Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2014-H-0876)

Complainant
v.

Jeffrey Mini Mart, Inc. / Ali Naji
d/b/a BP,

Respondent.
Docket No. C-14-1371
Decision No. CR3344

Date: August 26, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Jeffrey Mini Mart, Inc. / Ali Naji d/b/a BP, at 2971 West
Warren Avenue, Detroit, Michigan 48208, and by filing a copy of the complaint with the
Food and Drug Administration’s (FDA) Division of Dockets Management. The
complaint alleges that BP impermissibly sold cigarettes to minors and failed to verify, by
means of photo identification containing a date of birth, that the purchasers were 18 years
of age or older, thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21
U.S.C. § 301 ef seq., and its implementing regulations, 21 C.F.R. pt. 1140. CTP seeks to
impose a $500 civil money penalty against Respondent BP.

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

Respondent BP has neither filed an answer within the time prescribed, nor requested an
extension of time within which to file an answer. Pursuant to 21 C.F.R. § 17.11, 1
assume that the facts alleged in the complaint (but not its conclusory statements) are true.
Specifically:

e At approximately 11:32 a.m. on June 8, 2013, at Respondent’s business
establishment, 2971 West Warren Avenue, Detroit, Michigan 48208, an FDA-
commissioned inspector observed Respondent’s staff selling a package of
Newport Box 100s cigarettes to a person younger than 18 years of age. The
inspector also observed that staff failed to verify, by means of photographic
identification containing a date of birth, that the purchaser was 18 years of age or
older;

e Ina warning letter issued July 3, 2013, CTP informed Respondent of the
inspector’s June 8, 2013 observations, and that such actions violate federal law, 21
C.F.R. § 1140.14(a) and (b)(1). The letter further warned that Respondent’s
failure to correct its violations could result in a civil money penalty or other
regulatory action;

e At approximately 2:50 p.m. on November 23, 2013, at Respondent’s business
establishment, 2971 West Warren Avenue, Detroit, Michigan 48208, FDA-
commissioned inspectors documented Respondent’s staff selling a package of
Newport Box 100s cigarettes to a person younger than 18 years of age. The
inspectors also documented that staff failed to verify, by means of photographic
identification containing a date of birth, that the purchaser was 18 years of age or
older.

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

21 U.S.C. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b). The
Secretary of the U.S. Department of Health and Human Services issued the regulations at
21 C.F.R. pt. 1140 under section 906(d) of the Act. 21 U.S.C. § 387a-1; see 21 U.S.C. §
387£(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). Under 21 C.F.R. § 1140.14(a),
no retailer may sell cigarettes to any person younger than 18 years of age. Under 21
C.F.R. § 1140.14(b)(1), retailers must verify, by means of photographic identification
containing a purchaser’s date of birth, that no cigarette purchasers are younger than 18
years of age.
A $500 civil money penalty is permissible under 21 C.F.R. § 17.2.
Order

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

/s/
Catherine Ravinksi
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Fresenius Medical Care Randallstown, LLC,
Petitioner,
v.
Centers for Medicare & Medicaid Services
Docket No. C-14-735
Decision Number CR3343

Date: August 25, 2014

DECISION

Petitioner, Fresenius Medical Care Randallstown, LLC, met the requirements to be
approved and enrolled in Medicare as an End Stage Renal Disease (ESRD) facility,
effective September 5, 2013.

I. Background

The Centers for Medicare & Medicaid Services (CMS) notified Petitioner by letter dated
October 25, 2013, that Petitioner was approved as a supplier of ESRD services effective
September 9, 2013. CMS Exhibit (Ex.) 1 at 21-22. On November 11, 2013, CMS
notified Petitioner that CMS changed the effective date to September 5, 2013. CMS Ex.
1 at 23-26. On January 14, 2013, Petitioner requested reconsideration of the effective
date and that the date be changed to August 5, 2013, the date Petitioner first provided
dialysis services to patients. Petitioner’s Exhibit (P. Ex.) 1; CMS Ex. 1, at 27-28.
On March 17, 2014, CMS notified Petitioner that the September 5, 2013 effective date
was upheld on reconsideration. CMS Ex. | at 1-2.

Petitioner requested a hearing before an administrative law judge (ALJ) on February 10,
2014.' The case was assigned to me for hearing and decision on March 10, 2014, and an
Acknowledgement and Prehearing Order (Prehearing Order) was issued at my direction.
CMS filed a combined motion for summary judgment and prehearing brief (CMS Br.)
with CMS Ex. | on April 8, 2014. Petitioner filed its prehearing exchange including its
brief (P. Br.) and P. Exs. 1 through 7 on June 2, 2014. CMS filed a reply (CMS Reply)
on July 15, 2014. The parties did not object to my consideration of the offered exhibits
and CMS Ex. | and P. Exs. | through 7 are admitted.

IL. Discussion
A. Applicable Law

The Social Security Act (the Act) requires that the Secretary of Health and Human
Services (the Secretary) issue regulations to establish a process for the enrollment of
providers and suppliers, including the right to a hearing and judicial review of certain
enrollment determinations.” Act § 1866(j)(1) (42 U.S.C. § 1395ce(j)(1)). Section 1881
of the Act (42 U.S.C. § 1395rr) authorizes Medicare coverage and payment for the
treatment of individuals suffering ESRD, subject to the conditions specified in the Act
and regulations promulgated by the Secretary. Act § 1881(a), (b)(1).

' Petitioner’s February 10, 2014 request for hearing pre-dates the March 17, 2014
reconsideration determination. However, the parties have not raised any jurisdictional
issue and I find none.

> A “supplier” furnishes services under Medicare and the term supplier applies to
physicians or other practitioners and facilities that are not included within the definition
of the phrase “provider of services.” Act § 1861(d) (42 U.S.C. § 1395x(d)). A “provider
of services,” commonly shortened to “provider,” includes hospitals, critical access
hospitals, skilled nursing facilities, comprehensive outpatient rehabilitation facilities,
home health agencies, hospice programs, and a fund as described in sections 1814(g) and
1835(e) of the Act. Act § 1861(u) (42 U.S.C. § 1395x(u)). The distinction between
providers and suppliers is important because they are treated differently under the Act for
some purposes. Petitioner is a supplier.
The Secretary’s regulations establishing the conditions for coverage for ESRD facilities
are at 42 C.F.R. pt. 494.° The Secretary’s regulations governing the Medicare enrollment
of providers and suppliers, including ESRD facilities, are found in 42 C.F.R. pt. 424,
subpt. P. Pursuant to 42 C.F.R. § 424.510(a), a provider or supplier must submit the
applicable enrollment application and, if applicable, be surveyed and certified or
accredited, before CMS can enroll the provider or supplier. ESRD facilities are surveyed
prior to enrollment to determine whether or not they meet the conditions for coverage
established by 42 C.F.R. pt. 494. 42 C.F.R. §§ 488.3; 494.1(b). The effective date of
enrollment and the date of eligibility for reimbursement is determined under 42 C.F.R.

§ 489.13 for providers and suppliers that require a survey and certification or
accreditation. 42 C.F.R. § 424.510(b). Ifan ESRD facility meets all the conditions for
coverage established by 42 C.F.R. pt. 494 at the time of the required survey, the effective
date of the facility’s approval to participate and its enrollment as a supplier in Medicare is
effective the date on which the survey is completed or the date on which all other
enrollment and participation requirements are met, whichever is later. 42 C.F.R.

§ 489.13(b). If the ESRD facility does not meet all the conditions for coverage
established by 42 C.F.R. pt. 494 on the date the required survey is completed, assuming
all other enrollment and participation requirements for supplier approval are met, the
effective date of approval to participate and enrollment is the earlier of:

The date on which the ESRD facility meets all conditions for coverage; or

The date on which the ESRD facility meets all conditions for coverage, but has
lower-level deficiencies and CMS or the state receives an acceptable plan of
correction for the lower-level deficiencies; or the date on which CMS receives an
approvable waiver request.

42 CFR. § 489.13(c)(2)(i) and (ii).
If the ESRD facility does not meet other enrollment and participation requirements when
it meets the conditions for coverage, the effective date of supplier approval and
enrollment will be the date on which all other enrollment and participation requirements
are met. 42 C.F.R. § 489.13(c)(2).

B. Issues
The issues in this case are:

> Citations are to the 2012 revision of the Code of Federal Regulations (C.F.R.), unless
otherwise stated.
Whether summary judgment is appropriate; and

Whether the effective date of Petitioner’s approval and enrollment in
Medicare as a supplier of ESRD services should be August 5, 2013, rather
than September 5, 2013.

C. Findings of Fact, Conclusions of Law, and Analysis
My conclusions of law are set forth in bold followed by my findings of fact and analysis.
1. Summary judgment is appropriate.

CMS has requested summary judgment. Summary judgment is not automatic upon
request but is limited to certain specific conditions. The Secretary’s regulations that
establish the procedure to be followed in adjudicating Petitioner’s case are at 42 C.F.R.
pt. 498. 42 C.F.R. §§ 424.545(a), 498.3(b)(5), (15). The regulations do not establish a
summary judgment procedure or recognize such a procedure. However, the
Departmental Appeals Board (the Board) has long accepted that summary judgment is an
acceptable procedural device in cases adjudicated pursuant to 42 C.F.R. pt. 498. See,
e.g., Ill. Knights Templar Home, DAB No. 2274, at 3-4 (2009); Garden City Med. Clinic,
DAB No. 1763 (2001); Everett Rehab. & Med. Ctr., DAB No. 1628, at 3 (1997). The
Board also has recognized that the Federal Rules of Civil Procedure do not apply in
administrative adjudications such as this, but the Board has accepted that Federal Rule of
Civil Procedure 56 and related cases provide useful guidance for determining whether
summary judgment is appropriate. Furthermore, a summary judgment procedure was
adopted as a matter of judicial economy within my authority to regulate the course of
proceedings and made available to the parties in the litigation of this case by my
Prehearing Order dated March 10, 2014. The parties were given notice by the Prehearing
Order that summary judgment is an available procedural device and that the law as it has
developed related to Fed. R. Civ. Pro. 56 will be applied.

Summary judgment is appropriate when there is no genuine dispute as to any issue of
material fact for adjudication and/or the moving party is entitled to judgment as a matter
of 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. The party requesting summary
judgment bears the burden of showing that there are no genuine issues of material fact for
trial and/or that it is entitled to judgment as a matter of law. Generally, the non-movant
may not defeat an adequately supported summary judgment motion by relying upon the
denials in its pleadings or briefs but must furnish evidence of a dispute concerning a
material fact, i.e., a fact that would affect the outcome of the case if proven. Senior
Rehab. & Skilled Nursing Ctr., DAB No. 2300, at 3 (2010) (and cases cited therein).

See also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The standard for
deciding a case on summary judgment and an ALJ’s decision-making in deciding a
summary judgment motion differs from that used in resolving a case after a hearing. On
summary judgment, the ALJ does not make credibility determinations, weigh the
evidence, or decide which inferences to draw from the evidence, as would be done when
finding facts after a hearing on the record. Rather, on summary judgment the ALJ
construes the evidence in a light most favorable to the non-movant and avoids deciding
which version of the facts is more likely true. Holy Cross Vill. at Notre Dame, Inc., DAB
No. 2291, at 5 (2009). The Board also has recognized that on summary judgment it is
appropriate for the ALJ to consider whether a rational trier of fact could find that the
party’s evidence would be sufficient to meet that party’s evidentiary burden. Dumas
Nursing and Rehab., L.P., DAB No. 2347, at 5 (2010). The Secretary has not provided
for the allocation of the burden of persuasion or the quantum of evidence in 42 C.F.R. pt.
498. However, the Board has provided some persuasive analysis regarding the allocation
of the burden of persuasion in cases subject to 42 C.F.R. pt. 498. Batavia Nursing and
Convalescent Ctr., DAB No. 1904 (2004), aff'd, Batavia Nursing & Convalescent Ctr. v.
Thompson, 129 Fed. App’x 181 (6th Cir. 2005).

The material facts in this case are not disputed and there is no genuine dispute as to any
material fact that requires a trial. The issues in this case that require resolution are issues
of law related to the interpretation and application of the regulations that govern
enrollment and billing privileges in the Medicare program to the undisputed facts of this
case. Accordingly, summary judgment is appropriate.

2. Pursuant to 42 C.F.R. § 489.13(c)(2)(ii)(A), Petitioner’s effective
date of Medicare enrollment is September 5, 2013, the date on which
CMS or the state agency received an acceptable plan of correction for
lower-level deficiencies that did not amount to noncompliance with the
ESRD conditions for coverage.

Petitioner constructed and operates an ESRD facility located in Randallstown, Maryland
in the Randallstown Nursing and Rehab Center. Petitioner provides dialysis services for
the long-term care facility residents. There is no dispute that Petitioner began providing
dialysis services at its facility on August 5, 2013. P. Br. at 1; P. Ex. 2.

On June 12, 2013, Novitas Solutions, Inc. (Novitas), a CMS Medicare Administrative
Contractor, informed CMS that on June 5, 2013, it received an application from
Petitioner to enroll in Medicare as a supplier of ESRD services. Novitas further informed
CMS that it was recommending approval of the application. CMS Ex. | at 3.

On July 29, 2013, the Ambulatory Care Unit of the Maryland Department of Health and
Mental Hygiene (state survey agency) completed a state licensure survey. The state
survey agency found that Petitioner was compliant with Maryland regulations governing
freestanding ambulatory care facilities. The report completed by the state survey agency
does not show that Petitioner’s compliance with the federal conditions for coverage
established by 42 C.F.R. pt. 494 was assessed. CMS Ex. | at 4.

On August 21, 2013, the state survey agency completed an initial Medicare certification
survey that investigated whether or not Petitioner’s facility met the conditions for
coverage established by 42 C.F.R. pt. 494. The report of the survey shows that the
surveyors found no condition-level deficiencies. However, the surveyors did find seven
lower-level or standard-level deficiencies. CMS Ex. | at 5-17; P. Ex. 5. On August 28,
2013, the state survey agency provided Petitioner a copy of the report of the August 21
survey and directed that Petitioner submit a written plan of correction for the cited
deficiencies within ten calendar days. P. Ex. 5 at 1-2. On September 5, 2013, Petitioner
submitted its plan of correction. P. Ex. 5 at 3-16; CMS Ex. 1 at 5-17 (right column).
There is no dispute that the plan of correction was received by the state survey agency on
September 5, 2013. There is also no dispute that the plan of correction received by the
state survey agency on September 5, 2013, was approved by the state survey agency on
September 9, 2013. CMS Ex. | at 5-20, 29; P. Ex. 6.

CMS notified Petitioner on October 25, 2013, that Petitioner was approved to participate
in Medicare as an ESRD supplier effective September 9, 2013. CMS Ex. | at 21-22.
However, on November 5, 2013, CMS corrected the effective date of Petitioner’s
enrolment to September 5, 2013. CMS Ex. | at 23-24. Petitioner was notified of the
effective date change by CMS on November 11, 2013. CMS Ex. | at 25-26.

On January 14, 2014, Petitioner requested that the effective date of its approval to
participate in Medicare as an ESRD supplier be changed from September 5, 2013 to
August 5, 2013. CMS Ex. 27-28; P. Ex. 1. CMS denied Petitioner’s request (CMS Ex. 1
at 1-2) and Petitioner argues before me that I should make the requested change. P. Br. at
2.

Petitioner argues that its effective date should be based on the July 29, 2013 survey that
found no deficiencies. Petitioner argues that CMS conducted the July 29 survey; found
no deficiencies; and cleared Petitioner to treat patients. P. Ex. 2 at 2; P. Br. at 1-2.
Petitioner’s argument mischaracterizes the evidence. The July 29 survey was completed
by the state survey agency for the purpose of determining whether Petitioner met state
licensing requirements, not for determining whether Petitioner met the federal conditions
for coverage established by 42 C.F.R. pt. 494. CMS Ex. | at 4. Petitioner has presented
no evidence that conflicts with my reading of CMS Ex. | at 4 or that shows a genuine
dispute regarding whether Petitioner’s compliance with federal conditions for coverage
was assessed by the survey completed on July 29, 2013. The Board has considered this
issue in prior cases and concluded that a state licensure survey is no substitute for the
survey required to determine compliance with federal participation requirements or
conditions for coverage. Cmty. Hosp. of Long Beach, DAB No. 1938, at 8-9 (2004) (fact

that state agency surveyors determined hospital met state hospital standards for licensure
does not show facility met federal hospital standards on the date of state licensure
survey); Arbor Hosp. of Greater Indianapolis, DAB No. 1591, at 6 (1996) (regulations
require that the survey process be used to examine a facility’s compliance with applicable
program requirements and Medicare participation is not effective until all federal health
and safety conditions of participation are met).

The evidence before me shows, and I conclude, that there is no genuine dispute as to the
material fact that Petitioner’s compliance with federal conditions for coverage was not
assessed by a survey prior to the survey completed on August 21, 2013. Petitioner has
presented no evidence from which I might infer that Petitioner’s compliance with the
federal requirements was assessed prior to August 21, 2013.

lam bound to follow the regulations and the regulation is clear in this case. The survey
completed on August 21, 2013, was the survey that assessed whether Petitioner met the
federal conditions for coverage. The survey found no condition-level violations but
found standard-level deficiencies. When the required survey determines that an ESRD
supplier meets all conditions for coverage but has standard-level deficiencies, the
effective date of approval as an ESRD supplier is the date on which CMS or the state
survey agency received an acceptable plan of correction for the standard-level
deficiencies.’ 42 C.F.R. § 489.13(c)(2)(ii)(A). Petitioner’s plan of correction was
received by CMS or the state survey agency on September 5, 2013, and that is the earliest
effective date of approval and enrollment as an ESRD supplier permitted under the
regulations.

Petitioner raises several equitable arguments related to the need for Petitioner to begin
delivering dialysis services on August 5, 2013; the cost associated with delivering
dialysis services; and the adverse economic impact upon Petitioner if Medicare does not
reimburse for services rendered between August 5 and September 5, 2013. However, I
have no authority to deviate from the requirements of the regulation to accord Petitioner
relief on equitable grounds in the form of an earlier effective date or an order for CMS to
reimburse for services rendered. US Ultrasound, DAB No. 2302, at 8 (2010) (“[nJeither
the ALJ nor the Board is authorized to provide equitable relief by reimbursing or
enrolling a supplier who does not meet statutory or regulatory requirements.”) I also
have no authority to declare statutes or regulations invalid or ultra vires.
1866I1CPayday.com, L.L.C., DAB No. 2289, at 14 (2009) (“[a]n ALJ is bound by

* There is no issue that Petitioner met all other enrollment requirements and there was no
request for waiver under 42 C.F.R. § 489.13(c)(2)(ii)(B).
applicable laws and regulations and may not invalidate either a law or regulation on any
ground.”).

HI. Conclusion
For the foregoing reasons, I conclude that the effective date of Petitioner’s approval as an

ESRD supplier and Medicare enrollment was September 5, 2013.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

James Atkinson,
Petitioner,
v.

The Inspector General.

Docket No. C-14-1071

Decision No. CR3341

Date: August 21, 2014

DECISION

I sustain the determination of the Inspector General (I.G.) to exclude Petitioner, James
Atkinson, from participating in Medicare, State health care programs (Medicaid), and all
other federally funded health care programs, for a minimum of five years.
I. Background
Petitioner requested a hearing to challenge the I.G.’s determination to exclude him. I
established a briefing schedule. The L.G. filed a brief and exhibits that are identified as
1G. Ex. 1—LG. Ex. 6. Petitioner filed a response and exhibits that are identified as P.

Ex. 1—P. Ex. 6. The I.G. did not file a reply brief.’ I receive the parties’ exhibits into
the record.

' The LG. asserts that Petitioner’s hearing request fails to state an argument that I have
authority to adjudicate. However, Petitioner raises a justiciable issue, that being whether
he was “convicted” of a crime.
II. Issue, Findings of Fact and Conclusions of Law

A. Issue

The issue is whether Petitioner was convicted of a crime.

B

The LG.
Security
convicte

. Findings of Fact and Conclusions of Law

excluded Petitioner under the authority of section 1128(a)(1) of the Social
Act (Act). This section mandates the exclusion of any individual who is
d of a criminal offense related to the delivery of an item or service under

Medicare or a State health care program (Medicaid). The I.G. excluded Petitioner for at
least five years, the minimum mandatory exclusion period for an individual who is

convicte

d of an 1128(a)(1) crime. Act § 1128(c)(3)(B).

Petitioner does not deny that, if he was convicted of a crime, that crime is an offense
falling within the reach of section 1128(a)(1). In fact, Petitioner was charged under New
Mexico law with the crime of Medicaid fraud and he pled guilty to that crime. LG. Ex. 3

at 1;1.G

Ex. 4 at 1. However, Petitioner asserts that, even if he pled guilty to the crime of

Medicaid fraud, he was not “convicted” of that crime and, therefore, he argues, no basis

exists to

exclude him. I disagree. Petitioner was plainly “convicted” of a crime and,

consequently, the I.G. must exclude him. Act §§ 1128(i)(3), (4)

The gravamen of Petitioner’s argument is that, as part of his plea, he entered into a
“conditional discharge arrangement,” an arrangement that he characterizes as avoiding

any fin

ing of guilt and leaving him in a status equivalent to that of any individual who

has not been convicted of a crime. However, the terms of Petitioner’s plea agreement

make it

plain that the agreement is more than a simple non-finding of guilt. Discharge of

the criminal complaint against Petitioner hinged on his satisfactory completion of

probatio:
included

e
~

e H

n, payment of restitution, and additional requirements. The plea agreement
the following terms:

etitioner pled guilty to the crime of Medicaid fraud. I.G. Ex. 4 at 1.

e was sentenced to a term of probation, to be discharged upon his payment of

restitution in full. LG. Ex. 4 at 1 —2.

e
No

e agreed that, if he violated his probation, he could be incarcerated. I.G. Ex. 4 at

e H

e agreed to a five-year State exclusion from participating in Medicare, Medicaid,

or other federal health care programs. I.G. Ex. 4 at 2.
e He agreed that his probation could be subject to modification in the event that he
violated any of the terms and conditions that were imposed against him. I.G. Ex. 4
at 3.

e He acknowledged that his plea would have the effect of:

T]riggering certain administrative exclusion actions by federal and/or state
agencies... As a result I will be barred from employment by any facility or
agency or as an individual, that is funded in whole or in part by any federally-
funded healthcare program, or any licensed health care facility or agency.

LG. Ex. 4 at 5.

Under section 1128 an individual is “convicted” of a crime when a plea of guilty or nolo
contendere by that individual has been accepted by a federal, State, or local court. Act

§ 1128(4)(3). An individual also is “convicted” when he or she enters into participation in
a first offender, deferred adjudication, or “other arrangement or program where judgment
of conviction has been withheld.” Act § 1128(i)(4).

Petitioner’s agreement falls under both of these subsections. First, he pled guilty to a
crime and a New Mexico court accepted that plea. Act § 1128(i)(3). That is made
evident from Petitioner’s plea agreement. I.G. Ex. 4. It is also made evident by an Order
of Conditional Discharge subsequently signed by a New Mexico State judge. I.G. Ex. 5
at 1-2. That order recites explicitly that Petitioner “entered into a plea of guilty to” the
crime of Medicaid fraud. /d. at 1. The court accepted that plea conditioned on the
various terms that it imposed against Petitioner. Jd. at 1 — 2.

Second, the arrangement that Petitioner entered into was a “deferred adjudication” or
“other arrangement or program where judgment of conviction has been withheld.” Act
§ 1128(i)(4). The Order of Conditional Discharge recites that, “without adjudication of
guilt, further proceedings be deferred... .” I.G. Ex. 5 at 1. That is precisely what is
defined as a “deferred adjudication” arrangement or program by section 1128(i)(4).

Petitioner argues that he was not convicted of a crime because no finding of guilt was
entered against him. Rather, all of the proceedings were dismissed upon Petitioner’s
payment of restitution. But, the absence of a finding of guilt is no impediment to
Petitioner being “convicted” within the meaning of the Act. The Act contemplates that
there will be arrangements in which judgments of conviction are withheld or where
criminal charges are dismissed upon successful completion of court-imposed
requirements. Those arrangements are swept up in the broad definition of “convicted” set
forth by subsections (i)(3) and (4).
Furthermore, it is more than obvious that Petitioner knew that the arrangement that he
entered into would constitute a conviction under the Act and that it would subject him to
civil remedies including exclusion. Indeed, Petitioner agreed to that precise outcome.
1G. Ex. 4 at 4.

Petitioner also attempts to draw a legal distinction between a court receiving and
accepting a plea. He argues that when a court “receives” a plea it does not “accept” it if
subsequently the court discharges the charges against the party entering the plea. This is
a distinction without a difference under the Act, whatever fine lines may be drawn under
New Mexico law. The common and ordinary definition of “accept” is to receive
something.

http://www.merriam-webster.com/dictionary/accept

There is nothing to suggest that the Act uses the term in any way other than its ordinary
sense or meaning. Consequently, Petitioner was “convicted,” his arguments
notwithstanding.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Reme

dies Division

Center for Tobacco Products,

Complainant

Vv.

Khaled M

ohamad

d/b/a Marathon,

Respondent.

Docket No.
FDA Docket No.

. C-14-1338
FDA-2014-H-0820

Decision No. CR3340

Date: August 21, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP)

(Complaint) against Respondent, Khaled
facts and legal authority sufficient to justi
penalty of $500. Respon
request an extension of time within whic
default judgment against Respondent an

CTP began this case by serving the Comp!

the Complaint with the Food and Drug A
Dockets Management. The Complaint al
cigarettes to minors and failed to verify t!

lent did not answ

filed an Administrative Complaint
Mohamad d/b/a Marathon, that alleges
ify the imposition of a civil money

er the Complaint, nor did Respondent
to file an answer. Therefore, I enter a
assess a civil money penalty of $500.

laint on Respondent and filing a copy of
dministration’s (FDA) Division of

leges that Respondent impermissibly sold
at cigarette purchasers were 18 years of

age or older, thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21

ULS.C. § 301 et seg., and
Tobacco, 21 C.F.R. pt. 1

its implementin
40 (2013). CT

g regulations, Cigarettes and Smokeless
P seeks a civil money penalty of $500.

On June 25, 2014, CTP served the Complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and
accompanying cover letter, CTP explained that within 30 days, Respondent should
pay the proposed penalty, file an answer, or request an extension of time within
which to file an answer. CTP warned Respondent that if it failed to take one of
these actions within 30 days, an Administrative Law Judge could, pursuant to 21
C.F.R. § 17.11, issue an initial decision ordering Respondent to pay the full
amount of the proposed penalty.

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

Specifically, CTP alleges the following facts in its Complaint:

e Respondent owns Marathon, an establishment that sells tobacco products
and is located at 9657 Gratiot Avenue, Detroit, Michigan 48213.
Complaint §[ 3.

e During an inspection of Respondent’s establishment on February 28, 2013,
at approximately 6:06 PM, an FDA-commissioned inspector observed that
“a person younger than 18 years of age was able to purchase a package of
Newport Box cigarettes . . . [.]” The inspector also observed that “the
minor’s identification was not verified before the sale... .”. Complaint
q 10.

e¢ On June 20, 2013, CTP issued a Warning Letter to Respondent regarding
the inspector’s observations from February 28, 2013. The letter explained
that the observations constituted violations of regulations found at 21
C.F.R. § 1140.14(a) and (b)(1), and that the named violations were not
necessarily intended to be an exhaustive list of all violations at the
establishment. The Warning Letter went on to state that if Respondent
failed to correct the violations, regulatory action by the FDA or a civil
money penalty action could occur and that Respondent is responsible for
complying with the law. Complaint ¥ 10.

e Khaled Mohamad, Respondent’s owner, responded to the Warning Letter in
an August 29, 2013 telephone call. “Mr. Mohamad stated that the
employee who sold the tobacco product to the minor no longer works at the
establishment . . . [and] that all employees were trained to verify the
identification of every tobacco purchaser who looks under the age of 27,
and not to proceed with a sale if a purchaser is under the age of 18.”
Complaint § 11.

e During a subsequent inspection of Respondent’s establishment on
November 2, 2013, at approximately 12:42 PM, FDA-commissioned
inspectors documented that “a person younger than 18 years of age was
able to purchase package of Newport Box 100s cigarettes . . . [.]” The
inspectors also documented that “the minor’s identification was not verified
before the sale... .” Complaint ¥ 1.

These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is
misbranded if distributed or offered for sale in any state in violation of regulations
issued under section 906(d) of the Act. 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R

§ 1140.1(b). The Secretary of the U.S. Department of Health and Human Services
issued the regulations at 21 C.F.R. pt. 1140 under section 906(d) of the Act. 21
U.S.C. § 387a-1; see 21 U.S.C. § 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar.
19, 2010). The regulations prohibit the sale of cigarettes to any person younger
than 18 years of age. 21 C.F.R. § 1140.14(a). The regulations also require
retailers to verify, by means of photo identification containing a purchaser’s date
of birth, that no cigarette purchasers are younger than 18 years of age. 21 C.F.R.
§ 1140.14(b)(1).

Taking the above alleged facts as true, Respondent violated the prohibition against
selling cigarettes to persons younger than 18 years of age, 21 C.F.R. § 1140.14(a),
on February 28, 2013, and November 2, 2013. On those same dates, Respondent
also violated the requirement that retailers verify, by means of photo identification
containing a purchaser’s date of birth, that no cigarette purchasers are younger
than 18 years of age. 21 C.F.R. § 1140.14(b)(1). Therefore, Respondent’s actions
constitute violations of law that merit a civil money penalty.

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

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Beth A. Edwards, P.A.,
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-860
Decision No. CR3339

Date: August 20, 2014

DECISION

The Centers for Medicare & Medicaid Services (CMS), through its administrative
contractor, National Government Services (NGS), determined that the effective date of
enrollment for Beth A. Edwards, P.A. (Petitioner) as a Medicare supplier was June 24,
2013, with a retrospective billing period starting on May 25, 2013. Petitioner disputed
this determination and requested a hearing before an administrative law judge. For the
reasons stated below, I reverse NGS’s determination and set April 1, 2013, as Petitioner’s
date of enrollment and effective date of Medicare billing privileges.

I. Background and Procedural History

On March 19, 2013, NGS received an application (Form CMS-855I) from Petitioner to
enroll in the Medicare program as a physician assistant. CMS Exhibit (Ex.) 3.
Petitioner’s application was the version approved in February 2008. CMS Ex. 3, at 2-11.
Petitioner indicated on the enrollment application that her employment would begin April
1, 2013. CMS Ex. 3, at 1, 7.
Ina June 19, 2013 letter, NGS confirmed receipt of Petitioner’s enrollment application,
but stated that her application would be rejected if, within 30 days from the postmark on
the letter, she failed to complete and submit the July 2011 version of the Form CMS-
8551. CMS Ex. 4. On June 24, 2013, NGS received a completed July 2011 version of
the Form CMS-855I from Petitioner. CMS Ex. 5. Ina July 19, 2013 letter, NGS
informed Petitioner that it was closing and returning Petitioner’s enrollment application
that NGS received on March 19, 2013, because NGS received Petitioner’s second
enrollment application filed on June 24, 2013. CMS Ex. 6.

On October 1, 2013, NGS issued an initial determination in which it established May 25,
2013, as the effective date for billing privileges. CMS Ex. 7. On November 1, 2013,
Petitioner requested reconsideration of the effective date for billing privileges. CMS Ex.
8. In the request, Petitioner argued that NGS should not have considered Petitioner’s
second application as a new enrollment application because Petitioner timely submitted
the correct version of the enrollment application in response to NGS’s June 19, 2013
letter. CMS Ex. 8, at 2. Petitioner therefore concluded that her effective date for billing
privileges should be April 1, 2013. CMS Ex. 8, at 2. NGS issued an unfavorable
reconsidered determination on March 10, 2014, in which the entire substantive discussion
of Petitioner’s case was: “Physician Assistants follow a 30 day [sic] effective date from
the day application was received. Application was received on 06/24/2013 so thirty days
prior would be 05/25/2013.” CMS Ex. 9, at 1.

In response to the unfavorable reconsidered determination, Petitioner requested a hearing
before an administrative law judge. In response to my April 4, 2014 Acknowledgment
and Pre-hearing Order (Order), CMS filed a motion for summary judgment (CMS Br.),
exhibit list,? and 11 exhibits (CMS Exs. I-11). Petitioner filed a brief (P. Br.), exhibit
list, and four exhibits (P. Exs. 1-4).

II. Decision on the Written Record

Neither party objected to any of the proposed exhibits. See Order § 7. Therefore, I admit
CMS Exs. 1-11 and P. Exs. 1-4 into the record.

' This effective date for Medicare billing privileges is in fact a retrospective billing
period that may be set 30 days prior to the day that CMS received an enrollment
application. See 42 C.F.R. § 424.521(a)(1); Jorge M. Ballesteros, CNRA, DAB CR2067,
at 2 (2010) (“CMS apparently sets enrollment effective dates 30 days prior to the date of
application, which is what the Medicare contractor did here.”).

> Petitioner objects to the CMS’s exhibit list because the case caption on that document
provided incorrect information. P. Br. at 3. Subsequently, CMS requested leave to
submit a corrected exhibit list. I grant CMS’s unopposed request.
My Order advised the parties that they must submit written direct testimony for each
proposed witness and that an in-person hearing would only be necessary if the opposing
party requested an opportunity to cross-examine a witness. Order §{ 8, 9, 10; Vandalia
Park, DAB No. 1940 (2004); Pacific Regency Arvin, DAB No. 1823, at 8 (2002)
(holding that the use of written direct testimony for witnesses is permissible so long as
the opposing party has the opportunity to cross-examine those witnesses).’ Neither party
offered any witnesses. Consequently, I will not hold an in-person hearing in this matter
and I will decide this matter based on the written record.* Order § 11.

II. Issues
Whether CMS had a legitimate basis for establishing June 24, 2013, as the effective date
of Petitioner’s Medicare billing privileges and, if not, what is the proper effective date for

Petitioner’s Medicare billing privileges.

IV. Jurisdiction

ave jurisdiction to decide these issues. 42 C.F.R. § 498.3(b)(15); see also 42 U.S.C.
1395ce(j)(8).

an

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

The Social Security Act authorizes the Secretary of Health and Human Services
(Secretary) to promulgate regulations governing the enrollment process for providers and
suppliers.° 42 U.S.C. §§ 1302, 1395cc(j). Under the Secretary’s regulations, a provider
or supplier seeking billing privileges under the Medicare program must “submit
enrollment information on the applicable enrollment application. Once the provider or

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

* Because I am reversing CMS’s determination in this case, I am implicitly denying
CMS’s motion for summary judgment.

> My findings of fact and conclusions of law are set forth in italics and bold font.
° Petitioner is considered a “supplier” for purposes of the Medicare program. See

42 C.F.R. § 498.2 (definition of Supplier); see also 42 C.F.R. §§ 400.202 (definition of
Supplier); 410.74(c).
supplier successfully completes the enrollment process . . . CMS enrolls the provider or
supplier into the Medicare program.” 42 C.F.R. § 424.510(a). CMS then establishes an
effective date for billing privileges under the requirements stated in 42 C.F.R. § 424.520
and may permit limited retrospective billing under 42 C.F.R. § 424.521.

1. Petitioner filed a completed Form CMS-855I (February 2008 version)
to enroll as a supplier in the Medicare program, which NGS received
on March 19, 2013. CMS Ex. 3.

2. NGS informed Petitioner by letter that she filed an outdated version of
the Form CMS-855I and warned Petitioner that if she did not submit
a completed Form CMS-855I (July 2011 version) within 30 days of
NGS’s June 19, 2013 letter, NGS would reject Petitioner’s application.
CMS Ex. 4.

3. Petitioner timely filed a completed Form CMS-855I (July 2011
version), which NGS received on June 24, 2013. CMS Ex. 5.

4. NGS subsequently approved Petitioner’s enrollment application (i.e.,
the Form CMS-855I (July 2011 version) and established an
enrollment date of June 24, 2013, and a retrospective billing effective
date of May 25, 2013. See CMS Exs. 7; 9.

5. The proper effective date for Petitioner’s enrollment as a supplier in
the Medicare program and Medicare billing privileges is April 1, 2013.

The relevant regulation that controls the effective date for Medicare billing privileges
states:

The effective date for billing privileges for physicians,
nonphysician practitioners, and physician and nonphysician
practitioner organizations is the later of the date of filing of a
Medicare enrollment application that was subsequently
approved by a Medicare contractor or the date an enrolled
physician or nonphysician practitioner first began furnishing
services at a new practice location.

42 C.F.R. § 424.520(d) (emphasis added). The “date of filing” is the date that the
Medicare contractor “receives” a signed provider enrollment application that the
Medicare contractor is able to process to approval. 73 Fed. Reg. 69,726, 69,769 (Nov.
19, 2008); see also Caroline Lott Douglas, PA, DAB CR2406, at 5-7 (2011); Rizwan
Sadig, M.D., DAB CR2401, at 5 (2011).
At issue in this case is whether the date that Petitioner filed her first or second Form
CMS-855I should control the effective date for Petitioner’s Medicare billing privileges.
Petitioner argues that NGS properly treated her mistaken filing of an outdated enrollment
application as a potential reason to reject the application and thus correctly afforded
Petitioner 30 days to file a current version of the CMS-855I. P. Br. at 2-3; CMS Ex. 4.
CMS argues that NGS’s action in “returning” Petitioner’s outdated Form CMS-8551
meant that it was as if Petitioner had never filed the first application; therefore, NGS
properly set the effective date for billing privileges based on the date of receipt of the
second Form CMS-855I. CMS Br. at 9-11; CMS Ex. 6.

The regulations provide that CMS may reject a provider or supplier’s enrollment
application if a provider or supplier fails to provide complete information on the
enrollment application or complete documentation with the enrollment application within
30 days from the date the CMS contractor requests the missing information. 42 C.F.R.

§ 424.525(a)(1)-(2). CMS’s instructions to its contractors clearly direct contractors to
treat the filing of an outdated enrollment application under the rejection provision in
order to give providers or suppliers 30 days to file the most recent version of the Form
CMS-855.

In accordance with 42 CFR § 424.525(a)(1) and (2), the
contractor (including the National Supplier Clearinghouse)
may reject the provider’s application if the provider fails to
furnish complete information on the enrollment application -
including all necessary documentation - within 30 calendar
days from the date the contractor requested the missing
information or documentation. For purposes of this policy,
this includes situations in which the provider submitted an
application that falls into one of the following categories ....

(2) The submitted paper application is an outdated version of
the Form CMS-855.

The applications described in (1) through (8) above shall be
developed, rather than returned.

The provider must furnish all missing and clarifying data
requested by the contractor within the applicable timeframe.
If the provider furnishes some, but not all, of the requested
data, the contractor is not required to contact the provider
again to request the remaining data. It can simply reject the
application at the expiration of the aforementioned 30-day
period. Consider the following examples:

* The provider submits an outdated version of the Form CMS-
855B. On July 1, the contractor requests that the provider
resubmit its application using the current version of the Form
CMS-855B. On July 15, the provider submits the correct
version, but section 4B is blank. The contractor is not
required to make a follow-up request regarding section 4B. It
can reject the application on July 31.”

Medicare Program Integrity Manual (MPIM) § 15.8.2(A), (C).®

In addition to the plain language of the provision quoted above (which expressly
prohibits contractors from returning an application on an outdated form) it should be
noted that the procedure CMS relies on to substantiate its return of Petitioner’s
enrollment application does not appear in the regulations and is expressly limited to
certain specified situations, none of which include the filing of an outdated application.
MPIM § 15.8.1 (CMS Ex. 11).

7 This section of the MPIM only uses the word “provider” and does not use “supplier.”
However, this MPIM section has been applied to suppliers. Bird’s Song of North
Carolina, DAB CR3243 (2014); Neurology Care Consultants, LLC, ALJ Ruling 2014-29
(HHS CRD April 9, 2014); Medical Services of Suffolk County PC, DAB CR3149
(2014). Further, it is obvious that CMS’s failure to include the word “supplier” is simply
an oversight because, in the example when to reject an application quoted above, it refers
to an outdated Form CMS-855B; a Form CMS-855B is filed by suppliers, and not
providers, to enroll. MPIM § 15.1.2 (CMS Ex. | at 2). The Form CMS-855B can be
found on CMS’s website at: http://www.cms.gov/Medicare/CMS-Forms/CMS-
Forms/CMS-Forms-Items/CMS019476.html.

® The only version of this MPIM section available on CMS’s website appears to have
been issued on July 5, 2013 (http://www.cms.gov/Regulations-and-Guidance/Manuals/
Internet-Only-Manuals-IOMs-Items/CMS019033.html?DLPage=1&DLSort=
0&DLSortDir=ascending. However, a review of the transmittal for the July 5, 2013
changes shows that those changes did not affect MPIM § 15.8.2(A), (C). CMS Manual
System, Transmittal 474 (July 5, 2013) (http://www.cms.gov/Regulations-and-
Guidance/Guidance/Transmittals/index.html?redirect=/Transmittals/01_overview.asp).

Because NGS properly processed Petitioner’s application under the rejection procedures
and gave Petitioner an opportunity to submit a current application, and NGS approved
that application, NGS ought to have assigned an effective date for Medicare billing
privileges that was consistent with the filing date of the original application. See Bird’s
Song of North Carolina, DAB CR3243, at 3 (2014); Medical Services of Suffolk County,
PC, DAB CR3149, at 2-3 (2014). Although Petitioner’s application was received on
March 19, 2013, Medicare billing privileges should have been made effective April 1,
2013, because that is the first date Petitioner began furnishing services at her practice
location (P. Br. at 4; CMS Exs. 3, at 1, 7; 5, at 1, 7; 8, at 2). 42 C.F.R. § 424.520(d).

VI. Conclusion and Order

For the reasons stated above, | REVERSE CMS’s determination regarding the effective
date of Petitioner’s billing privileges. Petitioner’s date of enrollment as a supplier in the
Medicare program and Petitioner’s effective date for Medicare billing privileges is
April 1, 2013.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Marcie A. Conlon,
(OI File No. H-13-42844-9),

Petitioner,
v.
The Inspector General
Docket No. C-14-910
Decision No. CR3338

Date: August 20, 2014

DECISION

Petitioner, Marcie A. Conlon, is a registered nurse, practicing in New York, who forged
prescriptions for the narcotic, Percocet. She pled guilty in state court to one count of
felony criminal possession of a forged instrument. Pursuant to section 1128(a)(4) of the
Social Security Act (Act), the Inspector General (I.G.) has excluded her from
participating in Medicare, Medicaid, and all federal health care programs for a period of
five years. Petitioner appeals the exclusion.

For the reasons discussed below, I find that the I.G. is authorized to exclude Petitioner
and that the statute mandates a minimum five-year exclusion.

Background

In a letter dated March 31, 2014, the I.G. advised Petitioner Conlon that she was
excluded from participation in Medicare, Medicaid, and all federal health care programs
because she had been convicted of a felony offense related to the unlawful manufacture,
distribution, prescription, or dispensing of a controlled substance. I.G. Ex. 1. Petitioner
requested review.
The L.G. submitted its brief (I.G. Br.) and three exhibits (I.G. Exs. 1-3). In the absence of
any objection, I admit into evidence I.G. Exs. 1-3. Petitioner submitted a brief (P. Br.),
which included a letter dated June 5 (P. Ltr.) and additional documents, which she did not
mark as exhibits. They include: letters from the Office of Professional Discipline for the
New York State Education Department, dated September 19, 2013 and October 13, 2013;
letters attesting to her character and recovery from addictions; and a December 18, 2013
letter from her then attorney to the I.G., responding to the proposed exclusion.

I directed the parties to indicate in their briefs whether an in-person hearing would be
necessary, and, if so, to “provide the written direct testimony of any proposed witness in
writing and under oath or affirmation.” I also directed the parties “to explain why the
testimony is relevant” and why any witness’s proposed “testimony does not duplicate
written evidence that has been submitted by either party.” Order and Schedule for Filing
Briefs and Documentary Evidence at 2 (May 7, 2014). The LG. indicates that an in-
person hearing is not necessary and submits no declarations from proposed witnesses.
1.G. Br. at 4-5. Petitioner, on the other hand, asserts that an in-person hearing is
necessary, and lists witnesses who will testify regarding her character, her substance
abuse problems, and her recovery. She does not submit written declarations from her
proposed witnesses. As discussed below, this proposed testimony is simply not relevant
to the narrow issues before me. By regulation, I must exclude irrelevant or immaterial
evidence. 42 C.F.R. § 1005.17(c). Iam therefore obligated to exclude the proposed
testimony, and I decline to schedule a hearing that would serve no purpose.

Discussion

Because Petitioner was convicted of a felony relating to the
unlawful manufacture, distribution, prescription, or dispensing
of a controlled substance, she must be excluded from program
participation for at least five years. Act §§ 1128(a)(4),
()(3)(B). *

Section 1128(a)(4) of the Act requires the Secretary of Health and Human Services to
exclude from program participation any individual or entity convicted of a felony
criminal offense “relating to the unlawful manufacture, distribution, prescription, or
dispensing of a controlled substance.”

Here, Petitioner concedes that she was convicted of a drug-related felony. As she admits,
and the evidence establishes, she was addicted to the narcotic Percocet, and, to obtain the
drug, she stole her (nurse practitioner/physician) parents’ prescription pads, forged

' T make this one finding of fact/conclusion of law.
prescriptions for the drug, and presented the fraudulent prescriptions to drug stores. P.
Ltr.; LG. Ex. 2. On August 7, 2012, she pled guilty to one count of criminal possession
of a forged instrument, a class D felony (N.Y. Penal Law § 170.25). 1.G. Exs. 2, 3. She
was sentenced to five months probation and 250 hours of community service. IG. Ex. 2.

The undisputed evidence therefore establishes that Petitioner Conlon was convicted of a
felony relating to the unlawful prescription or dispensing of a controlled substance, and
she must be excluded from program participation.

Petitioner maintains that she has retained her nursing license and is an excellent nurse.
She has completed abuse rehabilitation and maintains sobriety. She points out that
excluding her “substantially limits [her] practice as a nurse.” P. Ltr. I accept all of these
assertions as true; however, they are not bases for overturning a mandatory exclusion.

I have no authority to reduce the length of her exclusion. An exclusion brought under
section 1128(a)(4) must be for a minimum period of five years. Act § 1128(c)(3)(B);
42 C.F.R. § 1001.2007(a)(2).

Conclusion

For these reasons, I conclude that the I.G. properly excluded Petitioner Conlon from
participation in Medicare, Medicaid, and all other federal health care programs, and that
period of exclusion must be for a minimum of five years.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Salem Healthcare and Rehabilitation Center, LLC,
(CCN: 36-5977),
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-191
Decision Number CR3337

Date: August 20, 2014

DECISION

I sustain the determination of the Centers for Medicare & Medicaid Services (CMS) to
impose a $2700 per-instance civil money penalty against Petitioner, Salem Healthcare
and Rehabilitation Center.

I. Background

Petitioner is a skilled nursing facility doing business in the State of Ohio. It requested a
hearing to challenge CMS’s determination to impose the remedy that I cite above. CMS
filed a pre-hearing exchange consisting of a brief plus 16 proposed exhibits that are
identified as CMS Ex. 1 — CMS Ex. 16. In its pre-hearing exchange Petitioner filed a
brief and 14 proposed exhibits that are identified as P. Ex. 1 — P. Ex. 18. CMS objected
to my receiving one of these exhibits, P. Ex. 8. I ruled that the exhibit must be excluded.

The exhibit consists of a video reenactment of the incident that is the basis for CMS’s
remedy determination. I excluded the exhibit because I found it to be inherently

unreliable and prejudicial to CMS. It is advocacy rather than evidence. Excluding the
exhibit did not prevent Petitioner from providing me with evidence of what transpired

during the incident. Such evidence, consisting of contemporaneous records of the
incident and statements by eyewitnesses, is inherently far less tainted than a staged
reenactment of those events.

The parties advised me that they did not desire an in-person hearing. I afforded CMS the
opportunity to file a reply to Petitioner’s pre-hearing brief. CMS did so but filed it
untimely, some weeks after it was due and only after being prodded at my direction by
the Departmental Appeals Board Civil Remedies Division staff attorney who is assigned
to work with me on this case. Petitioner objects to my receiving this brief because it was
filed untimely and because it contends that it will be prejudiced if I receive it.

CMS’s failure to file its brief timely plainly is annoying but it does not rise to the level of
a prejudicial event. It is apparent that CMS drafted the brief timely but that its counsel or
its counsel’s staff forgot to mail it. That would be a fatal error if the brief consisted of a
jurisdictional document. But, it is not, and I see no harm in considering it, especially
inasmuch as it is advocacy only and contains no additional evidence.

IL. Issues, Findings of Fact, and Conclusions of Law
A. Issues

The issues are whether: Petitioner failed to comply substantially with a Medicare
participation requirement; and CMS’s remedy determination is reasonable.

Petitioner sometimes seems to concede that it may not have complied substantially with a
participation requirement but that the scope and severity that CMS assigned to this
noncompliance (a so-called “level G” deficiency) is unreasonable and that it should be
reduced. If that were Petitioner’s sole argument I would dismiss its hearing request,
because I have no authority to address scope and severity levels of noncompliance except
where the issue is a remedy that is based on immediate jeopardy level noncompliance
versus a remedy that might be imposed for something that is less than immediate
jeopardy. However, Petitioner also argues that it was, in fact, in compliance with
participation requirements and that is an issue that I do have authority to hear and decide.

B. Findings of Fact and Conclusions of Law

CMS alleges that Petitioner failed to comply substantially with the requirements of

42 C.F.R. § 483.25(h)(1) and (2). This regulation requires that facility’s resident
environment be free of accident hazards and that the facility provide each of its residents
with adequate supervision and assistance devices to prevent residents from sustaining
accidents. The regulation has been interpreted on innumerable occasions to impose on a
skilled nursing facility the duty to take all reasonable measures to protect residents
against foreseeable accidents.
The noncompliance allegations revolve around the care Petitioner gave to a resident who
is identified as Resident # 60 and, in particular, around the care Petitioner’s staff gave to
that resident on one day, July 25, 2013. As of that date, the resident was a 79-year old
man who had been admitted to Petitioner’s facility just two days previously. He had been
discharged to Petitioner’s facility from a hospital after suffering a fall and subsequent
cerebral hemorrhage. He had a variety of debilitating illnesses that included Alzheimer’s
Disease, mental retardation, seizures, depression, anxiety, and coronary artery disease.
On July 24, 2013, Petitioner’s staff evaluated the resident and assessed him as having
moderate to severe cognitive deficits and significantly decreased balance, gait and
transfer ability. The staff found that the resident ambulated impulsively, meaning he was
prone to getting up and attempting to walk without warning. The staff also found that he
was unable to apply skills to untrained tasks, had poor ability to negotiate obstacles, and
ad reduced insight for unsafe situations. CMS Ex. 11 at 31 — 32; CMS Ex. 12 at 1,
4—5,8, 10, 12, 15, 19.

Petitioner’s staff concluded that Resident # 60 was at risk for: falls; further decline in
functioning; immobility; and, increased dependency on caregivers. The staff decided that
the resident needed one-on-one supervision, meaning that he needed to be under
continuous observation by Petitioner’s staff. CMS Ex. 11 at 31 — 33; CMS Ex. 12 at 1,
4-5, 8, 10, 15, 19.

On July 25, Resident # 60 was in a wheelchair and seated at a table in Petitioner’s dining
room. A nurse’s aide was assigned to sit with the resident. Another resident’s
Wanderguard bracelet sounded at a nearby elevator. The nurse’s aide rose from her seat
and walked a couple of steps in order to gain a clear view of the elevator and to determine
what was happening there, thus ceasing to observe Resident # 60 and physically
separating herself from him. As the aide did that, Resident # 60 attempted to stand from
his wheelchair. The chair moved because it was not locked. The resident took a few
steps and fell to the floor, fracturing his hip. CMS Ex. 11 at 32 — 35; CMS Ex. 12 at 2,
6-11, CMS Ex. 13 at 41 — 44, 86 — 100.

These facts plainly describe a failure by Petitioner to protect Resident # 60 against a
foreseeable event consisting of the likelihood that he would fall if not supervised
adequately. Petitioner’s staff assessed the resident as being at a high risk for falling as a
result of his physical infirmities and his mental impairments. He was not only unstable
but he had a tendency to ambulate impulsively, meaning that he might attempt to get out
of his chair and ambulate at any time and without warning. That is why Petitioner
assigned one-on-one supervision to the resident.

One-on-one supervision meant that the resident needed to be under continuous
observation. Nothing short of that would suffice given the resident’s many infirmities

coupled with his impulsiveness and lack of judgment. A staff member needed not only to
watch the resident continuously but be close enough to the resident so that the staff
member could intervene and protect the resident if he began to stand and walk.

That level of protection obviously was lacking on July 25, 2013. The nurse’s aide
assigned to provide one-on-one supervision to Resident # 60 allowed herself to be
distracted just long enough to enable the resident to stand and to begin walking. And, at
that moment, the aide had moved sufficiently far enough away from the resident so that
she was unable to provide the resident with physical support and protection as he lost his
balance and began to fall.

It is no defense to argue that the aide’s distraction was only momentary. The one-on-one
observation that the staff ordered was supposed to be continuous and seamless. The idea
was that someone would be assigned to the resident who could watch him constantly and
to be available at all times should there be a need for assistance. Any disruption in that
observation — no matter how brief and no matter how well-intentioned it may have been —
deprived the resident of the level of supervision that he needed and put the resident at risk
for precisely the fall and injury that he sustained.

Petitioner argues that it provided Resident # 60 with several levels of protection,
including floor mats at his bedside, bed and chair alarms, and one-on-one supervision and
that his fall and resulting injury were sustained despite all of the protection that he
received. In other words, Petitioner essentially argues that it did its best and should not
be penalized for an accident that occurred despite Petitioner’s best efforts to protect the
resident.

The facts belie this assertion. As I have discussed, Petitioner’s staff assessed this resident
—and with good reason — as needing continuous observation and protection. Providing
the resident with less than continuous observation and protection constituted a failure to
give the resident what Petitioner’s own staff concluded that he needed.

Petitioner argues also that the nursing assistant who was assigned to the resident on July
25 had no choice but to stand and to move away from the resident — even if momentarily
— because there was a pillar blocking her view of the facility elevator. The assistant had
to step around the pillar in order to observe the elevator area and ascertain why another
resident’s Wanderguard alarm had sounded.

However, the entire point of assigning one-on-one supervision to Resident # 60 was to
ensure that whatever staff member assigned that responsibility would not have other and
potentially distracting responsibilities. The nursing assistant should not have diverted her
attention from the resident to ascertain the reason for the Wanderguard sounding. Either
the staff member violated her responsibilities by responding to the Wanderguard, or, the
staff member should never have been assigned the responsibility of observing Resident #
60 and responding to distractions such as another resident’s Wanderguard sounding.

Petitioner argues also that another nursing assistant was in a position to respond
immediately to Resident # 60 after he sustained his fall. That may be true but it is no
justification for leaving the resident unsupervised, even momentarily.

The remedy that CMS imposed in this case, a $2700 per-instance civil money penalty, is
near the low end of the range of permissible per-instance penalties of from $1000 to
$10,000. 42 C.F.R. § 488.438(a)(2). In this case the penalty amount of $2700 is amply
justified by the seriousness of Petitioner’s noncompliance. 42 C.F.R. § 488.438(f)(3)
(incorporating 42 C.F.R. § 488.404 by reference). Petitioner does not contest the penalty
amount. Rather, it argues that, even if the penalty amount is justified, the scope and
severity of its noncompliance (level ““G”) is not. As I have discussed, I have no authority
to address that argument. 42 C.F.R. § 498.3(b)(14)(i).

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Center for Tobacco Products,
(FDA No. FDA-2014-H-0836)
Complainant
v.
Juan Antonio Guevara d/b/a Don Juan’s 2,
Respondent.
Docket No. C-14-1341
Decision No. 3336
Date: August 19, 2014
INITIAL DECISION AND DEFAULT JUDGMENT
The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Juan Antonio Guevara d/b/a Don Juan’s 2, at 7359 North
Bentsen Palm Drive, Mission, Texas 78574, and by filing a copy of the complaint with
the Food and Drug Administration’s (FDA) Division of Dockets Management. The
complaint alleges that Don Juan’s 2 unlawfully sold cigarettes to minors and failed to
verify the ages of tobacco purchasers by means of photographic identification containing
the bearer’s date of birth, thereby violating the Federal Food, Drug, and Cosmetic Act

(Act), 21 U.S.C. § 301 et seg., and its implementing regulations, 21 C.F.R. pt. 1140. CTP
seeks to impose a $500 civil money penalty against Respondent Don Juan’s 2.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on June 25, 2014, CTP served the
complaint on Respondent Don Juan’s 2 by United Parcel Service. In the complaint and
accompanying cover letter, CTP explained that, within 30 days, Respondent should pay
the penalty, file an answer, or request an extension of time in which to file an answer.
CTP warned Respondent that, if it failed to take one of these actions within 30 days, the
Administrative Law Judge could, pursuant to 21 C.F.R. § 17.11, issue an initial decision
ordering it to pay the full amount of the proposed penalty.

Respondent Don Juan’s 2 has neither filed an answer within the time prescribed, nor
requested an extension of time within which to file an answer. Pursuant to 21 C.F.R.
§ 17.11, Lassume that the facts alleged in the complaint (but not its conclusory

statements) are true. Specifically:

e At Respondent’s business establishment, 7359 North Bentsen Palm Drive,
Mission, Texas 78574, on February 24, 2013, at approximately 3:14 PM CT, an
FDA-commissioned inspector observed Respondent’s staff sell a package of
Camel Crush Regular Fresh cigarettes to a person younger than 18 years of age.
The inspector also noted that Respondent’s staff failed to verify, by means of
photo identification containing the bearer’s date of birth, that the cigarette
purchaser was 18 years of age or older;

e Ina warning letter issued on March 14, 2013, CTP informed Respondent of the
inspector’s observations from February 24, 2013, and that such actions violate
federal law, 21 C.F.R. § 1140.14(a) and (b)(1). The letter further warned that if
Respondent failed to correct its violations, the FDA could impose a civil money
penalty or take other regulatory action;

e At Respondent’s business establishment, 7359 North Bentsen Palm Drive,
Mission, Texas 78574, on January 11, 2014, at approximately 10:35 AM, FDA-
commissioned inspectors documented Respondent’s staff selling a package of
Marlboro cigarettes to a person younger than 18 years of age. The inspectors also
noted that Respondent’s staff failed to verify, by means of photo identification
containing the bearer’s date of birth, that the cigarette purchaser was 18 years of
age or older.

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

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

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

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

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

For these reasons, I enter default judgment in the amount of $500 against Respondent
Juan Antonio Guevara d/b/a Don Juan’s 2. Pursuant to 21 C.F.R. § 17.11 (b), this order
becomes final and binding upon both parties after 30 days of the date of its issuance.

/s/
Catherine Ravinski
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Emannuel Adebayo Ayodele, M.D.,
Petitioner,
v.
The Inspector General.
Docket No. C-14-944
Decision No. CR3335

Date: August 19, 2014

DECISION

I sustain the determination of the Inspector General (1.G.) to exclude Petitioner,
Emannuel Adebayo Ayodele, M.D., from participating in Medicare, State
Medicaid programs, and all other federally funded health care programs for a
minimum period of 20 years.

I. Background

Petitioner requested a hearing in order to challenge the I.G.’s determination to
exclude him. The L.G., at my direction, filed a brief and four exhibits that he
identified as I.G. Ex. 1 — .G. Ex. 4.' Petitioner filed a brief and one exhibit that
he identified as P. Ex. 1. I receive all of these exhibits into the record.

' The LG. also filed a motion to dismiss Petitioner’s hearing request, asserting that
Petitioner failed to state an argument that I had authority to hear and decide. I
deny that motion. Petitioner’s arguments — which go to the lawfulness of his
conviction — may not be legitimate defenses to the I.G.’s exclusion determination,
but I nevertheless have the authority to decide whether they are legitimate.
2

The I.G. did not request to present testimony in person. Petitioner requested that
he be allowed to testify. I deny that request for the following reasons. First, I
ordered both parties to reduce any proposed testimony to written declaration or
affidavit form. Petitioner did not comply with that directive. Second, the
testimony that Petitioner offers is not relevant. He seeks to testify that his guilty
plea to the crimes of which he was convicted was “hopelessly defective.” He
seeks to testify also in order to offer certain technical and legal arguments that he
asserts would invalidate his conviction. As I explain below, the authority to
exclude Petitioner in this case derives from his conviction. Petitioner may

exercise his right to appeal his conviction in the appropriate forum, but he may not
collaterally attack it here and he certainly has no right to litigate before me the
merits of the charges to which he pled guilty. Moreover, Petitioner’s arguments
are legal arguments. Petitioner is not qualified to testify about matters of law.

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

The issues are: whether Petitioner was convicted of a criminal offense within the
meaning of section 1128(a)(1) of the Social Security Act (Act); and, whether an
exclusion of at least 20 years is reasonable.

B. Findings of Fact and Conclusions of Law

Section 1128(a)(1) of the Act mandates the exclusion of any individual who is
convicted of a criminal offense related to the delivery of an item or service under
Medicare or a State health care program (State Medicaid program). The evidence
offered by the I.G. proves conclusively that Petitioner was convicted of a crime as
is described in section 1128(a)(1).

On May 28, 2013, Petitioner pled guilty to the federal crime of health care fraud.
1.G. Ex. 3. Subsequently, a United States District Court entered a judgment of
conviction against Petitioner based on his plea. I.G. Ex. 4. Petitioner, a physician,
specifically pled guilty to writing fraudulent prescriptions for durable medical
equipment (DME) to be used as documentation for false Medicare reimbursement
claims. I.G. Ex. 2 at 2-3. Petitioner committed his fraud to support a widespread
scheme to defraud the Medicare program.

Petitioner’s conviction plainly relates to the delivery of Medicare items or
services. Fraud directed against the Medicare program based on the filing of false
reimbursement claims or the generation of documentation to support such claims
is precisely what is aimed at by section 1128(a)(1). It is unnecessary to analyze
Petitioner’s conviction beyond saying that.
3

Petitioner asserts that his conviction is fatally flawed and he raises a number of
legal and constitutional arguments to challenge the court’s acceptance of his guilty
plea and the court’s subsequent entry of a judgment of conviction against him.
Additionally, Petitioner asserts that he is actually innocent of the crime of which
he was convicted.

These are not valid defenses. The I.G.’s authority to exclude pursuant to section
1128(a)(1) derives from the Petitioner’s conviction. I may not decide whether its
entry is flawed or look behind the conviction to address the underlying issues of
guilt, because the conviction is the basis for the I.G.’s authority so long as it is not
overturned by the court that entered it or on appeal. Petitioner is certainly free to
argue the merits and lawfulness of his conviction in the appropriate court, but not
here.

An individual who is convicted of a crime described in section 1128(a)(1) must be
excluded for a minimum of five years. Act, section 1128(c)(3)(B). The LG. may
exclude an individual for more than the five-year minimum where there exists
evidence showing that person to be so untrustworthy as to merit a longer
exclusion.

There are regulatory factors that function as rules of evidence for deciding whether
an exclusion of more than five years is reasonable. These factors are set forth at
42 C.F.R. § 1001.102. The regulatory factors include factors that may be
aggravating or mitigating. The factors do not dictate how long any exclusion must
be. Evidence that relates to an aggravating or mitigating factor may be weighed to
determine an individual’s trustworthiness and to decide how long of an exclusion
is reasonable. Evidence that does not relate to one of the factors is irrelevant to
deciding the length of an exclusion.

The I.G. offered evidence that relates to three aggravating factors. He proved that:

e Petitioner’s crime caused government programs to suffer $5000 or more in
losses. 42 C.F.R. § 1001.102(b)(1). In fact, the losses caused by
Petitioner’s fraud were enormous. He was ordered, along with his co-
conspirators, to pay restitution to the Medicare program totaling
$6,335,949. I.G. Ex. 4 at 1.

e Petitioner committed the crime resulting in his conviction over a period of
more than one year. 42 C.F.R. § 1001.102(b)(2). Petitioner pled guilty to
committing fraud against Medicare for a period of about four years, from
June 2006 to June 2010. I.G. Ex. 3 at 6, 21.
4

e Petitioner was sentenced to a term of incarceration for his crime. 42 C.F.R.
§ 1001.102(b)(5). Petitioner was sentenced to a term of 37 months’
imprisonment. I.G. Ex. 4 at 1.

The evidence that I have just cited is overwhelming proof that Petitioner is
manifestly untrustworthy to provide care and is strong support for the
reasonableness of an exclusion of at least 20 years. Petitioner, along with others,
engaged in a concerted, thoroughly calculated, and extensive conspiracy to
defraud Medicare. The magnitude of Petitioner’s crime and the intensity with
which he engaged in it is made evident by the amount of restitution that he is
sentenced to pay, more than $6 million.

Petitioner challenges the presence of aggravating evidence by asserting yet again
that he is not guilty of the crime of which he was convicted. He has not supported
this assertion by offering any affirmative proof that the evidence of aggravation is
invalid. But, more than that, his claim of innocence is extraordinarily
disingenuous. He openly agreed to his guilt and signed a plea agreement
admitting all of the evidence of aggravation when he thought it was in his self-
interest to do so. 1.G. Ex. 3. Now, however, he proclaims his innocence when he
sees it in his self-interest to change his tune. That is utterly unpersuasive.

Petitioner claims that there is mitigating evidence. However, he did not offer any
evidence that relates to one of the mitigating factors contained in 42 C.F.R.

§ 1001.102. Rather, he proclaims his innocence yet again and offers the same
legal arguments that he makes in other contexts to challenge the court’s
acceptance of his guilty plea and the judgment of conviction. These arguments are
irrelevant to the issue of mitigation.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Gustavo E. Borjas
(OI File No. H-13-42964-9),
Petitioner,
v.

The Inspector General.
Docket No. C-14-1080
Decision No. CR3334

Date: August 19, 2014

DECISION

I sustain the determination of the Inspector General (I.G.) to exclude Petitioner, Gustavo
E. Borjas, from participating in Medicare, all State health care programs (State Medicaid
programs) and all other federally funded health care programs for a minimum of five
years.

I. Background

Petitioner requested a hearing to challenge the I.G.’s determination to exclude him and
the case was assigned to me. I directed the parties to file briefs and proposed exhibits.
The LG. filed a brief, a reply brief, and four proposed exhibits, which are identified as
1G. Ex. 1—LG. Ex 4. Petitioner filed a brief. Neither party requested that I convene an
in-person hearing.

I receive LG. Ex. 1 —1.G. Ex. 4 into the record.
IL. Issue, Findings of Fact, and Conclusions of Law
A. Issue

The issue here is whether the I.G. is mandated to exclude Petitioner for a period of at
least five years.

B. Findings of Fact and Conclusions of Law

The I.G. excluded Petitioner under the authority of section 1128(a)(4) of the Social
Security Act (Act). This section mandates the exclusion of any individual who is
convicted of a felony relating to the unlawful manufacture, distribution, prescription, or
dispensing of a controlled substance. The evidence provides overwhelming support for
the I.G.’s determination.

On September 12, 2013, Petitioner pled nolo contendere to a felony under Florida State
law, namely, the crime of Solicitation to Purchase Cocaine. F.S. §§ 893.03(2)(a)(4),
777.04; I.G. Ex. 2 at 3. On its face Petitioner’s plea establishes that he was convicted of
a felony within the meaning of section 1128(a)(4), thereby mandating that the L.G.
exclude him.

Petitioner argues that he was not “convicted” of a crime because adjudication of guilt was
withheld under Florida law. He asserts that, under Florida law, an individual is not
“convicted” of a crime if adjudication of guilt is withheld in that individual’s case and he
or she successfully completes a term of probation. Petitioner’s Brief § I.

Whether or not that is so is irrelevant. Petitioner plainly was “convicted” within the
meaning of section 1128 of the Act. An individual is convicted of a crime for section
1128 purposes if that individual enters a plea of nolo contendere to an offense and that
plea has been accepted by a federal, State, or local court. Act § 1128(i)(3). Additionally,
an individual is convicted if that individual enters into participation in a first offender,
deferred adjudication, or other arrangement or program where judgment of conviction has
been withheld. Act § 1128(i)(4). Both of these sections apply to the nolo contendere
plea entered by Petitioner and accepted by the Florida court.

Petitioner argues that, even if he was convicted of a crime, he was not convicted of a
felony that is related to the unlawful manufacture, distribution, prescription, or dispensing
of a controlled substance. He contends that the essential element of his crime, soliciting
the purchase of cocaine, a controlled substance, is neither manufacture, distribution,
prescription, or dispensing of cocaine. Petitioner’s Brief § II.

The LG. argues at length that, whatever were the statutory elements of Petitioner’s crime,
his intent was to purchase a large quantity of cocaine (a kilogram) for resale. That intent,
according to the I.G., relates Petitioner’s crime to the unlawful distribution of cocaine and
makes Petitioner’s felony conviction a conviction of a crime within the meaning of
section 1128(a)(4). LG. Brief § I.B. The LG. relies on a sworn and notarized statement
made to the Sunrise, Florida Police Department that Petitioner was, in fact, operating a
cocaine distribution operation and was looking for additional sources of the drug so that
he could grow his criminal enterprise. 1.G. Ex. 2 at 5.

However, it is unnecessary that I look at evidence that is extrinsic to Petitioner’s
conviction in order to find that Petitioner was convicted of an offense that is related to the
unlawful distribution of a controlled substance. Any unlawful purchase or sale of cocaine
is an unlawful distribution of that substance. Petitioner was convicted of attempting to
purchase cocaine unlawfully. That crime is, on its face, related to unlawful distribution
of cocaine, a controlled substance. No additional analysis of the evidence is needed in
order to find that Petitioner was convicted of a felony that falls within the reach of section
1128(a)(4).

There is no issue in this case as to whether the length of Petitioner’s exclusion — for a
period of at least five years — is reasonable. That is the minimum exclusion period for
any exclusion imposed pursuant to section 1128(a)(4). Act § 1128(c)(3)(B).

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2014-H-0775)

Complainant
v.
RSH, Inc. d/b/a Ferndale Shell,

Respondent.

Docket No. C-14-1277

Decision No. CR3333

Date: August 15, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, RSH, Inc. d/b/a Ferndale Shell, at 7177 Baltimore Annapolis
Boulevard, Glen Burnie, Maryland 21061, and by filing a copy of the complaint with the
Food and Drug Administration’s (FDA) Division of Dockets Management. The
complaint alleges that Ferndale Shell unlawfully sold cigarettes to minors and, on two
occasions, failed to verify the age of a tobacco purchaser by means of photographic
identification containing the bearer’s date of birth, thereby violating the Federal Food,
Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seg., and its implementing regulations,
21 C.F.R. pt. 1140. CTP seeks to impose a $500 civil money penalty against Respondent
Ferndale Shell.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on June 19, 2014, CTP served the
complaint on Respondent Ferndale Shell by United Parcel Service. In the complaint and
accompanying cover letter, CTP explained that, within 30 days, Respondent should pay
the penalty, file an answer, or request an extension of time in which to file an answer.
CTP warned Respondent that, if it failed to take one of these actions within 30 days, the

Administrative Law Judge could, pursuant to 21 C.F.R. § 17.11, issue an initial decision
ordering it to pay the full amount of the proposed penalty.

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

e At Respondent’s business establishment, 7177 Baltimore Annapolis Boulevard,
Glen Burnie, Maryland 21061, on July 8, 2013, at approximately 11:57 AM, an
FDA-commissioned inspector observed Respondent’s staff sell a package of
Maverick Box 100s cigarettes to a person younger than 18 years of age. The
inspectors also noted that Respondent’s staff failed to verify, by means of photo
identification containing the bearer’s date of birth, that the cigarette purchaser was
18 years of age or older;

e Ina warning letter issued on August 8, 2013, CTP informed Respondent of the
inspector’s observations from July 8, 2013, and that such actions violate federal
law, 21 C.F.R. § 1140.14(a) and (b)(1). The letter further warned that if
Respondent failed to correct its violation, the FDA could impose a civil money
penalty or take other regulatory action;

e At Respondent’s business establishment, 7177 Baltimore Annapolis Boulevard,
Glen Burnie, Maryland 21061, on January 16, 2014, at approximately 2:20 PM,
FDA-commissioned inspectors documented Respondent’s staff selling a package
of Newport Box 100s cigarettes to a person younger than 18 years of age. The
inspectors also noted that Respondent’s staff failed to verify, by means of photo
identification containing the bearer’s date of birth, that the cigarette purchaser was
18 years of age or older.

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

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

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

§ 1140.14(a), no retailer may sell cigarettes or smokeless tobacco to any person younger
than 18 years of age. Under 21 C.F.R. § 1140.14(b)(1), retailers must verify, by means of
photo identification containing the bearer’s date of birth, that no cigarette or smokeless
tobacco purchaser is younger than 18 years of age.
A $500 civil money penalty is permissible under 21 C.F.R. § 17.2.
Order

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

/s/
Catherine Ravinski
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Center for Tobacco Products,
(FDA No. FDA-2013-H-1372)
Complainant
v.
William Blair d/b/a Downsville General Store,
Respondent.

Docket No. C-14-159

Decision No. CR3332

Date: August 15, 2014

INITIAL DECISION AND DEFAULT JUDGMENT
The Center for Tobacco Products (CTP) initiated a $500 civil money penalty (CMP)
action against Respondent for unlawfully selling cigarettes to minors, on three separate
occasions, in violation of the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C.
§ 301 et seq., and its implementing regulations, 21 C.F.R. pt. 1140. During the hearing
process, Respondent has failed to comply with three separate judicial directions to
respond to a CTP request for documents. | therefore strike Respondent’s answer and
issue this decision of default judgment.
I. Procedural History

Respondent timely answered CTP’s complaint proposing the CMP and requested a
hearing. Administrative Law Judge Joseph Grow issued an Acknowledgement and
Prehearing Order (APHO) that set deadlines for parties’ submissions, including the
March 31, 2014 deadline to request that the opposing party provide copies of documents

relevant to this case. Additionally the APHO stated that a party receiving such a request
must provide the requested documents no later than 30 days after the request.
CTP served Respondent with its request for documents on March 7, 2014. On April 15,
2014, CTP filed a motion to compel discovery indicating that Respondent did not respond
to its request within the time limit. See 21 C.F.R. § 17.23(a). CTP also moved to stay all
deadlines citing Respondent’s production of documents as necessary to complete its
informal brief and supporting exhibits. On May 1, 2014, Judge Grow suspended all
deadlines and provided Respondent another opportunity, within 10 days, to reply to
CTP’s motion to compel discovery or to otherwise file a motion for a protective order.

On May 6, 2014, however, Respondent prematurely filed his informal brief. CTP then
moved to sanction Respondent for not complying with its document request and the
ALJ’s orders. CTP specifically requested that Judge Grow strike Respondent’s
submissions and enter an Initial Decision and Default Judgment against Respondent
imposing the $500 civil money penalty. Judge Grow held a teleconference to discuss the
pending motion on June 23, 2014.

During the teleconference, Judge Grow reminded Respondent of his right to counsel.
Judge Grow further informed Respondent, that if he chose to proceed without counsel, he
would still be subject to the same rules as any other party, represented or not. See June
30, 2014 Teleconference Summary and Order Scheduling Submission of Briefs and
Evidence at 2. Judge Grow deferred ruling on CTP’s motion, granted Respondent yet
another opportunity to comply and gave Respondent an additional 10 days from receipt
of the latest order to either file a reply to CTP’s request for documents or file a protective
order. Jd. at 2-3. The order also reminded the parties that they could face sanctions for
not complying with any order. Jd. at 4; 21 C.F.R. § 17.35(a) (1)-(3).

On July 16, 2014, the Director of the Civil Remedies transferred this case to me.
Il. Pending Motions

On July 31, 2014, despite still not having filed any ordered response, Respondent emailed
the staff attorney assigned to this case and moved to dismiss the case “for lack of a
speedy trial.” I deny Respondent’s motion. Judge Grow explained the rules and
deadlines for the progression of the hearing and decision process in his APHO, and
Respondent has repeatedly ignored those deadlines and subsequent extensions. The fault
for not reaching a hearing in this matter is attributable to Respondent’s refusal to comply
with legal authority and ALJ orders.

I therefore grant CTP’s motion for sanctions by striking Respondent’s Answer, issuing
this default decision, and assuming the facts alleged in CTP’s complaint to be true. See
21 C.F.R. §§ 17.35(c)(3), 17.11(a). The harshness of the sanctions I impose upon either
party must relate to the nature and severity of the misconduct or failure to comply, and I
find the failure to comply here egregious. See 21 C.F.R. § 17.35(b). Respondent did not
comply with Judge Grow’s orders on three occasions nor did he provide any adequate
justification for not doing so. The record contains no evidence that suggests the
Respondent lacks the capacity to understand, conversely, it seems that Respondent
understands but clearly does not intend to comply with procedures. Respondent has
repeated the same pattern of non-compliance throughout these proceedings despite
several opportunities to produce documents or file a protective order.

Judge Grow afforded Respondent every opportunity for due process. He scheduled a
teleconference on June 23, 2014, during which he carefully explained Respondent’s legal
rights, obligations, and the procedures that would govern the case. He explained
Respondent’s options for responding to CTP’s discovery request before the new deadline
and duly extended the deadline to allow Respondent more time to respond. Finally,
Judge Grow explained to Respondent the potential consequences of Respondent’s failure
to comply. Judge Grow once again provided this information to the parties in writing in
his June 30, 2014 Teleconference Summary and Order Scheduling Submission of Briefs
and Evidence.

Rather than making any effort to comply with the discovery request, by either producing
documents or filing a protective order before the again extended deadline, Respondent
simply submitted an e-mail on July 31, 2014, purporting to move for dismissal for lack of
a speedy trial. Respondent stated that he had contacted FDA and tried to settle as the
Judge suggested in his letter, without success. A July 31, 2014 e-mail from a
representative of CTP’s Office of Compliance and Enforcement indicates that two
unsuccessful attempts were made to settle the case after the teleconference held by Judge
Grow. Respondent’s efforts to settle the case with CTP do not relieve him of the
obligation, in the absence of a settlement, to comply with the regulations and Judge
Grow’s orders to respond to CTP’s discovery request.

Ill. Default Decision

Striking Respondent’s answer leaves the Complaint unanswered. Therefore, I am
required to issue an initial decision by default if the complaint is sufficient to justify a
penalty. 21 C.F.R. § 17.11(a). Accordingly, I must determine whether the allegations in
the Complaint establish violations of the Act.

For purposes of this decision, I assume the facts alleged in the Complaint are true and
conclude that default judgment is merited based on the allegations of the Complaint and
the sanctions imposed on Respondent for failure to comply with Judge Grow’s orders. 21
C.F.R. § 17.11. Specifically:

e At Respondent’s business establishment, 8638 Downsville Pike, Williamsport,
Maryland 21795, on September 20, 2011, at approximately 4:35 PM, an FDA-
commissioned inspector observed Respondent’s staff sell a package of Newport
Box cigarettes to a person younger than 18 years of age;
e Ina warning letter issued on December 1, 2011, CTP informed Respondent of the
inspector’s observation from September 20, 2011, and that such an action violates
federal law, 21 C.F.R. § 1140.14(a). The letter further warned that if Respondent
failed to correct its violation, the FDA could impose a civil money penalty or take
other regulatory action;

e At Respondent’s business establishment, 8638 Downsville Pike, Williamsport,
Maryland 21795, on November 2, 2012, at approximately 12:56 PM ET, an FDA-
commissioned inspector observed Respondent’s staff sell a package of Newport
Box 100s cigarettes to a person younger than 18 years of age;

e Ina warning letter issued on January 31, 2013, CTP informed Respondent of the
inspector’s observation from November 2, 2012, and that such an action violates
federal law, 21 C.F.R. § 1140.14(a). The letter further warned that if Respondent
failed to correct its violation, the FDA could impose a civil money penalty or take
other regulatory action;

e At Respondent’s business establishment, 8638 Downsville Pike, Williamsport,
Maryland 21795, on May 16, 2013, at approximately 3:32 PM, FDA-
commissioned inspectors documented Respondent’s staff selling a package of
Newport Box cigarettes to a person younger than 18 years of age.

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

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

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

§ 1140.14(a), no retailer may sell cigarettes or smokeless tobacco to any person younger
than 18 years of age.

I conclude, therefore, that a $500 civil money penalty is permissible under 21 C.F.R.
§ 17.2. This order becomes final and binding upon both parties after 30 days of the date
of its issuance. 21 C.F.R. § 17.11(b).

/s/
Catherine Ravinski
Administrative Law Judge