Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

RT Specialists Corporation
(PTAN: 0946210001),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-15-419
Decision No. CR3729

Date: March 27, 2015

DECISION

The Centers for Medicare & Medicaid Services (CMS), through its administrative
contractor, the National Supplier Clearinghouse (NSC) of Palmetto GBA, revoked the
Medicare billing privileges of Petitioner, RT Specialists Corporation, based on a failure
to comply with durable medical equipment, prosthetics, orthotics, and supplies
(DMEPOS) Supplier Standard 22 (accreditation by a CMS-approved organization).
Petitioner requested a hearing to dispute the revocation. For the reasons stated below,

I affirm the revocation.

I. Background and Procedural History

Petitioner was enrolled in the Medicare program as a DMEPOS supplier. In a May 7,
2014 initial determination, NSC revoked Petitioner’s Medicare billing privileges effective
30 days from the postmarked date on the initial determination. CMS Exhibit (Ex.) | at 1.
Relevant to this proceeding, NSC stated that Petitioner was not in compliance with
Supplier Standard 22. CMS Ex. 1 at 1-2; see also 42 C.F.R. § 424.57(c)(22).
Specifically, NSC wrote that “[a]ccording to the Joint Commission, [Petitioner’s]
accreditation expired on January 11, 2014.”' CMS Ex. 1 at 2. NSC cited 42 C.F.R.

§§ 405.800, 424.57(e), 424.535(a)(1), and 424.535(g) as its authority for revoking
Petitioner’s billing privileges. CMS Ex. 1 at 1. NSC advised Petitioner that if it believed
it could correct the cited deficiency, it could submit a corrective action plan (CAP) within
30 days of the postmark on the initial determination. CMS Ex. | at 2.

Petitioner submitted a CAP on June 5, 2014, in which it explained, among other things,
that its accreditation was removed in error and that it was attempting to rectify The Joint
Commission’s mistaken removal of its accreditation. See CMS Ex. 6 at 1. NSC rejected
the CAP on July 14, 2014, finding that Petitioner was still not in compliance with
Supplier Standard 22. CMS Ex. 7. The CAP decision stated that Petitioner had until
August 14, 2014, to request reconsideration of the revocation.

Petitioner submitted its request for reconsideration on August 13, 2014, and argued that
NSC should not have rejected Petitioner’s earlier CAP because it was evident Petitioner
was working with The Joint Commission to regain its accreditation. CMS Ex. 8 at 2.
Petitioner provided NSC with copies of various correspondence between itself and The
Joint Commission as well as evidence of an upcoming survey of Petitioner’s location by
The Joint Commission. See CMS Ex 8 at 2. Petitioner did not argue that it was
accredited at the time of revocation; Petitioner merely asserted that the loss of
accreditation was in error and that NSC should provide Petitioner “the opportunity to
complete the CAP and obtain accreditation from The Joint Commission, and that the
decision to terminate its Medicare billing privileges be reversed once such accreditation
is finally reinstated.” CMS Ex. 8 at 2.

On September 25, 2014, an NSC hearing officer issued a reconsidered determination
upholding the revocation of Petitioner’s billing privileges. CMS Ex. 9. The hearing
officer found that Petitioner was “non-compliant” with Supplier Standard 22, stating that
a review of Petitioner’s argument and supporting exhibits “does not provide
documentation that [Petitioner] had maintained accreditation as required.” CMS Ex. 9 at
2. Further, in response to Petitioner’s argument that it should be permitted additional
time to regain accreditation, the hearing officer stated that “Medicare guidelines do not
allow for an extension of time to obtain accreditation.” CMS Ex. 9 at 2.

' The Joint Commission is an independent, not-for-profit national body that oversees the
safety and quality of health care and other services in accredited organizations. CMS Ex.
10 at 2. CMS approved The Joint Commission to accredit DMEPOS suppliers who seek
enrollment or are enrolled in the Medicare program. See Medicare New Deemed
Accreditation Organizations for Suppliers of Durable Medical Equipment, Prosthetics,
Orthotics and Supplies (DMEPOS) (March 2013), http://www.cms.gov/
Medicare/Provider-Enrollment-and-Certification/MedicareProviderSupEnroll/
DMEPOSAccreditation.html (last visited Mar. 18, 2015); see also 42 C.F.R. § 424.58.
Petitioner requested a hearing to dispute the revocation. In response to my November 20,
2014 Acknowledgment and Pre-hearing Order (Order), CMS filed a motion for summary
judgment and supporting brief (CMS Br.) as well as 11 proposed exhibits (CMS Exs. 1-
11). Petitioner filed an opposition to summary judgment (P. Br.) and nine proposed
exhibits (P. Exs. 1-9). CMS objected to the admission of several of Petitioner’s exhibits.
It also offered one additional exhibit as rebuttal (CMS Ex. 12). CMS did not offer the
written direct testimony of any witnesses. Petitioner offered the written direct testimony
of Alok Manchanda (P. Ex. 3); CMS stated it did not intend to cross-examine that
witness. CMS Objections at 3.

IL. Evidentiary Rulings and Decision on the Record

Petitioner did not object to the admission of CMS Exs. 1-11; therefore, I admit them into
the record.

CMS objects to the admission of P. Exs. 1, 2, 5, 6, 7, and 9 as duplicative of documents
that CMS already offered as exhibits. CMS Objections at 1. The record does not need to
contain multiple copies of the same documents. See Civil Remedies Division Procedures
§ 9 (eff. 2009) (“Parties . . . should not file as an exhibit a document already filed as an
exhibit by the opposing party.”). Therefore, I sustain CMS’s objection to P. Exs. 1, 2, 5,
6, 7, and 9, and I exclude these exhibits from the record. In the absence of further
objection, I admit P. Exs. 3, 4, and 8.

CMS offered CMS Ex. 12 as rebuttal evidence. That exhibit is an Accreditation Quality
Report by The Joint Commission, stating that The Joint Commission accredited Petitioner
as of September 30, 2014. CMS offered this exhibit to rebut P. Ex. 8, which is a letter
from The Joint Commission, stating that Petitioner’s “accreditation cycle” is effective as
of August 27, 2014. P. Ex. 8 at 1. As discussed below, the effective date of Petitioner’s
accreditation, whether August 27 or September 30, is not relevant in this proceeding,
which is limited to Petitioner’s accreditation status at the time of revocation. However,
because CMS offered CMS Ex. 12 to rebut P. Ex. 8, which I have already admitted, I will
admit CMS Ex. 12.

My Order advised the parties that they must submit written direct testimony for each
proposed witness and that an in-person hearing would be necessary only if the opposing
party requested an opportunity to cross-examine a witness. Order §§j 8-10. CMS did not
submit any written direct testimony. Petitioner submitted written direct for one witness
(P. Ex. 3), but CMS did not request to cross-examine the witness. Therefore, a hearing in
this case is unnecessary and I issue this decision based on the written record. Order § 11.

II. Issue

Whether CMS had a legitimate basis to revoke Petitioner’s Medicare billing privileges
based on the loss of its accreditation from The Joint Commission.

IV. Jurisdiction

I have jurisdiction to hear and decide this case because Petitioner timely filed a request
for hearing following the issuance of a reconsidered determination upholding the
revocation of Medicare billing privileges. 42 C.F.R. §§ 498.5(/)(2), 498.40(a); see also
42 U.S.C. § 1395cc(j)(8); 42 C.F.R. §§ 405.803(a), 424.545(a), 498.3(b)(17),
498.25(a)(3).

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

For a DMEPOS supplier to receive Medicare payments for items and services furnished
to a Medicare beneficiary, the Secretary of Health and Human Services (Secretary) must
first issue a supplier number to that supplier. 42 U.S.C. § 1395m(j)(1)(A). The Social
Security Act sets forth basic requirements for DMEPOS suppliers and authorizes the
Secretary to create additional DMEPOS supplier requirements. Jd. § 1395m(j)(1)(B)(ii).
The Secretary promulgated regulations establishing DMEPOS supplier enrollment
standards that a DMEPOS supplier must meet to enroll and to remain enrolled. 42 C.F.R.
§ 424.57(c). Specifically, Supplier Standard 22 requires a DMEPOS supplier to, among
other things, “be accredited by a CMS-approved accreditation organization in order to
receive and retain a supplier billing number.” 42 C.F.R. § 424.57(c)(22); see also

42 U.S.C. § 1395m(a)(20)(A), (F) (directing the Secretary to implement quality standards
to be used by independent accrediting organizations, and requiring suppliers of DMEPOS
to submit evidence of accreditation in order to receive and maintain Medicare billing
privileges).

I. Petitioner’s accreditation by The Joint Commission ceased in July 2013
following the transfer of its stock from the Doctors’ Hospital of Michigan to
its new owner, and Petitioner did not receive accreditation from The Joint
Commission again until either August 27, 2014, or October 1, 2014.

Prior to July 2013, Oakland Physicians Medical Center, LLC, doing business as Doctors’
Hospital of Michigan (Doctors’ Hospital), was the sole shareholder of Petitioner. P. Ex.
341. The Joint Commission accredited Doctors’ Hospital to provide durable medical
equipment (DME) through Petitioner. According to the Joint Commission, it did not

> My findings of fact and conclusions of law in this case are set forth in italics and bold
font.
independently accredit Petitioner at that time, but instead considered Petitioner to be a
“home care service of a hospital.” See CMS Ex. 3 at 1. This is because, upon evaluation
of Doctors’ Hospital and Petitioner, The Joint Commission concluded that Doctors’
Hospital and Petitioner were “so organizationally and functionally integrated, that, per
Joint Commission policy, they needed to be accredited as one organization.” CMS Ex. 3
at 1. The Joint Commission conducted surveys for accreditation in 2004, 2007, 2010, and
2013. CMS Ex. 3 at 1. The 2013 survey occurred in April 2013 and “took place at the
same time The Joint Commission surveyed [Doctors’] Hospital.” P. Ex. 3 42.

On July 10, 2013, Doctors’ Hospital transferred all of its stock in Petitioner to Alok
Manchanda. P. Ex. 3 § 3. On August 2, 2013, Mr. Manchanda sent a letter to the Joint
Commission’s Accreditation and Certification Operations, which served to notify The
Joint Commission of the transfer of Petitioner’s stock from Doctors’ Hospital to him.
CMS Ex. 4; P. Ex. 3 95. Mr. Manchanda received verbal verification that The Joint
Commission received his August 2 letter. P. Ex. 3 45. The Joint Commission did not
respond to Mr. Manchanda, but instead contacted Doctors’ Hospital, which confirmed
that it no longer held ownership interest over Petitioner. CMS Ex. 3 at 1-2; P. Ex.3 5.
The Joint Commission then “removed DME services from the hospital’s application . . .
[which] in turn, generated a weekly report to [NSC], and the now unaccredited hospital
DME service, known as ‘RT Specialists,’ became listed as unaccredited.”” CMS Ex. 3 at
2. The Joint Commission’s General Counsel later told Petitioner that it never contacted
Mr. Manchanda “because he was not listed as an authorized contact of the accredited
organization, the hospital.” CMS Ex. 3 at 1.

Mr. Manchanda believed that The Joint Commission had independently accredited
Petitioner and stated that the first he knew of The Joint Commission’s position that
Petitioner was not accredited was when Mr. Manchanda received NSC’s May 7, 2014
initial determination.’ P. Ex. 3 9§[ 4, 5. Petitioner’s owner and counsel both
communicated with The Joint Commission to seek clarification as to Petitioner’s
accreditation status, eventually learning that Petitioner needed to apply for accreditation
because Petitioner was not accredited. CMS Exs. 3, 5; P. Ex. 3 §§ 8-10. Petitioner
initiated the accreditation process, obtaining The Joint Commission accreditation by
either August 27, 2014 or October 1, 2014. CMS Exs. 10, 12; P. Ex. 3 § 11; P Ex. 8.

2. CMS was authorized to revoke Petitioner’s Medicare enrollment and billing
privileges because Petitioner failed to be in compliance with Supplier
Standard 22 after it lost its accreditation following the transfer of
Petitioner’s stock to a new owner in July 2013.

> The Joint Commission’s General Counsel stated that even if Petitioner had been
accredited separately from the Doctors’ Hospital, “Joint Commission accreditation would
not have automatically transferred along with a stock transfer to Mr. Manchanda . . . .”
CMS Ex. 3 at 2.
Supplier Standard 22 requires DMEPOS suppliers to be “accredited by a CMS-approved
accreditation organization in order to . . . retain a supplier billing number.” 42 C.F.R.

§ 424.57(c)(22). As stated above, Petitioner’s accreditation ceased following the transfer
of its shares from Doctors’ Hospital to a new owner on July 10, 2013. CMS Ex. 3.
Further, Petitioner did not obtain accreditation until August 27, 2014, at the earliest.
Although Petitioner did not realize that it had lost its accreditation following the transfer
of stock to a new owner and disputes that The Joint Commission properly removed its
accreditation, Petitioner does not, in these proceedings, dispute the loss of accreditation.
Request for Hearing at 2; P. Br. at 7-9.

The record is unclear why NSC stated in the initial determination that Petitioner’s
accreditation expired on January 11, 2014; however, the evidence of record is sufficient
to establish that Petitioner was not accredited as of January 11, 2014 (i.e., the date NSC
alleged Petitioner’s accreditation expired),’ and still not accredited on May 7, 2014 (i.e.,
the date NSC informed Petitioner that NSC was revoking Petitioner’s Medicare billing
privileges). Therefore, I conclude that Petitioner failed to comply with Supplier Standard
22, which was required “‘in order to . . . retain a supplier billing number.” 42 C.F.R.

§ 424.57(c)(22).

As indicated above, Petitioner argues that The Joint Commission erred when it removed
Petitioner’s accreditation. See P. Br. at 6-9; P. Ex. 3 at 8. Further, Petitioner repeatedly
asserts in this forum and has consistently asserted before the contractor that The Joint
Commission should have accredited Petitioner because it continued to meet all of the
standards for accreditation during the period when it was not accredited. See P. Br. at 6-
9; CMS Ex. 8 at 2; P. Ex. 3 at §f§ 3-5. Although CMS has the authority to oversee the
accrediting organizations, 42 C.F.R. § 424.58(c)-(d), I do not have jurisdiction to review
The Joint Commission’s decision to remove Petitioner’s accreditation because an
accreditation decision is not an “initial determination” subject to review under the
procedures in 42 C.F.R. Part 498. See Riverview Psychiatric Ctr., DAB No. 2586, at 9-
10 (2014).

Petitioner also asserts that it was not provided an opportunity to complete its CAP.
Petitioner asserts that it notified NSC in its CAP that it was “working with” the Joint
Commission to correct its accreditation status, but NSC did not afford Petitioner the

* The Joint Commission’s General Counsel explained that after The Joint Commission
removed Petitioner from Doctors’ Hospital’s accreditation, a weekly report was sent to
NSC that listed Petitioner as non-accredited. CMS Ex. 3; see also 42 C.F.R.

§ 424.58(c)(1). The letter from the General Counsel does not state when that report was
first generated and sent to NSC. NSC’s initial determination does not explain how NSC
determined the date when Petitioner’s accreditation “expired.” See CMS Ex. | at 2; CMS
Ex. 3.
opportunity to do so. P. Br. at 9. Petitioner argues that I should reverse the revocation
because NSC did not give Petitioner a “‘full opportunity to come into compliance.” P. Br.
at 10. Petitioner also claims that The Joint Commission did not respond in any way to
Alok Manchanda’s letter regarding the stock transfer or notify Petitioner of its true
accreditation status, and that the first notification of its non-accredited status was through
NSC’s initial determination letter. P. Br. at 9; P. Ex. 3 at §§5, 8. Under Petitioner’s
position, the 30-day period that NSC provided to demonstrate compliance through a CAP
was unreasonable because Petitioner could not regain accreditation from the Joint
Commission in that time. See P. Br. at 9-10.

However, NSC provided Petitioner an opportunity to correct its noncompliance through
the submission of a CAP. CMS Ex. | at 2. As stated above, NSC denied the CAP that
Petitioner submitted. CMS Ex. 7. Further, CMS’s decision to deny a CAP is not an
initial decision and, therefore, is not a matter over which I have jurisdiction. 42 C.F.R.
§ 405.809(b)(2); DMS Imaging, Inc., DAB No. 2313, at 4 (2010). NSC provided
Petitioner 30 days to demonstrate compliance, which Petitioner could not do. Petitioner
was not reaccredited until August 27, 2014, at the earliest. P. Ex. 8.

In any event, my review of this matter is limited to determining whether the record shows
that Petitioner was in compliance with Supplier Standard 22 at the time of revocation and
not whether Petitioner returned to compliance at some later time. 73 Fed. Reg. 36,448,
36,452 (June 27, 2008); see also Restwell Mattress Co., DAB CR2194, at 5 (2010)
(“Petitioner’s showing of accreditation over three months after the revocation is not a
ground to reverse the revocation.”); Sherye Epps, DAB CR2215, at 9 (2010). Petitioner’s
concession that The Joint Commission considered it not to be accredited at the time of
revocation is sufficient for me to affirm CMS. Eastern Plumas Dist. Hosp., DAB
CR2168, at 7 (2010). Although Petitioner argues that it simply did not know that The
Joint Commission removed its accreditation, Petitioner’s mistaken understanding of the
facts is no basis for me to reverse NSC’s otherwise lawful revocation of Petitioner’s
billing privileges. See Restwell, DAB CR2194, at 5-6.

VI. Conclusion

For the reasons stated above, | affirm the revocation of Petitioner’s Medicare billing
privileges.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Kenneth H. Weisiger, M.D.,
(NPI: 1376504670; PTAN: C305318)
(NPI: 1780611079; PTAN: C305308),

Petitioner,
v.
Centers for Medicare & Medicaid Services,

Respondent.

Docket No. C-14-1805
Decision No. CR3728

Date: March 26, 2015

DECISION

Novitas Solutions (Novitas), an administrative contractor acting for the Centers for
Medicare & Medicaid Services (CMS), revoked the Medicare enrollment and billing
privileges of Dr. Kenneth Weisiger, M.D. and Kenneth H. Weisiger M.D. PC because
neither Petitioner nor Kenneth H. Weisiger M.D. PC reported an adverse legal action and
both did not meet Medicare enrollment requirements. I find that Novitas Solutions had a
legal basis to revoke the Medicare enrollment and billing privileges of Dr. Kenneth
Weisiger, M.D. and Kenneth H. Weisiger M.D. PC because neither Petitioner nor his
practice group reported the adverse legal action that the Colorado Medical Board took
against Petitioner in a timely manner. I do not have authority to review the re-enrollment
bar that Novitas imposed on Petitioner and his practice group due to the revocations.
I. Background

On November 20, 2013, Petitioner entered into an Interim Cessation of Practice
Agreement (Interim Agreement) with the Colorado Medical Board (CMB) in which he
surrendered his medical license while the CMB fully investigated certain allegations
against him. CMS Exhibit (Ex.) 4. As part of the Interim Agreement, both parties agreed
that “reasonable grounds [existed] to believe that the public health, safety, or welfare
imperatively require[d] emergency action” against Petitioner. CMS Ex. 4, at 1.
Specifically, Petitioner’s “care of seven critical care patients showed a pattern of
substandard care demonstrating that [Petitioner] delayed the initiation of critical care or
otherwise was too slow to respond to patient conditions that required urgent action.”
CMS Ex. 4, at 1. Under the agreement, Petitioner was barred from “perform[ing] any act
requiring a license issued by the [CMB]... .” CMS Ex. 4, at 2.

Petitioner entered into a Stipulation and Final Agency Order (Final Order) with the CMB
on April 2, 2014. CMS Ex. 5. As part of the Final Order, Petitioner agreed to permanent
restrictions on his medical license. The Final Order barred Petitioner from practicing
critical or intensive care medicine in a critical or intensive care unit. It also prohibited
Petitioner from providing “consultation, management or treatment of critical care or
intensive care patients.” CMS Ex. 5, at 3.

In a letter dated May 12, 2014, Novitas informed Petitioner that it was revoking his
Medicare enrollment and the Medicare enrollment of his practice group, Kenneth H.
Weisiger MD PC. Novitas also imposed a three year re-enrollment bar on Petitioner and
his practice group. CMS Ex. 8. Petitioner requested a reconsidered determination on
May 20, 2014. CMS Ex. 3. Petitioner subsequently submitted additional information to
the hearing officer assigned to issue a reconsidered determination and specified that his
request applied to “both he and his group.” CMS Ex. 7, at 2.

Novitas issued a reconsidered determination on June 24, 2014. CMS Ex. 1. The
reconsidered determination found that CMS had two bases to revoke the Medicare
enrollments of Petitioner and his practice group: Petitioner and his practice group did not
comply with Medicare requirements, which authorized CMS to revoke their Medicare
enrollments under 42 C.F.R. § 424.535(a)(1), and Petitioner and his practice group failed
to report adverse legal actions, which authorized CMS to revoke their Medicare
enrollments under 42 C.F.R. § 424.535(a)(9). The reconsidered determination upheld the
three-year re-enrollment bar. CMS Ex. 1, at 1-2. Petitioner requested review of the
reconsidered determination before an Administrative Law Judge (ALJ) and challenged
both bases the reconsidered determination identified, as well as the re-enrollment bar. !

' Because I find that both Petitioner and his practice group failed to report an adverse
legal action, which authorized CMS to revoke their Medicare enrollments under section
Request for Hearing at 1. Petitioner specifically requested review of both his and his
practice group’s revocations. Request for Hearing at 5.

The matter was assigned to me for hearing and decision, and I issued an
Acknowledgment and Prehearing Order (Prehearing Order) that established a briefing
schedule requiring the parties to submit all their arguments including any motions for
summary judgment. CMS timely filed its prehearing exchange including a motion for
summary judgment, supporting brief (CMS Br.), and CMS Exs. 1-8. Petitioner, in turn,
timely filed his prehearing exchange including a brief in opposition to the motion for
summary judgment (P. Br.) and Petitioner’s Exhibits (P. Exs.) 1-4.

Neither party objected to the opposing party’s exhibits, therefore I admit CMS Exs. 1-8
and P. Exs. 1-4. Petitioner submitted affidavits from two proposed witnesses as P. Exs. 1
and 2. CMS did not request to cross-examine either witness and did not propose any of
its own witness testimony. I informed the parties that I would only conduct a hearing if
either party submitted affidavits of direct testimony from a witness and the opposing
party wished to cross-examine that witness. Prehearing Order 410. Further, Petitioner
affirmatively waived his right to a hearing. P. Br. at 1 (“Petitioner provides complete
evidence supporting his position in written form as part of this submission. Petitioner
does not specifically request a hearing... .”). Because CMS did not seek to cross-
examine Petitioner’s witnesses, and Petitioner waived his right to hearing, I will decide
this matter on the written record. Prehearing Order 11; Marcus Singel, D.P.M., DAB
No. 2609, at 5-6 (2014).

II. Analysis
A. Issues
1. Whether CMS had a legal basis to revoke the Medicare enrollments of
Petitioner and his practice group for not reporting an adverse legal action;

and, if so,

2. Whether I have the authority to consider the three year re-enrollment
bars CMS imposed on Petitioner and his practice group.

B. Applicable Law
A provider or supplier must be enrolled in the Medicare program and have a billing

number in order to be eligible to receive payment for services rendered to a Medicare-
eligible beneficiary. 42 C.F.R. § 424.505. “Suppliers” include physicians, other

424.535(a)(9), I do not decide the issue of whether section 424.535(a)(1) provided an
additional revocation basis.
practitioners, and “entities (other than providers of services) that furnish[] items or
services... .”* 42 U.S.C. § 1395x(d).

CMS may revoke a supplier’s Medicare enrollment for any of the reasons found at 42
C.F.R. § 424.535(a). Among those reasons, CMS may do so where the supplier fails to
comply “with the reporting requirements specified in [42 C.F.R.] § 424.516(d)(1)(ii).”

42 C.F.R. § 424.535(a)(9). In order to remain enrolled in the Medicare program, section
424.516(d)(1)(ii) requires physicians and physician organizations to report “[a]ny adverse
legal action” to their Medicare contractors within 30 days. Where CMS revokes a
supplier’s Medicare enrollment based on a license suspension, the revocation is effective
from the date of the suspension. 42 C.F.R. § 424.535(g).

C. Findings of Fact and Conclusions of Law

1. The November 20, 2013 Interim Agreement constituted an “adverse
legal action” that Petitioner had an obligation to report within 30
days.

Suppliers, including physicians and physician organizations, must report “any adverse
legal action” to their designated Medicare contractor within 30 days. 42 C.F.R.

§ 424.516(d)(1)(ii). The Interim Agreement forbade Petitioner from “perform[ing] any
act requiring a license issued by the [CMB] while [the] Interim Agreement” was in effect.
CMS Ex. 4, at 2. The Interim Agreement was a temporary deprivation of Dr. Weisiger’s
privileges to practice medicine. As such, the Interim Agreement imposed a suspension of
Petitioner’s license, an adverse legal action. See Akram A. Ismail, M.D., DAB No. 2429,
at 8 (2011) (“[W]e note that a ‘suspension’ is defined as ‘the temporary deprivation of a
person's powers or privileges, [especially] of office or profession.” citing Black’s Law
Dictionary 1487 (8th ed. 2004)). License suspensions, even if they are not finalized, are
still “adverse legal actions” within the meaning of section 424.516(d)(1)(ii). Zsmail,
DAB No. 2429 at 10-11.

? “Providers” include hospitals, critical access hospitals, skilled nursing facilities,
comprehensive outpatient rehabilitation facilities, home health agencies, and hospice
programs. 42 U.S.C. § 1395x(u); 42 C.F.R. § 400.202.

> Even if I were to find that the Interim Agreement did not impose a “suspension” of
Petitioner’s license, I would still deem its prohibition on Petitioner’s practice of medicine
an “adverse legal action” because it was adverse to Petitioner’s interest to continue to
practice medicine in Colorado and was an official action by the state licensing authority,
the CMB, that bore “legal consequences” as a “valid board order.” In either event,
Petitioner had an obligation to report it to Novitas.
Petitioner argues that the Interim Agreement is not an “action” under Colorado law by its
very terms. P. Br. at 7-8. However, I do not find the Colorado law definition of “action”
supersedes the federal regulations in this instance. C.f: Laurie Laurel, PT, DAB No.
2524, at 4 (2013) (rejecting supplier’s argument that the state law definition of
“convicted” controls in a revocation action under 42 C.F.R. § 424.535(a)(3)); Singing
River Rehab. & Nursing Ctr., DAB No. 2232, at 9-10 (2009) (rejecting nursing facility’s
argument that a state law definition of “abuse” limited regulatory language requiring the
reporting of alleged abuse). Even if I were to consider the Colorado provision in
question, Petitioner’s attempt to parse the terms of the Interim Agreement is not
persuasive. An “order” of the CMB is an “action” under Colorado law, C.R.S. 24-4-
102(1), and the “Interim Agreement and all its terms constitute a valid board order... .
CMS Ex. 4, at 2.

2. CMS had the authority to revoke Petitioner’s Medicare enrollment
pursuant to 42 C.F.R. § 424.535(a)(9) because Petitioner failed to
report an adverse legal action the CMB took against him within 30
days.

CMS may revoke a supplier’s Medicare enrollment where the supplier fails to comply
with the reporting requirements specified at 42 C.F.R. § 424.516(d)(1)(ii). 42 C.F.R.

§ 424.535(a)(9). Section 424.516(d)(1)(ii) requires physicians to report certain
“reportable events” to their Medicare contractors. It further defines a “reportable event”
to include “[a]ny adverse legal action” and requires physicians to report adverse legal
actions “within 30 days.” Therefore, section 424.516(d)(1)(ii) required Dr. Weisiger to
report his license suspension to his Medicare contractor, Novitas. It is undisputed that
Dr. Weisiger did not do so. P. Br. at 10 (“[T]he November 20, 2013 Interim Agreement
was not an adverse action requiring reporting.”). Therefore, CMS had the authority to
revoke Dr. Weisiger’s Medicare enrollment pursuant to 42 C.F.R. § 424.535(a)(9).

Petitioner argues that he “timely cured” his failure to report the adverse legal action when
he sent a May 20, 2014 letter to Novitas that “included a corrective action plan.” P. Br. at
8-9. Novitas’s May 12, 2014 initial determination and revocation notice gave Petitioner
the opportunity to submit a corrective action plan “within 30 calendar days after the
postmark” of the initial determination. CMS Ex. 8, at 2. Petitioner submitted his letter,
including his corrective action plan, eight days thereafter. CMS Ex. 3. The corrective
action that Petitioner proposed was his statement that he was “formally notifying
[Novitas] pursuant to 42 C.F.R. 516(d)(1)(ii) that [he] was disciplined by the CMB, the
terms of which are outlined” in an attachment. CMS Ex. 3, at 2. Petitioner did not
specifically report the Interim Agreement but instead referred to the April 2, 2014 Final
Order. He also apologized for missing “the May 1, 2014 deadline,” because he “had no
idea . . . [reporting discipline by the CMB] was required.” CMS Ex. 3, at 2. Had
Petitioner intended to report the Interim Agreement, the deadline for doing so would have
been 30 days from November 20, 2013, or December 20, 2013. Therefore, Petitioner did
not, in fact, report the Interim Agreement and the license suspension it imposed on him.

Even if Petitioner had reported the Interim Agreement’s license suspension as part of a
corrective action plan, Petitioner’s corrective action would not automatically relieve
CMS of the authority to revoke his Medicare enrollment. Petitioner misunderstands the
relationship between submitting a corrective action plan and requesting reconsideration
from a Medicare contractor. As the Board explained in DMS Imaging, Inc.:

After the initial notice of revocation, the supplier has two tracks to seek to
avoid revocation and may elect to pursue either or both concurrently. The
supplier, within 60 days, may request “reconsideration” of whether the
basis for revocation is erroneous or, within 30 days, it may submit a CAP to
demonstrate that it has corrected that basis. If the contractor accepts the
CAP, it notifies the supplier, and any reconsideration request is withdrawn.
If the contractor denies the CAP, the reconsideration process may proceed
to a hearing before a hearing officer, who reviews “the Medicare
contractor’s reason for imposing a . . . revocation at the time it issued the
action... .” An unfavorable hearing officer decision is appealable to an
ALJ, who reviews the basis for the revocation. No provision is made for an
appeal of the contractor’s decision not to reinstate based on the CAP.

DAB No. 2313, at 7-8 (2010) (citations and footnote omitted).

In the present case, Petitioner submitted a proposed corrective action plan, and Novitas
rejected that plan and proceeded with the reconsideration process. The result was that
Novitas issued a reconsidered determination. See CMS Ex. 1. The fact that Petitioner
submitted a corrective action plan does not preclude CMS from revoking his Medicare
enrollment, and I have no authority to question Novitas’s decision to reject the proposed
corrective action plan. Conchita Jackson, M.D., DAB No. 2495, at 6 (2013); DMS
Imaging, Inc., DAB No. 2313, at 6 (2010).

Petitioner additionally argues that, throughout the revocation process, various Novitas
employees provided him with inaccurate information. For instance, Petitioner alleges
that he “spoke with [a] Novitas Solutions Provider Management Supervisor . . . and was
told that he could correct timely notification of his adverse action through submission of
a letter to Novitas.” P. Br. at 4. Petitioner further alleges that a “Novitas Solutions
representative informed [him] that the revocation of his billing privileges was a result of
claims submitted under his name from November 20, 2013[,] to April 2, 2014.” P. Br. at
6. Additionally, Petitioner asserts that “multiple” unnamed Novitas representatives
“indicated . . . that the revocation did not impact the other providers in his group.” P. Br.
at 4.
Petitioner’s assertions amount to an argument that CMS should be equitably estopped
from revoking his billing privileges based on the misinformation he received. CMS did
not rebut any of Petitioner’s claims, and I accept that Novitas representatives may have
misinformed him, or, at a minimum, that serious miscommunication took place between
Novitas representatives and Petitioner. Petitioner, however, does not allege that either
Novitas or its representatives engaged in affirmative misconduct. It is clear that:

[T]he government cannot be estopped absent, at a minimum, a showing that
the traditional requirements for estoppel are present (i.e., a factual
misrepresentation by the government, reasonable reliance on the
misrepresentation by the party seeking estoppel, and harm or detriment to
that party as a result of the reliance) and that the government’s employees
or agents engaged in ‘affirmative misconduct.’

Citadel Cmty. Dev. Corp., DAB No. 2596, at 7 (2014) (quoting Oaks of Mid City Nursing
& Rehab. Ctr., DAB No. 2375, at 31 (2011)); Office of Pers. Mgmt. v. Richmond, 496
U.S. 414 (1990); Pac. Islander Council of Leaders, DAB No. 2091, at 12 (2007).
Because Petitioner has not alleged that Novitas engaged in affirmative misconduct, any
misinformation that Novitas or its representatives provided to him cannot prevent CMS
from exercising its authority to revoke his Medicare enrollment.

Lastly, Petitioner argues that even if CMS had the authority to revoke his Medicare
enrollment, the effective date of the revocation should not be November 20, 2013.
Petitioner argues that because his license was not suspended, the effective date should be
30 days from the date CMS provided notice of its intent to revoke his enrollment. P. Br.
at 12. I have determined, however, that the CMB action constituted a suspension of
Petitioner’s medical license. Therefore, I uphold the effective date of the revocation as
the date of his license suspension, or November 20, 2013. See 42 C.F.R. § 424.535(g).

3. CMS had the authority to revoke Dr. Kenneth H. Weisiger MD PC’s
Medicare enrollment because the practice group failed to report the
CMB’s adverse legal action against Dr. Weisiger within 30 days.

CMS revoked Dr. Kenneth H. Weisiger M.D. PC’s Medicare enrollment because it failed
to report an adverse legal action against Dr. Weisiger within 30 days. Novitas
specifically identified the Interim Agreement as the adverse legal action in question.
CMS Ex. 1, at 2. The initial determination and the reconsidered determination both
informed Dr. Weisiger that CMS was revoking his practice group’s Medicare enrollment.

CMS had the authority to revoke Dr. Kenneth H. Weisiger MD PC’s Medicare
enrollment pursuant to 42 C.F.R. § 424.535(a)(9). Both physicians and physician
organizations have an obligation to report an adverse legal action. 42 C.F.R.

§ 424.516(d)(1)(ii). A “physician . . . organization” is “any physician . . . entity that
enrolls in the Medicare program as a sole proprietorship or organizational entity.” 42
C.F.R. § 502. Dr. Weisiger acknowledges that he is the “sole owner” of his practice
group. Request for Hearing at 5. He does not argue that the group is not a “physician
organization” within the meaning of 42 C.F.R. §§ 424.516 and 424.502.

The Board has held that section 424.516(d)(1)(1i) requires physician organizations to
report adverse legal actions against their physician owners. Gulf South Med. & Surgical
Inst., and Kenner Dermatology Clinic, Inc., DAB No. 2400, at 7 (2011). In Gulf South
Medical, the Board considered two physician organizations’ obligations to report their
physician owner’s medical license revocation. The Board reasoned that requiring
physician organizations to report adverse legal actions against their physician owners is
consistent with the manner in which other owners are treated under section 424.535. Id.
at 8. Further, such a requirement advances the purpose of section 424.516(d)(1)(ii),
which is to “provide CMS with information about adverse legal actions that CMS has
determined are relevant to evaluating whether a supplier should continue to participate in
Medicare.” Id.

Dr. Weisiger did not report his license suspension because he did not believe he was
required to report it, either on his own behalf or on behalf of the practice group. While

is belief may have been earnest, Medicare suppliers, operating as program participants,
ave a duty to remain familiar with Medicare requirements. See, e.g., Heckler v. Cmty.
Health Servs. of Crawford County, Inc., 467 U.S. 51, 63-64 (1984); John Hartman, D.O.,
DAB No. 2564, at 3 (2014); Gulf South Medical, DAB No. 2400, at 9; Waterfront
Terrace, Inc., DAB No. 2320 (2010). Therefore, because Dr. Kenneth H. Weisiger MD
PC did not report its sole owner’s license suspension, CMS had the authority to revoke
the practice group’s Medicare enrollment.

Petitioner argues that Kenneth H. Weisiger MD PC did not receive fair and effective
notice that CMS was revoking its Medicare enrollment in addition to Dr. Weisiger’s
individual enrollment. P. Br. at 11-12. In support, Petitioner argues that “[t]he entire
revocation notice dated May 12, 2014[,] refers to revocation of billing privileges related
to licensure actions affecting Petitioner as an individual.” P. Br. at 11. Further,
Petitioner points out that “[t]he body of the letter does not refer to Petitioner’s
professional corporation” and that “[i]t was not until June 10, 2014[,] that Petitioner
learned . . . that his professional corporation’s billing privileges were also impacted ... .”
P. Br. at 11. Petitioner submitted a letter dated June 11, 2014, which confirms that he did
not understand that CMS intended to revoke both his and his practice group’s Medicare
enrollments. In that letter, Petitioner clarified that his “request for reconsideration relates
to both he and his group.” CMS Ex. 7, at 2.

CMS responds that the May 12, 2014 initial determination did adequately inform Dr.
Weisiger that CMS intended to revoke his practice group’s Medicare enrollment. CMS
argues that Novitas addressed the initial determination “to both Petitioner and his group”
and that “the notice specifies that it pertains to Petitioner’s individual NPI/PTAN and his
group NPI/PTAN.” CMS Br. at 9.

I find Novitas addressed the initial determination to both Petitioner and his practice
group. Novitas specifically drew Petitioner’s attention to his practice group’s National
Provider Identifier (NPI) and Provider Transaction Access Number (PTAN), and
identified those numbers as belonging to the practice group. CMS Ex. 8, at 1. It would
have made little sense for Novitas to reference the practice group’s NPI and PTAN if
they were not relevant to the revocation. Novitas could have been clearer by describing
the NPI’s and PTAN’s as something other than “Reference #[‘s].” Considering the initial
determination in its entirety, however, I find that it provided sufficient notice to Dr.
Weisiger that CMS intended to revoke his practice group’s Medicare enrollment.
Therefore, CMS both provided adequate notice to Dr. Weisiger and had a legal basis to
revoke his practice group’s Medicare enrollment.

4. I lack the authority to consider Petitioner’s challenge to the duration
of the re-enrollment bar that CMS imposed on him and his practice

group.

Petitioner argues the three-year re-enrollment bars that CMS imposed on him and his
practice group are disproportionate to their actions and unauthorized by Medicare
guidelines. P. Br. at 12-13. My review authority in this matter is limited to certain
enumerated initial determinations listed at 42 C.F.R. § 498.3(b). CMS’s selection of a re-
enrollment bar is not a determination subject to ALJ review because it is not a reviewable
initial determination under 42 C.F.R. § 498.3(b)(17). See David Tolliver, D.O., DAB
CR2281, at 10 (2010). Therefore, I cannot adjust the re-enrollment bar that CMS has
imposed on Petitioner and his practice group.

II. Conclusion

I find CMS and its contractor had a legal basis for revoking the Medicare enrollment of
Petitioner and Petitioner’s group practice because they did not properly report an adverse
legal action relating to a suspension of Petitioner’s license to practice medicine. I uphold
the three-year re-enrollment bar, which is effective November 20, 2013.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

IM Woodmoor, Inc. / Imran Uddin
d/b/a Woodmoor Shell,

Respondent.

Docket No. C-15-1056
(FDA No. FDA-2015-H-0232)

Decision No. CR3726

Date: March 25, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint)
against Respondent, IM Woodmoor, Inc./Imran Uddin d/b/a Woodmoor Shell, that
alleges facts and legal authority sufficient to justify the imposition of a civil money
penalty of $2,000. Respondent did not answer the Complaint, nor did Respondent
request an extension of time within which to file an answer. Therefore, I enter a default
judgment against Respondent and assess a civil money penalty of $2,000.

CTP began this case by serving the Complaint on Respondent and filing a copy of the
Complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The Complaint alleges that Respondent impermissibly sold cigarettes to a
minor, thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C.

§ 301 et seq., and its implementing regulations, Cigarettes and Smokeless Tobacco,

21 C.F.R. pt. 1140 (2013). CTP seeks a civil money penalty of $2,000.
On January 29, 2015, CTP served the Complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and accompanying
cover letter, CTP explained that within 30 days, Respondent should pay the proposed
penalty, file an answer, or request an extension of time within which to file an answer.
CTP warned Respondent that if it failed to take one of these actions within 30 days, an
Administrative Law Judge could, pursuant to 21 C.F.R. § 17.11, issue an initial decision
ordering Respondent to pay the full amount of the proposed penalty.

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

Specifically, CTP alleges the following facts in its Complaint:

e Respondent owns Woodmoor Shell, an establishment that sells tobacco products
and is located at 10144 Colesville Road, Silver Spring, Maryland 20901.
Complaint § 3.

e CTP previously issued a warning letter to Respondent Woodmoor Shell on
October 17, 2013, citing a violation on August 21, 2013, and stating that failure to
correct the violations may result in a civil money penalty action. Complaint { 10.

e¢ On May 27, 2014, CTP initiated a previous civil money penalty action, CRD
Docket Number 14-1172, FDA Docket Number FDA-2014-H-0677 against
Respondent for three violations of 21 C.F.R. Part 1140 within a 24-month period.
CTP alleged those violations to have occurred on October 17, 2013, and January 4,
2014. Complaint § 10.

e The previous action concluded when Imran Udin, Respondent’s authorized
representative, settled the claims on Respondent’s behalf. On July 9, 2014, Mr.
Udin signed an Acknowledgement Form in which he “admit[ed] that the
violations...occurred, waiv[ed] his ability to contest the violations in the future,
and stat[ed] that he understood that the violations may be counted in determining
the total number of violations for purposes of future actions.” The Administrative
Law Judge closed the case on July 31, 2014. Complaint § 11.

e At approximately 11:17 a.m. on August 15, 2014, at Respondent’s business
establishment, 10144 Colesville Road, Silver Springs, Maryland 20901,
FDA-commissioned inspectors documented that a person younger than 18 years of
age was able to purchase a package of Newport Box cigarettes. Complaint § 1.
These facts establish Respondent Woodmoor Shell’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.

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 August 15,
2014. Therefore, Respondent’s actions constitute violations of law that merit a civil

money penalty.

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

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2014-H-2127)

Complainant
v.

Smiley- K Inc. / John Yoo
d/b/a Sunoco A Plus Mini Market,

Respondent.
Docket No. C-15-600
Decision No. CR3723

Date: March 25, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Smiley- K Inc. / John Yoo, d/b/a Sunoco A Plus Mini Market,
at 4140 North Broad Street, Philadelphia, Pennsylvania 19140, and by filing a copy of the
complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The complaint alleges that a Sunoco A Plus Mini Market 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. 1140. CTP seeks to impose a $500 civil money
penalty against Respondent Sunoco A Plus Mini Market.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on January 26, 2015, CTP served the
complaint on Respondent Sunoco A Plus Mini Market by United Parcel Service. In the
complaint and accompanying cover letter, CTP explained that, within 30 days,
Respondent should pay the penalty, file an answer, or request an extension of time in
which to file an answer. CTP warned Respondent that, if it failed to take one of these
actions within 30 days, the Administrative Law Judge could, pursuant to 21 C.F.R.

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

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

e At approximately 6:03 p.m. on June 4, 2013, at Respondent’s business
establishment, 4140 North Broad Street, Philadelphia, Pennsylvania 19140, an
FDA-commissioned inspector observed Respondent’s staff selling a package of
Newport Menthol Gold Box 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;

e Ina warning letter dated June 20, 2013, CTP informed Respondent of the
inspector’s June 4, 2013observations, and that such actions violate federal law, 21
C.F.R. § 1140.14(a) and (b)(1). The letter further warned that Respondent’s
failure to correct its violations could result in a civil money penalty or other
regulatory action;

e At approximately 2:45 p.m. on June 8, 2014, at Respondent’s business
establishment, 4140 North Broad Street, Philadelphia, Pennsylvania 19140, 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 Sunoco A Plus Mini Market’s liability under the Act.
The Act prohibits misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco
product is misbranded if sold or distributed in violation of regulations issued under
section 906(d) of the Act. 21 U.S.C. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21 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. § 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
Smiley- K Inc. / John Yoo, d/b/a Sunoco A Plus Mini Market. Pursuant to 21 C.F.R.
§ 17.11(b), this order becomes final and binding upon both parties after 30 days of the
date of its issuance.

/s/
Catherine Ravinski
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2015-H-0133)

Complainant
v.

Faqid Lihmeidi
d/b/a Al-Amier Market,

Respondent.
Docket No. C-15-939
Decision No. CR3722

Date: March 25, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Faqid Lihmeidi d/b/a Al-Amier Market, at 1139 North
Highway 67, Florissant, Missouri 63031, and by filing a copy of the complaint with the
Food and Drug Administration’s (FDA) Division of Dockets Management. The
complaint alleges that Al-Amier Market impermissibly sold cigarettes to minors, thereby
violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and
its implementing regulations, 21 C.F.R. pt. 1140. CTP seeks to impose a $250 civil
money penalty against Respondent Al-Amier Market.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on January 22, 2015, CTP served the
complaint on Respondent Al-Amier Market by United Parcel Service. In the complaint
and accompanying cover letter, CTP explained that, within 30 days, Respondent should
pay the penalty, file an answer, or request an extension of time in which to file an answer.
CTP warned Respondent that, if it failed to take one of these actions within 30 days, the
Administrative Law Judge could, pursuant to 21 C.F.R. § 17.11, issue an initial decision
ordering it to pay the full amount of the proposed penalty.

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

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

e At approximately 4:33 p.m. on December 12, 2012, at Respondent’s business
establishment, 1139 North Highway 67, Florissant, Missouri 63031, an FDA-
commissioned inspector observed Respondent’s staff selling a package of
Marlboro cigarettes to a person younger than 18 years of age. The inspectors also
documented that staff failed to verify, by means of photographic identification
containing a date of birth, that the purchaser was 18 years of age or older;

e Ina warning letter dated January 3, 2013, CTP informed Respondent of the
inspector’s December 12, 2012 observations, and that such actions violate federal
law, 21 C.F.R. § 1140.14(a) and (b)(1). The letter further warned that
Respondent’s failure to correct its violations could result in a civil money penalty
or other regulatory action;

e At approximately 5:32 p.m. on November 18, 2013, at Respondent’s business
establishment, 1139 North Highway 67, Florissant, Missouri 63031, an FDA-
commissioned inspector documented Respondent’s staff selling a package of
Decade Red Box cigarettes to a person younger than 18 years of age.

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

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

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

/s/
Catherine Ravinski
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Teresa Brewer-Gable
(O.1. File No. H-14-42115-9),

Petitioner,
v.
The Inspector General.
Docket No. C-15-161
Decision No. CR3719

Date: March 20, 2015

DECISION

The Inspector General (IG) of the United States Department of Health and Human
Services (HHS) notified Petitioner, Teresa Brewer-Gable, that she was being excluded
from participation in Medicare, Medicaid, and all other federal health care programs for a
minimum period of five years under 42 U.S.C. § 1320a-7(a)(4). Petitioner requested a
earing before an administrative law judge to dispute the exclusion. For the reasons
stated below, I conclude that the IG has a basis for excluding Petitioner from program
participation and that the five-year exclusion is mandated by law.

I. Background

By letter dated September 30, 2014, the IG notified Petitioner that she was being
excluded from Medicare, Medicaid, and all other federal health care programs for a
period of five years, pursuant to 42 U.S.C. § 1320a-7(a)(4). The IG advised Petitioner
that the exclusion was based on her conviction in the Circuit Court of Harrison County,
Mississippi, of a criminal offense related to the unlawful manufacture, distribution,
prescription, or dispensing of a controlled substance. IG Exhibit (Ex.) 1.

Petitioner timely filed a request for hearing (RFH) and this case was assigned to me for
hearing and decision. On December 22, 2014, I convened a prehearing conference by
telephone, the substance of which is summarized in my Order and Schedule for Filing
Briefs and Documentary Evidence (Order), dated December 24, 2014. See 42 C.F.R.

§ 1005.6. Pursuant to the Order, the IG filed a brief (IG Br.) and five exhibits (IG Exs. 1-
5). Petitioner filed a response brief (P. Br.). The IG filed a reply brief (IG Reply Br.),
and Petitioner filed a supplemental brief (P. Supp. Br.).'

In the absence of objection, I admit IG Exs. 1-5 into the record. Petitioner did not submit
any marked exhibits.

II. Decision on the Record

My Order informed the parties that I would issue a decision based on the written record
unless a party requested a hearing in its brief and explained why one was necessary.
Order § 3. The IG indicated on his short form brief that he did not believe a hearing was
necessary and did not have any witness testimony to offer. IG Br. at 7-8. Petitioner did
not file a short form brief and made no request for a hearing in the briefs that she filed.
Therefore, I issue this decision on the basis of the written record.

II. Issue

Whether the IG has a basis for excluding Petitioner from participating in Medicare,
Medicaid, and all other federal health care programs for five years pursuant to 42 U.S.C.
§ 1320a-7(a)(4). See 42 C.F.R. § 1001.2007(a)(1)-(2).

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

The IG is excluding Petitioner based on 42 U.S.C. § 1320a-7(a)(4)), which requires the
IG to exclude “[a]ny individual or entity that has been convicted for an offense which
occurred after August 21, 1996, under Federal or State law, of a criminal offense
consisting of a felony relating to the unlawful manufacture, distribution, prescription, or
dispensing of a controlled substance.”

Therefore, the four essential elements necessary to support the IG’s exclusion are: (1) the
individual to be excluded must have been convicted of a criminal offense; (2) the
criminal offense must have been a felony; (3) the felony conviction must have been for

' | grant Petitioner’s March 13, 2015 motion for leave to file a supplemental brief.

> My findings of fact and conclusions of law are set forth below in bold and italics.
conduct relating to the unlawful manufacture, distribution, prescription, or dispensing of
a controlled substance; and (4) the felonious conduct must have occurred after August 21,
1996. 42 U.S.C. § 1320a-7(a)(4).

A, Petitioner pled guilty to the charge of Prescription Forgery; however, a state
court withheld adjudication of guilt and placed Petitioner on three years of
non-adjudicated probation.

Petitioner was accused of violating section 41-29-144(1) of the Mississippi Code based
on a February 6, 2012 affidavit filed in the Circuit Court for Harrison County, Mississippi
(Circuit Court). Petitioner waived presentation of the indictment to the grand jury and,
instead, agreed to indictment by Information. IG Ex. 3 at 1.

On August 27, 2012, an assistant district attorney filed an Information in the Circuit
Court. The Information charged that Petitioner “did unlawfully, willfully, knowingly,
intentionally and feloniously acquire and obtain possession of Hydrocodone, a schedule
III controlled substance, by misrepresentation and deception, to wit: by presenting a
forged prescription . . . in violation of § 41-29-144(1).” IG Ex. 2.

On March 4, 2013, Petitioner pled guilty to one-count of Prescription Forgery in violation
of section 41-29-144(1) of the Mississippi Code. The Circuit Court then “specifically
withh[eld] acceptance of [Petitioner’s] plea and adjudication of guilt and imposition of
sentence in accordance with Mississippi Code of 1972, Annotated, § 41-29-150 pending
successful completion of the conditions imposed in this order.” IG Ex. 4 at 1. The
Circuit Court ordered Petitioner to serve “a period of Three (3) Years Non-
Adjudication Probation ....” IG Ex. 4 at 2 (emphasis in original). Further, the Circuit
Court ordered that “upon finding that [Petitioner] has failed to comply with the terms and
conditions imposed shall immediately accept [Petitioner’s] plea of guilty and proceed to
sentence her.” IG Ex. 4 at 2.

On November 4, 2013, the Circuit Court released Petitioner from probation early,
dismissed the criminal charge against Petitioner, and expunged the criminal charge from
Petitioner’s record. IG Ex. 5.

B. Petitioner was convicted of a criminal offense for purposes of 42 U.S.C.
§ 1320a-7(a)(4).

The only issue Petitioner raises is that she has not been “convicted.” Petitioner argues
that there has been no conviction because Petitioner participated in a non-adjudication
program, ultimately resulting in the dismissal of all charges against her and an expunged
record. RFH at 1-2; P. Br. at 1, 3; P. Supp. Br. at 1, 2; IG Exs. 4, 5. Petitioner cites
United States v. Matassini, 565 F.2d 1297 (5th Cir. 1978) for the proposition that state
law pardons control as to whether someone was convicted for federal purposes unless
Congress specifically legislates the effect of a pardon for federal purposes. P. Br. at 2, 4.
Petitioner appears to argue that non-adjudication is not the same as deferred adjudication
in 42 U.S.C. § 1320a-7(i)(4). Presumably, this argument is based on the title of the
Circuit Court’s Order (i.e., Non-Adjudication Order) and the text of section 49-29-
150(d)(1) of the Mississippi Code, which states: “Discharge and dismissal under this
subsection shall be without court adjudication of guilt, but a nonpublic record thereof
shall be retained by the bureau solely for the purpose of use by the courts in determining
whether or not, in subsequent proceedings, such person qualifies under this subsection.”

The IG argues that Petitioner has been convicted for exclusion purposes under 42 U.S.C.
§ 1320a-7(i)(4), which provides that an individual is convicted when he or she “has
entered into participation in a first offender, deferred adjudication, or other arrangement
or program where judgment of conviction has been withheld.”* The IG asserts that
Petitioner entered into such a program. IG Ex. 4. The IG avers that in the event
Petitioner had not completed the terms of the Non-Adjudication Order, the Circuit Court
would “immediately accept [Petitioner’s] plea of guilty and proceed to sentence her.” IG
Ex. 4 at 2. Further, the IG argues that Congress has specifically legislated what
constitutes a conviction for exclusion purposes, therefore, Matassini does not apply.

l agree with the IG’s argument. Congress has clearly defined by statute what it means to
be “convicted” for exclusion purposes and that definition controls. Travers v. Shalala,
20 F.3d 993, 996 (9" Cir. 1994) (“What constitutes a ‘conviction’ under the Medicaid
Act, however, is determined by federal law, not state law.”).

Further, Petitioner’s claim that a “non-adjudication” under Mississippi law is not a
deferred adjudication under 42 U.S.C. § 1320a-7(i)(4) is incorrect. “To determine
whether state court proceedings constituted a conviction under § 1320a—7( i), we look to
the substance of the proceedings, rather than any formal labels or characterizations used
by the state or by the parties.” Travers, 20 F.3d at 996. Therefore, the title difference

> The IG also argues that Petitioner was “convicted” under 42 U.S.C. § 1320a-7(i)(3)
because she pled guilty to a felony offense. IG Br. at 5. I doubt that Petitioner would be
considered convicted because section 1320a-7(i)(3) requires a court to have accepted the
guilty plea. In the present matter, the Circuit Court “‘specifically with[eld] acceptance of
Petitioner’s] plea and adjudication of guilt and imposition of sentence in accordance
with Mississippi Code of 1972, Annotated, § 41-29-150 pending successful completion
of the conditions imposed in this order.” IG Ex. 4 at 1. This is consistent with the statute
cited by the Circuit Court, which states that “upon a plea of guilty, the court may, without
entering a judgment of guilty and with the consent of such person, defer further
proceedings and place him on probation upon such reasonable conditions as it may
require and for such period, not to exceed three (3) years, as the court may prescribe.”
Miss. Code Ann. § 41-29-150(d)(1). However, I do not need to reach a definitive
conclusion concerning this issue because I affirm the IG’s exclusion on other grounds.

Petitioner raises between non-adjudication and deferred adjudication is not controlling.
Rather, it is more significant that Petitioner pled guilty to a criminal charge and that the
guilty plea was one that, should Petitioner have violated the terms of the non-adjudication
order, the Circuit Court would have accepted and then sentenced Petitioner. IG Ex. 4 at
2; Miss. Code Ann. § 41-29-150(d)(1) (“Upon violation of a condition of the probation,
the court may enter an adjudication of guilt and proceed as otherwise provided.”). This
provision in the non-adjudication order and the statute authorizing that order is sufficient
to conclude that it qualifies as a deferred adjudication under 42 U.S.C. § 1320a-7(i)(4).
As the court stated in Travers:

In a deferred prosecution, it is not simply the judgment, but
the initiation of charges altogether, which is withheld. If the
defendant does not live up to the terms of his agreement with
the prosecutor, he may be free to enter or persist in a plea of
not guilty and proceed to trial. In a deferred adjudication, on
the other hand, if the defendant does not live up to the terms
of his agreement, he is not free to set aside his plea or proceed
to trial—the court may simply enter a judgment of conviction.
Under those circumstances, the entry of a judgment is a mere
formality because the defendant has irrevocably committed
himself to a plea of guilty or no contest which cannot be
unilaterally withdrawn.

20 F.3d at 997.

Petitioner argues that the Circuit Court’s order expunging Petitioner’s criminal record
should, under state law, preclude consideration in this forum of Petitioner’s guilty plea
and the Circuit Court’s order of a period of non-adjudicated probation. P. Supp. Br. at 2;
see also P. Br. 1,4. Although Petitioner’s record has been expunged, this does not mean
that I cannot consider the circumstances surrounding Petitioner’s guilty plea to determine
whether, under federal law, Petitioner must be excluded. As stated by one court:

Contrary to Rudman's assertion, the mere fact that, under
Maryland law, Rudman's record could be expunged after
three years if he successfully completes the term of probation
does not erase the fact that Rudman entered into a “program
where judgment of conviction has been withheld.” The
material inquiry is whether § 1320a-7(i)(4) treats Rudman's
guilty plea as a conviction, not how state law may treat his
guilty plea in the future.

Rudman v. Leavitt, 578 F.Supp.2d 812, 815 (D. Md. 2008); see also Gupton v. Leavitt,
575 F.Supp.2d 874, 880-881 (E.D. Tenn. 2008).
For the reasons stated above, I conclude that Petitioner was “convicted” of a criminal
offense as that term is defined in 42 U.S.C. § 1320a-7(i)(4).

C. Petitioner was convicted of a felony.

Petitioner was convicted under section 41-29-144(1) of the Mississippi Code. In court
documents, this offense is described as a felony. IG Ex. 3 at 1. Further this crime
requires a term of imprisonment of no less than one year and no more than five years.
Miss. Code Ann. § 41-29-144(3). Crimes punishable by more than one year in prison are
felonies. 18 U.S.C. § 3559(a). Petitioner does not dispute that an offense under section
41-29-144(1) of the Mississippi Code is a felony. Therefore, I conclude that Petitioner
was convicted of a felony offense.

D. Petitioner’s criminal offense is related to the unlawful distribution,
prescription, or dispensing of a controlled substance.

Petitioner was charged with “unlawfully, willfully, knowingly, intentionally, and
feloniously acquir[ing] or obtain[ing] possession of Hydrocodone, a schedule III
controlled substance, by misrepresentation and deception, to wit: by presenting a forged
prescription at Walgreens ....” IG Ex. 2. Petitioner pled guilty to this charge. IG Ex. 3
at 1. Based on the conduct that Petitioner admitted and the statute Petitioner pled guilty
to violating (Miss. Code Ann. § 41-29-144(1)), I conclude that Petitioner was convicted
of a felony that is related to the unlawful distribution, prescription, or dispensing of a
controlled substance under 42 U.S.C. § 1320a-7(a)(4).

E. The underlying conduct of Petitioner’s felony conviction occurred after
August 21, 1996.

To be excluded pursuant to 42 U.S.C. § 1320a-7(a)(4), Petitioner’s felony offense “must
have occurred after August 21, 1996.” The record shows that the conduct on which
Petitioner’s conviction was based occurred between July 2011 to January 2012. IG Ex. 2.
Petitioner does not dispute this fact. See generally RFH; P. Br.; P. Supp. Br. Therefore,
I conclude that Petitioner’s conviction meets the four elements of a mandatory exclusion
under 42 U.S.C. § 1320a-7(a)(4), and, therefore, the IG was authorized to impose a
mandatory exclusion.

F. Petitioner must be excluded for the statutory minimum of five years under
42 U.S.C. § 1320a-7(c)(3)(B).

Because I have concluded that a basis exists to exclude Petitioner pursuant to 42 U.S.C.
§ 1320a-7(a)(4), Petitioner must be excluded for a minimum period of five years.
42 US.C. § 1320a-7(c)(3)(B); 42 C.F.R. §§ 1001.102(a), 1001.2007(a)(2).
V. Conclusion

For the foregoing reasons, I affirm the IG’s determination to exclude Petitioner from
participating in Medicare, Medicaid, and all other federal health care programs for the
statutory five-year minimum period pursuant to 42 U.S.C. § 1320a-7(a)(4), (c)(3)(B).

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Ambulatory EEG Recordings, LLC,
(NPI: 1306892922),

Petitioner,

v.

Centers for Medicare & Medicaid Services.
Docket No. C-15-661
Decision Number: CR3718

Date: March 20, 2015

DECISION

I grant summary judgment sustaining the determination of the Centers for Medicare &
Medicaid Services (CMS) revoking the Medicare billing privileges and enrollment of
Petitioner, Ambulatory EEG Recordings, LLC.

I. Background

Petitioner is an independent diagnostic testing facility (IDTF) that participated as a
supplier in the Medicare program. CMS revoked Petitioner’s Medicare enrollment and
billing privileges based on a determination that Petitioner had not complied with
regulations governing IDTFs. Subsequently, this determination was affirmed upon
reconsideration. Petitioner requested a hearing.

CMS moved for summary judgment. At first, Petitioner failed to file a response to the
motion. I sent Petitioner an order to show cause in which I ordered it either to file a
response or to explain why it had not done so. It then filed a response.
With its motion CMS filed six exhibits that it identified as CMS Ex. | — CMS Ex. 6.
Petitioner responded with two unidentified exhibits that appear to consist of unsigned
statements by unnamed individuals. I am identifying these two exhibits as P. Ex. 1 and P.
Ex. 2. I receive all of the parties’ exhibits into the record for purposes of deciding this
case.

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

The issue is whether CMS was authorized to revoke Petitioner’s Medicare enrollment and
billing privileges.

B. Findings of Fact and Conclusions of Law

A participating IDTF supplier is obligated to comply with Medicare regulations
governing the terms of its participation. Among these is the requirement that the supplier
permit CMS and any of its agents or its contractors to conduct unannounced on-site
inspections of the supplier’s facility. 42 C.F.R. § 410.33(g)(14). Failure by an IDTF to
grant access to its facility for inspection is grounds for revocation of its Medicare
enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(1) because it
constitutes noncompliance with the requirement of 42 C.F.R. § 410.33(g)(14).

The undisputed facts of this case establish that Petitioner refused access to a CMS
contractor who sought to conduct an unannounced inspection of Petitioner’s facility.
That refusal is a violation of 42 C.F.R. § 410.33(g)(14) and is a basis for revocation of
Petitioner’s Medicare enrollment and billing privileges.

On February 27, 2014, Olga Kravets, an inspector for a CMS contractor, attempted to
conduct an on-site inspection of Petitioner’s facility. CMS Ex. 494. The inspector
entered the facility and informed the receptionist that she was there to conduct an
inspection on CMS’s behalf. Jd. The receptionist informed Ms. Kravets that the office
manager was not available at that time. Ms. Kravets began to leave the office but was
informed by the receptionist that the manager had become available. Jd. Ms. Kravets
then met with Petitioner’s office manager. The manager refused to permit Ms. Kravets to
conduct an inspection. CMS Ex. 495.

Petitioner has not denied any of these facts. It admits that it denied Ms. Kravets
admission to its facility “because the agent for CMS was not able to identify the
organization she was working for and did not look like the person on the badge that she
presented.” However, it concedes that Ms. Kravets showed Petitioner’s office manager
an identification badge and a clipboard with information on it. P. Ex. 1, P. Ex. 2.
For purposes of this decision I accept as true Petitioner’s assertions that Ms. Kravets did
not verbally identify her employer by name and that she did not “look like” her
photograph on the identification badge that she presented. But, those assertions,
assuming their truth, were not sufficient grounds for Petitioner to refuse access to Ms.
Kravets. Petitioner has offered nothing to show that Ms. Kravets failed to identify
herself. Nor has it provided any legitimate justification for refusing her access to the
facility. Finally, Petitioner has not shown why it could not have verified easily Ms.
Kravets’ employer and the purpose of her visit.

By Petitioner’s own admission, Ms. Kravets presented an identification badge. That
should have identified Ms. Kravets by name and the name of Ms. Kravets’ employer.
Petitioner could easily have verified Ms. Kravets’ identity if it really believed that the
person whose image appeared on the badge did not look like Ms. Kravets. A simple
phone call to the organization whose name appeared on the badge would have resolved
that concern.

The undisputed facts — as conceded by Petitioner — thus plainly establish that Petitioner
unjustifiably refused access to an agent for CMS for purposes of an inspection. That is
all that is needed to sustain CMS’s determination.

/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-2015-H-0136)

Complainant
v.
Hot Box Smoke Shop LLC / Jawad Mustafa,
Respondent.
Docket No. C-15-942
Decision No. CR3717

Date: March 19, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Hot Box Smoke Shop LLC / Jawad Mustafa, at 3246 East
Cactus Road, Phoenix, Arizona 85032, and by filing a copy of the complaint with the
Food and Drug Administration’s (FDA) Division of Dockets Management. The
complaint alleges that Hot Box Smoke Shop LLC / Jawad Mustafa unlawfully utilized a
self-service display of tobacco products in a non-exempt facility, thereby violating the
Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its
implementing regulations, 21 C.F.R. pt. 1140. CTP seeks to impose a $250 civil money
penalty against Respondent Hot Box Smoke Shop LLC / Jawad Mustafa.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on January 23, 2015, CTP served the
complaint on Respondent Hot Box Smoke Shop LLC / Jawad Mustafa 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 Hot Box Smoke Shop LLC / Jawad Mustafa has neither filed an answer
within the time prescribed, nor requested an extension of time within which to file an
answer. Pursuant to 21 C.F.R. § 17.11, L assume that the facts alleged in the complaint
(but not its conclusory statements) are true. Specifically:

e Atan unspecified time on February 7, 2014, at Respondent’s business
establishment, 3246 East Cactus Road, Phoenix, Arizona 85032, an
FDA--commissioned inspector observed “cigarette tobacco for sale from
customer-accessible shelves throughout the sales floor.” Additionally, the
inspector noted establishment is open to the general public during normal business
hours;

e Ina warning letter dated April 10, 2014, CTP informed Respondent of the
inspector’s February 7, 2014, observations, and that such action violates federal
law, 21 C.F.R. § 1140.16(c). The letter further warned that Respondent’s failure
to correct its violations could result in a civil money penalty or other regulatory
action;

e Atan unspecified time on June 27, 2014, at Respondent’s business establishment,
3246 East Cactus Road, Phoenix, Arizona 85032, FDA-commissioned inspectors
documented a violation for using a self-service display in a non-exempt facility.
Specifically, the establishment had shelves of cigarette tobacco accessible to
customers on the main sales floor. The inspectors also documented that a minor
was able to enter the establishment and retrieve a tobacco product from the
display.

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

§ 387a-1; see 21 U.S.C. § 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). The
regulations require a retailer to sell cigarettes only in a direct, face-to-face exchange.

21 CFR. § 1140.16(c).

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

For these reasons, | enter default judgment in the amount of $250 against Respondent Hot
Box Smoke Shop LLC / Jawad Mustafa. 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

Monterey Care Inc., d/b/a Scottsdale Nursing & Rehabilitation
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-15-130
Ruling No. 2015-11

Date: March 18, 2015

ORDER OF DISMISSAL

This matter is before me on a motion to dismiss that the Centers for Medicare

& Medicaid Services (CMS) filed on December 29, 2014. Petitioner opposes the motion.
I conclude that Petitioner is not entitled to a hearing because CMS has not imposed any
enforcement remedies, and I must dismiss Petitioner’s hearing request.

I. Procedural History and Background

Petitioner is a skilled nursing facility, located in Scottsdale, Arizona, that participates in
the Medicare program. On May 9, 2014, the Arizona Department of Health Services,
Division of Licensing Services, Bureau of Long Term Care Licensing (state agency)
completed a recertification survey of the facility and found that it was not in substantial
compliance with federal program participation requirements. Specifically, the state
agency alleged that four deficiencies were found, all at the scope and severity level of
“G.” Ina notice letter dated June 5, 2014, the state agency informed Petitioner that, as
authorized by CMS, it would impose a denial of payment for new admissions (DPNA)
effective August 9, 2014, unless Petitioner submitted an acceptable plan of correction and
demonstrated substantial compliance at a subsequent revisit survey. The state agency
also stated that it would recommend that CMS impose a civil money penalty (CMP) of
$700 per day, effective May 9, 2014, if substantial compliance was not achieved. CMS
Exhibit (Ex.) 1. Further, the state agency informed Petitioner that CMS would terminate
its provider agreement if it did not achieve substantial compliance by November 9, 2014.
The notice letter also notified Petitioner of its right to request a hearing before an
administrative law judge (ALJ) within 60 days of receiving the June 5, 2014 letter. CMS
Ex. 1. Finally, it advised Petitioner that “[e]ffective July 1, 2007, facilities requesting an
Informal Dispute Resolution must submit separate requests, one for State deficiencies
cited and one for Federal deficiencies cited, if applicable.” CMS Ex. 1, at 4.

On July 21, 2014, the state agency conducted a revisit survey and determined that
Petitioner had returned to substantial compliance as of July 21, 2014. CMS Ex. 2. Asa
result, CMS did not impose the DPNA. Moreover, the state agency made no
recommendations to CMS regarding the imposition of a CMP. The state imposed its own
CMP against Petitioner in the total amount of $1500 for violations of Arizona
regulations. CMS Ex. 3.

On October 15, 2014, Petitioner filed a letter to request a hearing “to dispute four Federal
deficiencies” from its most recent survey.’ According to Petitioner’s Administrator, he
spoke to representatives from the state agency and CMS, who informed him that he
should initiate informal dispute resolution (IDR) with the state and that he would have
appeal rights before an ALJ if he did not agree with the IDR results. Petitioner’s
Administrator acknowledged that “[a]s there were no Federal Remedies recommended
with our survey outcomes I did not receive a letter from CMS in regards to our Appeal
rights.” Petitioner indicated that the state agency had recently notified it by letter dated
October 3, 2014, “that the Federal deficiencies [they] had submitted an IDR for back in
June would remain the same with only one resident being removed.” Request for
Hearing.

In addition to requesting IDR for the federal deficiencies, Petitioner also requested a
separate IDR proceeding for the State deficiencies cited, for which it received separate
IDR results from the stage agency in a letter dated October 3, 2014. I note that the state
IDR process is separate from and in addition to appeal rights provided to a facility under
federal regulations. An IDR result from the state agency is not a CMS administrative
action that may be appealed to an ALJ. See 42 C.F.R. §§ 498.3(b)(13), 498.3(d),
498.40(a); Capitol House Nursing & Rehab Ctr., DAB No. 2252, at 4-5 (2009); High
Tech Home Health, Inc., DAB No. 2105, at 7-8 (2007), aff'd, High Tech Home Health,
Inc. v. Leavitt, Civ. No. 07-80940 (S.D. Fla. Aug. 15, 2008).

' Although CMS did not raise this as an issue, I note that Petitioner’s letter requesting a
hearing was filed more than 60 days after receipt of the June 5, 2014 letter.
The case was assigned to me for hearing and decision, and I issued an Acknowledgment
and Initial Pre-Hearing Order. CMS filed its motion to dismiss Petitioner’s request for
hearing on grounds that no enforcement remedy was imposed, and therefore, Petitioner
had no right to a hearing. CMS submitted five exhibits with its motion, marked as CMS
Ex. | through CMS Ex. 5. After receiving an extension, Petitioner filed a response
opposing CMS’s motion (P. Br.). Petitioner submitted two exhibits with its response.

II. Issue

Whether Petitioner has a right to a hearing before an ALJ where CMS has imposed no
enforcement remedies against Petitioner.

III. Discussion

CMS has imposed no enforcement remedies in this case; therefore, Petitioner
has no right to a hearing before an ALJ.

The hearing rights of a long-term care facility are established by federal regulations at
42 C.F.R. Part 498. A provider dissatisfied with CMS’s initial determination is entitled
to further review, but administrative actions that do not constitute initial determinations
are not subject to appeal. 42 C.F.R. § 498.3(d). The regulations specify which actions
are “initial determinations” and set forth examples of actions that are not. A finding of
noncompliance that results in the imposition of a remedy specified in 42 C.F.R.

§ 488.406 (with the exception of state monitoring) is an initial determination for which a
facility may request an ALJ hearing. 42 C.F.R. § 498.3(b)(13). Unless the finding of
noncompliance results in the actual imposition of a specified remedy, the finding is not
an initial determination. 42 C.F.R. § 498.3(d)(10)(ii). Remedies specified at 42 C.F.R.
§ 488.406 include termination of a provider agreement, a DPNA, CMPs, and directed in-
service training.

Here, CMS effectuated no remedies based on the May 9, 2014 survey. Because
Petitioner returned to substantial compliance as of July 21, 2014, the imposition of the
DPNA never went into effect. Further, CMS did not impose any other enforcement
remedy, such as a CMP, based on the May 9, 2014 survey. In fact, Petitioner’s
Administrator admitted in the October 15, 2014 hearing request that he had not received
any correspondence from CMS containing information regarding “Appeal rights”
because no “Federal Remedies [had been] recommended with our survey outcomes.” In
his October 21, 2014 letter, Petitioner’s Administrator again conceded that the facility
“did not receive enforcement remedies from CMS and I was informed we would not be.”

Where, as here, CMS has imposed no remedies, Petitioner does not have a right to a
hearing. See, e.g., San Fernando Post Acute Hosp., DAB No. 2492 (2012); Fountain
Lake Health & Rehab., Inc., DAB No. 1985 (2005); Lakewood Plaza Nursing Ctr., DAB
No. 1767 (2001); The Lutheran Home-Caledonia, DAB No. 1753 (2000); Schowalter
Villa, DAB No. 1688 (1999); Arcadia Acres, Inc., DAB No. 1607 (1997). It is the
enforcement remedy, not the citation of a deficiency, that triggers the right to a hearing.
San Fernando Post Acute Hosp., DAB No. 2492 at 7 (2012) (“Thus, the regulations do
not provide a hearing right for a noncompliance finding alone.”).

In its response, Petitioner complains that it received disparate treatment from CMS that is
arbitrary and capricious and amounts to unequal treatment under the law. According to
Petitioner, the State of Arizona, acting under state regulations which mirror the federal
regulations, did not find the deficiencies to be very serious, while the federal government,
through CMS, acting on the same information by the same state surveyors, treated the
deficiencies much more harshly, citing them at a “G” scope and severity level. In
addition, Petitioner argues that it will suffer the “loss of property rights and a loss of due
process” if it is not allowed to appeal the deficiency and scope and severity rating. P. Br.
at 1-3.

Insofar as Petitioner has raised what may be Constitutional claims, I have no authority to
review them. The Departmental Appeals Board has concluded that neither the Board nor
ALJs can ignore unambiguous statutes or regulations on the basis that they are
unconstitutional. Florida Health Sciences Ctr., Inc., DAB No. 2263, at 5-6 (2009).

Because CMS did not impose any enforcement remedies, Petitioner has no right to a
hearing. An ALJ may dismiss a hearing request where a party has no right to a hearing.
42 C.F.R. § 498.70(b). I therefore grant CMS’s motion to dismiss and order this case
dismissed. The parties may request that an order dismissing a case be vacated pursuant to
42 CFR. § 498.72.

/s/
Joseph Grow
Administrative Law Judge