442
Decision No. CR3361

Date: September 9, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Yohana, Inc. d/b/a 7-Eleven 23696, at 650 East University
Boulevard, Silver Spring, Maryland 20901, and by filing a copy of the complaint with the
Food and Drug Administration’s (FDA) Division of Dockets Management. The
complaint alleges that 7-Eleven 23696 unlawfully 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. An Administrative Law Judge (ALJ)
has previously found Respondent to have committed two violations of regulations found
at 21 C.F.R. pt. 1140. Yohana, Inc. d/b/a 7-Eleven #23696, DAB CR2947, at 2-3 (2013);
Complaint 4] 11. Therefore, CTP seeks to impose a $500 civil money penalty against
Respondent 7-Eleven 23696.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on July 11, 2014, CTP served the
complaint on Respondent 7-Eleven 23696 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 ALJ 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 7-Eleven 23696 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:

e CTP previously issued a warning letter to Respondent 7-Eleven 23696 on October
25, 2012, citing a violation of 21 C.F.R. pt. 1140 on August 6, 2012, at
Respondent’s business establishment, 650 East University Boulevard, Silver
Spring, Maryland 20901;

¢ On August 14, 2013, CTP initiated a previous civil money penalty action, CRD
Docket Number C-13-1101, FDA Docket Number FDA-2013-H-0907, against
Respondent for two violations of 21 C.F.R. pt. 1140 within a twelve-month period.
CTP alleged those violations to have occurred on August 6, 2012, and January 10,
2013;

e The previous action concluded when the ALJ issued an Initial Decision and
Default Judgment in which he found that Respondent 7-Eleven 23696 committed
two violations of 21 C.F.R. pt. 1140 by selling cigarettes to a minor on two
separate occasions. Yohana, Inc. d/b/a 7-Eleven #23696, DAB CR2947, at 2-3
(2013); Complaint 11;

e At approximately 11:54 AM on December 17, 2013, at Respondent’s business
establishment, 650 East University Boulevard, Silver Spring, Maryland 20901,
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 7-Eleven 23696’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.
Under 21 C.F.R. § 17.2, a $500 civil money penalty is permissible for three violations of the
regulations found at 21 C.F.R. pt. 1140.

Order

For these reasons, | enter default judgment in the amount of $500 against Yohana, Inc.
d/b/a 7-Eleven 23696. 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