Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Patricia Ann Smith, L.P.N.
(O.L. File No. H-11-42435-9),
Petitioner,

v.

The Inspector General.
Docket No. C-13-51
Decision No. CR2805

Date: May 30, 2013

DECISION

The Inspector General (I.G.) of the Department of Health and Human Services excluded
Petitioner, Patricia Ann Smith, L.P.N., from participation in Medicare, Medicaid, and all
other federal health care programs pursuant to 42 U.S.C. § 1320a-7(a)(1) for five years.
Petitioner appealed. For the reasons stated below, I conclude that the I.G. has a basis for
excluding Petitioner from program participation and that the five-year exclusion is
mandated by law. Therefore, I affirm the I.G.’s exclusion of Petitioner.

I. Background and Procedural History

By letter dated July 31, 2012, the I.G. notified Petitioner, a licensed practical nurse, that
she was being excluded from participation in Medicare, Medicaid, and all other federal
health care programs for a period of five years pursuant to 42 U.S.C. § 1320a-7(a)(1).
1G. Exhibit (Ex.) 1. The I.G. advised Petitioner that her exclusion was based on her
conviction

in the Court of Common Pleas of Franklin County, Ohio, of a criminal
offense related to the delivery of an item or service under the Medicare or a
State health care program, including the performance of management or
administrative services relating to the delivery of items or services, under
any such program.

LG. Ex. 1, at 1.

Petitioner timely filed a request for hearing (RFH) and I was assigned to hear and decide
this case. On November, 14, 2012, I convened a telephonic prehearing conference.
During the prehearing conference, Petitioner stated that she was actively seeking
representation, but was not currently represented by an attorney. I continued the
prehearing conference so that Petitioner could secure counsel. I reconvened the
prehearing conference by telephone on December 12, 2012. The substance of the
prehearing conference is summarized in my Order and Schedule for Filing Briefs and
Documentary Evidence (Order), dated December 13, 2012. See 42 C.F.R. § 1005.6.

Pursuant to the Order, the I.G. filed a brief (I.G. Br.) along with seven proposed exhibits
(LG. Exs. 1-7). Petitioner subsequently filed a brief (P. Br.) and four proposed exhibits
(P. Exs. 1-4). The I.G. filed a reply brief.

Neither party objected to any of the proposed exhibits. Therefore, I admit I.G. Exs. 1-3,
5-7 and P. Exs. 1-4 into the record. However, for the reasons stated below, I exclude I.G.
Ex. 4 from the record.

The 1.G.’s fourth exhibit is a declaration from an attorney in the state attorney general’s
office that criminally prosecuted Petitioner. The declaration appears to have been
produced for this proceeding because the top of the document shows the caption of this
case. See I.G. Ex. 4, at 1.

Although I may accept written direct testimony, the I.G. did not request that I do so in
this case. See 42 C.F.R. § 1005.16(b). To the contrary, the I.G. expressly stated that he
did not have any witnesses to offer and that a hearing was not necessary. I.G. Br. at 5.
However, it is clear from reading the declaration that it contains substantive testimony
specifically intended to support the I.G.’s case. Although a declaration from a prosecutor
is permissible evidence, see Lyle Kai, R.Ph., DAB No. 1979 (2005), this does not absolve
the I.G. from failing to properly indicate in his brief that he has a witness and is
submitting that testimony in writing so that Petitioner, who is pro se, might seek to cross-
examine that witness. See 42 C.F.R. § 1005.16(b).

“At the discretion of the [administrative law judge], testimony (other than expert
testimony) may be admitted in the form of a written statement.” Jd. Based on the I.G.’s
failure to properly notice his witness and request that I accept written testimony, I
exclude I.G. Ex. 4 from the record. Cf Beth Ann Lee, R.N., DAB CR2735, at 2 (2013)
review declined, DAB No. 2512 (2013) (exclusion of prosecutor’s declaration under
similar circumstances to this case).

Because both parties indicated that a hearing is not necessary in this case (I.G. Br. at 5; P.
Br. at 2), I decide this case on the basis of the written record.

IL. Issue

The only issue in this case is whether the I.G. has a basis for excluding Petitioner from
participating in Medicare, Medicaid, and all other federal health care programs pursuant
to 42 U.S.C. § 1320a-7(a)(1). 42 C.F.R. § 1001.2007(a)(1)-(2).

Ill. Findings of Fact, Conclusions of Law, and Analysis’

The Secretary of Health and Human Services must exclude from participation in any
federal health care program “[a]ny individual or entity that has been convicted of a
criminal offense related to the delivery of an item or service under subchapter XVIII of
this chapter or under any State health care program.” 42 U.S.C. § 1320a-7(a)(1).

A. Petitioner was convicted by a jury of theft in the fifth degree due to improper
billing for nursing services and a state court entered judgment against her.

Petitioner is a licensed practical nurse. See I.G. Ex. 2. On July 9, 2010, a grand jury in
Franklin County, Ohio indicted Petitioner on one felony count of theft in the fifth degree
in violation of section 2913.02(A) of the Ohio Revised Code. LG. Ex. 5, at 1. According
to the indictment, Petitioner unlawfully obtained money from the Ohio Department of
Job and Family Services (JFS). The indictment specifically charged that Petitioner,

[b]eginning on or about September 21, 2009 and continuing until on or
about October 21, 2009 . . . as a continuing course of criminal conduct . . .
did knowingly obtain control over the property or services by deception, to
wit: obtaining money from the Ohio Department of Job and Family
Services to which she was not entitled, the value of said property or
services being five hundred dollars ($500.00) or more, but less than five
thousand dollars ($5,000.00) . . . a felony of the fifth degree.

On August 26, 2011, a jury found Petitioner guilty of theft in the fifth degree. IG. Ex. 6.
The court entered judgment against Petitioner, sentencing her to “community control” for
a period of one (1) year under basic supervision and ordering her to pay $1,189.66 in
restitution. I.G. Ex. 7, at 1-2. Petitioner concedes her conviction. RFH at 2.

' My findings of fact and conclusions of law are set forth in italics and bold font as
headings in this section of the decision.
B. Petitioner was convicted of a criminal offense for the purposes of 42 U.S.C.
§ 1320a-7(a)(1).

Under 42 U.S.C. § 1320a-7(a)(1), a petitioner must be “convicted of a criminal offense”
before the I.G. is authorized to exclude the individual. A “conviction” includes “when a
judgment of conviction has been entered against the individual or entity by a Federal,
State, or local court [or] when there has been a finding of guilt against the individual or
entity by a Federal, State, or local court.” 42 U.S.C. § 1320a-7(i)(1)-(2). Here, the Court
of Common Pleas for Franklin County, Ohio entered a judgment of guilty against
Petitioner based on the jury verdict. I.G. Ex. 7, at 1. Accordingly, Petitioner was
“convicted” of a criminal offense within the meaning of the statute because she was
found guilty and the court entered judgment based on that finding. 42 U.S.C.

§ 1320a-7(i)(1).

Petitioner does not dispute that a jury convicted her, but she nevertheless claims that she
did not commit the crime. P. Br. at 4-5; RFH at 1-2. Petitioner asserts she performed the
services for which she submitted claims to JFS and that the investigation by the Ohio
Attorney General’s Office was both “incomplete” and “inadequate.” P. Br. at 4-5.

By regulation, “the basis for the underlying conviction . . . is not reviewable and the
individual . . . may not collaterally attack it either on substantive or procedural grounds in
this appeal.” 42 C.F.R. § 1001.2007(d); see also Travers v. Shalala, 20 F.3d 993, 998
(9th Cir. 1994) (holding that it is unnecessary to provide an excluded individual with the
opportunity to relitigate the facts underlying the criminal conviction). Therefore,
Petitioner’s assertion that she is innocent of the crime for which she was convicted is not
relevant to this case and cannot serve as a basis to reverse the exclusion.

C. Petitioner must be excluded under 42 U.S.C. § 1320a-7(a)(1) because her
conviction was for an offense related to the delivery of an item or service
under a state health care program.

The I.G. must exclude an individual from participation in any federal health care program
if the individual was convicted under federal or state law of a criminal offense related to
the delivery of an item or service under the Medicare program or a state health care
program. 42 U.S.C. § 1320a-7(a)(1). In the present case, the evidence of record shows
that there is a nexus between the criminal offense for which Petitioner was convicted and
the delivery of an item or service under a state health care program.

Petitioner was charged with and convicted of unlawfully obtaining between $500 and
$5,000 from JFS. I.G. Ex. 5, at 1; LG. Ex. 3 45. Petitioner stipulated during her criminal
case that JFS implements and operates the Ohio Medicaid program7and Petitioner was a
Medicaid provider under the agreement she entered into with JFS. LG. Exs. 2; 3 2, 7.
Petitioner’s criminal offense involved billing JFS for nursing services that she did not
provide (see P. Br. at 4-6), and the criminal trial court ordered Petitioner to pay restitution
to JFS. LG. Ex. 7 at 2. Finally, Petitioner does not dispute that her conviction was
“related to the delivery of an item or service under Medicare or a State health care (a
State Medicaid) program.” P. Br. at 2.

Because there is a clear nexus between Petitioner’s conviction and the delivery of
services under a state health care program, I conclude that the record supports Petitioner’s
mandatory exclusion under 42 U.S.C. § 1320a-7(a)(1).

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

Petitioner argues that the length of the exclusion imposed by the I.G. is unreasonable.
RFH at 2. However, Petitioner must be excluded for a minimum period of five years
because, as discussed above, there is a basis to exclude Petitioner pursuant to the
mandatory exclusion provision of the Act. 42 U.S.C. § 1320a-7(a)(1), (c)(3)(B). The
statute does not give me discretion to reduce a five-year exclusion. See Manocchio v.
Kusserow, 961 F.2d 1539, 1542 (11th Cir. 1990). Therefore, Petitioner must be excluded
for at least five-years.

Petitioner also asserted that she is an honest and competent licensed practical nurse. RFH
at 1-2. There is nothing in the record to show that Petitioner was deficient in the care she
provided to her patients. P. Br. at 6; P. Ex. 4. However, the quality of Petitioner’s
services as a nurse is not relevant to the length of exclusion required by statute.

IV. Conclusion

For the foregoing reasons, I affirm the I.G.’s determination to exclude Petitioner from
participating in Medicare, Medicaid, and all other federal health care programs for the
statutory five-year minimum period pursuant to 42 U.S.C. § 1320a-7(a)(1).

/s/
Scott Anderson
Administrative Law Judge

> The Medicaid program is a “State health care program” for purposes of the exclusion
regulations. See 42 C.F.R. § 1001.2.


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Dawn Coffee,
Petitioner,
v.
The Inspector General.
Docket No. C-13-246
Decision No. CR2804

Date: May 30, 2013

DECISION

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

I. Procedural Background

Petitioner pro se Dawn Coffee is a licensed practical nurse licensed to practice in the
State of Missouri. In 2010 she was employed in a physician’s office. While so
employed, but without the physician’s knowledge or authorization, she called a local
pharmacy and placed a prescription for hydrocodone for a person named Shane Umfleet,
who later obtained the drugs prescribed on January 5, 2010 by paying for them with a
check on a closed bank account.

Local law enforcement authorities became aware of the transaction and on January 22,
2010 filed a criminal complaint against Petitioner in the Circuit Court of Stoddard
County, Missouri. I.G. Ex. 4. The complaint was followed on March 1, 2010 by the
filing of an Information charging Petitioner with the Class D felony of Fraudulently
Obtaining a Controlled Substance, in violation of MO. REV. STAT. § 195.204. LG. Ex.
5. On April 21, 2010, Petitioner appeared with counsel in the Circuit Court and pleaded
guilty to the charge of Fraudulently Attempting to Obtain a Controlled Substance, in
violation of MO. REV. STAT. § 195.204. This final charge, specifically the one on which
Petitioner was ultimately convicted, is classified as a Class D felony by Missouri statutes,
Mo. REV. STAT. §§ 558.011.1(4) and 195.204.2. LG. Ex. 2

Petitioner returned to the Circuit Court with counsel on June 2, 2010. Imposition of
sentence on her plea was suspended, and she was placed on four years of supervised
probation. She was required to pay $46.00 to a victim compensation fund. She was
discharged early from her term of probation by the Missouri Board of Probation and
Parole on October 26, 2012. I.G. Ex. 6.

On November 30, 2012, the LG. notified Petitioner that she was being excluded pursuant
to the terms of section 1128(a)(3) of the Act for the mandatory minimum period of five
years. The I.G.’s action was required by the terms of section 1128(a) of the Act, 42
U.S.C. § 1320a-7(a).

Acting pro se, Petitioner timely sought review of the L.G.’s action by letter dated
December 10, 2012. I convened a telephonic prehearing conference on January 22, 2013,
pursuant to 42 C.F.R. § 1005.6, in order to discuss the issues presented by the case and
procedures for addressing those issues. By Order of that date, as amended by my Order
of March 25, 2013, I established a schedule for the submission of documents and briefs.
All briefing is now complete, and the record in this case closed on May 13, 2013.

There are seven exhibits in this case. The LG. proffered six exhibits marked I.G. Exhibits
1 through 6 (I.G. Exs. 1-6), and they are admitted without objection. Petitioner filed an
undated letter from her employer’s administrative assistant, K. Nenninger, but that
document was not marked as an exhibit in compliance with CRDP § 9 and paragraphs
5(e) and 10 of my Orders of January 22, 2013 and March 25, 2013. Nevertheless, I have
marked and admitted it as Petitioner’s Exhibit 1 (P. Ex.1).

II. Issues

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

1. Whether the I.G. has a basis for excluding Petitioner from participating in
Medicare, Medicaid, and all other federal health care programs pursuant to section
1128(a)(3) of the Act; and
2. Whether the length of the proposed period of exclusion is unreasonable.

Both issues must be resolved in favor of the I.G.’s position. Because her predicate
conviction has been established, there is a basis for Petitioner’s exclusion pursuant to
section 1128(a)(3) of the Act. A five-year term of exclusion is the minimum established
by section 1128(c)(3)(B) of the Act, 42 U.S.C. § 1320a-7(c)(3)(B) and is therefore not
unreasonable.

III. Controlling Statutes and Regulations

Section 1128(a)(3) of the Act, 42 U.S.C. § 1320a-7(a)(3), requires the mandatory
exclusion from participation in Medicare, Medicaid, and all other federal health care
programs of “[a]ny individual or entity that has been convicted for an offense which
occurred after [August 21, 1996,] under Federal or State law, in connection with the
delivery of a health care item or service or with respect to any act or omission in a health
care program (other than those specifically described in [section 1128(a)](1)) operated by
or financed in whole or in part by any Federal, State, or local government agency, of a
criminal offense consisting of a felony related to fraud, theft, embezzlement, breach of
fiduciary responsibility, or other financial misconduct.” The terms of section 1128(a)(3)
are restated in similar language at 42 C.F.R. § 1001.101(c).

The Act defines “conviction” as including those circumstances “when a judgment of
conviction has been entered against the individual . . . by a Federal, State, or local court,”
Act § 1128(i)(1); “when there has been a finding of guilt against the individual .. . by a
Federal, State, or local court,” Act § 1128(i)(2); “when a plea of guilty . . . by the
individual . . . has been accepted by a Federal, State, or local court,” Act § 1128(i)(3); or
“when the individual . . . has entered into participation in a first offender, deferred
adjudication, or other arrangement or program where judgment of conviction has been
withheld.” Act § 1128(i)(4). These definitions are repeated at 42 C.F.R. § 1001.2.

An exclusion based on section 1128(a)(3) is mandatory and the I.G. must impose it for a
minimum period of five years. Act § 1128(c)(3)(B); 42 U.S.C. § 1320a-7(c)(3)(B). The
regulatory language of 42 C.F.R. § 1001.102(a) affirms the statutory provision.

IV. Findings and Conclusions

I find and conclude as follows:

1. On April 21, 2010, in the Circuit Court of Stoddard County, Missouri, Petitioner
Dawn Coffee pleaded guilty to one Class D felony count of Fraudulently Attempting to

Obtain a Controlled Substance, in violation of MO. REV. STAT. § 195.204. The conduct
to which Petitioner pleaded guilty occurred on or about January 5, 2010. I.G. Exs. 2, 5.
2. On June 2, 2010, the Circuit Court suspended imposition of sentence on Petitioner’s
guilty plea, and she was placed on four years of supervised probation. I.G. Exs. 2,6. She
was discharged from her term of probation by the Missouri Board of Probation and
Parole on October 26, 2012. I.G. Ex. 6.

3. The accepted plea of guilty and the suspension of the imposition of sentence described
above in Findings | and 2 constitute a “conviction” within the meaning of sections
1128(a)(3) and 1128(i)(3) and (4) of the Act, and 42 C.F.R. § 1001.2.

4. There is a nexus and a common-sense relationship between the felony offense of
which Petitioner was convicted, as noted above in Findings 1, 2, and 3 above, and fraud
in connection with the delivery of a health care item or service. I.G. Exs. 4, 5.

5. Petitioner’s conviction as noted above in Findings 1, 2, 3, and 4 constitutes a basis for
the I.G.’s exclusion of Petitioner from participation in Medicare, Medicaid, and all other
federal health care programs. Act § 1128(a)(3); 42 U.S.C. § 1320a-7(a)(3).

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

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

V. Discussion

The four essential elements necessary to support an exclusion based on section
1128(a)(3) of the Act are: (1) the individual to be excluded must have been convicted of
a felony offense; (2) the felony offense must have been based on conduct relating to
fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial
misconduct; (3) the felony offense must have been for conduct in connection with the
delivery of a health care item or service, or the felony offense must have been with
respect to any act or omission in a health care program operated by or financed in whole
or in part by any federal, state, or local government agency; and (4) the felonious conduct
must have occurred after August 21, 1996. Andrew D. Goddard, DAB No. 2032 (2006);
Kenneth M. Behr, DAB No. 1997 (2005); Erik D. DeSimone, R.Ph., DAB No. 1932
(2004); Jeremy Robinson, DAB No. 1905 (2004); Breton Lee Morgan, M.D., DAB
CR1913 (2009); Morganna Elizabeth Allen, DAB CR1479 (2006); Theresa A. Bass,
DAB CR1397 (2006); Michael Patrick Fryman, DAB CR1261 (2004); Golden G.
Higgwe, D.P.M., DAB CR1229 (2004); Thomas A. Oswald, R.Ph., DAB CR1216 (2004);
Katherine Marie Nielsen, DAB CR1181 (2004).
Petitioner does not contest the existence of the second, third, and fourth essential
elements, and their presence is plain on this record. The fourth element is proven by the
date of the misconduct charged. The second and third elements are shown by the events
set out in the charging documents, by the substance of the charge as defined by Missouri
statute, and by Petitioner’s stipulation before the Missouri State Board of Nursing that her
crime was “an offense an essential element of which is fraud and/or dishonesty.” I.G. Ex.
3, at 2. The nexus of this misconduct with the delivery of a health care item, based as it

is on the unauthorized generation of the hydrocodone prescription, is obvious. Thus, the
evidence shows that Petitioner acted fraudulently, and in connection with the delivery of
a health care item, well after August 21, 1996.

Petitioner’s defense rests on her assertion that the proceedings against her did not result
in a conviction. She does not deny the procedural history of those proceedings as set out
above in Findings | and 2 above, but she argues that under Missouri law, her successful
— and early — completion of her term of probation leaves her without a felony
conviction. Neither Petitioner nor the I.G. have proffered documents with any specific
reference to the Missouri statute applicable to this situation, but I believe that the statutes
involved are most likely MO. REV. STAT. §§ 557.011.2(3), 557.011.2(4), and 610.105.

Petitioner is correct in arguing that under Missouri law a criminal case concluded by the
suspended imposition of sentence does not result in a “conviction.” M.A.B. v. Nicely, 909
S.W.2d 669 (Mo. 1995) (en banc); Yale v. City of Independence, 846 S.W.2d 193 (Mo.
1993) (en banc); Missouri ex rel. Light v. Sheffield, 768 S.W.2d 590 (Mo. Ct. App. 1989).
The terms of MO. REV. STAT. § 610.105 allow deserving defendants to avoid the civil,
criminal, and social consequences of a record as a convicted felon. Without lengthy
citation here, I note that Missouri courts have, when asked to do so, steadfastly applied
their “no-conviction” interpretation to criminal dispositions under MO. REV. STAT. §
610.105. The State of Missouri’s policy that permits such a result may be entirely
reasonable, and nothing in this decision should be understood to trivialize or discount
Petitioner’s success in complying with the requirements of that policy. The established
law of this forum, however, requires that the Act’s definitions of “conviction” be applied
in these circumstances. Those specific definitions noted in sections 1128(i)(3) and
1128(i)(4) of the Act encompass the proceedings against Petitioner. By the federal
definitions applicable in this federal litigation aimed at protecting the integrity of federal
health care programs, the criminal proceedings against Petitioner ended in her
“conviction.”

This issue has been debated in this forum and before the Departmental Appeals Board
(Board) for two decades, and its resolution has never varied. The Administrative Law
Judges (ALJs) of this forum and appellate panels of the Board have frequently addressed
petitioners’ arguments that they should not be regarded here as “convicted” because they
are not considered “convicted” under state law. The Board panels and ALJs of this forum
have consistently rejected those arguments for the reason that federal law — specifically
section 1128(i) of the Act — and not state laws, governs the meaning of “convicted” in
applying the terms of the Social Security Act. Ellen L. Morand, DAB No. 2436 (2012);
Henry L. Gupton, DAB No. 2058 (2007), aff'd sub nom. Gupton v. Leavitt, 575 F. Supp.
2d 874 (E.D. Tenn. 2008); Marc Schneider, D.M.D., DAB No. 2007 (2005); Carolyn
Westin, DAB No. 1381 (1993), aff'd sub nom. Westin v. Shalala, 845 F.Supp. 1446 (D.
Kan. 1994); see Bethany Anne Winther-Galimore, DAB CR2501 (2012); Myrna Baptista,
DAB CR2410 (2011); Theresa A. Bass, DAB CR1397.

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

Petitioner appears here pro se. Because of that I have been guided by the Board’s
reminders that pro se litigants should be offered “some extra measure of consideration”
in developing their records and their cases. Louis Mathews, DAB No. 1574 (1996);
Edward J. Petrus, Jr., M.D., et al., DAB No. 1264 (1991). [have searched all of
Petitioner’s pleadings for any arguments or contentions that might raise a valid, relevant
defense to the I.G.’s Motion, but have found nothing that could be so construed.

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

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

VI. Conclusion

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

/s/
Richard J. Smith
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Yong Hyun Kim
d/b/a Minute Stop Market,

Respondent.

Docket No. C-13-579
FDA Docket No. FDA-2013-H-0357

Decision No. CR2802

Date: May 29, 2013

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint
(Complaint) against Respondent, Yong Hyun Kim d/b/a Minute Stop Market,
alleging facts and legal authority sufficient to justify the imposition of a civil
money penalty of $2,000. Respondent did not timely answer the Complaint, nor
did Respondent request an extension of time within which to file an Answer.
Therefore, I enter a default judgment against Respondent and assess a civil money
penalty of $2,000.

CTP began this case by serving the Complaint on Respondent and filing a copy of
the Complaint with the Food and Drug Administration’s (FDA) Division of
Dockets Management. The Complaint alleges that Yong Hyun Kim d/b/a Minute
Stop Market impermissibly sold tobacco products to minors and failed to verify
that a purchaser of cigarettes was 18 years of age or older, thereby violating the
Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its
implementing regulations, Cigarettes and Smokeless Tobacco, 21 C.F.R. Part 1140
(2012). CTP seeks a civil money penalty of $2,000.

On March 29, 2013, 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 timely requested an extension. Pursuant to 21 C.F.R. § 17.11(a), lam
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 Minute Stop Market, an establishment that sells tobacco
products and is located at 3373 Jackson Highway, Chehalis, WA 98532.
Complaint § 2.

e On February 17, 2011, at an undisclosed time, an FDA-commissioned
inspector observed a violation of 21 C.F.R. § 1140.14(a) at Respondent’s
establishment. Section 1140.14(a) prohibits the sale of cigarettes or
smokeless tobacco to any person younger than 18 years of age. Complaint

q9.

e On April 14, 2011, CTP issued a Warning Letter to Respondent regarding
the inspector’s observations from February 17, 2011. The letter explained
that the act the inspector observed violated a regulation found at 21 C.F.R.
§ 1140.14(a) and that the named violation was not necessarily intended to
be an exhaustive list of all violations at the establishment. The Warning
Letter went on to state that failure to correct the violation could result in the
imposition of a civil money penalty or other regulatory action by the FDA
and that Respondent is responsible for complying with the law. Complaint

q9.
e Yong Hyun Kim responded to the Warning letter by telephone and stated
that “employees would be required to verify the age of any purchaser of
tobacco products.” Complaint § 10.

e An FDA-commissioned inspector or inspectors documented an additional
violation at the Minute Stop Market during an inspection conducted on
October 25, 2011, and November 7, 2011, at an undisclosed time or times.
The inspector or inspectors observed a violation of 21 C.F.R. § 1140.14(a),
“for selling tobacco products to a minor.” Complaint § 11.

e¢ CTP brought a civil money penalty action against Yong Hyun Kim d/b/a
Minute Stop Market on January 5, 2012, docket number FDA-2012-H-
0016, for a violation of Part 1140. Complaint § 11.

e An Administrative Law Judge issued an Order for Default Judgment in the
civil money penalty action on February 16, 2012. Before the Order became
final, however, Yong Hyun Kim d/b/a Minute Stop Market paid the
assessed penalty and the Administrative Law Judge closed the case.
Complaint § 12.

e On June 6, 2012, FDA-commissioned inspectors observed another violation
of 21 C.F.R. § 1140.14(a) when “a person younger than 18 years of age was
able to purchase a package of Newport Box 100s cigarettes . . . at
approximately 3:51 PM PT.” The inspectors also observed a violation of
21 C.F.R. § 1140.14(b)(1) when Respondent’s staff failed to verify, by
means of photo identification containing the purchaser’s date of birth, that
the purchaser of the Newport Box 100s cigarettes was 18 years of age or
older. 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 issued the regulations at 21 C.F.R. Part 1140 under
section 906(d) of the Act. 21 U.S.C. § 387(a); 21 U.S.C. § 387f(d)(1); 75 Fed.
Reg. 13,229 (Mar. 10, 2010). The regulations prohibit the sale of cigarettes or
smokeless tobacco to any person younger than 18 years of age. 21 C.F.R.

§ 1140.14(a). The regulations also require retailers to verify, by means of photo
identification containing a purchaser’s date of birth, that no purchasers of
cigarettes or smokeless tobacco are younger than 18 years of age. 21 C.F.R.

§ 1140.14(b)(1).

Taking the above alleged facts as true, Respondent violated regulations contained
in 21 C.F.R. Part 1140 four times within a sixteen month period. Specifically,
Respondent had a violation on February 17, 2011; a violation during a two-part
inspection conducted on October 25, 2011, and November 7, 2011; and two
violations on June 6, 2012. Respondent’s actions violated the prohibition against
selling cigarettes or smokeless tobacco to persons younger than 18 years of age.
21 C.F.R. § 1140.14(a). Respondent’s actions also violated the requirement that
retailers verify, by means of photo identification containing a purchaser’s date of
birth, that no purchaser of cigarettes or smokeless tobacco is younger than 18
years of age. 21 C.F.R. § 1140.14(b)(1). Therefore, Respondent’s actions
violated the law and merit a civil money penalty.

The regulations require me to impose a civil money penalty in the amount that is
either the maximum provided for by law or the amount sought in the Complaint,
whichever is smaller. 21 C.F.R. § 17.11(a)(1)-(2). The regulations currently
allow a maximum penalty of $2,000 for a fourth violation within a sixteen month
period and CTP has sought a penalty in that amount. 21 C.F.R. § 17.2. Therefore,
I find that a civil money penalty of $2,000 is warranted and so order one imposed.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2013-H-0413)

Complainant
v.

JEC, Inc.
d/b/a Atkins Shell,

Respondent.
Docket No. C-13-633
Decision No. CR2800

Date: May 28, 2013

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an
administrative complaint on Respondent, JEC, Inc. d/b/a Atkins Shell, at 1202
North Church Street, Atkins, Arkansas 72823, and by filing a copy of the
complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The complaint alleges that Atkins Shell impermissibly sold
cigarettes or smokeless tobacco to a minor, violating the Federal Food, Drug, and
Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its implementing regulations, 21
C.F.R. Part 1140. CTP seeks to impose a $500 civil money penalty against
Respondent Atkins Shell.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on April 12, 2013, CTP served the
complaint on Respondent Atkins 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 Atkins 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, I assume that the facts alleged in the complaint (but not its
conclusory statements) are true. Specifically:

e At Respondent’s business establishment, 1202 North Church Street, Atkins,
Arkansas 72823, on May 20, 2011, an FDA-commissioned inspector
observed Respondent’s staff sell cigarettes or smokeless tobacco to a
person younger than 18 years of age;

e Ina warning letter issued August 11, 2011, CTP informed Respondent of
the inspector’s May 20, 2011 observation, and that such action violates
federal law, 21 C.F.R. §§ 1140.14(a). The letter further warned that
Respondent’s failure to correct its violation could result in a civil money
penalty or other regulatory action;

e On February 3 and 9, 2012, at Respondent’s business establishment, 1202
North Church Street, Atkins, Arkansas 72823, inspectors documented that
Respondent’s staff again sold tobacco products to a person younger than 18
years of age;

e¢ On June 6, 2012, CTP commenced a civil money penalty action against
Respondent based on the preceding events. Respondent paid a $250
penalty, and this tribunal closed the case;

e At approximately 10:36 a.m. on November 20, 2012, at Respondent’s
business establishment, 1202 North Church Street, Atkins, Arkansas 72823,
an FDA-commissioned inspector observed Respondent’s staff sell a
package of Pall Mall Blue to a person younger than 18 years of age.

These facts establish Respondent Atkins Shell’s liability under the Act. The Act
prohibits misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco
product is misbranded if sold or distributed in violation of regulations issued under
section 906(d) of the Act. 21 U.S.C. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21
C.F.R. § 1140.1(b). The Secretary issued the regulations at 21 C.F.R. Part 1140
under section 906(d) of the Act. 21 U.S.C. 387(a); see 21 U.S.C. § 387£(d)(1); 75
Fed. Reg. 13,229 (Mar. 10, 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.
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 JEC, Inc. d/b/a Atkins 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/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Gena C. Randolph,
(OI File No. H-12-42170-9),

Petitioner,
v.
The Inspector General.
Docket No. C-13-388
Decision No. CR2799

Date: May 24, 2013

DECISION

The Inspector General (I.G.) of the U.S. Department of Health and Human Services
notified Gena C. Randolph (Petitioner) that she was being excluded from participation in
Medicare, Medicaid, and all other federal health care programs for a minimum period of
five years pursuant to section 1128(a)(1) of the Social Security Act, 42 U.S.C. § 1320a-
7(a)(1). I find that the L.G. has a basis for excluding Petitioner and that the five-year
exclusion is mandated as a matter of law.

I. Background

By letter dated January 31, 2013, the LG. notified Petitioner that she was being excluded
from Medicare, Medicaid, and all federal health care programs for a minimum period of
five years pursuant to section 1320a-7(a)(1). I.G. Ex. 1. The I.G. advised Petitioner that
the exclusion was based on her conviction “in the Court of General Sessions, State of
South Carolina, Charleston County, of a criminal offense related to the delivery of an
item or service under the Medicare or a state health care program, including the
performance of management or administrative services relating to the delivery of items or
services, under any such program.” I.G. Ex. 1, at 1.
Petitioner timely filed her February 5, 2013 request for hearing (RFH), and this case was
assigned to me for hearing and decision. On February 22, 2013, I convened a prehearing
conference by telephone, the substance of which is summarized in my Order and
Schedule for Filing Briefs and Documentary Evidence (Order). See 42 C.F.R.

§ 1005.6(c).

Pursuant to the Order, the I.G. filed a brief (I.G. Br.) on March 25, 2013, with I.G.
exhibits (I.G. Exs.) 1 through 4. On March 25, 2013, Petitioner also filed her brief (P.
Br.). Absent objection, I admit I.G. Exs. 1 through 4 into the record. Petitioner did not
file any proposed exhibits with her brief. However, Petitioner submitted supporting
documents with her hearing request and refers to those documents in her brief. See DAB
E-file Record Document # 1 (“OIG Appeal Documents”); P. Br. at 1. I find, as explained
more fully below, that Petitioner offers the documents in support of an impermissible
collateral attack on the underlying conviction. See 42 C.F.R. § 1001.2007(d). Therefore,
the documents are irrelevant, and I must exclude them from the record. 42 C.F.R.

§ 1005.17(c).

On April 5, 2013, the LG. filed its reply brief (I.G. Reply). Later on that same date,
Petitioner filed an “Objection and Motion to Strike the I.G.’s Reply Brief” (Motion to
Strike). On April 7, 2013, Petitioner also filed an “Objection to Material Facts Asserted
in the L.G.’s Short Form Brief and Reply Brief” (Objection). The I.G. did not file a
response to either Petitioner’s Motion to Strike or Objection to Material Facts.

II. Rulings on Outstanding Motions

On April 5, 2013, Petitioner filed an Objection and Motion to Strike the I.G.’s Reply
Brief. Petitioner’s argument in opposition to the admission of the L.G.’s Reply Brief is
that the cases cited in the brief are irrelevant. Motion to Strike at 1. Petitioner further
contends that the Reply should be stricken because it fails to offer any evidence that the
plea agreement was entered into without undue influence and coercion, and it fails to
address Petitioner’s constitutional and due process arguments. Jd. at 1-2.

I deny Petitioner’s Motion to Strike because there is no basis to strike the I.G.’s Reply
Brief from the record. Contrary to Petitioner’s view, the I.G. does respond to the
arguments Petitioner raised in her brief. The I.G.’s response is that Petitioner’s
arguments are impermissible collateral attacks on the underlying conviction. I.G. Reply
at 1-2. Accordingly, because the cases cited by the I.G. in its Reply Brief support its
legal argument, the cases are relevant. Finally, the I.G. is not required to provide
evidence regarding the circumstances surrounding the plea agreement because the
underlying conviction is not reviewable. See 42 C.F.R. § 1001.2007(d). Thus, there is no
basis to strike the I.G.’s Reply Brief from the record.
Petitioner also objects to the plea agreement and the state court’s judgment, and she asks
that I strike them from the record. Objection at 1. Petitioner contends that I should strike
the plea agreement from the record because the I.G. failed to provide any documentary
evidence that shows Petitioner voluntarily entered into the plea agreement. In a similar
vein, Petitioner argues the state court’s judgment should be stricken because the I.G.
failed to provide evidence to refute her assertion that the judge accepted her plea based
on perjured testimony. I overrule Petitioner’s objections. Both the plea agreement and
state court’s judgment are relevant to show whether there is a basis for Petitioner’s
exclusion. As addressed below, the LG. is not required to provide evidence regarding the
circumstances surrounding the plea agreement or state court’s judgment and failure to
provide such evidence is therefore not a basis to exclude these documents. As such, I
find that both documents are relevant and supported by the record, and I have no basis to
strike them from the record.

III. Decision on the Written Record

Both parties indicated in their exchanges that an in-person hearing was unnecessary and
that neither party had any witnesses to offer. I.G. Br. at 7; P. Br. at 3. Therefore, the
record is now closed, and I decide this case based on the written record.

IV. Issue

Whether the I.G. has a basis for excluding Petitioner from participating in Medicare,
Medicaid, and all other federal health care programs pursuant to 42 U.S.C. § 1320a-
7(a)(1). Because exclusion under section 1320 a-7(a)(1) must be for a minimum period
of five years, the reasonableness of the length of the exclusion is not an issue. 42 U.S.C.
§ 1320a-7(c)(3)(B); 42 C.F.R. § 1001.2007(a)(2).

V. Findings of Fact and Conclusions of Law

The Secretary of the U.S. Department of Health and Human Services must exclude an
individual from participation in any federal health care program if that individual has
been convicted of a criminal offense related to the delivery of an item or service under
title XVIII of the Social Security Act (42 U.S.C. § 1395 et seq.) or under any state health
care program. 42 U.S.C. § 1320a-7(a)(1).

A, Petitioner pleaded guilty in the Court of General Sessions in the State of
South Carolina to one count of Medical Assistance Provider Fraud.

Petitioner is a speech therapist in South Carolina. On July 10, 2012, Petitioner entered
into a plea agreement with the State of South Carolina agreeing to “waive presentment
and plead guilty to one (1) indictment which charged Defendant with Filing False Claims
with the South Carolina Medicaid Program in violation of § 43-7-60(B), S.C. Code of
Laws, 1976, as amended.” I.G. Ex. 3, at 1. On August 15, 2012, Petitioner entered a
guilty plea to the one count indictment. I.G. Ex. 4. Specifically, Petitioner pleaded guilty
to:

[KJnowingly and willfully fil[ing], or caus[ing] to be filed, false claims for
speech therapy under Current Procedure Terminology Code 92507 for
Medicaid recipient C.J. with the South Carolina Department of Health and
Human Services. These claims were false because the services that were
billed for were not provided.

LG. Ex. 4, at 2.

On August 15, 2012, the state court judge accepted Petitioner’s guilty plea and sentenced
Petitioner to probation for five years and ordered restitution in accordance with the plea
agreement. I.G. Ex. 2.

B. Petitioner was convicted of a criminal offense for purposes of
42 U.S.C. § 1320a-7(a)(1).

Under 42 U.S.C. § 1320a-7(a)(1), Petitioner must be “convicted of a criminal offense.”
For the purposes of a violation under 42 U.S.C. § 1320a-7(a)(1), the term “convicted”
includes “when a plea of guilty . . . by the individual . . . has been accepted by a Federal,
State, or local court.” 42 U.S.C. § 1320a-7(i)(3); see also 42 C.F.R. § 1001.2.
Considering Petitioner’s guilty plea, I find that the record supports the finding that
Petitioner was convicted within the meaning of the statute.

Petitioner nevertheless claims that she has not been convicted of a criminal offense
because the plea agreement is invalid. P. Br. at 1-2. Petitioner claims that the plea
agreement is a product of coercion, undue influence and prosecutorial misconduct.
Petitioner also raises procedural and due process concerns in her hearing request. RFH at
1. It is well-established that “constitutional arguments about the process leading to a
state criminal conviction are not relevant in determining whether the I.G. has authority to
exclude a petitioner.” Chander Kachoria, R. Ph., DAB No. 1380 (1993) (citing David S.
Muransky, D.C., DAB No. 1227 (1991)). Moreover, the regulations explicitly preclude
any collateral attack on Petitioner’s conviction:

When the exclusion is based on the existence of a criminal conviction . . .
where the facts were adjudicated and a final decision was made, the basis
for the underlying conviction . . . is not reviewable and the individual or
entity may not collaterally attack it either on substantive or procedural
grounds in this appeal.
42 C.F.R. § 1001.2007(d); see also Emmanuel Uko Akpan, DAB No. 2330, at 8 (2010)
(rejecting Petitioner’s argument that his guilty plea was not a proper basis for his
exclusion because the guilty plea was based on coercion, threats, promises, conflicts of
interests and misrepresentation).

Therefore, the alleged circumstances surrounding the plea agreement cannot serve as a
basis to reverse the exclusion, and I find that Petitioner was convicted of a criminal
offense within the meaning of 42 U.S.C. § 1320a-7(a)(1).

C. Petitioner’s conviction requires exclusion under 42 U.S.C. § 1320a-7(a)(1)
because her criminal conduct related to the delivery of an item or service
under Medicaid.

An individual must be excluded from participation in any federal health care program if
the individual was convicted under federal or state law of a criminal offense related to the
delivery of an item or service under Medicare or a state health care program. 42 U.S.C.

§ 1320a-7(a)(1). In the present case, the record fully supports this conclusion. Petitioner
pleaded guilty to one count of Medical Assistance Provider Fraud. The indictment makes
it clear that Petitioner “knowingly and willfully filed, or caused to be filed, false claims
for speech therapy . . . for Medicaid recipient C.J. with the South Carolina Department of
Health and Human Services (SCDHHS).” I.G. Ex. 4, at 2. SCDHHS administers the
state’s Medicaid program. Medicaid is a “State health care program” for exclusion
purposes. 42 C.F.R. § 1001.2. Therefore, Petitioner’s conviction is related to the
delivery of services under a State healthcare program.

I conclude that the record fully supports Petitioner’s mandatory exclusion under 42
U.S.C. § 1320a-7(a)(1).!

' Throughout these proceedings, Petitioner has also requested other forms of relief.
Specifically, Petitioner seeks data suppressed in the National Practitioner Data Bank and
compensatory and punitive damages. RFH at 2; P. Br. at 3. The scope of the issues an
Administrative Law Judge (ALJ) may review is limited by regulation. 42 C.F.R.

§ 1001.2007(a)(1); see also 42 C.F.R. § 1005.4 (authority of an ALJ). Thus, in the
present matter, the only issue I may consider is whether the basis for the imposition of the
exclusion exists. I do not have the authority to provide the relief Petitioner seeks.
D. Petitioner must be excluded for the statutory minimum of five years under
42 U.S.C. § 1320a-7(c)(3)(B).

Because I have concluded that a basis exists to exclude Petitioner pursuant to 42 U.S.C.
§ 1320a-7(a)(1), Petitioner must be excluded for a mandatory minimum period of five
years. 42 U.S.C. § 1320a-7(c)(3)(B); 42 C.F.R. § 1001.2007(a)(2).

VI. Conclusion

For the foregoing reasons, I sustain the I.G.’s determination to exclude Petitioner from
participating in Medicare, Medicaid, and all federal health care programs for the statutory
five-year minimum period pursuant to 42 U.S.C. § 1320a-7(a)(1), (c)(3)(B).

/s/
Joseph Grow
Administrative Law Judge