Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Lake County Nursing & Rehabilitation Center,
(CCN: 15-5653),
Petitioner,
v.

Centers for Medicare and Medicaid Services.

Docket No. C-11-514

Decision No. CR2642

Date: October 5, 2012

DECISION

Petitioner, Lake County Nursing & Rehabilitation Center, appeals the determination of
the Centers for Medicare and Medicaid Services (CMS) that, based on a survey
completed on February 15, 2011, it was not in substantial compliance with Medicare
program requirements. CMS has moved for summary judgment.

The stipulated facts establish that Petitioner was not in substantial compliance with
Medicare program requirements from February 15 through March 16, 2011. I grant
CMS’s motion for summary judgment and find there is a basis for the imposition of a
civil money penalty (CMP) of $200 per day from February 15 through March 16, 2011.
The undisputed evidence further substantiates the CMP considering Petitioner did not
follow a physician’s order to administer pain medication to a resident.

I. Background

Petitioner is a long-term care facility, located in East Chicago, Indiana, that participates
in the Medicare program. Based on a survey completed on February 15, 2011, CMS
determined that Petitioner was not in substantial compliance with 16 Medicare program
requirements, the most serious of those deficiencies was a violation of 42 C.F.R.

§ 483.25, Tag F309, cited at a scope and severity level of G (an isolated instance of actual
arm to resident health and safety that is not considered immediate jeopardy’).

By letter dated April 14, 2011, CMS advised Petitioner that it would impose certain
remedies for the noncompliance that included a CMP of $200 per day for 30 days,
beginning February 15 and continuing through March 16, 2011, for a total amount of
$6,000; a denial of payment for new Medicare and Medicaid admissions (DPNA)
effective May 15, 2011; a mandatory termination of Petitioner’s provider agreement if
Petitioner did not achieve substantial compliance by August 15, 2011; and loss of any
nurse aid training and competency evaluation program (NATCEP) for a period of two
years. A revisit survey conducted on April 5, 2011, determined that Petitioner returned to
substantial compliance as of March 17, 2011. Consequently, CMS did not pursue the
DPNA and termination remedies.

By letter dated June 9, 2011, Petitioner requested an administrative law judge (ALJ)
earing. The Civil Remedies Division received Petitioner’s request, assigned it to me for
earing and decision, and on June 14, 2011, an Acknowledgment and Initial Prehearing

Order was issued at my direction.

On June 24, 2011, the parties filed a joint stipulation (Jt. Stip.) agreeing that Petitioner
only challenges the F309 deficiency from the February 2011 survey. The stipulation
specifically notes that Petitioner is not appealing the remaining citations from that survey.

CMS filed its prehearing exchange (CMS Br.) on September 9, 2011, accompanied by
CMS exhibits (CMS Exs.) 1-32. Petitioner filed its prehearing exchange (P. Br.) on
October 14, 2011, accompanied by Petitioner exhibits (P. Exs.) 1-3. On October 26,
2011, CMS moved for summary judgment (CMS MSJ), and on November 29, 2011,
Petitioner filed its opposition to the motion (P. Opposition).

The Social Security Act (Act) sets forth requirements for a long-term care facility’s
participation in the Medicare program and authorizes the Secretary 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

' “Immediate jeopardy” is defined as “a situation in which the provider’s noncompliance
with one or more requirements of participation has caused, or is likely to cause, serious
injury, harm, impairment, or death to a resident.” 42 C.F.R. § 488.301.
deficiencies may pose no greater risk to resident health and safety than “the potential for
causing minimal harm.” 42 C.F.R. § 488.301.

The applicable state agency, or CMS, conducts surveys of nursing facilities to determine
whether they are in compliance with the requirements of Part 483. 42 C.F.R. §§ 488.301;
488.330. Ifa facility is found out of substantial compliance, then CMS has the authority
to impose one or more of the enforcement remedies listed in section 1819(h) of the Act,
42 U.S.C. § 1395i-3(h), and 42 C.F.R. § 488.406, including a per day CMP and loss of
NATCEP. Remedies are applied on the basis of the scope and severity of the
noncompliance found during a survey. 42 C.F.R. § 488.402(b). The factors CMS
considers when selecting remedies are set forth at 42 C.F.R. § 488.404.

A facility has a right to appeal a certification of noncompliance leading to an enforcement
remedy. However, the choice of remedies by CMS, or the factors CMS considered when
choosing remedies, are not subject to my review. 42 C.F.R. §§ 488.408(g)(1);
488.330(e); 488.408(g)(2); 498.3. I may not review the scope and severity level of
noncompliance that CMS determines unless: (1) a successful challenge would affect the
range of the CMP amounts that CMS could collect; or (2) there was a finding of
“substandard quality of care” that resulted in the loss of approval for a facility’s
NATCEP. 42 C.F.R. § 498.3(b)(14)(i), (ii). Neither of those contingencies apply here.

CMS notified Petitioner by letter dated April 14, 2011, that it was ineligible to conduct a
NATCEP for two years. CMS asserts that Petitioner did not have a NATCEP in place at
the time and Petitioner does not dispute this assertion. CMS MSJ at 12 n.8; CMS Br. at
11; CMS Exs. 31, at 1; 32, at 1. Because Petitioner notes that it is appealing the penalty
and remedies imposed (specifically, the CMP and the loss of NATCEP), I note that a
state may not approve and must withdraw any prior approval of a NATCEP offered by a
nursing facility that has been: (1) subject to an extended or partial extended survey under
sections 1819(g)(2)(B)(i) or 1919(g)(2)(B)(i) of the Act; (2) assessed a CMP of not less
than $5,000; or (3) subject to termination of its participation agreement, a DPNA, or the
appointment of temporary management. 42 C.F.R. § 483.151(b)(2) and (e)(1). In this
case, the state is required to withdraw any approval given or deny any approval sought by
Petitioner to conduct a NATCEP for a period of two years because the CMP imposed
here is $6,000, which is in excess of the $5,000 threshold amount.

Il. Issues
The issues before me are whether:

Petitioner was in substantial compliance with Medicare participation requirements;
and, if not, whether the imposed CMP is reasonable.

Til. Summary Judgment Standard
Summary judgment is appropriate when a case presents no issue of material fact, and its
resolution turns on questions of law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
247-48 (1986); Livingston Care Ctr. v. United States Dep’t of Health & Human Servs.,
388 F.3d 168, 173 (6th Cir. 2004); see also Illinois Knights Templar Home, DAB No.
2274, at 3-4 (2009) (citing Kingsville Nursing Ctr., DAB No. 2234, at 3-4 (2009)). The
moving party may show the absence of a genuine factual dispute by presenting evidence
so one-sided that it must prevail as a matter of law, or by showing that the non-moving
party has presented no evidence “sufficient to establish the existence of an element
essential to [that party’s] case, and on which [that party] will bear the burden of proof at
trial.” Livingston Care Ctr., 388 F.3d 168, 173 (quoting Celotex Corp. v. Catrett, 477
USS. 317, 323-24 (1986)). To avoid summary judgment, the non-moving party must then
act affirmatively by tendering evidence of specific facts showing that a dispute exists.
See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 n.11 (1986);
see also Vandalia Park, DAB No. 1939 (2004); Lebanon Nursing & Rehab. Ctr., DAB
No. 1918 (2004). To defeat an adequately supported summary judgment motion, the
non-moving party may not rely on the denials in its pleadings or briefs, but it must
furnish evidence of a dispute concerning a material fact. I/linois Knights Templar, DAB
No. 2274, at 4; Livingston Care Ctr., DAB No. 1871, at 5 (2003).

In examining the evidence for purposes of determining the appropriateness of summary
judgment, I must draw all reasonable inferences in the light most favorable to the non-
moving party. Brightview Care Ctr., DAB No. 2132, at 2, 9 (2007); Livingston Care
Ctr., 388 F.3d at 168, 172; Guardian Health Care Ctr., DAB No. 1943, at 8 (2004); but
see Cedar Lake Nursing Home, DAB No. 2344, at 7 (2010); Brightview, DAB No. 2132,
at 10 (upholding summary judgment where inferences and views of non-moving party are
not reasonable). However, drawing factual inferences in the light most favorable to the
non-moving party does not require that I accept the non-moving party’s legal
conclusions. Cedar Lake, DAB No. 2344, at 7; Guardian, DAB No. 1943, at 11 (“A
dispute over the conclusion to be drawn from applying relevant legal criteria to
undisputed facts does not preclude summary judgment if the record is sufficiently
developed and there is only one reasonable conclusion that can be drawn from those
facts.”).

I have accepted all of Petitioner’s factual assertions as true. In addition, I have drawn all
reasonable inferences in Petitioner’s favor. No dispute exists that Petitioner was not in
substantial compliance with program participation requirements based on the 15
stipulated deficiencies at the scope and severity of D and E. Further, when resolving all
disputed facts in Petitioner’s favor relating to Resident 33’s pain management and the
F309 deficiency, I find the undisputed evidence supports a finding in favor of CMS.

Accordingly, for the reasons set out further below, summary judgment is appropriate in
this case.
IV. Discussion

A, Petitioner’s stipulation that it was not in substantial compliance with 15
deficiency citations supports the CMP that CMS imposed.

I agree with CMS’s position that the 15 uncontested deficiencies from the February 2011
survey provide a fully adequate and independent basis for the CMP imposed.

CMS’s determination that Petitioner was not in substantial compliance with those
uncontested, non-appealed program participation requirements is final and binding.

42 C.F.R. § 498.20(b). Because there is a final and binding determination that the facility
was not in substantial compliance, CMS has discretion to impose one or more of the
enforcement remedies listed in 42 C.F.R. § 488.406, which include the per day CMP
imposed here. Act § 1819(h), 42 U.S.C. § 1395i-3(h); 42 C.F.R. § 488.402. I have no
authority to review CMS’s decision to impose a remedy, if a basis exists for its
imposition, nor may I review CMS’s choice of remedy. 42 C.F.R. § 488.438(a)(1)(ii),
(e).

The administratively final 15 deficiencies include 11 deficiencies at a scope and severity
level of D (isolated instances with the potential to cause more than minimal harm to the
health and safety of residents but not considered immediate jeopardy) and four
deficiencies at a scope and severity level of E (a pattern of instances with the potential to
cause more than minimal harm to the health and safety of residents but not considered
immediate jeopardy):

Eleven Uncontested Deficiencies at a Scope and Severity Level of D:

* 42 C.E.R. § 483.10(b) (5)-(10) (Tag F156) — Notice of Rights, Rules, Services, Charges

* 42 CER. § 483.10(b)(11) (Tag F157) — Notification of Changes

* 42 C.F.R. § 483.20(d), (k)(1) (Tag F279) — Comprehensive Care Plans

+ 42 C.F.R. § 483.20(d) and 483.10(k)(2) (Tag F280) — Care Planning Participation

* 42 CER. § 483.20(k)(3)(i) (Tag F281) — Services Meeting Professional Standards

* 42 CER. § 483.20(k)(3)(ii) (Tag F282) — Services by Qualified Persons

* 42 C.F.R. § 483.25(h) (Tag F323) — Accident Hazards/Supervision/Devices

* 42 C.F.R. § 483.25(/) (Tag F329) — Unnecessary Drugs

+ 42 C.F.R. § 483.35(i) (Tag F371) — Sanitary Conditions for Food

* 42 C.F.R. § 483.55(b) (Tag F412) — Dental Services

+ 42 C.E.R. § 483.60(b), (d), (e) (Tag F431) — Records, Labeling/Storage of Drugs and
Biologicals

Four Uncontested Deficiencies at a Scope and Severity Level of E:
* 42 C.F.R. § 483.15(h)(2) (Tag F253) — Housekeeping and Maintenance Services
* 42 C.F.R. § 483.20(d) (Tag F286) — Maintaining 15 Months of Resident Assessments

* 42 CFR. § 483.25(c) (Tag F314) — Pressure Sores
* 42 C.E.R. § 483.75(J)(1) (Tag F514) — Clinical Records

See CMS Ex. 1.
B. The CMP that CMS imposed is reasonable.

CMS may impose a CMP for the number of days that the facility is not in compliance, or
for each instance that a facility is not in substantial compliance. 42 C.F.R. § 488.430(a).
The lower range of CMPs, from $50 per day to $3,000 per day, is reserved for
deficiencies that do not constitute immediate jeopardy but either cause actual harm to
residents or have the potential to cause more than minimal harm. 42 C.F.R.

§ 488.438(a)(1)(iii). In this case, CMS proposed a 30-day CMP of $200 per day, an
amount in the lower end of the non-immediate jeopardy range.

An ALJ determines de novo whether the amount of a CMP is reasonable based on
evidence in the appeal record concerning certain factors. See 42 C.F.R. § 488.438(e), (f);
Senior Rehab. and Skilled Nursing Ctr., DAB No. 2300, at 19-20 (2010), aff'd, Senior
Rehab. and Skilled Nursing Ctr. v. Health & Human Srves., 405 F. App’x 820 (5th Cir.
2010); Lakeridge Villa Healthcare Ctr., DAB No. 2396, at 14 (2011). These factors are:
(1) the facility’s history of noncompliance, including repeated deficiencies; (2) the
facility’s financial condition; (3) the seriousness of the deficiencies as set forth at 42
C.F.R. § 488.404; and (4) the facility’s degree of culpability, which includes neglect,
indifference or disregard for resident, care, comfort, or safety. The factors in 42 C.F.R. §
488.404 include: (1) the scope and severity of the deficiency; (2) the relationship of the
deficiency to other deficiencies resulting in noncompliance; and (3) the facility’s prior
history of noncompliance in general and specifically with reference to the cited
deficiencies. Unless a facility contends that one of these regulatory factors does not
support the CMP amount imposed, the ALJ must sustain it. Coquina Ctr., DAB No.
1860 (2002). Petitioner does not contest the length of time during which CMS imposed
the CMP or claim that its financial condition affects its ability to pay. Therefore there is
no basis for me to consider either of these factors to mitigate the reasonableness of the
penalty.

I find that Petitioner has a history of substantial noncompliance. A summary report that
CMS submitted, covering the survey cycles beginning December 10, 2004 through July
12, 2010, shows that Petitioner was cited for some of the same deficiencies cited in this
case (F157, F281, F282, F323, F314, F371 and F514), as well as a number of other
deficiencies cited by surveys completed during that time period, many of which posed the
potential for more than minimal harm.” CMS Ex. 3.

> In prior survey cycles from 2004 through 2010, Petitioner was cited under various
Tags: in July 2010, F224 at a scope and severity level (s/s) of G; in November 2009,
In reviewing the seriousness of the deficiencies and the facility’s degree of culpability, I
find that the 15 uncontested deficiencies cited were serious. Eleven of the 15 uncontested
deficiencies cited in the February 2011 Statement of Deficiencies were at a D scope and
severity level and four deficiencies were at a E level. 42 C.F.R. § 483.25(h)(2).

These deficiencies involved a pattern of not ensuring proper treatment for residents at
risk for pressure sores. Specifically, based on surveyor observation, record reviews and
interviews, Petitioner failed to ensure treatment when a pressure sore developed for two
residents. Further, Petitioner did not timely notify the facility’s Registered Dietician to
implement related dietary recommendations. CMS Ex. 1, at 39-42.

The deficiencies also included a pattern of failing to ensure resident records were
complete and accurate, such as, assessments for pain, risk of falling, and skin integrity.
CMS Ex. 1, at 14-17, 30-33, 54-59. Other examples of uncontested deficiencies include
a lack of adequate supervision when moving a resident who was a fall-risk and failing to
ensure non-pharmacological interventions were attempted prior to the use of an anti-
anxiety medication on a resident. CMS Ex. 1, at 43-48.

Some of the deficiencies also show that Petitioner did not ensure a clean environment for
its residents. For example, surveyors noted that walls and floors were marred, paint on
doors, walls, ceilings and bed frames was peeling, there were gouged bed boards and
walls, closet doors were off track, and there was spillage on walls. CMS Ex. 1, at 14-17.
In addition, resident Minimum Data Set (MDS) Assessments were at times not kept in
residents’ records and were therefore not accessible to staff for review. CMS Ex. 1, at
30-33.

Further, Petitioner failed to provide necessary dental services for a resident after a dentist
indicated the resident needed two teeth extracted due to decay. CMS Ex. 1, at 50.

Petitioner did not deny that all of these deficiencies, which only represent examples of
the total 15 undisputed deficiencies, posed the potential for more than minimal harm to
residents. A revisit survey shows Petitioner did not come back into compliance with the

F323 and F490 at s/s of K, F50, F54, F130, F144 at s/s of F, and F157, F250, F272, F314,
F322, F514 at s/s of D; in October 2008, F282 and F514 at s/s of E, and F250, F279,
F323 at s/s of D; in November 2008, F14, F27, F51, F67, F144 at s/s of F; in April 2008,
F272, F323 at s/s of D; in April 2007, F250, F309, F314 at s/s of G; in July 2007, F315 at
s/s of G, F38, F50, F53, F54 at s/s of F, and F253 at s/s of E; in April 2006, F309, F314,
F325 at s/s of G, F18, F45, F46, F50, F72, F147 at s/s F, and F281 at s/s of E; in
November 2005, F281 and F324 at s/s of D; in February 2005, F157, F248, F253,

F281, F371, F514 at s/s of E; and in December 2004, F324 at s/s of G. CMS Ex. 3.
15 uncontested deficiencies until March 17, 2011. CMS Ex. 2. Petitioner also does not
dispute this date. Accordingly, I find that these 15 uncontested deficiencies alone are
sufficient to justify the CMP imposed, $200 per day for 30 days of noncompliance, from
February 15 through March 16, 2011.

C. Undisputed evidence establishes that the facility was not in substantial
compliance with 42 C.F.R. § 483.25 (Tag F309) and further supports the
reasonableness of the CMP.

CMS claims Petitioner violated 42 C.F.R. § 483.25 and cites instances involving
Residents 33 and 38. An ALJ need not make more findings than is necessary to support
the remedies imposed, even if the ALJ does not address every deficiency cited in a
survey. See, e.g., Beechwood Sanitarium, DAB No. 1824, at 22 (2002). Therefore I am
not required to address noncompliance findings that are not material to the outcome of
the appeal. However, I choose to address CMS’s allegations relating to Resident 33’s
pain management, considering | find that evidence to be undisputed and further support
for the reasonableness of the CMP although not material to the outcome of the appeal.

Resident 33 was initially admitted to Petitioner’s facility in September 2008. She was 82
years old during the relevant time and had a diagnosis of, among other things,
osteoarthritis. CMS Ex. 7, at 1. A pain assessment, updated on November 9, 2010, notes
that Resident 33 suffered from generalized pain that was controlled through the use of
pain medication — Hydrocodone APAP — ordered to be administered three times per day.
CMS Ex. 8, at 1-2. Resident 33’s plan of care, as updated February 2010, addresses the
resident’s risk of “pain” and “stiff episodes” related to her diagnosis of arthritis and
requires staff to “[a]dminister medications as ordered... .” CMS Ex. 7, at 1. Resident
33’s November 2010 physician’s order contains a standing pain medication prescription
for Hydrocodone-APAP 7.5-325 mg (Norco) to be administered three times per day (8
a.m., 4 p.m., and 8 p.m.). The order also contains an “as needed” (PRN) provision of the
pain medication. CMS Ex. 9, at 1, 2.

It is undisputed that, from January | through 13, 2011, Petitioner’s staff failed to comply
with Resident 33’s physician’s order to administer pain medication three times per day,
as documented in Resident 33’s January 2011 Medication Administration Record
(MAR). CMS Ex. 14. Petitioner admits there was a pharmacy transcription error and
does not dispute that the resident did not receive her standard pain medication at the three
ordered times per day during the first several weeks in January 2011. P. Opposition at 1;
P. Br. at 4. Petitioner argues, though, that the “as needed” aspect of the physician’s order
resulted in Resident 33 receiving the equivalent of what the Resident would normally
receive. P. Opposition at 2.

From January | through 13, 2011, the time period during which Resident 33’s standard
pain medication order was not followed, she required the administration of her PRN pain
medication eight times due to complaints of leg pain (January 5, 6, 7, 9 (twice), 12
(twice), and13 (twice)). CMS Ex. 14, at 4. A social service progress note entry for
January 12, 2011 states that the resident “has had complaints of pain” and also notes that
the resident had a foot infection. CMS Ex. 11, at 2. It was not until January 13, 2011
that Petitioner added Resident 33’s standard pain medication prescription to the MAR,
and the Resident began receiving it again. CMS Ex. 13, at 1.

Each resident must receive care and services necessary to attain and maintain the highest
practicable physical, mental, and psychosocial well-being of the resident. The care and
services are to be based upon the resident’s comprehensive assessment and plan of care.
See 42 C.F.R. § 483.25. Further, the Board has held that failure to follow a physician’s
order amounts to a violation of 42 C.F.R. § 483.25. Venetian Gardens, DAB No. 2286,
at 4 (2009) (“The Board has repeatedly stated that a facility’s failure to follow its care
plan or a doctor’s order may be grounds for concluding that the facility is not in
substantial compliance with section 483.25 quality of care standards.”); Lakeridge Villa
Health Care Ctr., DAB No. 1988, at 22 (2005) (citing The Windsor House, DAB No.
1942, at 55-56 (2004); Batavia Nursing & Convalescent Ctr., DAB No. 1904, at 35-36
(2004)). A facility must carry out every order and ensure the sufficiency of resident care
plans so that each resident receives all of the necessary care and services to attain or
maintain the highest practicable physical, mental, and psychosocial well-being.
Alexandria Place, DAB No. 2245, at 7-8 (2009).

Here the resident’s physician clearly ordered pain medication three times a day at set
times. In spite of the unambiguous instructions, the facility did not provide the ordered
medications at the ordered times. Petitioner claims the end result was the same because
the order allowed her to receive medication on an “as needed” basis. However, I do not
find these two parts of the physician’s order to be equivalent. The “as needed” part of the
order was to be in addition to, not in place of, the standing three times per day part of the
order. This difference is fundamental and had the potential to result in untreated pain
symptoms for Resident 33.

Vv. Conclusion

For the reasons set forth above, I grant summary judgment in favor of CMS. The
stipulated facts show that Petitioner was not in substantial compliance with several
program requirements from February 15, 2011 through March 16, 2011. I also find that a
$200 per day CMP from February 15 through March 16, 2011 is reasonable. The
reasonableness of the CMP amount is further supported by an additional violation of
10

program requirements relating to Petitioner’s failure to follow a physician’s order to
administer pain medication to a resident.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.
Lil Mart, Inc.,
Respondent.

Docket No. C-12-1130
FDA Docket No. FDA-2012-H-0885

Decision No. CR2639

Date: October 4, 2012

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) initiated the above-captioned matter when it
filed an Administrative Complaint for Civil Money Penalties (Complaint) with the
Departmental Appeals Board, Civil Remedies Division (CRD) and the Food and Drug
Administration’s (FDA) Division of Dockets Management. CTP seeks to impose civil
money penalties under the Federal Food, Drug, and Cosmetic Act (Act) and the Act’s
implementing regulations.

The Complaint alleges the following facts. Respondent owns an establishment in
Odenville, Alabama that sells tobacco products. Complaint § 2. CTP conducted two
inspections of the establishment. Complaint §] 8. During a December 13, 2011
inspection, an FDA-commissioned inspector observed that Respondent “[sold] cigarettes
or smokeless tobacco products to a person younger than 18 years of age.” Complaint 4 9.
On February 2, 2012, CTP issued a warning letter to Respondent specifying the violation
that the inspector observed. The letter warned Respondent that a failure to correct the
violation could result in the imposition of civil money penalties and that it was
Respondent’s responsibility to ensure compliance with the law. Complaint § 9. CTP did
not receive a response to the warning letter. Complaint § 10.

During a subsequent two-part inspection on April 18, 2012, and May 3, 2012, FDA-
commissioned inspectors documented that Respondent was “using a self-service display
in a non-exempt facility.” Complaint § 1. CTP specifically alleges that Respondent “‘is a
convenience store open to persons of all ages [and] has self-service displays of smokeless
tobacco.” Complaint 1.

In compliance with 21 C.F.R. §§ 17.5 and 17.7, CTP served Respondent with the
Complaint on August 17, 2012, via United Parcel Service. CTP charged Respondent
with violating 21 C.F.R. § 1140.14(a) (sale of tobacco products to a minor) and 21 C.F.R.
§ 1140.16(c) (use of vending machines and self-service displays without an exception).
Complaint {J 1, 9. CTP asked the CRD to impose a $250 civil money penalty based on
two alleged violations of the regulations in a 12-month period. Complaint § 12.

The cover letter to the Complaint and the Complaint provided detailed instructions
related to filing an answer and requesting an extension of time to file an answer. The
letter and Complaint stated that failure to file an answer could result in the imposition of
a civil money penalty against Respondent. Respondent neither filed an answer nor
requested an extension of time within the 30-day time period prescribed in 21 C.F.R.

§ 17.9.

If a respondent does not file an answer within 30 days of a properly served complaint, the
regulations provide that the:

presiding officer shall assume the facts alleged in the complaint to be true,
and if such facts establish liability under the relevant statute, the presiding
officer shall issue an initial decision within 30 days of the time the answer
was due, imposing: (1) The maximum amount of penalties provided for by
law for the violations alleged; or (2) The amount asked for in the complaint,
whichever amount is smaller.

21 C.F.R. § 17.11(a). Further, a failure to file a timely answer means that “respondent
waives any right to a hearing and to contest the amount of penalties and assessments”
imposed in the initial decision. 21 C.F.R. § 17.11(b).

Accepting the facts alleged in the Complaint as true, I find that those facts establish
Respondent’s liability under the Act. See 21 U.S.C. §§ 333(f)(9), 387c(a)(7)(B), 387£(d);
21 C.F.R. §§ 1140.1(b), 1140.14, 1140.16. I also find that CTP’s request to impose a
$250 civil money penalty is permissible. See 21 C.F.R. § 17.2.

Therefore, Respondent is directed to pay a civil money penalty in the amount of $250.
This initial decision becomes final and binding upon both parties within 30 days of the
date of its issuance. 21 C.F.R. § 17.11(b).

It is so ordered.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.
Ralph Baskerville d/b/a 4744 Corner Store,
Respondent.

Docket No. C-12-1037
FDA Docket No. FDA-2012-H-0792

Decision No. CR2636

Date: October 2, 2012

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) initiated the above-captioned matter when it
filed an Administrative Complaint for Civil Money Penalties (Complaint) with the
Departmental Appeals Board, Civil Remedies Division (CRD) and the Food and Drug
Administration’s (FDA) Division of Dockets Management. CTP seeks to impose civil
money penalties under the Federal Food, Drug, and Cosmetic Act (Act) and the Act’s
implementing regulations.

The Complaint alleges the following facts. Respondent owns an establishment in
Baltimore, Maryland that sells tobacco products. Complaint 2. CTP conducted two
inspections of the establishment. Complaint J 8. During an October 20, 2011 inspection,
an FDA-commissioned inspector observed that Respondent:
[Sold] cigarettes or smokeless tobacco products to a person younger than

18 years of age . . . [and] fail[ed] to verify by means of photographic
identification, containing the bearer’s date of birth, that no person purchasing
cigarettes or smokeless tobacco is younger than 18 years of age.

Complaint § 10.

On December 22, 2011, CTP issued a warning letter to Respondent specifying the
violations that the inspector observed. The letter warned Respondent that a failure to
correct the violations could result in the imposition of civil money penalties and that it
was Respondent’s responsibility to ensure compliance with the law. Complaint § 10.
Respondent sent e-mail messages to CTP on January 9, 2012, and March 28, 2012,
stating that his store would be “extremely vigilant” to request identification from
customers who appear to be under the age of 37. Complaint § 11.

During a subsequent inspection, an FDA-commissioned inspector documented that “a
person younger than 18 years of age was able to purchase a package of Newport Box
100s cigarettes on March 28, 2012, at approximately 4:36 PM ET” and “the minor’s
identification was not verified before the sale . . . on March 28, 2012, at approximately
4:36 PM ET.” Complaint ¥ 9.

In compliance with 21 C.F.R. §§ 17.5 and 17.7, CTP served Respondent with the
Complaint on August 8, 2012, via United Parcel Service. CTP charged Respondent with
violating 21 C.F.R. § 1140.14(a) (sale of tobacco products to a minor) and 21 C.F.R.

§ 1140.14(b)(1) (failure to verify the age of a person purchasing tobacco products by
means of photographic identification containing the bearer’s date of birth). Complaint
41 1,9, 10. CTP asked the CRD to impose a $500 civil money penalty based on three
alleged violations of the regulations in a 24-month period. Complaint § 13.

The cover letter to the Complaint and the Complaint provided detailed instructions
related to filing an answer and requesting an extension of time to file an answer. The
letter and Complaint stated that failure to file an answer could result in the imposition of
a civil money penalty against Respondent. Respondent neither filed an answer nor
requested an extension of time within the 30-day time period prescribed in 21 C.F.R.

§ 17.9.

If a respondent does not file an answer within 30 days of a properly served complaint, the
regulations provide that the:

presiding officer shall assume the facts alleged in the complaint to be true,
and if such facts establish liability under the relevant statute, the presiding
officer shall issue an initial decision within 30 days of the time the answer
was due, imposing: (1) The maximum amount of penalties provided for by
law for the violations alleged; or (2) The amount asked for in the complaint,
whichever amount is smaller.

21 CFR. §

7.11(a). Further, a failure to file a timely answer means that “respondent

waives any right to a hearing and to contest the amount of penalties and assessments”

imposed in tl

e initial decision. 21 C.F.R. § 17.11(b).

Accepting the facts alleged in the Complaint as true, I find that those facts establish

Respondent’

s liability under the Act. See 21 U.S.C. §§ 333(f)(9), 387c(a)(7)(B), 387£(d);

21 C.F.R. §§ 1140.1(b), 1140.14. Lalso find that CTP’s request to impose a $500 civil

money penal

ty is permissible. See 21 C.F.R. § 17.2.

Therefore, Respondent is directed to pay a civil money penalty in the amount of $500.00.

This initial d

lecision becomes final and binding upon both parties within 30 days of the

date of its issuance. 21 C.F.R. § 17.11(b).

It is so ordered.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Community Medical Lab, LLC,
Petitioner,
v.
Centers for Medicare and Medicaid Services.
Docket No. C-12-646
Decision No. CR2635

Date: October 2, 2012

DECISION

TrailBlazer Health Enterprises (TrailBlazer), an administrative contractor acting on
behalf of the Centers for Medicare and Medicaid Services (CMS), found Petitioner not to
be operational and denied Petitioner’s application for enrollment as a supplier in the
Medicare program. Petitioner appealed. For the reasons stated below, | affirm the
determination to deny Petitioner’s application for enrollment.

I. Background and Procedural History

In May 2011, TrailBlazer received Petitioner’s application (Form CMS-855B) for
enrollment in the Medicare program as an independent clinical laboratory. CMS Exhibits
(CMS Exs.) 1; 2, at 3; 9. Petitioner is a “one-man operation” in which its owner, Claxton
Arthur, is “frequently in the field” drawing blood from patients at their homes; Mr.
Arthur then returns to the laboratory to analyze the blood samples. Request for Hearing
(RH) at 1; Petitioner’s Brief (P. Br.) at 3; CMS Exs. 5, at 1; 7, at 64.

Trailblazer attempted to conduct a site visit of the business location identified in
Petitioner’s enrollment application (5200 West Loop South, Suite 204, Bellaire, Texas
77401) at 9:10 a.m. on October 19, 2011, to determine if Petitioner was operational.
CMS Ex. 3, at 1. However, the inspector documented that she could not complete the
visit because the name on the business at Petitioner’s address was Bridal Connection
Mall (Mall); the exterior signage indicated that the hours of operation were 11:00 a.m. to
7:00 p.m.; and the facility appeared not to be operational. CMS Ex. 3, at 1. In its
November 3, 2011 initial determination, TrailBlazer denied Petitioner’s application to
enroll in the Medicare program pursuant to 42 C.F.R. § 424.530(a)(5)(i) or (ii), because
Petitioner failed a site survey. CMS Ex. 4, at 1.

Petitioner, through Mr. Arthur, filed a timely request for reconsideration of TrailBlazer’s
denial of enrollment. CMS Ex. 5, at 1. Petitioner contested TrailBlazer’s finding that
Petitioner was not operational by asserting that it was one of a variety of small businesses
in the Mall and that Mr. Arthur observed TrailBlazer’s inspector arrive in the parking lot
of the Mall on October 19, 2011, and then drive away without coming inside the building
or finding its office. CMS Ex. 5, at 1. In addition to filing a request for reconsideration,
Petitioner filed another enrollment application (Form CMS-855B). CMS Ex. 7.

On March 5, 2012, at 2:00 p.m., TrailBlazer attempted to conduct another site visit at
Petitioner’s location. CMS Ex. 8, at 1. The inspector documented that Petitioner was not
open for business and did not appear to be operational. Further, the inspector indicated
that Petitioner did not appear to have: employees present; signs of customer activity
present; and inventory. CMS Ex. 8, at 1. Further, Petitioner’s sign at the entrance to its
office does not indicate Petitioner’s hours of operation. CMS Ex. 8, at 2. On April 5,
2012, TrailBlazer issued an unfavorable reconsideration determination noting that
Petitioner failed site surveys on October 19, 2011, and March 5, 2012. CMS Ex. 9.

Petitioner timely filed a request for a hearing with the Departmental Appeals Board, Civil
Remedies Division. In response to my May 9, 2012 Acknowledgment and Pre-hearing
Order (Pre-hearing Order), CMS filed a pre-hearing brief (CMS Br.), nine proposed
exhibits, and a witness list. Petitioner filed a brief on June 27, 2012, but did not file any
exhibits or object to CMS’s exhibits. In the absence of an objection, I admit CMS Exs. 1
through 9 into the record.'

The Pre-hearing Order advised the parties that they must submit written direct testimony
for each proposed witness and that an in-person hearing would only be necessary if the
opposing party requested an opportunity to cross-examine a witness. Pre-hearing Order
49 8, 9, 11; Vandalia Park, DAB No. 1940 (2004); Pacific Regency Arvin, DAB No.
1823, at 8 (2002) (holding that the use of written direct-testimony for witnesses is
permissible so long as the opposing party has the opportunity to cross-examine those

' Petitioner submitted two documents with its request for hearing. CMS also submitted
these documents and they have been admitted into the record. See CMS Ex. 7, at 6, 20.
witnesses). Petitioner did not offer any witnesses that CMS could request to cross-
examine. Although CMS submitted a witness list, Petitioner did not request to cross-
examine those witnesses.” See Pre-hearing Order 10. Consequently, I will not hold an
in-person hearing in this matter. See Kate E. Paylo, D.O., DAB CR2232, at 9 (2010).
Accordingly, the record is closed and I will evaluate the documentary evidence admitted
into the record. See Pre-hearing Order 4 11, 12.

II. Discussion

Petitioner is a supplier for purposes of the Social Security Act (Act) and the regulations.
See 42 U.S.C. §§ 1395x(d), 1395x(u); 42 C.F.R. § 498.2. In order to participate in the
Medicare program as a supplier, individuals and entities must meet certain criteria to
enroll and receive billing privileges. 42 C.F.R. §§ 424.505, 424.510. CMS will enroll a
supplier into the Medicare program only when the supplier “successfully completes the
enrollment process including, if applicable, a State survey and certification or
accreditation process ....” 42 C.F.R. § 424.510(a). During the enrollment process,
CMS may perform on-site reviews to verify the accuracy of a supplier’s enrollment
information, to determine the supplier’s compliance with Medicare enrollment
requirements, and to determine whether the supplier is no longer operational. 42 C.F.R.
§§ 424.510(d)(8), 424.517(a).

A Medicare supplier “must be operational to furnish Medicare covered items or services
before being granted Medicare billing privileges.” 42 C.F.R. § 424.510(d)(6). A
qualified supplier is “operational” when it has a:

qualified physical practice location, is open to the public for the purpose of
providing health care related services, is prepared to submit valid Medicare
claims, and is properly staffed, equipped, and stocked (as applicable based on the
type of facility or organization, provider or supplier specialty, or the services or
items being rendered), to furnish these items or services.

42 C.F.R. § 424.502.

2 CMS’s witness list identifies two witnesses. However, CMS failed to submit written
direct testimony for either witness. Pre-hearing Order §{ 8, 9. Because CMS neither
objected to this requirement nor requested that I waive the requirement, I will not accept
testimony from these witnesses. See Golden Living Center — Frankfort, DAB No. 2296,
at 4 (2009) (noting that the petitioner had not “made any request below to require
particular witnesses to present their direct testimony in person”); The Laurels at Forest
Glenn, DAB No. 2182, at 10 (2008) (noting that a party failed to object to the pre-hearing
order’s direct testimony requirement “‘at the time’). Although CMS submitted a witness
list, CMS also requested that I render a decision on the written record. CMS Br. at 1.
CMS may deny enrollment in the Medicare program where, upon on-site review, CMS
determines that the supplier is not operational or does not meet the enrollment
requirements to furnish Medicare covered items or services. 42 C.F.R. § 424.530(a)(5).

A. Issue

The issue in this case is whether CMS has a legitimate basis to deny Petitioner enrollment
as a supplier in the Medicare program based on a determination that Petitioner was not
operational under 42 C.F.R. § 424.530(a)(5).

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

CMS argues that Petitioner was properly denied enrollment in the Medicare program
because Petitioner was not operational to furnish Medicare covered items or services.
CMS alleges that on two occasions, October 19, 2011, at about 9:10 a.m., and March 5,
2012, at about 2:00 p.m., a TrailBlazer inspector attempted to complete an on-site visit of
Petitioner’s address but was unable to do so because Petitioner was not open. CMS Exs.
3, 8.

Petitioner does not dispute that the surveyors attempted to inspect its premises on these
dates and times. However, Petitioner argues that the October 19, 2011 visit was not
completed because the inspector did not “try hard enough to locate my business.” RH at
1. Further, Petitioner asserts that because his laboratory has only one employee, and Mr.
Arthur provides services for patients in their homes, TrailBlazer needs to schedule any
site visit with Petitioner in advance. RH at 1-2.

1, The March 5, 2012 site visit could not be conducted because Petitioner
was closed.

Petitioner does not dispute that Mr. Arthur was not at its office location at 2:00 p.m. on
March 5, 2012, when TrailBlazer’s inspector attempted a site visit. RH at 1; P. Br. at 3.
CMS submitted the inspector’s report of the attempted visit along with photographs of

the exterior portions of Petitioner’s offices (CMS Ex. 8) and Petitioner did not object to
this evidence or otherwise dispute its authenticity. Therefore, I find that Petitioner was
closed when the inspector attempted to conduct the March 5, 2012 site visit.

2. The March 5, 2012 site visit complied with CMS’s procedures.

Although Petitioner does not dispute that Mr. Arthur was not present when the inspector
appeared for a site visit on March 5, 2012, Petitioner asserts that Mr. Arthur was working

> My findings of fact and conclusions of law are set forth in italics and bold font.
with a TrailBlazer enrollment analyst, Robert Maurer, on completing Petitioner’s
enrollment application and that Mr. Maurer allegedly agreed that an inspector would call
Mr. Arthur before coming to the laboratory for the site visit. P. Br. at 3.

Petitioner offers no documentary or other evidence to support this agreement with Mr.
Maurer. Although the record contains evidence of communication between Mr. Maurer
and Mr. Arthur regarding missing and incomplete documentation on Petitioner’s
November 28, 2011 enrollment application, nowhere in this communication does Mr.
Maurer suggest that the site inspector will contact Petitioner before attempting a site visit.
CMS Ex. 6. To the contrary, Petitioner had been previously informed by TrailBlazer that
site inspectors “will not call — just show up,” a fact acknowledged by Petitioner in a letter
he wrote. CMS Ex. 7, at 60, 64.

The Medicare Program Integrity Manual (MPIM) outlines the policy and procedure for
conducting site visits for suppliers. The manual states that a contractor will conduct a site
visit for independent clinical laboratories “to ensure that the supplier is still in
compliance with CMS’s enrollment requirements,” and the visit will be conducted under
the general site visit procedures for suppliers and providers. MPIM, Ch. 15, §
15.4.2.2(D). Under those procedures, inspectors determine whether the supplier meets
four specified elements. MPIM, Ch. 15, § 15.19.2.2(B). The specific procedures for site
visits require the inspector to conduct the visit on weekdays during a facility’s posted
business hours. MPIM, Ch. 15, § 15.20.1(B). If the facility has no posted business
hours, site visits should occur between 9:00 a.m. and 5:00 p.m. Jd. “If, on the first
attempt the facility is closed but there are no obvious indications the facility is non-
operational, a second attempt on a different day during posted hours of operation should
be made.” Jd.

I find the March 5, 2012 site visit complied with the MPIM. The site inspector arrived on
a weekday between 9 a.m. and 5 p.m., entered the Mall, found Suite 204, and recorded
that the door was locked and that no-one was present or answered the door. CMS Ex. 8,
at 1. There were no posted business hours on the sign on the door. CMS Ex. 8, at 2. The
inspector’s report indicates that: the facility was not open; there were no personnel at the
facility; there were no customers at the facility; and the facility did not appear to be
operational. CMS Ex. 8, at 1. Based on the inspector’s findings, TrailBlazer properly
conducted a site visit and was not required to make a second attempt to inspect
Petitioner’s facility.4 See MPIM, Ch. 15, § 15.20.1(B).

+ CMS’s position is that TrailBlazer attempted to conduct two site visits of Petitioner’s
facility, on October 19, 2011 and March 5, 2012. CMS Br. at 7. However, Petitioner
disputes that the October 19, 2011 site visit was properly attempted. RH at 1. The
inspector’s notes and photographs related to this attempted visit (CMS Ex. 3), and Mr.
Arthur’s observations of the inspector as detailed in his reconsideration request (CMS Ex.
5), request for hearing, and brief, appear consistent. The inspector arrived at the Mall at
3. CMS has a legitimate basis to deny Petitioner enrollment in the
Medicare program because Petitioner was not operational pursuant to
42 CER § 424.530(a)(5).

As indicated previously, a Medicare supplier “must be operational to furnish Medicare
covered items or services before being granted Medicare billing privileges” and CMS
may conduct a site visit to determine whether a supplier is operational. 42 C.F.R.

§ 424.510(d)(6), (8). Under the site visit procedures in the MPIM for determining
whether a facility is operational, an inspector must observe whether: the facility is open;
personnel are at the facility; customers are at the facility (if applicable); and the facility
appears to be operational. MPIM, Ch. 15, § 15.19.2.2(B). Significantly, CMS has
directed its contractors that “[i]f any of the 4 elements . . . are not met, the enrollment
contractor will . .. deny the provider’s enrollment application” because it is not
operational under 42 C.F.R. § 424.530(a)(5)(i) or (ii). Zd. In the present case, the
inspector noted, during the March 5, 2012 site visit, that Petitioner’s facility was closed
and, based on observations from outside of Petitioner’s facility, determined that none of
the four elements were met. CMS Ex. 8, at 1. Consequently, TrailBlazer denied
Petitioner’s application.

Petitioner argues that if an inspector was able to conduct a site visit when he was present,
the inspector would see that Petitioner’s facility is operational. However, Petitioner
acknowledges that Mr. Arthur is Petitioner’s only employee and that Petitioner is
regularly out of the office during the work day because he is in the field. P. Br. at 2-3.
Thus, Petitioner has continually requested advance notice or scheduling of the site visit.
RH at 1-2; P. Br. at 3; CMS Ex. 5, at 1. Petitioner may believe that, because of the
unique nature of its approach to gathering blood samples for testing, it is not required to
have a representative physically present in its laboratory in order to be “operational”
within the meaning of the law. However, to be “operational,” a Medicare supplier must
be “open to the public for the purpose of providing health care related services .. . and
[be] properly staffed . . . to furnish these services.” 42 C.F.R. § 424.502. A supplier
cannot be “open to the public” nor “properly staffed” if a supplier’s business location is
closed and no staff is present to allow a site inspector access to the facility. Even if,
given the nature of its business, Petitioner might not be expected to have a customer

9:10 a.m., and determined that the posted hours of operation for the Mall indicated that it
would not open until 11 a.m. CMS Ex. 3, at 1,5. The inspector only took external
photographs of the Mall. CMS Ex. 3, at 3-5. There is no evidence that the inspector
attempted to enter the Mall and find Petitioner’s suite (CMS Ex. 7, at 60) and Petitioner
asserts that the inspector did not appear at its door. RH at 1; CMS Ex. 5, at 1. Because I
find that TrailBlazer’s March 5, 2012 attempted site visit was sufficient under the
procedures in the MPIM, I do not need to decide whether the October 19, 2011 attempted
site visit complied with those procedures.
presence, CMS still reasonably expects personnel to be present at the premises of that
business. See Suitable Homehealth Care, Inc., DAB CR2488, at 7 (2012).

TrailBlazer complied with CMS’s procedures and applied CMS’s policy to deny the
enrollment application. Although the MPIM is not binding on me, I agree with Suitable
Homehealth Care, Inc. that, based on the need to maintain the integrity of the Medicare
program, CMS’s policies are not unreasonable nor are they are inconsistent with the
regulatory scheme. Jd. Therefore, CMS had a legitimate basis to deny Petitioner’s
application under 42 C.F.R. § 424.530(a)(5).

II. Conclusion

Petitioner was not operational because it was not open and accessible to the site inspector
on March 5, 2012. CMS’s denial of Petitioner’s application to enroll as a supplier in the
Medicare program is affirmed.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Gursheel S. Dhillon, M.D.,
(O.L. File No.: H-11-40841-9),
Petitioner,

v.

The Inspector General.
Docket No. C-12-645
Decision No. CR2633

Date: September 28, 2012

DECISION

Petitioner, Gursheel S. Dhillon, M.D., appeals the determination by the Inspector General

(L.G.) to exclude him

rom participating in Medicare, Medicaid, and all federal health

care programs until he regains his Tennessee medical license and reinstatement from the

LG. LG. Ex. 1. Fort

ie reasons discussed below, I find that the I.G. is authorized to

exclude Petitioner pursuant to section 1128(b)(4) (42 U.S.C. § 1320a-7(b)) of the Social
Security Act (Act) and that the duration of his exclusion must be for a period that is at

least coterminous wit

the suspension of his Tennessee medical license.

I. Procedural Background

In a letter dated Marc

30, 2012, the I.G. notified Petitioner that he was excluded from

participation in Medicare, Medicaid, and all federal health care programs because the
Tennessee Board of Medical Examiners (State Board) suspended his license for reasons
bearing on his professional competence, professional performance, or financial integrity.

The letter explained t

at section 1128(b)(4) of the Act authorizes the exclusion.

Petitioner timely requested this review.
The parties have filed briefs (I.G. Br.; P. Br.). The L.G. also filed three exhibits (I.G. Exs.
1-3) and a reply brief. Petitioner did not object to the I.G.’s exhibits, and I admit into
evidence I.G. Exs. 1-3. Petitioner filed 19 exhibits (P. Exs. 1-7 and 9-20)! and three
unmarked exhibits. The I.G. objects to Petitioner’s proposed exhibits as irrelevant or
immaterial evidence pursuant to 42 C.F.R. § 1005.17(a) and (c) because Petitioner’s
proposed exhibits are offered in support of his impermissible collateral attack on the
underlying State Board’s actions. Pursuant to that section, I must exclude immaterial
evidence. | agree with the LG. that Petitioner’s exhibits are offered to collaterally attack
the underlying proceeding of the State Board. Therefore, I must exclude them as
immaterial, but they will remain a part of the case file for review purposes.

Petitioner believes an in-person hearing, including oral argument, is necessary to present
the complexities of his case and proposed two witnesses whom he claims would testify
about the State Board proceeding. I find the proposed testimony of these witnesses
would amount to a collateral attack on the State Board’s action, and such an attack is
prohibited by 42 C.F.R. § 1001.2007(d). Therefore, because I find that none of the
proposed testimony would affect the outcome here, an in-person hearing is not necessary.
l agree with the I.G. that this matter may now be resolved on the written record.

IL. Issue
The only issue in this case is whether the I.G. is authorized to exclude Petitioner pursuant
to section 1128(b)(4) of the Act. If I find that the LG. is so authorized, Petitioner’s
exclusion must continue at least until Petitioner regains his license to practice medicine in
Tennessee. Act § 1128(c)(3)(E) (42 U.S.C. § 1320a-7(c)(3)(E)); 42 C.F.R.
§ 1001.501(b).
Ill. Applicable Law
Section 1128(b)(4) of the Act states in relevant part:

(b) Permissive Exclusion — The Secretary may exclude the following

individuals and entities from participation in any Federal health care
program (as defined in section 1128B(f)):

* * * *

(4) License revocation or suspension.—Any individual or entity—

' Petitioner references the “Bill of Rights of Patients” in his brief and identifies it as his
Exhibit 8, but he did not provide a copy of that exhibit. P. Br. at 5.
(A) whose license to provide health care has been revoked or
suspended by any State licensing authority, or who otherwise lost
such a license or the right to apply for or renew such a license, for
reasons bearing on the individual’s or entity’s professional
competence, professional performance, or financial integrity... .

Any period of exclusion based on section 1128(b)(4) must not be less than the period
during which the individual’s or entity’s license to provide health care is revoked,
suspended, or surrendered. Act § 1128(c)(3)(E) (42 U.S.C. § 1320a-7(c)(3)(E)).

The regulations governing exclusions, at 42 C.F.R. § 1001.2007(d), limit the scope of an
appeal of an exclusion as follows:

§ 1001.2007 Appeal of exclusions.

* * * *

(d) When the exclusion is based on the existence of a criminal
conviction or a civil judgment imposing liability by Federal, State or local
court, a determination by another Government agency, or any other prior
determination where the facts were adjudicated and a final decision was
made, the basis for the underlying conviction, civil judgment or
determination is not reviewable and the individual or entity may not
collaterally attack it either on substantive or procedural grounds in this
appeal.

IV. Finding

The 1G. had a legal basis to exclude Petitioner from participation in
Medicare, Medicaid, and other federally funded health care programs
because the State Board suspended his medical license for reasons
bearing on his professional competence or performance.

The Act authorizes the Secretary of Health and Human Services to exclude from program
participation an individual whose license to provide health care has been suspended by
the state licensing authority for reasons bearing on the individual’s professional
competence, professional performance, or financial integrity. Act § 1128(b)(4)(A); 42
C.F.R. § 1001.501(a).

Initially, on March 19, 2008, the State Board entered an Amended Final Order which
placed Petitioner’s Tennessee medical license on probation. In that order, the State
Board determined that certain facts constituted grounds for disciplinary action against
Petitioner’s medical license for unprofessional, dishonorable, or unethical conduct
pursuant to Tennessee State law. Under the directives of the order, Petitioner was

required to submit to a Physician Assessment by the Center for Personalized Education
for Physicians and to enroll in, and successfully complete within the first six months of
probation, a three-day medical course at Case Western Reserve University. I.G. Ex. 3.

On January 26, 2011, the State Board issued a Final Order indefinitely suspending
Petitioner’s medical license, effective February 11, 2011, because Petitioner failed to
comply with conditions of the State Board’s earlier probation order. The State Board’s
Final Order specifically found facts constituting grounds for disciplinary action against
Petitioner’s license to practice as a medical doctor in Tennessee because Petitioner
engaged in unprofessional, dishonorable, or unethical conduct. I.G. Ex. 2. Both the
initial probation order and the final order indefinitely suspending Petitioner also provide
that the actions were taken to “protect the health, safety, and welfare” and were “in the
best interests and best safety for the welfare of the citizens of the State of Tennessee.”
LG. Ex. 3 at 4; 1.G. Ex. 2 at 3.

Petitioner contends his license suspension was because he did not comply with the State
Board’s earlier probation order and that this noncompliance is not a circumstance
prescribed in section 1128(b)(4). I disagree. The State Board in both the earlier
probation order and then the later final order suspending Petitioner specifically found that
Petitioner’s actions constituted grounds for disciplinary action against his license to
practice as a medical doctor in Tennessee because he engaged in unprofessional,
dishonorable, or unethical conduct. LG. Ex. 2 at 3; 1.G. Ex. 3 at 3. Specifically, the
originating basis of the State Board’s suspension was because Petitioner initiated a
treatment course for a patient without adequate documentation of risk stratification and
before proper consultations with related medical disciplines. IG. Ex. 3 at 3. The State
Board took action against Petitioner “in order to uphold the standards of care regarding
medical record-keeping and interaction between colleagues within the state and to protect
the health, safety, and welfare of such citizens.” Jd. at 4.

The orders of the State Board are now final and based on findings that Petitioner engaged
in unprofessional, dishonorable, or unethical conduct, which clearly relate to Petitioner’s
professional competence or performance. The fact that Petitioner did not comply with
the terms of the probation order that resulted in his license being indefinitely suspended is
the result of his disregard of the State Board’s directives. However, it does not negate the
State Board’s substantive findings in both actions that relate to Petitioner’s professional
competence or professional performance.

Petitioner’s arguments and exhibits attempt to further explain the circumstances
underlying the State Board’s actions and to show how they were prejudiced against
Petitioner. These arguments amount to a collateral attack on the State Board’s actions.
42 C.F.R. § 1001.2007(d) prohibits such collateral attacks and prohibits me from
considering them. See, e.g., John W. Foderick, M.D., DAB No. 1125 (1990) (holding
that the exclusion statute never intended that the party being excluded under section
1128(b)(4) could mount a collateral attack on the state procedure); Marvin L. Gibbs, Jr.,
M.D., DAB No. 2279, at 15-16 (2009) (‘“[T]he settled rule is that such collateral attacks
on the soundness or validity of a state action are impermissible in this forum.”).

Petitioner also contends that the I.G. violated his due process rights when his exclusion
became effective prior to the completion of this appeal process. P. Br. at 1. I do not have
the authority to address any constitutional challenges Petitioner presents, but the
applicable regulations do provide that an exclusion becomes effective 20 days from the
date of the I.G.’s notice letter. 42 C.F.R. § 1001.2002(b). Thus, the regulation permits
Petitioner’s exclusion to become effective prior to the completion of his appeal to me,
and I am bound by that regulation.

V. Conclusion

For the above reasons, I conclude that the I.G. properly excluded Petitioner from
participation in Medicare, Medicaid, and all other federal health care programs, for a
period that lasts at least as long as his medical license is suspended to provide health care
in Tennessee. Petitioner’s suspension related to his professional competence or
performance, and he is not permitted to collaterally attack that state action here.

/s/
Joseph Grow
Administrative Law Judge