Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Callie Hall Herpin
(OI 6-03-40336-9),
Petitioner
Vv.

The Inspector General.
Docket No. C-10-811
Decision No. CR2333

Date: March 3, 2011

DECISION

In this case, the parties agree that Petitioner, Callie Hall Herpin, was convicted of crimes
— health care fraud related to the delivery of items or services under the Medicare
program and a felony relating to the unlawful manufacture, distribution, prescription, or
dispensing of a controlled substance — that subject her to a minimum five-year exclusion
from participation in federal health care programs under sections 1128(a)(1) and
1128(a)(4) of the Social Security Act (Act). The Inspector General (IG) now proposes a
45-year exclusion, which Petitioner argues is excessive and unreasonable.

For the reasons set forth below, I find that a 45-year exclusion is reasonable.
I. Background

Petitioner was physician, licensed to practice medicine in the State of Texas, who was a
key player in a far-reaching scheme of drug dealing, money laundering, and Medicare
fraud. IG Ex. 3 at 8. On April 6, 2005, she pled guilty in federal district court for the
Southern District of Texas to one felony count of conspiracy to commit health care fraud
and violation of the anti-kickback statute (18 U.S.C. § 371), and to one felony count of
conspiracy to distribute and dispense, outside the scope of professional practice and not
for a legitimate purpose, more than 1,765,000 dosage units of hydrocodone and 2,500
gallons of promethazine with codeine (21 U.S.C. §§ 846, 841(a)(1) and (b)(1)(D)). IG
Ex. 3 at 1-2.

In a letter dated February 28, 2007, the IG advised Petitioner that, because of her
convictions, she was excluded from participation in Medicare, Medicaid, and all federal
health care programs for a minimum period of 50 years. IG Ex. 5. The letter explained
that sections 1128(a)(1) and 1128(a)(4) of the Act authorize the exclusion.

In a hearing request dated June 29, 2010, postmarked June 30, 2010, Petitioner sought
review. The IG moved to dismiss the appeal as untimely. In a ruling dated October 20,
2010, I denied the IG’s motion, finding that Petitioner had made a reasonable and
unrebutted showing that she had not been apprised of her appeal rights until June 2010.

During the course of this appeal, the IG reduced the period of exclusion from 50 years to
45 years. P. Ex. 3.

Each party submitted an initial brief (IG Br.; P. Br.). The IG also submitted five exhibits
(IG Exs. 1-5), and Petitioner submitted two exhibits (P. Exs. 1-2). After she received the
1G’s January 25, 2011 letter reducing the period of exclusion, Petitioner filed a
supplemental motion/brief (P. Supp. Br.), along with three exhibits, which have been
remarked as (P. Exs. 3-5). The IG filed a reply brief (IG Reply). In the absence of any
objection, I admit into evidence IG Exs. 1-5 and P. Exs. 1-5.

II. Issue

Because the parties agree that the IG has a basis upon which to exclude Petitioner from
program participation, the sole issue before me is whether the length of the exclusion (45
years) is reasonable. 42 C.F.R. § 1001.2007.

II. Discussion

Based on the aggravating factors and the one mitigating
factor presented in this case, a 45-year exclusion is
reasonable.'

Section 1128(a)(1) of the Act mandates that the Secretary of Health and Human Services
exclude an individual who has been convicted under federal or state law of a criminal

offense related to the delivery of an item or service under Medicare or a state health care
program. 42 C.F.R. § 1001.101(a). Section 1128(a)(4) requires the Secretary to exclude

' [make this one finding of fact/conclusion of law.
any individual or entity convicted of a felony criminal offense “relating to the unlawful
manufacture, distribution, prescription, or dispensing of a controlled substance.”

Petitioner concedes that she was convicted and is subject to exclusion under sections
1128(a)(1) and 1128(a)(4). P. Br. at 1.

An exclusion brought under either section 1128(a)(1) or 1128(a)(4) must be for a
minimum period of five years. Act § 1128(c)(3)(B); 42 C.F.R. §§ 1001.102(a);
1001.2007(a)(2). Federal regulations set forth criteria for lengthening exclusions beyond
the five-year minimum. 42 C.F.R. § 1001.102(b). Evidence that does not pertain to one
of the aggravating or mitigating factors listed in the regulation may not be used to decide
whether an exclusion of a particular length is reasonable.

Among the factors that may serve as a basis for lengthening the period of exclusion are
the three that the IG relies on in this case: 1) the acts resulting in the conviction, or
similar acts, caused a government program or another entity financial losses of $5,000 or
more; 2) the acts that resulted in the conviction, or similar acts, were committed over a
period of one year or more; and 3) the sentence imposed by the court included
incarceration. 42 C.F.R. § 1001.102(b)(1), (2), and (5). The presence of an aggravating
factor or factors, not offset by any mitigating factor or factors, justifies lengthening the
mandatory period of exclusion.

Program financial loss: The district court ordered Petitioner to pay the Medicare program
a whopping $12,926,680 in restitution. IG Ex. 3 at 6-7. Based on this, the IG argues that
her crimes caused the Medicare program financial losses many times greater than the
$5,000 threshold for aggravation. Petitioner objects to the IG’s reliance on the court-
ordered restitution. Pointing to her plea agreement, she notes that she specifically
admitted to writing just 920 certificates of medical necessity (CMN)* for motorized
wheelchairs and personally realized “only” $184,000 in cash proceeds. P. Br. at 1 (citing
CMS Ex. 2 at 11). In fact, in her plea agreement, Petitioner admitted to writing no fewer
than 920 CMNs for motorized wheelchairs and prescriptions and receiving no less than
$184,000, which does not preclude her having generated more fraudulent CMNs and
realized greater sums. IG Ex. 2 at 11. At the time of her crimes, Medicare was paying
approximately $4,216 for a motorized wheelchair, which means that, by any reckoning,
her crimes cost the Medicare program significantly more than the $184,000 she admits
she pocketed.

In any event, aggravation is not triggered by the amount of money netted by Petitioner;
the standard is loss to the program. Restitution has long been considered a reasonable
measure of program losses. See Jason Hollady, M.D., DAB No. 1855 (2002).

> Medicare covers durable medical equipment, like motorized wheelchairs, only if
justified by a CMN signed by a medical doctor or other authorized provider.
If anything, the amount of restitution ordered by the court grossly underestimates the

program losses. Petitioner was t

medical license and her Medicare

could not have occurred. In her

medical equipment used the frau
Etta Williams, generated to bill t!
11. She should be held accountal

attributable to her participation in

of her sentencing, “None of this
fraud] would have been possible
of illegality ....” IG Ex. 3 at8.
losses to Medicare underscores t
program.

In any event, whether the figure i
the Medicare program significant

for aggravation. The Departmen
substantially greater than the stat

e lynch-pin in a vast scheme to defraud. But for her
provider enrollment number, the fraudulent billing

plea agreement, she admits that suppliers of durable
dulent CMNs that she and her employee/co-conspirator,
he Medicare program more than $30 million. IG Ex. 2 at
ble for all of those program losses since they are directly
the fraud. IG Ex. 2. As Judge Hittner said at the time
rug distribution, money laundering, and Medicare
without a licensed physician at the apex of the pyramid
That one corrupt physician could cause such significant
e importance of keeping the unscrupulous out of the

is $12,926,680 or $30,000,000, Petitioner’s crime caused
financial losses, far in excess of the $5,000 threshold
tal Appeals Board has characterized amounts

utory standard as an “exceptionally aggravating factor”

that is entitled to significant weight. Jeremy Robinson, DAB No. 1905 (2004); Donald A.

Burstein, PhD., DAB No. 1865 (

2003). I agree and consider that the substantial program

loss here more than justifies a significant increase in the period of exclusion.

Length of criminal conduct. The IG maintains that the acts that resulted in Petitioner’s

conviction and similar acts were

challenges this assertion, claiming t
and she closed it in September 2003. P. Br.

Petitioner’s crimes were not limi

The counts she was convicted on sa’
combine, conspire, confederate, an

committe
at she

over a period of at least one year. Petitioner
did not open her office until December 2002,
atl.

ited to what occurred within the confines of her office.
y that she “did knowingly, intentionally, and willfully
agree” with her co-conspirators to violate the law.

IG Ex. | at 5. The fraud conspiracy ran from on or about October 2002 until on or about

October 2003. IG Ex. 1 at 5. The

December 2005. IG Ex. | at 16.

furtherance of the conspiracy, whic!

rug conspiracy ran from October 2002 until
e indictment lists multiple overt acts committed in
include obtaining, on July 19, 2002, a County

T

Assumed Name Certificate for her business, CH Medical Consultants, PA., and thereafter
opening several bank accounts in October 2002. IG Ex. | at 8,21. The final two overt

acts listed under the drug count im

controlled substances that was in

volved: 1) her writing a bogus prescription for
the possession of one of her co-conspirators on October

22, 2002; and 2) a prescription for controlled substances filled under her DEA (Drug
Enforcement Administration) authorization number on November 18, 2003. IG Ex. | at

32.
Thus, Petitioner pled guilty to criminal activity that lasted for more than one year, and the
IG appropriately considered the duration of the crimes an aggravating circumstance.

Incarceration. The sentence imposed by the criminal court included a lengthy period of
incarceration — ten years. IG Ex. 3 at 3. The IG appropriately considered this in
letermining the period of exclusion.

These aggravating factors show that Petitioner poses a significant threat to program
integrity. She engaged in an enormous fraud for at least a year, costing the Medicare
program millions of dollars. Her actions were egregious enough to merit a substantial
period of incarceration. Based on these factors, I find that the IG’s originally proposed
50-year exclusion fell within a reasonable range. I now consider the one mitigating
actor presented in this case.

Mitigating factors. The regulations consider mitigating just three factors: 1) a petitioner
was convicted of three or fewer misdemeanor offenses and the resulting financial loss to
the program was less than $1,500; 2) the record in the criminal proceedings demonstrates
that a petitioner had a mental, physical, or emotional condition that reduced her
culpability; and 3) a petitioner’s cooperation with federal or state officials resulted in
others being convicted or excluded, or additional cases being investigated, or a civil
money penalty being imposed. 42 C.F.R. § 1001.102(c). Characterizing the mitigating
factor as “‘in the nature of an affirmative defense,” the Board has ruled that Petitioner has
the burden of proving any mitigating factor by a preponderance of the evidence. Barry
D. Garfinkel, M.D., DAB No. 1572 at 8 (1996).

The parties agree that Petitioner cooperated with law enforcement and that her
cooperation led to the conviction in state court of one of her co-conspirators. Based on
her cooperation, the IG reduced Petitioner’s period of exclusion from 50 years to 45
years. P. Ex. 3; IG Reply at 3. Petitioner complains that the reduction is meaningless,
because either period of exclusion (45 years or 50 years) is effectively a lifetime
exclusion. This may be true, but it does not make the period of exclusion unreasonable.
The IG should appropriately offset the period of exclusion based on Petitioner’s
cooperation with law enforcement, but that factor does not have greater impact simply
because her underlying crime was so substantial. I consider it reasonable for the IG to
reduce an exclusion by five years where, as here, the individual cooperates with law
enforcement, leading to the conviction of a co-conspirator.

Petitioner also points out that the sentencing court recommended that, during her
incarceration, she participate in the prison’s comprehensive residential drug abuse
treatment program, “stemming from [her] drug abuse which occurred during the offense.”
IG Ex. 3 at 3; P. Ex. 4. From this, she suggests reduced culpability as a mitigating
circumstance. 42 C.F.R. § 1001.102(c)(2). But to establish a mitigating factor under 42
C.F.R. § 1001.102(c)(2), Petitioner must show that the criminal court specifically
determined “that a mental, emotional, or physical condition reduced culpability for the
crime.” Joseph M. Ruske, Jr., R.Ph., DAB No. 1851 at 6 (2002) (citing Frank R.
Pennington, M.D., DAB No. 1786 at 6 (2001)). Petitioner points to no portion of the
criminal record suggesting that the court considered that Petitioner’s drug abuse made her
less responsible for her crime. In fact, Judge Hittner’s comments at sentencing leave no
doubt that he held her fully culpable for her crimes. IG Ex. 3 at 8-9. (“You took
probably the most valued and respected graduate degree in our society, the M.D. degree,
and deposited it in the middle of schemes of drug distribution, money laundering and
Medicare fraud. You not only cheated the government, but also committed a disservice
to citizens of your own community. ... I consider you a disgrace to every physician in
this country who adheres to the ethics of the medical profession and to the Hippocratic
oath.”).

Additional defenses. Petitioner raises some additional arguments. She cites

§ 1001.102(d), which provides that an individual with a prior conviction must be
excluded for a minimum period of ten years, and argues that, as a first-time offender, she
is entitled to a shorter period of exclusion than a repeat offender. But Petitioner’s
underlying premise is faulty. Ten years is simply the minimum period of exclusion for
repeat offenders. Based on aggravating and mitigating circumstances, the actual period
of exclusion could be considerably longer. An individual with prior convictions whose
case presented aggravating factors similar to those presented here would unquestionably
have been subjected to a longer period of exclusion than Petitioner’s.

Petitioner also complains about the effective date of her exclusion. As a matter of law, an
exclusion becomes effective 20 days after the date of the IG’s notice of exclusion. 42
C.F.R. § 1001.2002. An administrative law judge has no authority to review the timing
of the IG’s determination to impose an exclusion or to alter retroactively the date of the
imposition of the exclusion. Tanya A. Chuoke, R.N., DAB No. 1721 (2000); Samuel W.
Chang, M.D., DAB No. 1198 (1990).

IV. Conclusion

So long as the period of exclusion is within a reasonable range, based on demonstrated
criteria, I have no authority to change it. Joann Fletcher Cash, DAB No. 1725 at 17
(2000) (citing 57 Fed. Reg. 3298, 3321 (1992)). The record in this case establishes that
Petitioner is an exceptionally untrustworthy individual who presents a significant risk to
the integrity of health care programs. The staggering financial loss she caused the
Medicare program greatly exceeds the regulatory threshold for aggravation. Her crime
continued for at least a year, and was serious enough to earn her ten years in prison.
Because she cooperated with law enforcement, the IG reasonably reduced her period of
exclusion by five years. Nevertheless, based on the totality of the aggravating and
mitigating factors, I find that the 45-year exclusion falls within a reasonable range.

/s/

Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Shannon Donnell McEnany, a/k/a Shannon Donnell Smith,
Petitioner
Vv.
The Inspector General.
Docket No. C-11-35
Decision No. CR2332

Date: March 3, 2011

DECISION

This matter is before me in review of the Inspector General’s (I.G.’s) determination to
exclude Petitioner pro se Shannon Donnell McEnany from participation in Medicare,
Medicaid, and all other federal health care programs for a period of five years. The LG.’s
determination to exclude Petitioner is based on the terms of section 1128(a)(3) of the
Social Security Act (Act), 42 U.S.C. § 1320a-7(a)(3). As the facts of this case mandate
the imposition of a five-year exclusion, I grant the 1.G.’s Motion for Summary
Disposition.

I. Procedural Background

Petitioner Shannon Donnell McEnany was a registered pharmacy technician in the state
of Iowa and in 2009 worked at Walgreens Pharmacy. On July 30, 2009, Petitioner was
charged by Information in Iowa District Court for Polk County, Iowa with one count of
obtaining or attempting to obtain a prescription drug by fraud, deceit, misrepresentation,
or subterfuge in violation of IOWA CODE §§ 124.401(1)(c)(8), 155A.24, and 155A.23.
Represented by counsel, on September 14, 2009 Petitioner entered a plea of guilty to the
charge which plea was accepted by the District Court. Petitioner appeared with counsel
before the District Court on October 26, 2009, and the sentencing judge entered an order
of deferred judgment with supervised probation for five years.

As required by the terms of section 1128(a) of the Act, 42 U.S.C. § 1320a-7(a), the I.G.
began the process of excluding Petitioner from participation in Medicare, Medicaid, and
all other federal health care programs. On September 30, 2010 the I.G. notified Petitioner
that she was being excluded pursuant to the terms of section 1128(a)(3) of the Act for the
mandatory minimum period of five years.

Acting pro se, Petitioner timely sought review of the I.G.’s action by letter dated October
10, 2010. I convened a telephonic prehearing conference on November 10, 2010,
pursuant to 42 C.F.R. § 1005.6, in order to discuss the issues presented by the case and
procedures for addressing those issues. By Order of November 10, 2010 I established a
schedule for the submission of documents and briefs. All briefing is now complete, and
the record in this case closed on February 11, 2011.

The evidentiary record on which I decide the issues before me comprises eight exhibits.
The I.G. proffered six exhibits marked I.G. Exhibits 1 through 6 (LG. Exs. 1 through 6).
Petitioner proffered two unmarked exhibits which I have designated as Petitioner’s
Exhibits 1 and 2 (P. Exs. 1 and 2). All proffered exhibits are admitted without objection.

II. Issues

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

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

2. Whether the length of the proposed period of exclusion is unreasonable.

The controlling authorities require that both issues be resolved in favor of the I.G.’s
position. Because her predicate conviction has been established, there is a basis for
Petitioner’s exclusion pursuant to section 1128(a)(3) of the Act. A five-year term of
exclusion is the minimum established by section 1128(c)(3)B) of the Act, 42 U.S.C.
§ 1320a-7(c)(3)(B).

III. Controlling Statutes and Regulations
Section 1128(a)(3) of the Act, 42 U.S.C. § 1320a-7(a)(3), requires, in pertinent part, the

mandatory exclusion from participation in Medicare, Medicaid, and all other federal
health care programs of any individual or entity convicted of a criminal offense under
federal or state law, which occurred after August 21, 1996, and relates to the delivery of a
health care item or service under title XVIII of the Act (the Medicare program) or any
state health care program, and consists of a felony relating to fraud, theft, embezzlement,
breach of fiduciary responsibility, or other financial misconduct. The terms of section
1128(a)(3) are restated in similar language at 42 C.F.R.

§ 1001.101(c)(1). The Act defines “convicted” to include, among other things, “when a
plea of guilty . . . by the individual has been accepted by a Federal, State, or local court.”
Act § 1128 (i)(3); 42 C.F.R. § 1001.2. An exclusion based on section 1128(a)(3) is
mandatory and the I.G. must impose it for a minimum period of five years. Act

§ 1128(c)(3)(B); 42 U.S.C. § 1320a-7(c)(3)(B); 42 C.F.R. § 1001.102(a).

The standard of proof is a preponderance of the evidence and there may be no collateral
attack of the conviction that is the basis for the exclusion. 42 C.F.R. § 1001.2007(c) and
(d). Petitioner bears the burden of proof and persuasion on any affirmative defenses or
mitigating factors and the LG. bears the burden on all other issues. 42 C.F.R.

§ 1005.15(b) and (c).

IV. Findings of Fact and Conclusions of Law

The following findings of fact and conclusions of law are based upon the uncontested and
undisputed assertions of fact in the pleadings and the exhibits admitted.

A. Findings of Fact

1. On September 14, 2009, in the Iowa District Court for Polk County, Iowa, Petitioner
Shannon Donnell McEnany, appeared with counsel and pleaded guilty to one felony
charge of Obtaining or Attempting to Obtain a Prescription Drug by Fraud, Deceit,
Misrepresentation or Subterfuge, in violation of IOWA CODE §§ -124.401(1)(c)(8),
155A.24, and 155A.23. LG. Ex. 2, at 1.

2. Final adjudication of guilt and judgment of conviction based on that plea of guilty
were imposed on Petitioner in the District Court on September 14, 2009. I.G. Ex. 2, at 1-
2.

3. The felony criminal offense to which Petitioner pleaded guilty was based on conduct
relating to fraud, was in connection with the delivery of a health care item or service, and
occurred after August 21, 1996. I.G. Exs. 2, at 1; 5, at 3-4; 6.

4. The LG. notified Petitioner by letter dated September 30, 2010 that she was to be
excluded from participation in Medicare, Medicaid, and all federal health care programs
for the mandatory minimum period of five years, pursuant to section 1128(a)(3) of the
Act. LG. Ex. 1.
5. Acting pro se, Petitioner perfected her appeal from the I.G.’s action by filing a timely
request for hearing by letter dated October 10, 2010.

B. Conclusions of Law

6. By reason of Petitioner’s conviction, a basis exists for the I.G.’s exercise of authority,
pursuant to section 1128(a)(3) of the Act, 42 U.S.C. § 1320a-7(a)(3), to exclude
Petitioner from participation in Medicare, Medicaid, and all other federal health care
programs.

7. By reason of her conviction, Petitioner was subject to, and the I.G. was required to
impose, the mandatory minimum five-year period of exclusion from Medicare, Medicaid,
and all other federal health care programs. Act § 1128(c)(3)(B), 42 U.S.C. § 1320a-
7(c)(3)(B); 42 C.F.R. § 1001.102(a).

8. Because the five-year period of Petitioner’s exclusion is the mandatory minimum
period provided by law, it is therefore not unreasonable. Act § 1128(c)(3)(B), 42 U.S.C.
§ 1320a-7(c)(3)(B); 42 C.F.R. §§ 1001.102(a) and 1001.2007(a)(2).

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

V. Discussion

The four essential elements necessary to support an exclusion based on section
1128(a)(3) of the Act are: (1) the individual to be excluded must have been convicted of
a felony offense; (2) the felony offense must have been based on conduct relating to
fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial
misconduct; (3) the felony offense must have been for conduct in connection with the
delivery of a health care item or service, or the felony offense must have been with
respect to any act or omission in a health care program operated by or financed in whole
or in part by any federal, state, or local government agency; and (4) the felonious conduct
must have occurred after August 21, 1996. Andrew D. Goddard, DAB No. 2032 (2006);
Kenneth M. Behr, DAB No. 1997 (2005); Erik D. DeSimone, R.Ph., DAB No. 1932
(2004); Jeremy Robinson, DAB No. 1905 (2004); Breton Lee Morgan, M.D., DAB
CR1913 (2009); Wendi Mueller, DAB CR1478 (2006); Theresa A. Bass, DAB CR1397
(2006); Michael Patrick Fryman, DAB CR1261 (2004); Golden G. Higgwe, D.P.M.,
DAB CR1229 (2004); Thomas A. Oswald, R.Ph., DAB CR1216 (2004); Katherine Marie
Nielsen, DAB CR1181 (2004).

Petitioner does not deny that she was convicted of a felony offense. Petitioner does not
dispute the relation of the conduct underlying her conviction to fraud or theft and its
nexus to the delivery of health care items or services. Petitioner does not dispute that the
elonious conduct occurred after August 21, 1996. In summary, Petitioner does not argue
that her felony conviction is insufficient to satisfy the four essential elements set out
above. Request for Hearing (RFH) at 1; Petitioner’s Answer Brief (P. Ans. Br.).
Moreover, those four essential elements are demonstrated in the District Court records
before me. I.G. Exs. 2, 3, 6. Therefore, as Petitioner has conceded the existence of all
our of these essential elements, I need not discuss them at length in this decision.

Petitioner admits here what she confessed in District Court: while working as a
pharmacy technician at Walgreens Pharmacy she obtained a prescription drug by fraud
and theft, and diverted the drug for her own use. She admits that she fraudulently ordered
the prescription drug Lortab, a controlled substance, from a vendor while employed at the
pharmacy. RFH at 1; P. Ans. Br.; 1.G. Ex. 2. Petitioner’s actions resulted in her being
charged and subsequently convicted of a Class C Felony related to obtaining a controlled
substance by fraud. Petitioner’s conviction is sufficient to support an exclusion under
section 1128(a)(3). The requisite nexus between Petitioner’s criminal offense and the
delivery of a health care item or service has been well-established. Theft of drugs by an
employee from an employer constitutes theft in connection with the delivery of a health
care item. Kevin J. Bowers, DAB No. 2143 (2008); Erick D. DeSimone, R. Ph., DAB
No. 1932, at 3; Andrew D. Goddard, DAB No. 2032. The actions underlying Petitioner’s
conviction occurred after August 21, 1996 (from May 2009 through July 7, 2009). LG.
Ex. 6.

Although Petitioner does not challenge the factual and legal bases for her exclusion, she
asks for a “second chance.” Petitioner points out that her exclusion will impede her
ability to work in certain occupations, and will thus severely limit her ability to meet the
terms of the Stipulation and Consent Order she entered into with the lowa Board of
Pharmacy (Pharmacy Board) in order to settle a disciplinary proceeding before the
Pharmacy Board which was based on the same actions which are the basis of the I.G.’s
exclusion. P. Ans. Br.; P. Ex. 2,48. I cannot provide Petitioner with the relief she seeks
as the exclusion is statutorily-mandated and neither the LG. nor I have been granted the
authority or discretion to do as Petitioner asks.

Last, Petitioner discusses the alleged ineffectiveness of the attorney she retained in the
criminal proceeding, and complains of other purported actions related to her criminal trial
and conviction. I cannot look behind Petitioner’s criminal conviction and the
representation she received during her criminal proceedings — federal regulations
explicitly preclude such collateral attacks on a conviction. 42 C.F.R. § 1001.2007(d);
Joann Fletcher Cash, DAB No. 1725 (2000); Chander Kachoria, R.Ph., DAB No. 1380,
at 8 (1993).

The five-year period of exclusion proposed in this case is the minimum required by
section 1128(c)(3)(B) of the Act. As a matter of law, it is not unreasonable, and neither
the Departmental Appeals Board nor I can reduce it. 42 C.F.R. § 1001.2007(a)(2); Mark
K. Mileski, DAB No. 1945 (2004); Salvacion Lee, M.D., DAB No. 1850 (2002).

Resolution of a case by summary disposition is particularly fitting when settled law can
be applied to undisputed material facts. Michael J. Rosen, M.D., DAB No. 2096; Thelma
Walley, DAB No. 1367. Summary disposition is authorized by the terms of 42 C.F.R.

§ 1005.4(b)(12). This forum looks to FED. R. CIV. P. 56 for guidance in applying that
regulation. Robert C. Greenwood, DAB No. 1423 (1993). The material facts in this case
are undisputed and unambiguous. They support summary disposition as a matter of
settled law. The Decision issues accordingly.

VII. Conclusion

For the reasons set forth above, the 1.G.’s Motion for Summary Disposition should be,
and it is, GRANTED. The I.G’s exclusion of Petitioner Shannon Donnell McEnany from
participation in Medicare, Medicaid, and all other federal health care programs for a
period of five years, pursuant to the terms of section 1128(a)(3) of the Act, is sustained.

/s/
Richard J. Smith
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Fort Madison Health Center,
(CCN: 16-5227),

Petitioner
Vv.
Centers for Medicare & Medicaid Services.
Docket No. C-10-783
Decision No. CR2331

Date: March 3, 2011

DECISION

Petitioner, Fort Madison Health Center challenges the determination of the Centers for
Medicare & Medicaid Services (CMS) that it was not in substantial compliance with
program participation requirements. Petitioner also challenges CMS’s imposition of a
per instance civil money penalty (PICMP) of $5,000. For the reasons discussed below, I
sustain CMS’s imposition of the $5,000 PICMP. I sustain also a two-year prohibition on
Petitioner’s ability to offer a nurse aide training and competency evaluation program
(NATCEP) and competency evaluation program (CEP).

I. Background

Petitioner is a long-term care facility located in Fort Madison, Iowa. Petitioner
participates in the Medicare and Medicaid programs. The Iowa Department of
Inspections and Appeals (state agency) completed a complaint investigation survey of
Petitioner’s facility on April 2, 2010. The survey cited a deficiency under 42 C.F.R. §
483.25(h) (Tag F323, scope and severity level J).'! By letter dated April 19, 2010, CMS
notified Petitioner that it was imposing the $5,000 PICMP and that federal law prohibited

' A scope and severity level of J denotes an isolated deficiency that constitutes
immediate jeopardy to resident health and safety. State Operations Manual (SOM),
section 7400E; 42 C.F.R. §§ 488.301, 488.408.
2

the approval of a NATCEP or CEP where a facility has been assessed a CMP of not less
than $5,000. Petitioner requested a hearing by letter dated June 18, 2010.

CMS filed a motion for summary disposition (CMS Br.) on July 21, 2010, accompanied
by CMS Exhibits (CMS Exs.) | and 2.” Petitioner filed an answer (P. Br.) on August 18,
2010, accompanied by Petitioner’s Exhibits (P. Exs.) 1-3. In the absence of objection, I
admit CMS Exs. | and 2 and P. Exs. 1-3.

II. Issues
The issues before me are:

1. Whether Petitioner was in substantial compliance with participation
requirements in the Medicare and Medicaid programs; and

2. Whether the remedies imposed are reasonable.
II. Controlling Law

Sections 1819 and 1919 of the Social Security Act (Act) and the regulations at 42 C.F.R.
Part 483 govern Petitioner’s participation in Medicare and Medicaid. Sections 1819 and
1919 of the Act provide the Secretary of Health and Human Services (Secretary) with
authority to impose remedies, including CMPs, against long-term care facilities for
failure to comply with participation requirements.

Regulations define the term “substantial compliance” to mean”

[A] level of compliance with the requirements of participation such that any
identified deficiencies pose no greater risk to resident health or safety than the
potential for causing minimal harm.

42 C.F.R. § 488.301.

The Secretary has delegated to CMS and the states the authority to impose remedies
against long-term care facilities not complying substantially with federal participation
requirements. The applicable regulations at 42 C.F.R. Part 488 provide that state survey
agencies, on behalf of CMS, may survey facilities participating in Medicare and
Medicaid to ascertain whether the facilities are complying with participation
requirements. 42 C.F.R. §§ 488.10-488.28. The regulations contain special survey
conditions for long-term care facilities. 42 C.F.R. §§ 488.300-488.335. Under Part 488,
a state or CMS may impose a CMP against a long-term care facility if a state survey
agency ascertains that the facility is not complying substantially with participation

2 CMS filed a motion to dismiss on July 6, 2010. Petitioner responded to the motion on
July 19, 2010. I do not address that motion here.
3

requirements. 42 C.F.R. §§ 488.406, 488.408, and 488.430. The CMP may begin to
accrue as early as the date that the facility was first substantially out of compliance or
may continue to accrue until the date the facility achieves substantial compliance, or until
CMS terminates the facility’s provider agreement. 42 C.F.R. § 488.440.

The regulations specify that if a CMP is imposed against a facility based on an instance
of non-compliance, the CMP will be in the range of $1,000 to $10,000 per instance. 42
C.F.R. § 488.438(a)(2). When a CMP is imposed against a facility on a per-day basis, it
must fall into one of two broad ranges of penalties. 42 C.F.R. §§ 488.408, 488.438. The
upper range of CMP, from $3,050 per day to $10,000 per day, is reserved for deficiencies
that constitute immediate jeopardy to a facility’s residents and, in some circumstances,
for repeated deficiencies. 42 C.F.R. § 488.438(a)(1)(i), (d)(2). The lower range of CMP,
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 cause no actual harm,
but have the potential for causing more than minimal harm. 42 C.F.R. §
488.438(a)(1)(ii). “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 CFR. § 488.301.

Sections 1819(f)(2)(B) and 1919(f)(2)(B) of the Act prohibit approval of a
NATCEP/CEP if within the last two years the facility has been subject to, among other
things, an extended or partial extended survey; imposition of a CMP of not less than
$5,000; or imposition of a denial of payment for new admissions.

A facility may challenge the scope and severity that CMS cites only if a successful
challenge would affect the range of CMP amounts that CMS imposed or would affect the
facility’s NATCEP. 42 C.F.R. § 498.3(b)(14), (d)(10)(i). CMS’s determination as to the
scope and severity of non-compliance “must be upheld unless it is clearly erroneous.” 42
C.F.R. § 498.60(c)(2). This includes CMS’s finding of immediate jeopardy. Woodstock
Care Center, DAB No. 1726, at 9 (2000), aff'd, Woodstock Care Center v. U.S.
Department of Health and Human Services, 363 F.3d 583 (6th Cir. 2003).

The Departmental Appeals Board (Board) has long held that the net effect of these
regulations is that a provider has no right to challenge the scope and severity assigned to
a non-compliance finding except in the situation where that finding is the basis for an
immediate jeopardy determination. See, e.g., Ridge Terrace, DAB No. 1834 (2002);
Koester Pavilion, DAB No. 1750 (2000).

CMS has moved for summary disposition. An appellate panel of the Board recited the
standard for summary disposition or judgment in the case of Senior Rehabilitation and
Skilled Nursing Center, DAB No. 2300, at 3 (2010), aff’d, Senior Rehabilitation and
Skilled Nursing Center v. Health & Human Services, No. 10-60241 (5th Cir. Dec. 20,
2010). It stated that summary judgment is appropriate where the record shows that there
is no genuine issue as to any material fact and the moving party is entitled to judgment as
a matter of law. The party moving for summary judgment bears the initial burden of
showing that there are no issues of material fact for trial and that it is entitled to judgment
as a matter of law. To defeat an adequately supported motion, the non-moving party may
not rely on the denials in its pleadings or briefs, but must furnish evidence of a dispute
concerning a material fact — a fact that, if proven, would affect the outcome of the case
under governing law. In determining whether there are genuine issues of material fact,
the reviewer must view the evidence in the light most favorable to the non-moving party,
drawing all reasonable inferences in that party’s favor. In Holy Cross Village at Notre
Dame, Inc., DAB No. 2291, at 5 (2009), the Board stated that the role of an
Administrative Law Judge (ALJ) in deciding a summary judgment motion differs from
the ALJ’s role in resolving a case after hearing, and that in the context of a motion for
summary judgment, an ALJ should not assess credibility or evaluate the weight of
conflicting evidence. Below, I find there are no material facts in dispute precluding
summary disposition.

IV. Discussion

I make numbered findings of fact and conclusions of law (Findings) to support my
decision. I set them forth below as separate headings, in bold and italic type, and discuss
each in detail.

1. Petitioner failed to comply substantially with the participation requirement at
42 C.F.R. § 483.25(h).

42 C.F.R. § 483.25 requires that:

Each resident must receive and the facility must provide the necessary care and
services to attain or maintain the highest practicable physical, mental, and
psychosocial well-being, in accordance with the comprehensive assessment and
plan of care.

* Petitioner argues that CMS’s finding of immediate jeopardy is clearly erroneous. I do
not have the authority to consider the scope and severity of the deficiency in this case, as
CMS imposed only a PICMP and the range of CMP will not be affected. Although CMS
also prohibited Petitioner from offering a NATCEP, the NATCEP is based on imposition
of the PICMP.
5
The subsection at 42 C.F.R. § 483.25(h) references accidents* and requires that:

(h) Accidents. The facility must ensure that —

(1) The resident environment remains as free of accident hazards as is
possible; and

(2) Each resident receives adequate supervision and assistance devices to
prevent accidents.

In the case of Meridian Nursing Center, DAB No. 2265, at 3 (2009), the Board described
the requirements of this subsection, stating:

Section 483.25(h)(1) requires that a facility address foreseeable risks of harm from
accidents “by identifying and removing hazards, where possible, or where the
hazard is unavoidable because of other resident needs, managing the hazard by
reducing the risk of accident to the extent possible.” Maine Veterans’ Home —
Scarborough, DAB No. 1975, at 10 (2005). Section 483.25(h)(2) requires that a
facility take “all reasonable steps to ensure that a resident receives supervision and
assistance devices that meet his or her assessed needs and mitigate foreseeable
risks of harm from accidents.” Briarwood Nursing Center, DAB No. 2115, at 11
(2007), citing Woodstock Care Ctr. v. Thompson, DAB No. 1726 (2000) (facility
must take “all reasonable precautions against residents’ accidents”), aff'd,
Woodstock Care Ctr. v. Thompson, 363 F.3d 583 (6" Cir. 2003).
A resident’s “environment” is to be broadly construed and encompasses the situation in
which a facility transports a resident under its care in a van. The van is then the
resident’s “environment” and the regulation at 42 C.F.R. § 483.25(h) applies. SunBridge
Care and Rehabilitation for Pembroke, DAB No. 2170 (2008); Liberty Nursing and
Rehabilitation Center — Mecklenberg County, DAB No. 2095 (2007).

The violations of 42 C.F.R. § 483.25(h) that CMS asserts in this case involve Petitioner’s
failure to provide adequate supervision to Resident 1, who, following a medical
appointment on March 23, 2010, was left unattended in a transport van for approximately
two hours. CMS then cites an incident related to Residents 2 and 3, where it asserts that
Petitioner failed to properly implement a system that was designed to prevent a repeat of
the incident with Resident 1 (a sign-out board to document when residents left and then

+ The Board references the SOM in defining an accident as:

“an unexpected, unintended event that can cause a resident bodily injury,”
excluding “adverse outcomes associated as a direct consequence of treatment or
care (e.g., drug side effects or reactions).” SOM Appendix PP, Guidance to
Surveyors, Part 2, SOP 483.25 Quality of Care (Rev. 274, June 1995 (SOM
Guidance).

Woodstock Care Center, DAB No. 1726, at 4 (2000).
6

returned to facility premises). State agency surveyors found that Residents 2 and 3 were
out of the facility for medical appointments on March 31, 2010, but their names were not
on the sign-out board so as to indicate that they had left the facility. CMS argues that this
failure to document that Residents 2 and 3 were out of the facility supports its
determination that the deficiency assessed was system-wide. Petitioner argues in
response that any acts or omissions by the van driver who left Resident 1 in the van were
not foreseeable. Further, if any risk was identified, Petitioner asserts that it implemented
measures to mitigate that risk.

The following material facts, both those which are genuinely undisputed and those
additional facts that Petitioner asserts and I accept as true, support a finding that
Petitioner was out of compliance with 42 C.F.R. § 483.25(h).

Resident 1: Resident 1 was admitted to the facility on February 18, 2005. Resident 1 had
a diagnosis of pernicious anemia for which her physician prescribed periodic blood
transfusions. CMS Ex. 2, at 5, 6. Resident 1 was also diabetic and had orders for
Metformin ER (extended release), a medication used to control blood sugars, which she
received once a day at 5:00 p.m. before her evening meal. CMS Ex. 2, at 7, 8. CMS
notes that Metformin should be taken at the same time every day to maintain an even
level of the medication in the blood. CMS Br. at 3. Petitioner notes, and I accept, that its
protocol allows for Metformin to be administered up to an hour before or after the
designated time it is to be administered. P. Br. at 4.

Petitioner arranges transportation services for residents needing medical tests or services
at off-premises locations. The annex section of Fort Madison Community Hospital
provides blood transfusion services for residents of Petitioner’s facility, including
Resident 1. The hospital is less than one mile from Petitioner’s facility. CMS Ex. 2, at 2;
P. Br. at 3; CMS Br. at 2. Petitioner uses the services of a company named Inpropco to
transport its residents to the hospital for medical tests or services. Inpropco employs van
drivers to transport these residents. Inpropco is under common ownership with the
company that owns and operates Petitioner’s facility. P. Br. at 3; CMS Br. at 2.

Resident 1’s care plan for pernicious anemia, dated March 15, 2010, states that Petitioner
was to:

5. Arrange for transportation to [and] from FMCH [Fort Madison Community
Hospital] Annex for Blood Transfusion as needed.

6. Monitor [and] report signs of reaction to transfusion i.e. elevated
temp/decreased BP/chills/pain/hematuria/dyspnea/chest pain/Lung
congestion/Frothy Sputum/ rash.

CMS Ex. 2, at 9.

On the morning of March 23, 2010, Resident 1 was transported to the hospital for a blood
transfusion. P. Br. at 3; CMS Br. at 3. The Inpropco van driver picked the Resident up at
7

the hospital presumably for the purpose of transporting her safely back to the facility, and
returned to Petitioner’s facility at about 4:30 p.m. Upon arriving at Petitioner’s facility
the van driver became distracted or forgetful, parked the van, locked it, and left for home,
leaving Resident | sitting in the van unattended. Paperwork related to Resident 1’s
treatment was in the van driver’s pocket, where the driver had placed it before
abandoning Resident | and the van. P. Br. at 5; CMS Br. at 4; CMS Ex. 2, at 6, 15, 20,
21; P. Ex. 2, at 3-6. The exact location where the van was parked is described in at least
two accounts as the “back area” or “back lot,” and is thus presumably not near the
facility’s front entrance. P. Ex. 2, at 3,6. At 6:30 p.m., a nurse at Petitioner’s facility
called the hospital to inquire about Resident 1 and her whereabouts. The hospital
informed the nurse that Resident 1 had been picked up. The nurse called the Inpropco
van coordinator/supervisor who contacted the van driver. At 6:45 p.m., the
coordinator/supervisor and the van driver went to the facility, found Resident | still
sitting in the van, and escorted her back into the facility. P. Br. at 4; CMS Br. at 4; P. Ex.
2, at 6; CMS Ex. 2, at 22, 23. Resident 1 was assessed, and her vital signs were taken and
found to be within normal limits. Resident 1 did not complain of pain or severe
discomfort. P. Br. at 4; CMS Ex. 2, at 23. She did, however, suffer an unaccustomed
episode of urinary incontinence during the two hours she was locked in the van. P. Ex. 2,
at 6; CMS Ex. 1, at 7-8. Metformin was administered and dinner served to Resident 1 at
approximately 7:00 p.m. P. Br. at 4; P. Ex. 1, at 2. The van driver was terminated from
her employment with Inpropco. P. Br. at 5; P. Ex. 2, at 2.

Following the incident, and effective March 23, 2010, Petitioner adopted a new transport
sign-out policy requiring that:

All van drivers or employees transporting residents will sign the resident out on
the marker board in the nurse’s station before leaving the building. When
returning with the resident you will take the resident’s name off the board. Nurses
will check the board at the beginning of your shift. If the resident has not returned
to the building by 5 PM you will call the van driver or employee to verify the
status of the resident.

CMS Ex. 2, at 28, 29, 30.

Petitioner and CMS differ about the protocol that existed between the hospital, Inpropco,
and the facility on March 23, 2010, regarding notification of when a resident is to be
returned to the facility. For purposes of summary disposition, I accept Petitioner’s
assertion that pursuant to the protocol between the facility and Inpropco, for non-routine
medical visits,’ the hospital normally would contact the facility when a resident was

* Laccept Petitioner’s categorization of Resident 1’s blood transfusion as a non-routine
medical appointment. However, if Petitioner’s protocols for routine and non-routine
transport are different, that might have led to the confusion attendant to Resident 1’s
return to the facility.
8

ready to be returned to the facility, in order to arrange transportation and to provide
updates or new orders relating to treatment. I accept Petitioner’s assertion that the
acility’s charge nurse became aware that Resident 1 had not yet returned to the facility
as dinner was winding down at approximately 5:45 p.m., because at that time the nurse
realized that Resident 1 was not present for the routine administration of her Metformin;
that the nurse waited about a half hour to contact the hospital; that Petitioner was not
provided with a concrete timeline as to how long the Resident would be out of the
acility, other than that it would be “all day;” that the estimates of Resident 1’s return
time changed from 3:00 to 3:30 to 4:15 p.m.; that it was not unusual for Resident 1 to be
at the hospital for observation for a lengthy period; and that facility staff were aware that
Resident 1 was under supervision by licensed staff at the hospital. I accept that Resident
1 was uninjured as a result of her two-hour period of abandonment and immobility in the
locked van. I accept that the van driver, who had been employed by Inpropco since 2006,
did not report to anyone at the facility about the Resident’s expected return time nor did
the van driver notify the facility from the van that the Resident was in the process of
being returned to the facility. I accept that the van driver had earlier directed the hospital
to call her instead of the facility, which precluded the facility from receiving notice from
the hospital as to when Resident 1 would return. I accept that Inpropco routinely
transports between four and five residents per day, five days a week, to medical
appointments averaging 40 to 50 one-way transports per week, and that over the past
several years Inpropco has transported in excess of 1,000 resident round-trips per year,
without a resident being left unattended in a transport van. P. Br. at 3, 5, 6, 11; P. Ex. 1,
at 1, 2; P. Ex. 2, at 3-4.°

Resident 2: Petitioner does not dispute that Resident 2 was admitted to the facility on
January 17, 2008, with a diagnosis of chronic renal failure for which renal dialysis was
ordered. She had a history of chronic pain/degenerative joint disease, for which she was
prescribed topical Lidocaine as needed and a Fentanyl patch every 72 hours. Her care
plan indicated she was at risk for dehydration. On March 31, 2010, Resident 2 left the
facility for a dialysis appointment at 6:45 a.m. The surveyor observed that at 7:30 a.m.
and 9:40 a.m. the facility sign-out board by the nurses’ station did not list any resident,
including Resident 2, as out of the building. Resident 2’s records contained no

° Ido not accept Petitioner’s assertion that Resident 1 did not have a significant health
condition requiring treatment or medications that would be exacerbated if there was a
delay in her return to the facility. Petitioner does not dispute that Resident 1 is a diabetic
who did not timely receive a scheduled medication for controlling blood sugars. Further,
I do not accept Petitioner’s assertion that there were no environmental hazards posed by
Resident 1’s sojourn in the van simply because she was properly secured and not at risk
for falls. P. Br. at 5, 11. While the temperature was not “unseasonable” (ranging from 64
to 68 degrees, P. Ex. 2, at 7; CMS Ex. 1, at 8), that does not mean the inside of the van
was a comfortable temperature, that the Resident might not have tried to get up from her
restraints and harmed herself, or that someone else could have attempted to get into the
van while it sat abandoned in the “back lot.” Resident | did tell her rescuers that she had
suffered an incident of incontinence, telling them “I think I’m wet.” P. Ex. 2, at 6.

9

documentation of her leaving the facility, how she left, or when she was expected to
return. P. Br. at 15; CMS Br. at 4-5; CMS Exs. 31-35.

Resident 3: Petitioner does not dispute that Resident 3 was admitted to the facility on
September 14, 2006, with diagnoses of, among other things, kidney disease, renal failure,
and cerebral vascular accident. On March 31, 2010, Resident 3 left the facility for a
dialysis appointment at 6:45 a.m. The surveyor observed at 7:30 a.m. and 9:40 a.m. that
the facility sign-out board by the nurses’ station did not list any resident, including
Resident 3, as out of the building. Resident 3’s records contained no documentation of
is leaving the facility, when he left, or how he was expected to return. P. Br. at 15;
CMS Br. at 5; CMS Exs. 36, 37.

CMS argues that Petitioner is responsible for ensuring adequate supervision of its
residents outside the facility’s premises and simply failed to do so. With regard to
Resident 1, CMS asserts that a van is the resident’s “environment” when a resident is in a
van and the regulations apply, including the requirement for ensuring adequate
supervision. Sunbridge Care and Rehabilitation for Pembroke, DAB No. 2170; Liberty
Nursing and Rehabilitation Center — Mecklenberg County, DAB No. 2095; St. Michael’s
Nursing Center, DAB CR2038 (2009). That the van driver was not an employee or under
Petitioner’s control does not discharge the facility from its responsibility to supervise
Resident 1. Facilities may very well “contract out” services such as resident
transportation, and may very well do so frequently. If that “contracting out” is hoped or
intended to insulate the contracting facility from some measure of responsibility for the
activities of a hypothetically “independent” contractor, then such a hope or intention is
misplaced: the fact that services are contracted out does not relieve a facility of its
responsibility to make sure that the services provided meet professional standards of
quality. St. Michael’s Nursing Center, DAB CR2038.

CMS argues also that Petitioner must be alert to the expected return time for a resident
who is outside the facility, and that it must take steps to locate a resident who fails to
return at the expected time. Eastwood Convalescent Center, DAB No. 2088 (2007).
CMS notes that the van driver picked Resident 1 up from the hospital at 4:15 p.m. The
drive from the hospital to the facility is less than one mile. However, Petitioner did not
contact the hospital for more than two hours.

Petitioner disputes CMS’s assertion that it must ensure that the contracted transportation
services meet professional standards of quality, and points out — correctly — that the
facility was not cited for a violation of 42 C.F.R. § 483.20(k), the regulation requiring
that the services a facility arranges must meet professional standards of quality.
Petitioner asserts that the services and standards described in that regulation are clinical
services and standards of clinical practice, not transportation services. And Petitioner
asserts that its past practices and protocols show that it met reasonable standards of
quality, in that there have been thousands of resident-transports over the last several
years, including many by the van driver in question, without a single incident of a
resident left unattended. Thus, Petitioner says that it could not have anticipated that this
10

van driver would leave a resident unattended without notifying anyone that she had
returned the van to the facility, left Resident 1 restrained and locked in the van, and then
had simply gone home.

Petitioner argues that CMS’s comparison of Resident | to the resident described in St.
Michaels Nursing Center, DAB CR2038, is not applicable, as that resident had a history
of falls and was sent to the hospital in a van without the facility’s verifying the driver’s
training or competence to provide the resident the level of supervision he required. Here,
argues Petitioner, there is no evidence that the van driver was not competent and there is
no evidence to establish that Petitioner should have questioned the driver’s competence
or anticipated that she would leave Resident | unattended in the van. And there was
nothing in Resident 1’s history to indicate that there was any problem in allowing the
driver to accompany Resident 1 back to the facility alone.’

Petitioner argues that CMS’s reliance on the Board’s decision in Eastwood Convalescent
Center, DAB No. 2088, is misplaced because the factual situations are different.
Petitioner asserts that in Eastwood a resident with highly compromised health, a need for
multiple medications, and who was totally dependent on staff for care, did not make a
return trip to the facility in the facility van following dialysis but instead accompanied her
spouse on an errand. The facility administrator was told that they would return in about
an hour and a half. However, facility staff was not informed of this and made no attempt
to locate the resident. Five hours later the facility received a call from a hospital
indicting that the resident had been admitted following a fall. Petitioner asserts that the
Board’s concern was with the facility’s failure to mitigate the foreseeable risk of the
resident having an accident after leaving with her husband in light of her compromised
health, her need for multiple medications, and her total dependence for care. In contrast,
in this case, Petitioner argues that the facility charge nurse became aware Resident | had
not returned, Petitioner did not know when Resident | was supposed to return to the
facility, Resident 1 did not have any health problems requiring medical treatment or
medications that would be exacerbated if there was a delay in her return to the facility,
facility staff knew she was under the supervision of licensed personnel at the hospital, she
was uninjured, and there were no environmental hazards in the van posing a risk of harm
to her.

7 Petitioner analogizes that under CMS’s theory an injury to a resident being transported
by ambulance, where the driver is negligently involved in a traffic accident, would
impose “regulatory liability.” Assuming that Petitioner had arranged such a hypothetical
transport it very well might be exposed to some liability. However, the quantum of proof
necessary to establishing liability based on a hypothetical situation involving a
negligently-caused traffic accident is hardly comparable to the proof here showing the
actual abandonment of a resident in a van parked on a remote corner of facility premises
for over two hours.
11

Here the system Petitioner had in place on March 23, 2010 to transport its residents to
non-routine or non-regular hospital visits failed utterly, and that utter failure produced
real, concrete, disturbing consequences. Petitioner was and is responsible for residents’
care while they are being transported in an Inpropco van because that van was and is part
of its residents’ environment. It was and is Petitioner’s responsibility to ensure that the
Inpropco drivers transporting its residents understand its practices and protocols,
including those for communicating among other Inpropco drivers, the facility, and the
hospital with regard to a resident’s return. The van driver in this case, despite having
transported Petitioner’s residents for several years, apparently did not understand
Petitioner’s practices and protocols for these non-routine or non-regular hospital trips.
That there were no previous problems at the facility is not evidence of Petitioner’s
compliance with the regulations. It is simply luck, and luck is a notoriously-unreliable
charm against mishap. It is no defense to a citation for non-compliance with a regulation
intended to protect the vulnerable from mishap or worse.

Petitioner notes, with regard to Residents 2 and 3, that although the two Residents were
not listed on the sign-out board on the morning of March 31, 2010, the surveyor observed
both Residents in the building following their incident-free return from routine dialysis
treatment. P. Br. at 15; P. Ex. 3, at 2, 4. Petitioner asserts that because the new transport
sign-out policy was in the process of being implemented, there was some “expected
confusion” regarding whether the policy applied to residents with regularly scheduled as
opposed to non-regularly scheduled appointments. P. Br. at 15. Now, it may be an
obvious point, and discussing it further may belabor that obvious point, but it seems
inarguable that the very reason for the existence of any policy is to avoid confusion on
matters within its purview by providing explicit and practical guidance, and by
establishing clear and readily-followed procedures, for situations governed by the policy.
Thus, to suggest as Petitioner does that some “expected confusion” existed concerning
the new policy is virtually to admit that the policy was inadequate. Petitioner’s
admission — and it is precisely that, an admission — is hardly evidence of compliance
with the regulations. When a facility attempts to address a risk of harm to its residents it
should “expect” not confusion, but immediate and substantial compliance. Petitioner’s
failure with regard to implementation of the sign-out board, exemplified by Residents 2
and 3 not having been signed out on March 31, 2010, shows that Petitioner’s problems
supervising its residents were system-wide and not yet corrected.

2. The $5,000 PICMP imposed is reasonable, and so the two-year prohibition
against Petitioner conducting a NATCEP/CEP is required by law.

Petitioner argues that issues of material fact exist regarding whether the immediate
jeopardy finding is clearly erroneous. Petitioner is mistaken in this argument. As I have
written previously, Petitioner does not have the right to challenge the scope and severity
of a deficiency citation except when such a finding would affect the range of the CMP
imposed. As CMS imposed a PICMP in this case, whether I find immediate jeopardy or
not cannot affect the range of CMP. And although imposition of a NATCEP is also a
12

basis for challenging the scope and severity of a citation, since the NATCEP here is
based on imposition of the PICMP, I do not consider the scope and severity of this one.

Petitioner’s arguments regarding immediate jeopardy, however, also relate to whether the
remedies imposed are reasonable. Petitioner asserts that Resident 1 did not sustain any
injury, harm, or impairment in the two hours she was in the van unattended. She denied
sustaining physical injury. A nursing assessment noted no injury or change in condition
and her vital signs were normal. Resident 1 was appropriately strapped in her
wheelchair, which was strapped into the van. The temperature was clement and she was
not exposed to outside environmental factors, was not at risk for falls or coming into
contact with traffic, water hazards, or other physical hazards. There is no evidence that
Petitioner’s failure to monitor her for two hours after her blood transfusion was likely to,
or reasonably could be expected to, result in serious injury, harm, impairment or death.
According to Petitioner, any theoretical risk of serious harm to Resident 1 is irrelevant in
light of the fact that the Resident exhibited no negative reactions or symptoms as a result
of the transfusion or her abandonment in Petitioner’s parking lot.

In determining whether the PICMP imposed is reasonable, I apply the factors listed in 42
C.F.R. § 488.438(f): 1) the facility’s history of non-compliance; 2) the facility’s financial
condition; 3) factors specified in 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 absence of culpability is not a mitigating factor. The factors at 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 non-compliance; and 3) the facility’s prior
history of non-compliance in general and specifically with reference to the cited
deficiencies.

Petitioner does not dispute that its care plan regarding Resident 1’s anemia required it to
monitor and report for signs of reaction to the transfusion. Had it not been important for
Petitioner to do so, and could the failure to do so not potentially harm Resident 1,
checking for and reporting signs of reaction to the transfusion would not have been
included in Resident 1’s care plan in the first place. Clearly Petitioner could not monitor
Resident | for reactions to the transfusion while she was sitting unsupervised in the van.
And even if I accept that Resident 1’s Metformin could be administered an hour late
without adverse consequences to Resident 1, the medication was in this instance
administered two hours late. Moreover, although Petitioner downplays the risk to
Resident | sitting unsupervised in the van, there is no way now to know whether the
actual temperature in the van was subjectively comfortable to the person who was made
without explanation or reassurance to endure it in silence and solitude for two hours. The
Resident could in desperation or confusion have attempted to get up from her restraints
and harmed herself. Someone could have attempted, for a variety of motives, to get into
the van. The Resident could have suffered emotional or psychological harm from not
knowing when — or whether — she would be rescued. She did endure an episode of
urinary incontinence as a result of her confinement in the van. The somber fact is that,
unsupervised and alone in the locked van for two hours, anything could have happened to

13

Resident 1. The fact that she may not have sustained actual physical harm is sheer luck,
not the happy result of appropriate or adequately-supervised care. Moreover, the fact that
Petitioner did not comply with its own protocol or procedure for signing residents out of
the facility, as exemplified by its failures with Residents 2 and 3, shows that Petitioner
was not in compliance with the regulations a week later.

A $5,000 PICMP is in the middle range of PICMP that CMS may impose for an instance
of non-compliance. Given Petitioner’s failure to supervise Resident 1, and its continuing
failure to supervise Residents 2 and 3, the amount of PICMP imposed is reasonable. The
prohibition on Petitioner’s offering a NATCE/CEP is reasonable as a matter of law.

V. Conclusion

For the reasons set forth above, CMS’s motion for summary disposition must be, and it
is, GRANTED. CMS is authorized to impose a $5,000 PICMP, and thus must prohibit
Petitioner from offering a NATCEP/CEP for two years.

/s/
Richard J. Smith
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Robert Knapp, M.D.
(NPI: 1437268067),

Petitioner
Vv.
Centers for Medicare and Medicaid Services.
Docket No. C-10-992
Decision No. CR2329

Date: March 1, 2011

DECISION

For the reasons set forth below, I grant the motion of the Centers for Medicare and
Medicaid Services (CMS) for summary judgment. Highmark Medicare Services, the
CMS contractor, had an undisputed and legitimate basis to revoke Petitioner’s enrollment
and billing privileges as a supplier in the Medicare program for non-compliance with
Medicare enrollment requirements under section 42 C.F.R. § 424.535(a)(1).

I. Background

Petitioner, Robert Knapp, M.D., is a physician who participated as a supplier in the
Medicare program. Hearing Request (HR). On March 23, 2010, Petitioner surrendered
his medical license to the Pennsylvania State Board of Medicine due to pending criminal
charges. CMS Exhibit (Ex.) 1. After learning of the surrender through a report from the
Pennsylvania Department of Health, on May 13, 2010, Highmark notified Petitioner that
it was revoking his Medicare billing privileges effective March 23, 2010. CMS Exs. 2-3.
Specifically, Highmark articulated that Petitioner was not in compliance with the
Medicare enrollment requirements set forth in 42 C.F.R. § 424.535(a)(1) because he
lacked a valid state medical license as contemplated under 42 C.F.R. § 410.20(b). The
letter further noted that Petitioner failed to comply with the reporting requirements in 42
C.F.R. § 424.516(d)(1)(ii), which requires that a physician report any adverse legal action
within 30 days. CMS Ex. 3.

When a provider or supplier is revoked from the Medicare program, CMS automatically
reviews all other related Medicare enrollment files to determine if a revocation of the
related files is warranted. 42 C.F.R. § 424.535(f). Upon review, the contractor found
Petitioner possessed another Medicare Provider Transaction Access Number (PTAN) that
he used to continue to bill Medicare and receive payment for services. Substitute
physicians that Petitioner recruited for his practice provided these services. By a separate
notice letter dated May 13, 2010, the contractor also revoked Petitioner’s Medicare
billing privileges under the active PTAN effective March 23, 2010. CMS Ex. 4. Upon
notice, Petitioner claims to have repaid all monies paid for improperly submitted claims.
HR.

On May 24, 2010, Petitioner requested that the contractor reconsider his revocation and
reinstate his billing privileges. CMS Ex. 5. On August 23, 2010, the contractor issued its
unfavorable determination finding that the contractor properly revoked Petitioner’s
enrollment and billing privileges in the Medicare program. CMS Ex. 6. Pursuant to

42 C.F.R. § 498.40, Petitioner timely filed a request for an Administrative Law Judge
(ALJ) hearing by letter dated August 31, 2010. With Petitioner’s hearing request, he
included nine supplemental pages, which I have marked as Petitioner’s Exhibit 1 (P. Ex.
1). Petitioner later submitted an additional filing that was received on October 14, 2010.
It contained largely duplicative documentation and one new document, which I have
marked as Petitioner’s Exhibit 2 (P. Ex. 2).

This case was originally assigned to Board Member Leslie A. Sussan pursuant to

42 C.F.R. § 498.44, which permits a Member of the Departmental Appeals Board (Board)
to hear appeals under Part 498. The case was subsequently transferred to me for decision,
and the parties were notified by letter dated October 27, 2010. Pursuant to the September
22, 2010 Acknowledgement and Pre-Hearing Order, CMS filed a motion for summary
judgment and supporting memorandum (CMS Br.) on October 21, 2010. CMS
accompanied its submission with CMS Exhibits 1-6. On December 13, 2010, my office
received Petitioner’s reply letter that again contained largely duplicative documentation
and two new documents that I have marked as Petitioner’s Exhibit 3 (P. Ex. 3). In the
absence of objection, I receive into the record of this case P. Exs. 1-3 and CMS Exs. 1-6.

Il. Applicable Standard

The Board stated the standard for summary judgment:
Summary judgment is appropriate when the record shows that there is no
genuine issue as to any material fact, and the moving party is entitled to
judgment as a matter of law. . .. The party moving for summary judgment
bears the initial burden of showing that there are no genuine issues of
material fact for trial and that it is entitled to judgment as a matter of

law. ... To defeat an adequately supported summary judgment motion, the
non-moving party may not rely on the denials in its pleadings or briefs, but
must furnish evidence of a dispute concerning a material fact — a fact that, if
proven, would affect the outcome of the case under governing law. . . . In
determining whether there are genuine issues of material fact for trial, the
reviewer must view the evidence in the light most favorable to the non-
moving party, drawing all reasonable inferences in that party’s favor.

Senior Rehab. & Skilled Nursing Ctr., DAB No. 2300, at 3 (2010) (citations

omitted). The role of an ALJ in deciding a summary judgment motion differs from the
ALJ’s role in resolving a case after a hearing. The ALJ should not assess credibility or
evaluate the weight of conflicting evidence. Holy Cross Vill. at Notre Dame, Inc, DAB
No. 2291, at 5 (2009). The Board has further stated, “[i]n addition, it is appropriate for
the tribunal to consider whether a rational trier of fact could regard the parties’
presentation as sufficient to meet their evidentiary burden under the relevant substantive
law.” Dumas Nursing and Rehab., L.P., DAB No. 2347, at 5 (2010).

III. Issue

The issue in this case is whether a basis exists for CMS to revoke Petitioner’s enrollment
as a supplier in the Medicare program.

IV. Findings of Fact, Conclusions of Law, and Discussion
I make a single finding and conclusion set out below:

A legitimate basis exists for CMS to revoke Petitioner’s enrollment in
Medicare.

There is no dispute that Petitioner relinquished his license to practice medicine in the
State of Pennsylvania, effective March 23, 2010, and that CMS subsequently revoked
Petitioner’s enrollment in Medicare. See CMS Ex. 1. CMS also noted that Petitioner
failed to timely report the adverse legal action. CMS Exs. 3-4.

The undisputed facts establish that CMS was authorized to revoke Petitioner’s enrollment
because Petitioner ceased to comply with enrollment requirements due to the surrender of
his license to practice medicine. CMS may revoke the billing privileges of a participating
Medicare provider for noncompliance with Medicare enrollment requirements. 42 C.F.R.
§ 424.535(a)(1). Such noncompliance includes the surrender of a physician’s license to
practice medicine. Medicare will pay for a physician’s services to its beneficiaries only
where the physician is licensed to practice medicine in the State where he provides them.
42 C.F.R. § 410.20(b). Thus, a physician who relinquished his license to practice
medicine, such as Petitioner, is not in compliance with Medicare enrollment
requirements.

Additional grounds to revoke Petitioner’s enrollment in Medicare also exist due to
Petitioner’s failure to report his change in circumstances. Regulations require a
participating physician to report to Medicare within 30 days an adverse legal action. 42
C.F.R. § 424.516(d)(1)(ii). Here, it does not appear that Petitioner complied with the
regulation. Rather, in this case, Highmark learned of Petitioner’s surrender of his
medical license indirectly through a report from the Pennsylvania Department of Health.
Further, Highmark did not learn of Petitioner’s change in circumstances until May 13,
2010, which was nearly two months after Petitioner surrendered his medical license.
However, because CMS may revoke Petitioner’s enrollment based on his noncompliance
with Medicare enrollment requirements, I need not further discuss Petitioner’s failure to
timely report his change in circumstances. See Houston v. CMS, DAB CR2071, at 4
(2010) (“License suspension and failure to inform CMS of a change in circumstances are
independent grounds for revocation of enrollment. Either basis, standing alone, is
sufficient authority for CMS to revoke Petitioner’s enrollment.”).

Vv. Conclusion

CMS had the authority to revoke Petitioner’s enrollment and billing privileges for
noncompliance with Medicare enrollment requirements under 42 C.F.R. § 424.535(a)(1).
I therefore grant the CMS motion for summary judgment.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Ruben Aguilar, R.Ph.
(O.I. File Number 2-06-40373-9),

Petitioner
Vv.
The Inspector General.
Docket No. C-11-30
Decision No. CR2327

Date: February 22, 2011

DECISION

This matter is before me on the Inspector General’s (1.G.’s) Motion to Dismiss and arises
from the I.G.’s determination to exclude Petitioner Ruben Aguilar, R.Ph., from
participation in Medicare, Medicaid, and all federal health care programs, for a period of
13 years pursuant to sections 1128(a)(1) and 1128(a)(3) of the Social Security Act (Act).
42 U.S.C. § 1320a-7(a)(1) and (a)(3). As I explain below, I find that Petitioner’s request
for hearing was not timely filed as required by 42 C.F.R. §§1001.2007(b) and 1005.2(c),
and for that reason I grant the I.G.’s Motion to Dismiss.

I. Procedural Background

On June 30, 2010, the I.G. notified Petitioner that he was to be excluded from Medicare,
Medicaid, and all other federal health care programs for a period of 13 years. The I.G.’s
notice-of-exclusion letter explained the basis for the exclusion, informed Petitioner of his
appeal rights, told him that any request for hearing must be made in writing within 60
days of his receipt of the notice-of-exclusion letter, pointed out the content requirements
for an effective request for hearing, and provided Petitioner with the address to which his
request for hearing should be mailed. Petitioner filed his request for hearing by letter
dated October 8, 2010.

I convened a prehearing conference by telephone on November 8, 2010. During the
telephone conference the timeliness of Petitioner’s request for hearing was discussed, and
co-counsel for the I.G. stated their intention to seek the dismissal of the request for
hearing as untimely. By Order of that date I established a briefing schedule by which the
parties could submit their positions and exhibits. All briefing is now complete, and the
record in this case closed for purposes of 42 C.F.R. § 1005.20(c) on February 9, 2011.

The evidentiary record on which I decide this case contains 15 exhibits. The I.G.
proffered eight exhibits marked I.G. Exhibits 1-8 (I.G. Exs. 1-8). Petitioner proffered
seven exhibits designated by number in a separate Petitioner’s Exhibit List. These
exhibits were not individually marked in compliance with Civil Remedies Division
Procedures (CRDP), although the importance of doing so was emphasized in paragraphs
5(e) and 10 of the Order of November 8, 2010. I have marked them Petitioner’s Exhibits
1-7 (P. Exs. 1-7). I have admitted all proffered exhibits.

II. Issue

The sole issue before me is whether Petitioner’s request for hearing was filed in a timely
manner in compliance with the terms of 42 C.F.R. §§ 1001.2007(b) and 1005.2(c). Ifthe
request for hearing was not filed in a timely manner, I am obliged by the mandatory
terms of 42 C.F.R. § 1005.2(e)(1) to dismiss it.

The record before me requires that this issue be resolved against Petitioner. I find that his
request for hearing was filed untimely, a month past the deadline established by
regulation. Petitioner’s argument that he perfected his appeal from the I.G.’s proposed
action by his attorney’s letter dated June 25, 2010 is unpersuasive, for reasons I shall
discuss below. Accordingly, 42 C.F.R. § 1005.2(e)(1) requires that I dismiss Petitioner’s
request for hearing.

Ill. Controlling Statutes and Regulations

Section 1128(a) of the Act, 42 U.S.C. § 1320a-7(a), requires the exclusion from
participation in Medicare, Medicaid, and all other federal health care programs of any
individual or entity convicted of certain classes of criminal offenses. The terms of
section 1128(a) are restated in similar language at 42 C.F.R. § 1001.101. This mandatory
exclusion must be imposed for a minimum of five years. Act § 1128(c)(3)(B), 42 U.S.C.
§ 1320a-7c(3)(b). If aggravating factors are present, the period of exclusion may be
lengthened beyond five years. 42 C.F.R. § 1001.102(b).

The I.G. is charged with effecting exclusions based on sections 1128(a) and
1128(c)(3)(B) of the Act. See 42 C.F.R. § 1001.1001. If the I.G. determines that a
conviction constitutes a proper predicate for exclusion, he must send notice of his intent
to exclude to the affected individual or entity. The affected party is permitted to respond
to this notice of intent with “documentary evidence and written argument concerning
whether the exclusion is warranted and any related issues.” 42 C.F.R. § 1001.2001(a).
This opportunity for an affected party to make its position known to the I.G. before a
final decision is made regarding exclusion is consistent with the “reasonable notice”
language of section 1128(c)(1) of the Act, 42 U.S.C. § 1320a-7(c)(1).

If the I.G. remains convinced that exclusion is warranted, he must send written notice of
his final decision to exclude to the affected individual or entity, and must in that notice
provide detailed information on a number of points, including the appeal rights of the
excluded party. 42 C.F.R. § 1001.2002; see also Act §1128(c), 42 U.S.C. § 1320a-7(c).
The individual or entity to be excluded may appeal the exclusion by filing a request for
hearing before an Administrative Law Judge (ALJ). 42 C.F.R. § 1001.2007. That
regulation sets limits on the issues that may be considered on appeal and establishes
requirements for the hearing request’s content. It also establishes a discrete time limit for
the filing of a request for hearing. Specifically, 42 C.F.R. § 1001.2007(b) provides that:

The excluded individual or entity has 60 days from the receipt of notice of
exclusion provided for in [section] 1001.2002 to file a request for such a
hearing.

This filing time limit is reiterated in the regulations governing the conduct of an excluded
party’s appeal before the ALJ that appear at 42 C.F.R. §§ 1005.1-1005.23. The 60-day
deadline is repeated at 42 C.F.R. § 1005.2(c):

The request for hearing will be made in writing to the DAB; signed by the
petitioner . . . or by his or her attorney; and sent by certified mail. The
request must be filed within 60 days after the notice, provided in
accordance with [section] 1001.2002 .. ., is received by the petitioner or
respondent. For purposes of this section, the date of receipt of the notice
letter will be presumed to be 5 days after the date of such notice unless
there is a reasonable showing to the contrary.

The content requirements for an effective request for hearing, adopted by reference at 42
C.F.R. § 1001.2007(a)(3), are set out explicitly at 42 C.F.R. § 1005.2(d):

The request for hearing will contain a statement as to the specific issues or
findings of fact and conclusions of law in the notice letter with which the
petitioner . . . disagrees, and the basis for his or her contention that the
specific issues or findings and conclusions were incorrect.
The regulation at 42 C.F.R. § 1005.2(e) directs that:

The ALJ will dismiss a hearing request where—
(1) The petitioner’s or the respondent’s hearing request is not filed
in a timely manner.

It is important to note that 42 C.F.R. § 1005.2(e)(1) does not permit the ALJ to extend the
60-day filing deadline on a showing of good cause. A tardy or dilatory petitioner can
gain relief only by negating the presumption of receipt through a “reasonable showing”
that the I.G.’s notice-of-exclusion letter was not received as presumed by 42 C.F.R.

§ 1005.2(c).

IV. Findings of Fact and Conclusions of Law
I find and conclude that:

1. The LG. mailed the notice-of-exclusion letter to Petitioner, announcing his final
decision to exclude Petitioner from Medicare, Medicaid, and all other federal health care
programs for a period of 13 years, on June 30, 2010. I.G. Ex. 1.

2. Petitioner’s letter of June 25, 2010 was written and mailed five days before, and not
“within 60 days after,” the I.G. announced his final decision to exclude Petitioner from
Medicare, Medicaid, and all other federal health care programs for a period of 13 years.

P. Ex. 6; 1G. Exs. 1, 8; 42 C.F.R. § 1005.2(c).

3. Petitioner’s letter of June 25, 2010 does not comply with the address and mailing
requirements of 42 C.F.R. § 1001.2007(a)(3) and 42 C.F.R. § 1005.2(c). P. Ex. 6; LG.
Ex. 8.

4. Petitioner’s letter of June 25, 2010 does not comply with the content requirements of
42 CFR. § 1001.2007(a)(3) and 42 C.F.R. § 1005.2(d). P. Ex. 6; I.G. Ex. 8.

5. Petitioner’s letter of June 25, 2010 is not a request for hearing within the meaning of
42 C.F.R. § 1005.2(c), and did not perfect Petitioner’s appeal from the I.G.’s notice-of-
exclusion letter of June 30, 2010.

6. Petitioner is presumed to have received the I.G.’s June 30, 2010 notice-of-exclusion
letter not later than July 6, 2010. 1.G. Ex. 1; 42 C.F.R. § 1005.2(c).

7. Petitioner filed his request for hearing on October 8, 2010. Request for Hearing; P
Ex. 7.

8. Petitioner’s request for hearing was not timely filed. 42 C.F.R. §§ 1001.2007(b),
1005.2(c).

9. Petitioner’s request for hearing must be dismissed. 42 C.F.R. § 1005.2(e)(1).
V. Discussion

My consideration of the I.G.’s Motion to Dismiss begins by evaluating the timeliness of
Petitioner’s October 8, 2010 letter requesting a hearing. My analysis applies rules well-
established in this forum.

The first rule is the presumption of the receipt, within five days, of exclusion notices
mailed pursuant to 42 C.F.R. § 1001.2002. This rule is established by regulation at 42
C.F.R. § 1005.2(c), and is acknowledged by the Departmental Appeals Board (Board) in
Sharon R. Anderson, D.P.M., DAB No. 1795 (2001). Given the dates of the
Independence Day holiday in 2010, that presumption relies on the date of I.G. Ex. 1, the
June 30, 2010 notice-of-exclusion letter, to establish July 6, 2010 as the latest date from
which the 60-day filing period could be calculated.'

The second rule is found in 42 C.F.R. § 1005.11(a)(4): “Papers are considered filed when
they are mailed.” The terms of CRDP § 5 repeat this rule. The date of Petitioner’s letter
is, of course, October 8, 2010, and neither party has suggested that it was mailed or filed
on any other date.

The third rule is simply a calculation: if a request for hearing is to be timely, then it must
under most circumstances be filed no more than 65 days after the date of the notice-of-
exclusion letter to which it responds. Given the dates of the Labor Day holiday in 2010,
in order to be timely, Petitioner was required to file his request for hearing not later than
September 7, 2010. 42 C.F.R. §§ 1001.2007(b), 1005.2(c), 1005.12. There is no
provision for the extension of that deadline for good cause shown. Kris Durschmidt,
DAB No. 2345 (2010); Cathy Statler, DAB No. 2241 (2009); John Maiorano, R.Ph.,
DAB CR1113 (2003), aff'd, John Maiorano, R.Ph., v. Thompson, Civil Action No. 04-
2279, 2008 WL 304899, at *3-4 (D. N.J. 2008). The only relief available from that 65-
lay time limit demands a “reasonable showing to the contrary” of the presumption of
receipt in due course set out at 42 C.F.R. § 1005.2(c).

' The LG. asserts that there is direct evidence that Petitioner’s attorney received the June

30, 2010 notice-of-exclusion letter on July 6, 2010, based on the “RECEIVED” stamp on
the copy of that letter admitted as I.G. Ex. 1, at 1. A similar stamp appears on
Petitioner’s copy of the 1.G.’s acknowledgment letter of June 2, 2010. But the stamp
impressions are generic and not otherwise identifiable with Petitioner’s attorney, and
there is no explanation of how the I.G. came into possession of Petitioner’s copy of I.G.
Ex. 1. Since the presumptive receipt date is the same as this direct evidence would show
if I found it reliable, I employ the presumptive date in this decision.

6

The fourth rule is that “a reasonable showing to the contrary” of the presumption of
timely receipt must be made through demonstration of articulated facts calling the
presumed delivery of the notice-of-exclusion letter genuinely into question. Alan K.
Mitchell, M.D., CR1614 (2007); Andrew M. Perez, DAB CR1371 (2005); Dulal
Bhattacharjee, M.D., CR1107 (2003); George P. Rowell, M.D., DAB CR974; Peter D.
Farr, M.D., DAB CR909 (2002); Sunil R. Lahiri, M.D., DAB CR296 (1993).

Petitioner has not attempted to make that “reasonable showing” here. Although
Petitioner never concedes the point in so many words, he neither argues that the LG.’s
June 30, 2010 notice of exclusion failed to reach him as presumed, nor does he argue that
is October 8, 2010 letter was a timely response to it. Petitioner thus tacitly concedes the
untimeliness of the October 8, 2010 letter as a request for hearing. But that tacit
concession is essentially gratuitous, for on this record I find and conclude that
Petitioner’s October 8, 2010 request for hearing was untimely filed and subject to
dismissal pursuant to the mandatory terms of 42 C.F.R. § 1005.2(e)(1).

But that is hardly the end of the matter, for Petitioner pointedly does not rely on his
October 8, 2010 letter as his actual request for hearing. Instead, Petitioner claims to have
perfected this appeal by a letter dated June 25, 2010 his attorney sent to an official in the
1.G.’s Office of Investigations in Manhattan five days before the I.G. announced his final
decision to exclude Petitioner. P. Ex. 6; I.G. Ex. 8.

To understand this remarkable claim, and to assay its merits fairly, it is important to
appreciate the context in which Petitioner’s attorney wrote the letter of June 25, 2010.
Chronologically, it was the sixth written communication in a series of seven letters that
began on April 14, 2010 and culminated in the L.G.’s notice-of-exclusion letter on June
30, 2010. It is also important — and quite revealing — to note the exact language
Petitioner uses to identify certain of those written communications.

On April 14, 2010, the I.G. wrote to Petitioner and notified him of the I.G.’s intention to
exclude him from the protected health-care programs. P. Ex. 1; 1.G. Ex. 3. This notice-
of-intention letter complied fully with 42 C.F.R. § 1001.2001(a) and section 1128(c)(1)
of the Act, for it alerted Petitioner that he faced exclusion, pointed out his exposure to an
enhanced period of exclusion, invited his responses, and closed by assuring Petitioner
that “Once the OIG has made its determination, the OIG will send you a letter notifying
you of its decision and, if an exclusion is imposed, of the effective date and length of the
exclusion, as well as your appeal rights.” P. Ex. 1, at 2, 1.G. Ex. 3, at 2. This notice-of-
intention letter was sent from the I.G.’s Manhattan office and was signed by the Assistant
Special Agent in Charge (ASAC).

Petitioner’s attorney responded on April 22, 2010, in a letter she sent to the ASAC at the
1.G.’s Manhattan address. P. Ex. 2; 1.G. Ex. 4. The letter is a vigorous and detailed
request that “Mr. Aguilar will not be excluded from eligibility to participate in any
capacity in the [protected health-care] programs.” The last paragraph of the letter reads:
“Please advise in writing whether my request will be granted.” P. Ex. 2, at 7; LG. Ex. 4,
at 7.

These two letters leave little doubt as to what Petitioner’s attorney knew about the state
of the exclusion process in late April 2010. It was clear that the I.G. proposed to exclude
Petitioner, clear that the period of exclusion might be enhanced beyond the mandatory
minimum of five years, and clear that the I.G. had solicited and had received from
Petitioner information intended to forestall or minimize the exclusion. It was also clear
that Petitioner’s attorney understood that the I.G. had made no final decision, and that the
attorney expected written notice of it when a final decision had been made.

The third letter is, on its face, innocuous enough: on June 2, 2010, the I.G.’s ASAC in
Manhattan wrote to acknowledge receipt of Petitioner’s April 22 communication. P. Ex.
3; LG. Ex. 5. It is a “form” letter, and the only things distinguishing it from another
“form” letter in this record are its own date and the reference to the date “April 22, 2010”
in identifying the correspondence it acknowledged. In Petitioner’s Exhibit List this letter
is accurately described as “Health and Human Services, Office of Investigations
Acknowledgement of Petitioner’s Letter.”

On June 7, 2010, Petitioner’s attorney sent the ASAC in Manhattan the fourth letter in
this sequence. By its own terms, it conveyed additional information intended to
“supplement my previous letter.” P. Ex. 4, at 1; LG. Ex. 6, at 1. The entire letter, and
especially its penultimate paragraph, shows that Petitioner’s attorney was well aware that
no final decision had been reached by the I.G.

The fifth letter in the series is another facially-innocuous “form” letter. On June 23,
2010, the I.G.’s ASAC in Manhattan acknowledged Petitioner’s June 7 communication.
P. Ex. 5; LG. Ex. 7. Given that it is a “form” letter, it is hardly surprising that it is in
every way identical to the I.G.’s letter of June 2, 2010, except for its own date and the
date of the letter that it acknowledged. Like the I.G.’s letter of June 2, this letter contains
the following assurance: “The material you submitted has been associated with the file
and will be sent to OIG Headquarters for further consideration. That office will
communicate to you and your client about the proposed program exclusion and the
appeal rights.”

Now, I have described the I.G.’s letters of June 2 and June 23 as substantively-identical
and facially-innocuous. I emphasize that except for dates relevant only so far as they
place the two letters in context, they employ exactly the same language to convey exactly
the same information and to make exactly the same promise: that when a final decision
should be made, the IG. “will communicate to you and your client about the proposed
program exclusion and the appeal rights.” In no way can either letter reasonably be
construed as a response to Petitioner’s attorney’s April 22, 2010 request: “Please advise

in writing whether my request will be granted.” P. Ex. 2, at 7; 1.G. Ex. 4, at 7. The I.G.’s
June 23 letter signals no change in the stage reached in the I.G.’s deliberative process,
and most certainly does not suggest a final decision. But these two identical letters
elicited very different responses from Petitioner’s attorney, and in doing so became
anything but innocuous.

I have pointed out that in Petitioner’s Exhibit List, the 1.G.’s June 2 acknowledgment
letter is accurately described as “Health and Human Services, Office of Investigations
Acknowledgement of Petitioner’s Letter.” I have pointed out the identical nature of the
1.G.’s June 23 acknowledgment letter, and have pointed out that the June 23
acknowledgment letter cannot reasonably be understood to convey any suggestion of
movement in the I.G’s deliberative process or any hint of a final decision. One might
expect, then, that Petitioner’s attorney would have understood and characterized the
1.G.’s June 23 acknowledgment letter (P. Ex 5) exactly as she had the identical letter of
June 2 (P. Ex. 3) as “Health and Human Services, Office of Investigations
Acknowledgement of Petitioner’s Letter.”

At least as far as the position taken here by Petitioner is concerned, any such expectation
would be disappointed. Petitioner’s Exhibit List inexplicably describes the I.G.’s June 23
letter (P. Ex. 5) as “Health and Human Services, Office of Inspector General notice of
Proposed Exclusion from Program.” No reason for this new characterization is offered in
Petitioner’s briefing, but the new characterization is the catalyst by which the two
identical I.G. letters are transmuted from innocuous “form” letters to indicators of very
troubling aspects of Petitioner’s position. Bluntly put, Petitioner’s characterization of the
June 23 acknowledgment letter, and the discussions of it in Petitioner’s briefing, suggest
a studied effort to call it something that it manifestly is not, and then to use that manifest
misnomer to justify three subsequent errors.

Petitioner’s first error was in assuming, entirely without justification, that the I.G.’s June
23 acknowledgment letter represented the I.G.’s final decision on the questions of
exclusion, the effective date of any exclusion the I.G. might determine to impose, and the
precise period of any exclusion so imposed. Petitioner’s unjustified assumption could
ave been made only by ignoring the closing lines of the I.G.’s April 14, 2010 notice-of-
intent letter quoted above. P. Ex. 1, at 2, LG. Ex. 3, at 2.

Petitioner’s second error lay in responding to the I.G.’s June 23 letter with his attorney’s
letter of June 25, 2010. P. Ex. 6; I.G. Ex. 8. Petitioner’s Exhibit List now calls that letter
“Petitioner’s Notice to Health and Human Services, Office of Inspector General, Notice
of Appeal from June 23, 2010 Proposed Exclusion from Program.” That designation is,
owever, a rather patent effort to build on Petitioner’s mischaracterization of what the
1.G. wrote on June 23, and thereby to legitimatize an imperfect and premature attempt to
seek appellate relief from a decision not yet final.

When Petitioner’s attorney wrote the letter of June 25, the I.G. had not yet announced a
final decision on Petitioner’s exclusion. Because no final decision had been announced,
no effective date for the beginning of such an exclusion had been set pursuant to 42
C.F.R. § 2001.2002(b). The results of the I.G.’s consideration of aggravating factors, and
of the potentially-mitigating factors outlined in Petitioner’s letters of April 22 and June 7,
had not been announced, and thus no final decision as to the period of any eventual
exclusion had been conveyed to Petitioner.”

To put the situation plainly, on June 25, 2010 nothing had happened in this case from
which Petitioner could appeal. And to put the matter even more plainly, Petitioner’s
premature letter was sent to the wrong addressee — the I.G.’s ASAC in Manhattan, not
the DAB, as required by 42 C.F.R. § 1005.2(c) — contained none of the particulars
required by 42 C.F.R. § 1005.2(d), and does not appear to have been sent by certified
mail as required by 42 C.F.R. § 1005.2(c). Now, the certified-mail requirement may not
go to the substance of a successful appeal, but the other two mentioned requirements at
42 C.F.R. § 1005.2(c) and 1005.2(d) certainly do, and Petitioner’s June 25 letter was thus
inadequate in its address, insufficient in its content, and premature in its timing, and was
for those three reasons nugatory.

Petitioner’s third error lay in not realizing, once the I.G.’s June 30, 2010 notice-of-
exclusion letter reached his attorney, that the premature and insufficient effort to
“exercise his appeal rights in this matter” was nugatory and that further action was
demanded if he hoped to exercise his right to an appeal of the now-final exclusion. It
may be significant that Petitioner has not included the notice-of-exclusion letter in his
proffer of exhibits — it does, of course appear in the I.G.’s proffer as I.G. Ex. 1 — but
even the most superficial comparison between the acknowledgment letter of June 23 and
the notice-of-exclusion letter of June 30 would have alerted Petitioner’s attorney to the
need for action if an appeal were to be perfected, to the form and content required of that
action, and to the ample time still available for completing that action and perfecting an
appeal. For whatever reason, however, no action was forthcoming from Petitioner until
October 8, 2010, three months after the notice-of-exclusion and too late by one month to
meet the filing deadline established by 42 C.F.R. §§ 1001.2007(b) and 1005.2(c).

In sum, the 60-day period for filing Petitioner’s request for hearing established by 42

> Although the procedural settings and legal matrices are quite different, it still may be
worth noting that the Article III courts generally disfavor premature appeals and enforce
their so-called “final judgment rule,” and the Board itself is extremely reluctant to
entertain appeals in situations where litigation has not been fully resolved before the ALJ.
See, for example, De/ Rosa Villa, App. Div Docket No. A-11-20 (December 2, 2010).
But even those situations arise only after some sort of adverse ruling has been made and
announced. Here, nothing whatsoever had been decided, and there was simply no ruling,
decision, or determination as to even a subordinate part of this exclusion process.
C.F.R. §§1001.2007(b) and 1005.2(c) expired on September 7, 2010. Petitioner’s request
for hearing, filed as it was on October 8, 2010, was out-of-time by one month. No
previous actions by Petitioner — specifically including his attorney’s letters of June 25,
2010, June 7, 2010, or April 22, 1010 — constitute an effective and jurisdictionally-
sufficient request for hearing within the plain terms of 42 C.F.R. §§ 1001.2007(a)(3),
1001.2007(b), 1005.2(c) and 1005.2(d). The regulations and the unvarying decisions of
this forum deny an ALJ the authority to extend the filing period. Kris Durschmidt, DAB
No. 2345; Cathy Statler, DAB No. 2241. Petitioner’s request for hearing is untimely and
it must be dismissed. 42 C.F.R. § 1005.2(e)(1).

VI. Conclusion

For the reasons set forth above, I grant the I.G.’s Motion to Dismiss. The request for
hearing filed by Petitioner Ruben Aguilar, R.Ph., on October 8, 2010 must be, and it is,
DISMISSED.

/s/
Richard J. Smith
Administrative Law Judge