Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Steven Ray Wallace
d/b/a The Corner Store,

Respondent.

Docket No. C-15-704

FDA Docket No. FDA-2014-H-2232

Decision No. CR3666

Date: February 24, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Prod

ucts (CTP) filed an Administrative Complaint (Complaint)

against Respondent, Steven Ray Wallace d/b/a The Corner Store that alleges facts and
legal authority sufficient to justify the imposition of a civil money penalty of $500.

Respondent did not answer t

e 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 civi

CTP began this case by servi
Complaint with the Food and

1 money penalty of $500.

ng the Complaint on Respondent and filing a copy of the
Drug Administration’s (FDA) Division of Dockets

Management. The Complaint alleges that Respondent impermissibly used a self-service

display in a non-exempt faci

ity, and impermissibly sold cigarettes to minors and failed to

verify that cigarette purchasers were 18 years of age or older, thereby violating the
Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its
implementing regulations, Cigarettes and Smokeless Tobacco, 21 C.F.R. pt. 1140 (2013).
CTP seeks a civil money penalty of $500.
On January 5, 2015, CTP served the Complaint on Respondent by United Parcel Service,
pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and accompanying cover letter,
CTP explained that within 30 days, Respondent should pay the proposed penalty, file an
answer, or request an extension of time within which to file an answer. CTP warned
Respondent that if it failed to take one of these actions within 30 days, an Administrative
Law Judge could, pursuant to 21 C.F.R. § 17.11, issue an initial decision ordering
Respondent to pay the full amount of the proposed penalty.

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

Specifically, CTP alleges the following facts in its Complaint:

e Respondent owns The Corner Store, an establishment that sells tobacco products
and is located at 5632 Highway 1, Cheraw, South Carolina 29520. Complaint 3.

e During an inspection of Respondent’s establishment on January 6, 2014, an FDA-
commissioned “inspector observed a customer-accessible display of Montclair
brand cigarettes on the checkout counter.” Additionally, “the cashier on duty told
the inspector that the establishment [was] open to the public.” Complaint § 10.

¢ On February 27, 2014, CTP issued a Warning Letter to Respondent regarding the
inspector’s observation from January 6, 2014. The letter explained that the
observation constituted a violation of the regulation found at 21 C.F.R.
§ 1140.16(c), 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 if Respondent failed to correct the violation, 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 Although United Parcel Service records indicate that an individual named
“Wallace” received the Warning Letter the FDA did not receive a response.
Complaint § 11.

e During a subsequent inspection of Respondent’s establishment on June 11, 2014,
at approximately 12:47 PM, FDA-commissioned inspectors documented that “a
person younger than 18 years of age was able to purchase a package of Marlboro
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). Pursuant to 21 C.F.R.

§ 1140.16(c), self-service displays in facilities where, at any time, persons younger than
18 years of age are present or permitted to enter are prohibited. 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 using
a self-service display in a facility where minors were permitted to enter, 21 C.F.R.

§ 1140.16(c), on January 6, 2014. Further, Respondent violated the prohibition against
selling cigarettes to persons younger than 18 years of age, 21 C.F.R. § 1140.14(a), on
June 11, 2014. Also, on June 11, 2014, Respondent 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
Shaikh M. Hasan, M.D.,
(OI File No. H-14-4-0705-9),
Petitioner,

v.

The Inspector General.
Docket No. C-14-1811
Decision No. CR3663

Date: February 24, 2015

DECISION

Petitioner, Shaikh M. Hasan, M.D., is a physician, licensed to practice in New York, who
broke the law by selling prescriptions for the narcotic drug, Percocet. He pled guilty in
state court to 41 felony counts of criminal sale of a prescription for a controlled
substance. Pursuant to section 1128(a)(4) of the Social Security Act (Act), the Inspector
General (I.G.) has excluded him 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 he I.G. is authorized to exclude Petitioner and
that the statute mandates a minimum five-year exclusion.

Background
In a letter dated June 30, 2014, the I.G. advised Petitioner Hasan that he was excluded

from participation in Medicare, Medicaid, and all federal health care programs because
he 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 I.G. submitted its brief (I.G. Br.) and ten exhibits (I.G. Exs. 1-10). Petitioner
submitted a brief (P. Br.) and ten exhibits (P. Exs. 1-10). The LG. filed a reply. In the
absence of any objection, I admit into evidence LG. Exs. 1-10 and P. Exs. 1- 10.

The parties agree that an in-person hearing is not necessary and that the case may be
decided based on the written record. I.G. Br. at 8; P. Br. at 2.

Discussion

Because Petitioner was convicted of a felony relating to
the unlawful manufacture, distribution, prescription, or
dispensing of a controlled substance, he must be
excluded from program participation for at least five
years. Act § 1128(a)(4), (c)(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 Hasan was unquestionably convicted of a drug-related felony. On
October 10, 2013, he was convicted on 41 felony counts of criminal sale of a
prescription. The court sentenced him to 30 days imprisonment followed by five years
probation. LG. Ex. 5; P. Ex. 4 at 1 (admitting “that Dr. Hasan has been convicted of a
crime that is noted in 1128(a)(4) of the Social Security Act”); see I.G. Exs. 4, 6. He must
therefore be excluded from program participation.

Petitioner, however, questions the validity of his convictions, complaining that he “was
duped by criminals and arguably entrapped by the police who reacted to information
about prescriptions” he had written. P. Br. at 4.’ Federal regulations explicitly preclude
such a 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

' T make this one finding of fact/conclusion of law.

> Although numbered page 1, this claim appears on the fourth page of Petitioner’s
written argument.
. .. 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); Joann Fletcher Cash, DAB No. 1725 (2000); Chander
Kachoria, R.Ph., DAB No. 1380 at 8 (1993) (“There is no reason to ‘unnecessarily
encumber the exclusion process’ with efforts to reexamine the fairness of state
convictions.”); Young Moon, M.D., DAB CR1572 (2007).

Petitioner also argues that his conduct did not adversely affect any of his patients, nor has
anyone suggested that he defrauded Medicare, Medicaid, or any other health care
program. As a threshold matter, selling prescriptions for a highly addictive drug to
patients who have not demonstrated a medical need for them likely causes them
significant harm. But even accepting Petitioner’s highly questionable premise, exclusion
under section 1128(a)(4) does not require findings of patient harm or health care fraud.

Petitioner complains that, if he is excluded, he will effectively not be able to practice
medicine. P. Br. at 6. The exclusion’s impact on his profession is irrelevant and not a
basis for overturning a mandatory exclusion.

Petitioner suggests that his exclusion be waived because his work in a poor community
“fits the [s]pirit of 42 CFR 1001.1801(b).” P. Br. at 7. The waiver provision (42 C.F.R.
§ 1001.1801(b)) authorizes the LG. to grant or deny a state health care program’s request
that exclusion be waived “if the individual . . . is the sole community physician or the
sole source of essential specialized services in a community.” So a state health care
official must present the request to the I.G. But “the decision to grant, deny, or rescind a
request for a waiver is not subject to administrative or judicial review.” 42 C.F.R.

§ 1001.1801(f); Act § 1128(c)(3)(B).

Finally, Petitioner asks that he be given “credit” for the time he was excluded from the
Medicaid program. He was excluded from participation in the Medicaid program
effective September 19, 2012, and argues that this exclusion should be made retroactive
to that date. P. Br. at 5. As a matter of law, an exclusion becomes effective 20 days after
the date of the I.G.’s notice of exclusion. 42 C.F.R. § 1001.2002. I have no authority to
review the timing of the I.G.’s determination to impose an exclusion or to alter
retroactively the date the exclusion was imposed. Kailash C. Singhvi, DAB No. 2138 at
4-5 (2007).

Nor may I reduce the length of Petitioner’s 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 1.G. properly excluded Petitioner Hasan 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

Center for Tobacco Products,
(FDA No. FDA-2014-H-2253)

Complainant
v.

Quick N Easy Market, LLC
d/b/a Carolina A Market /
Quick N Easy Market,

Respondent.
Docket No. C-15-728
Decision No. CR3662

Date: February 23, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Quick N Easy Market, LLC d/b/a Carolina A Market / Quick
N Easy Market, at 2739 Spruill Avenue, Charleston, South Carolina 29405, and by filing
a copy of the complaint with the Food and Drug Administration’s (FDA) Division of
Dockets Management. The complaint alleges that Carolina A Market / Quick N Easy
Market impermissibly sold cigarettes to minors and failed to verify, by means of photo
identification containing a date of birth, that a tobacco purchaser 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, 21 C.F.R. pt. 1140. CTP seeks to impose a
$250 civil money penalty against Respondent Carolina A Market / Quick N Easy Market.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on December 30, 2014, CTP served the
complaint on Respondent Carolina A Market / Quick N Easy Market by United Parcel
Service. In the complaint and accompanying cover letter, CTP explained that, within 30
days, Respondent should pay the penalty, file an answer, or request an extension of time
in which to file an answer. CTP warned Respondent that, if it failed to take one of these
actions within 30 days, the Administrative Law Judge could, pursuant to 21 C.F.R.

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

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

e At approximately 6:14 p.m. on March 25, 2014, at Respondent’s business
establishment, 2739 Spruill Avenue, Charleston, South Carolina 29405, an
FDA-commissioned inspector observed Respondent’s staff selling a package of
Marlboro cigarettes to a person younger than 18 years of age. The inspector also
observed that staff failed to verify, by means of photographic identification
containing a date of birth, that the purchaser was 18 years of age or older;

e Ina warning letter dated May 22, 2014, CTP informed Respondent of the
inspector’s March 25, 2014 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 10:24 a.m. on August 13, 2014, at Respondent’s business
establishment, 2739 Spruill Avenue, Charleston, South Carolina 29405,
FDA-commissioned inspectors documented Respondent’s staff selling a package
of Newport Box 100s cigarettes to a person younger than 18 years of age.

These facts establish the liability of Respondent Carolina A Market / Quick N Easy
Market under the Act. The Act prohibits misbranding of a tobacco product. 21 U.S.C.

§ 331(k). A tobacco product is misbranded if sold or distributed in violation of
regulations issued under section 906(d) of the Act. 21 U.S.C. § 387f(d); see 21 U.S.C.

§ 387c(a)(7)(B); 21 C.F.R. § 1140.1(b). The Secretary of the U.S. Department of Health
and Human Services issued the regulations at 21 C.F.R. pt. 1140 under section 906(d) of
the Act. 21 U.S.C. § 387a-1; see 21 U.S.C. § 387f(d)(1); 75 Fed. Reg. 13,225, 13,229
(Mar. 19, 2010). Under 21 C.F.R. § 1140.14(a), no retailer may sell cigarettes to any
person younger than 18 years of age. 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 $250 civil money penalty is permissible under 21 C.F.R. § 17.2.
Order

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

/s/
Catherine Ravinski
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2014-H-2252)

Complainant,
v.

Alabama Gas and Mini Mart LLC
d/b/a Phillips 66,

Respondent.
Docket No. C-15-727
Decision No. CR3661
Date: February 23, 2015
INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Alabama Gas and Mini Mart LLC d/b/a Phillips 66, at 430
North Alabama Street, Indianapolis, Indiana 46204, and by filing a copy of the complaint
with the Food and Drug Administration’s (FDA) Division of Dockets Management. The
complaint alleges that Phillips 66 unlawfully sold cigarettes to minors and failed to
verify, by means of photo identification containing a date of birth, that tobacco
purchasers were 18 years of age or older, thereby violating the Federal Food, Drug, and
Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its implementing regulations, 21 C.F.R.
pt. 1140. CTP seeks to impose a $500 civil money penalty against Respondent Phillips
66.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on December 23, 2014, CTP served the
complaint on Respondent Phillips 66 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 Phillips 66 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, 430 North Alabama Street, Indianapolis,
Indiana 46204, on October 24, 2012, at approximately 6:22 PM, an FDA-
commissioned inspector observed Respondent’s staff sell a package of Marlboro
Black cigarettes to a person younger than 18 years of age. The inspector also
observed that Respondent’s staff failed to verify, by means of photo identification
containing the bearer’s date of birth, that the tobacco purchaser was 18 years of
age or older;

e Ina warning letter issued on December 6, 2012, CTP informed Respondent of the
inspector’s observations from October 24, 2012, 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, 430 North Alabama Street, Indianapolis,
Indiana 46204, on June 21, 2014, at approximately 4:11 PM, FDA-commissioned
inspectors observed Respondent’s staff sell a package of Newport Box cigarettes
to a person younger than 18 years of age. The inspectors also observed that
Respondent’s staff failed to verify, by means of photo identification containing the
bearer’s date of birth, that the tobacco 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 US.C. § 387f(d); see 21 U.S.C. § 387¢(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, | enter default judgment in the amount of $500 against Respondent
Alabama Gas and Mini Mart LLC d/b/a Phillips 66. 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
Golden Living Center — Trussville,
(CCN: 01-5131),

Petitioner,

v.

Centers for Medicare & Medicaid Services
Docket No. C-14-853
ALJ Ruling No. 2015-9

Date: February 20, 2015

DISMISSAL

Petitioner, Golden Living Center — Trussville, is a skilled nursing facility located in
Trussville, Alabama, that participates in the Medicare program as a provider of services.
Based on its poor compliance history, the Centers for Medicare & Medicaid Services
(CMS) designated it a “special focus facility,” which, by law, CMS must survey at least
once every six months. Petitioner now asks me to review CMS’s purported
determination “to require the facility to remain on its Special Focus Facility . . . list.”
Hearing Request at 1.

For the reasons set forth below, I conclude that Petitioner is not entitled to Administrative
Law Judge (ALJ) review of CMS’s determination that it remain a special focus facility,
if, indeed, CMS has made that determination (which is far from clear). I therefore
dismiss Petitioner’s hearing request pursuant to 42 C.F.R. § 498.70(b).

Background

The Social Security Act (Act) sets forth requirements for nursing facility participation in
the Medicare program and authorizes the Secretary of Health and Human Services to
promulgate regulations implementing those statutory provisions. Act § 1819. The
Secretary’s regulations are found at 42 C.F.R. Part 483. To participate in the Medicare
program, a nursing facility must maintain substantial compliance with program
requirements. To be in substantial compliance, a facility’s deficiencies may pose no
greater risk to resident health and safety than “the potential for causing minimal harm.”
42 CFR. § 488.301.

The Secretary contracts with state survey agencies to conduct periodic surveys to
determine whether skilled nursing facilities are in substantial compliance. Act § 1864(a);
42 C.F.R. § 488.20. The regulations require that each facility be surveyed once every
twelve months and more often, if necessary, to ensure that identified deficiencies are
corrected. Act § 1819(g)(2)(A); 42 C.F.R. §§ 488.20(a); 488.308. If, as here, a facility
has consistently demonstrated failure to maintain compliance, and its practices have
harmed residents, it will be designated a “special focus facility,” which must be surveyed
at least once every six months. Act § 1819(f)(8); See CMS State Survey and Certification
Notice, S&C-10-32-NH (September 17, 2010)).

CMS’s policies with respect to special focus facilities have been relatively lenient.
Although it has the authority to terminate facilities that are not in substantial compliance,
it apparently has allowed these substandard facilities to continue as special focus
facilities, for at least two additional years, without demonstrating correction. To
“graduate,” i.e. shed the designation, a facility must have two consecutive surveys with
no deficiencies cited at scope and severity level “F” or higher. An F-level deficiency is
not trivial; although it does not involve actual harm, the facility’s noncompliance is
widespread and presents the potential for more than minimal harm. S&C-10-32-NH at 5.

Although the record in this case is spotty, it appears that the facility was designated a
special focus facility in February 2012. P. Response at 3.' Petitioner claims that,
following a survey completed October 31, 2013, CMS determined that, among other
deficiencies, the facility was not in substantial compliance with 42 C.F.R. § 483.35(i)
(dietary services — sanitary conditions) at scope and severity level F — widespread
noncompliance that has caused no actual harm, with the potential for more than minimal

' These facts are derived from Petitioner’s submissions, to which CMS has not objected.
CMS submitted only a virtually analysis-free motion to dismiss, citing 42 C.F.R.

§ 498.3(b)(13) and the Departmental Appeals Board’s decision in Golden Living — Grand
Island Lakeview, DAB No. 2364 (2011). But a district court in Nebraska reversed and
remanded that case more than two years earlier. Golden Living Ctr. — Grand Island
Lakeview v. Sebelius, 2011 WL 6303243 (D. Neb. Dec. 16, 2011). Petitioner, naturally,
cited the reversal in its response to CMS’s motion, and CMS did not reply. Nevertheless,
the shortcomings in CMS’s advocacy do not relieve me of my obligation to follow the
regulations, particularly with respect to my jurisdiction.
harm. According to Petitioner, the October survey finding might keep it a special focus
facility for an additional year.

Discussion

Petitioner has no right to a hearing because CMS has not made an initial
determination that is reviewable in this forum.

The hearing rights of a long-term care facility are established by federal regulations at 42
C.F.R. Part 498. A provider dissatisfied with an initial determination is entitled to further
review, but administrative actions that are not initial determinations are not subject to
appeal. 42 C.F.R. § 498.3(a). The regulations specify which actions are “initial
determinations” and set forth examples of actions that are not. A finding of
noncompliance that results in the imposition of a remedy specified in 42 C.F.R. § 488.406
is an initial determination for which a facility may request an ALJ hearing. 42 C.F.R. §
498.3(b)(13). But a facility has no right to a hearing unless CMS imposes one of the
specified remedies. San Fernando Post Acute Hosp., DAB No. 2492 (2012); Lutheran
Home — Caledonia, DAB No. 1753 (2000); Schowalter Villa, DAB No. 1688 (1999);
Arcadia Acres, Inc., DAB No. 1607 (1997). The remedy, not the citation of a deficiency,
triggers the right to a hearing. San Fernando, DAB No. 2492 at 7 (“Thus, the regulations
do not provide a hearing right for a noncompliance finding alone.”); Schowalter Villa;
Arcadia Acres, Inc. Where CMS declines to impose one of the specified remedies,
Petitioner has no hearing right. See Fountain Lake Health & Rehab., Inc., DAB No.

1985 (2005).

Notwithstanding the explicit language of the regulations, Petitioner suggests that the
prospect of it remaining a special focus facility is sufficient to create a hearing right. But
Iam bound by the regulations; the regulations are unequivocal; not every potential injury
creates a hearing right. See San Fernando, DAB No. 2492 at 9-10, citing Shalala v. Ill.
Council on Long Term Care, 529 U.S. 1 (2000) (finding that, consistent with the statute,
the regulations authorize a hearing only if a facility’s program participation is terminated
or other specified remedies are imposed.”).°

Moreover, Petitioner has not even alleged an actual injury. It speculates that CMS may
take certain adverse actions if the facility remains special focus. But Petitioner’s position

> T make this one finding of fact/ conclusion of law.

> T recognize that the district court in Golden Living Center — Grand Island Lakeview
carved out an exception to the regulations, noting there that survey findings of sexual
abuse and actual harm to a resident could be particularly problematic to that facility. But
the Nebraska decision is not controlling, and the regulations (which have, after all,
withstood Supreme Court scrutiny) are.
suggests a fundamental misunderstanding of CMS’s enforcement authority. CMS has the
authority to take the actions Petitioner fears without regard to the facility’s special focus
status.

First, Petitioner assumes — wrongly — that, but for the October survey, it would be exempt
from any heightened scrutiny. In fact, CMS and the state survey agencies have broad
authority to survey facilities, and any determination to do so is not an initial
determination that is subject to review in this forum. 42 C.F.R. §§ 498.3(b); 498.5. In
addition to conducting the mandatory annual survey, the agencies may survey a facility
“as frequently as necessary” in order to:

(1) determine whether a facility complies with participation requirements; and
(2) confirm that the facility has corrected deficiencies previously cited.

42 C.F.R. § 488.308(c). Inasmuch as facilities must, at all times, maintain substantial
compliance with program requirements, they can hardly claim that they are prejudiced by
the state agency’s decision to survey them. See Act §§ 1819(g)(2)(B) (“Any other
facility may, at the Secretary’s or State’s discretion, be subject to such an extended
survey (or a partial extended survey.”)); 1819(g)(3)(D) (authorizing the Secretary to
survey a facility and make independent and binding determinations if she “has reason to
question” its compliance); 1819(g)(4) (mandating that the state agency investigate
complaints). Indeed, Petitioner’s poor compliance history would justify heightened
scrutiny without regard to the October survey findings or the facility’s special focus
status.

Petitioner also complains that the October survey findings could ultimately cause it to
suffer “severe sanctions” for what it characterizes as a potentially “relatively minor
deficiency citation.”* As a matter of law, CMS has broad discretion to select a penalty
whenever a facility is not in substantial compliance, and that discretion is not diminished
because the agency is reluctant to terminate any but the “most egregious recidivist
institutions.” See Ill. Council, 529 U.S. at 22. CMS may terminate a facility’s program
participation whenever that facility is not in substantial compliance with program
requirements. Act §§ 1819(h)(2); 1866(b)(2)(A); 42 C.F.R. § 488.412(a). A facility is
not in substantial compliance if its deficiencies pose the potential for causing more than

* Although this argument is often presented and has some surface appeal, I am not aware
of any case in which an unreviewable survey finding has, in fact, had a significant — or
any — impact on a later penalty. Petitioner has cited none. Moreover, Petitioner seems to
trivialize deficiencies that Congress took seriously. It authorized the Secretary to
terminate program participation if the facility was not in substantial compliance (i.e., had
“D” and “E” level deficiencies) because such deficiencies pose potential harm to
residents.
minimal harm. 42 C.F.R. § 488.301. Thus, CMS may terminate a facility’s program
participation for deficiencies cited at the “D” and “E” levels of scope and severity. See
Beverly Health & Rehab. Servs., v. Thompson, 223 F. Supp. 2d 73, 111 (D.D.C. 2002)
(holding that the agency’s authority to terminate is not limited to immediate jeopardy
cases, but “‘may span all noncompliant facility behavior.”) (emphasis in original).

Conclusion

Because CMS has not made an initial determination that is reviewable in this forum,
Petitioner has no right to an ALJ hearing, and this matter must be dismissed. 42 C.F.R.
§ 498.70(b). I therefore grant CMS’s motion to dismiss.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

CJN Enterprises, Inc.,
(NPI: 1598933681; PTAN: 67-3126),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-409
Decision No. CR3659
Date: February 20, 2015
DECISION

Petitioner, CJN Enterprises, Inc.,' a home health agency, appeals a reconsideration
decision, dated October 17, 2013, upholding the revocation of Petitioner’s Medicare
enrollment and billing privileges. The undisputed evidence establishes that Petitioner
was not in compliance with Medicare program requirements for home health care
certification. Consequently, I find the Centers for Medicare & Medicaid Services (CMS)
ad a legitimate basis to revoke Petitioner’s Medicare enrollment and billing privileges
and impose a three-year re-enrollment bar.

Background

Petitioner is a home health agency located in Houston, Texas. CMS Exhibit (Ex.) 1. By
letter dated June 24, 2013, Palmetto GBA (Palmetto) notified Petitioner that it was
revoking Petitioner’s provider transaction access number (PTAN) and terminating
Petitioner’s provider agreement. CMS Ex. 3. Palmetto stated it was taking this action
under 42 C.F.R. § 424.535(a)(1), which provides CMS with the authority to revoke
billing privileges and any corresponding provider or supplier agreement for
noncompliance with enrollment requirements. Palmetto noted that the form CMS 855A

' Petitioner conducted its business as “CJ Home Health Services.” CMS Ex. 2, at 1.
enrollment application (CMS 855A) for home health agencies contains a certification
statement requiring the appropriate agency official to certify:

I agree to abide by the Medicare laws, regulations and program...
instructions that apply to this provider. The Medicare laws, regulations,
and program instructions are available through the Medicare contractor. I
understand that payment of a claim . . . by Medicare is conditioned upon
the claim and the underlying transaction complying with such laws,
regulations, and program instructions . . . and on the provider’s compliance
with all applicable conditions of participation in Medicare.

CMS Ex. 3, at 1. Palmetto determined that Petitioner failed to abide by Medicare laws,
regulations, and program instructions when it:

... failed to obtain a valid order from a physician when it submitted claims
using [Dr. B.I.’s] NPI [national provider identifier] for Medicare patients
from November 1, 2009 through October 21, 2012. [Dr. B.I.] signed an
attestation indicating that she has neither provided any Part B services to or
referred these beneficiaries for home health services provided by CIN
Enterprises Inc. In addition, a review of the eight sets of records delivered
by CJN showed some of the records just listed [Dr. B.I.] as the patient’s
physician and included what was purported to be her signature. Some of
the records included [Dr. B.I.] with [Dr. P.O.], while another set included
her with [Dr. T.S.]. However one set of the records showed [Dr. B.1.] along
with [Dr. J.P.], [Dr. J.G.], [Dr. S.Z.], and [Dr. T.L.]. While another set of
records only showed [Dr. T.L.], with no mention at all of [Dr. B.1.].

CMS Ex. 3, at 1. Palmetto gave Petitioner the opportunity both to file a corrective action
plan (CAP) and to request reconsideration. CMS Ex. 3, at 1-2. Petitioner requested
reconsideration on August 20, 2013.7 CMS Ex. 2. In its reconsideration request,
Petitioner asserted that Palmetto’s Notice was vague and did not reference the
beneficiaries by name. However, Petitioner “assume[d]” they were the beneficiary
claims Petitioner had previously provided to HI, the CMS entity which apparently
requested the information. Petitioner noted that it had not been provided a copy of

Dr. B.I.’s statement. Petitioner stated that Dr. B.I. did refer and provide services to three
of the beneficiaries in question. Petitioner also noted that according to Petitioner’s

> T refer to some individuals by their initials.

> The reconsideration decision in this case explains that Petitioner submitted a CAP to
Palmetto on July 18, 2013 and provides reasons for rejecting it. I do not have authority to
review those reasons.
owner, Obinna Ujari (whose affidavit Petitioner attached), Dr. B.I. provided services to
over 80 patients she had referred to Petitioner since 2008. CMS Ex. 2, at 1-3.

On October 17, 2013, CMS’s Center for Program Integrity (CPI) issued a decision in
response to Petitioner’s reconsideration request. CPI stated that it had reviewed the
evidence and determined that Petitioner did not abide by Medicare law, regulations, and
program instructions in submitting claims for Medicare beneficiaries without a valid
certification or plan of care. Specifically, Petitioner failed to obtain a valid order from a
physician when submitting claims using Dr. B.I.’s NPI for Medicare beneficiaries.
CMS Ex. 1, at 2-3.

Petitioner filed a timely request for an administrative law judge hearing. The case was
assigned to me for hearing and decision. I ordered the parties to file pre-hearing
exchanges including all of their arguments and evidence. CMS filed a motion for
summary judgment (CMS Br.), accompanied by 19 exhibits.’ Petitioner did not file a
responsive brief or any exhibits by the deadline I ordered. I ordered Petitioner to show
good cause for its omission, and then I granted its request for an extension. Petitioner
eventually filed 11 exhibits, P. Exs. 1-11, including the affidavit of Petitioner’s owner,
Obinna Ujari (P. Ex. 1), and the affidavit of Helen Ujari, R.N., a quality assurance nurse
for Petitioner responsible for auditing Petitioner’s clinical records. (P. Ex. 11).

My pre-hearing order advised the parties that they must submit written direct testimony
for each proposed witness and that an in-person hearing is only necessary when the
opposing party affirmatively requests an opportunity to cross-examine a witness.
Pre-Hearing and Acknowledgment Order (Order) §§j 8, 9; see 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). Considering neither party requested the
opportunity to cross-examine any witnesses, | find that an in-person hearing in this case
is unnecessary and issue this decision on the full merits of the written record. Order

q9 10, 11.

Issue

Whether CMS had a legitimate basis to revoke Petitioner’s Medicare enrollment
and billing privileges.

4 CMS Ex. 9 consists of CMS Ex. 9 and 9.1; CMS Ex. 13 consists of CMS Ex. 13 and
13.1; and CMS Ex. 16 consists of CMS Ex. 16, 16.1, and 16-2.
Findings of Fact and Conclusions of Law

I. CMS had a legitimate basis to revoke Petitioner’s Medicare enrollment and
billing privileges because Petitioner filed Medicare reimbursement claims
containing improper physician certifications for at least four beneficiaries.

CMS’s authority to revoke a provider or supplier’s enrollment and billing privileges is
codified at 42 C.F.R. § 424.535. The pertinent subsection of the regulation states:

(a) Reasons for revocation. CMS may revoke a currently enrolled
provider or supplier’s Medicare billing privileges and any corresponding
provider agreement or supplier agreement for the following reasons:

(1) Noncompliance. The provider or supplier is determined not to
be in compliance with the enrollment requirements described in this
section, or in the enrollment application applicable for its provider
or supplier type....

The Medicare statute defines “home health services” as “items and services furnished to
an individual, who is under the care of a physician . . . under a plan (for furnishing such
items and services to such individual) established and periodically reviewed by a
physician...” 42 U.S.C. § 1395x(m). Home health services are covered by Medicare
only if “a physician . . . certifies... that .. . home health services . . . are or were
required because the individual is or was confined to his home . . . and needs or needed
skilled nursing care... .” 42 U.S.C. § 1395f(a)(2)(C); 42 U.S.C. § 1395n(a)(2)(A).
Thus, a home health agency may receive Medicare payment for home health services for
individuals only after the home health agency has obtained a valid certification from a
physician that the individual is homebound and requires home health services. Home
ealth services must be furnished while the individual is under the care of a physician,
and a physician must establish and periodically review a plan of care for furnishing the
services. 42 C.F.R. § 424.22(a)(1)(iii), (iv). Also, the certifying physician is required to
now the Medicare beneficiary’s medical status, and therefore there must be a face-to-
face encounter with the individual. 42 C.F.R. § 424.22(a); Medicare Benefit Policy
Manual; CMS Pub. 100-102, Ch. 7 (Home Health Services), § 30.5.1.1. The face-to face
encounter must be “related to the primary reason the patient requires home health
services....” 42 C.F.R. § 424.22(a)(1)(v).

To enroll in Medicare, a home health agency must complete an enrollment application,
the CMS 855A. The CMS 855A requires a home health agency to have its authorized
official sign a statement acknowledging that its signature binds the provider to the laws,
regulations and program instructions of the Medicare program and to acknowledge that
the petitioner will not knowingly submit false claims or submit claims with deliberate
ignorance or reckless disregard for their truth or falsity. See CMS Ex. 16, at 32-35
(CMS 855A signed by Petitioner’s authorized official in 2005).

CMS argues that Petitioner submitted Medicare claims lacking the requisite valid
physician certification from a physician involved in the care, treatment, or monitoring of
the beneficiaries, and doing so constituted noncompliance. CMS Br. at 1-2. CMS
submitted evidence to that effect (CMS Exs. 4-16, 18, 19; see CMS Br. at 7-11).

Petitioner’s owner, Obinna Ujari, testified that of the eight beneficiaries CMS cited, and
for whom Petitioner claimed payment, Dr. B.I. actually treated only four of them. P. Ex.
1. Petitioner’s nurse auditor, Helen Ujari, testified that four of the beneficiaries “were
seen by a different doctor.” P. Ex. 11. Combined, I find their testimony establishes that,
for at least four Medicare beneficiaries for whom Petitioner claimed payment, Dr. B.I.
was not the treating physician or involved in their care or monitoring and thus Dr. B.I.
could not be the certifying physician. It is unnecessary for me to find that Petitioner
improperly claimed payment for other beneficiaries to uphold the revocation.

2. Petitioner may not avoid revocation by assigning blame to a third party biller
for its improper certifications to CMS’s contractor.

Obinna Ujari and Helen Ujari both testified that Dr. B.I. was not the treating physician
for at least four beneficiaries (Obinna Ujari testifying that Dr. B.I. only treated four of the
beneficiaries and Helen Ujari testifying that four beneficiaries for whom Petitioner
claimed payment were actually seen by a physician other than Dr. B.I., identifying those
beneficiaries as B.W., C.H., H.N. and J.L.). P. Exs. 1, 11; CMS Ex. 6 (Home Health
Certification and Treatment Plan for C.H.); CMS Ex. 7 (Home Health Certification and
Treatment Plan for H.N.); CMS Ex. 8 (Home Health Certification and Treatment Plan for
B.W.); CMS Ex. 15 (Home Health Certification and Treatment Plan for J.L.). The only
evidence Petitioner presents suggesting why it claimed that Dr. B.I. was the certifying
physician for beneficiaries she did not treat is that:

The independent biller hired by [Petitioner] billed under the wrong [NPI]
. .. The independent biller made errors in the billing by confusing some of
the other doctor’s patients with [Dr. B.I.].

P. Ex. 11, at 1 (Helen Ujari’s affidavit). However, it is home health agencies’
responsibility to “take the necessary steps to ensure that they are billing appropriately for
services furnished to Medicare beneficiaries.” See 73 Fed. Reg. 36,448, 36,455 (June 27,
2008).° The Departmental Appeals Board concluded:

Medicare suppliers and providers certify that they are responsible for the
accuracy of their claims for reimbursement, and the regulation contains no
exception for improper claims prepared and submitted by billing agents,
which is consistent with the preamble stating that providers and suppliers
are responsible for claims submitted on their behalf .... Petitioner’s
position, if adopted, would effectively shield a supplier from any
consequences for the submission of an unlimited number of improper
claims on his behalf, so long as he could point to an agreement with a
billing agent, who is not a party to the supplier’s Medicare agreement, to
submit the claims. Petitioner’s efforts to assign blame for the improper
billing to his billing agent . . . do not relieve him of his responsibility for
the improper claims or bar CMS from revoking his billing privileges.

Louis J. Gaefke, D.P.M., DAB No. 2554, at 6 (2013).

The CMS 855A enrollment application signed on behalf of Petitioner placed Petitioner on
notice that submitting claims with reckless disregard for their truth or falsity could lead to
revocation of its enrollment and billing privileges. Simply relying on a billing agent
without checking that the claims filed are correct could clearly lead to the submission of
incorrect and invalid claims. Petitioner’s failure to assure that the claims it submitted
were correct persuades me that Petitioner submitted claims with reckless disregard for the
truth or falsity of the physician certification in at least four cases.°

> At least three instances of filing a claim for services that could not have been furnished
to a specific individual on the date of service may constitute a “pattern of improper
billing,” which could have constituted a separate basis for revocation. 42 C.F.R.

§ 424.535(a)(8); 73 Fed. Reg. 36,448, 36,455 (June 27, 2008).

® Ina separate and independent decision issued on the same date as this decision, I
upheld CMS’s revocation of another home health agency also finding its owner, Obinna
Ujari, filed improper claims based on Dr. B.I.’s physician certifications which
undisputedly never occurred. See Oakwest Healthcare Services, Inc., DAB CR3658
(2015).
Accordingly, I find that Petitioner’s evidence showing that it submitted invalid claims
due to invalid physician certifications for four Medicare beneficiaries, whether or not due
to its billing agent’s error, supports CMS’s revocation of its enrollment and billing
privileges.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Oakwest Healthcare Services, Inc.,
(NPI: 1285642223; PTAN: 45-3105),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-408
Decision No. CR3658
Date: February 20, 2015
DECISION

Petitioner, Oakwest Healthcare Services, Inc., a home health agency, appeals a
reconsideration decision, dated October 17, 2013, upholding the revocation of
Petitioner’s Medicare enrollment and billing privileges. The undisputed evidence
establishes that Petitioner was not in compliance with Medicare program requirements
for home health care certification. Consequently, I find the Centers for Medicare

& Medicaid Services (CMS) had a legitimate basis to revoke Petitioner’s Medicare
enrollment and billing privileges and impose a three-year re-enrollment bar.

Background

Petitioner is a home health agency located in Houston, Texas. CMS Exhibit (Ex.) 3.

By letter dated June 24, 2013, Palmetto GBA (Palmetto) notified Petitioner that it was
revoking Petitioner’s provider transaction access number (PTAN) and terminating
Petitioner’s provider agreement. CMS Ex. 8. Palmetto stated it was taking this action
under 42 C.F.R. § 424.535(a)(1), which provides CMS with the authority to revoke
billing privileges and any corresponding provider or supplier agreement for
noncompliance with enrollment requirements. Palmetto noted that the form CMS 855A
enrollment application (CMS 855A) for home health agencies contains a certification
statement requiring the appropriate agency official to certify:

I agree to abide by the Medicare laws, regulations and program instructions
that apply to this provider. The Medicare laws, regulations, and program
instructions are available through the Medicare contractor. I understand
that payment of a claim by Medicare is conditioned upon the claim and the
underlying transaction complying with such laws, regulations and program
instructions . . . and on the provider’s compliance with all applicable
conditions of participation in Medicare.

CMS Ex. 8, at 2. Palmetto determined that Petitioner failed to abide by Medicare laws,
regulations, and program instructions because Petitioner did not obtain valid physician
orders when submitting claims using the NPI (national provider identifier) for Dr. B.I.,'
for seven Medicare beneficiaries from November 1, 2009 through October 21, 2012.
Palmetto stated that Dr. B.I. provided a CMS contractor, Health Integrity (HI), with a
statement in which she attested that she neither provided Part B services to these
Medicare beneficiaries nor referred them to Petitioner for home health services. Palmetto
stated that its review of the medical records for these beneficiaries (provided to HI by
Petitioner) showed:

. .. most records listed Dr. [B.I.] as the patient’s physician. Often, the
records included an additional physician with Dr. [B.I.]. One record
included . . . Drs. [P.O.] and [O.D.], two records showed Dr. [B.I.] with Dr.
[R.K.], one record showed Dr. [B.I.] and Dr. [J.R.], another with Dr. [J.G.],
another with Dr. [P.O.], and another with Dr. [D.M.] . .. One record didn’t
mention Dr. [B.I.] at all and instead listed Dr. [M.C.].

CMS Ex. 8, at 2. Palmetto gave Petitioner the opportunity both to file a corrective action
plan (CAP) and to request reconsideration. CMS Ex. 8, at 2-4; see CMS Ex. 6.

Petitioner requested reconsideration on August 20, 2013.’ CMS Ex. 6. In its
reconsideration request, Petitioner asserted that Palmetto’s revocation notice letter was
vague and did not reference the seven beneficiaries by name. However, Petitioner
“assume[d]” they were the seven beneficiary claims Petitioner had previously provided to
HI. Petitioner noted that it had not been provided a copy of Dr. B.I.’s statement.
Petitioner stated that Dr. B.I. referred and provided services to three of the beneficiaries
in question. Petitioner also noted that according to Petitioner’s owner, Obinna Ujari

' [refer to some individuals by their initials.

> The reconsideration decision explains that Petitioner submitted a CAP to Palmetto on
July 18, 2013, and provides reasons for rejecting it. CMS Ex. 2. I do not have authority
to review those reasons.
(whose affidavit Petitioner attached), Dr. B.I. provided services to and referred over 130
patients to Petitioner since 2008. CMS Exs. 6, at 2; 16, at 7-8; Petitioner Exhibits (P.
Exs.) 1, 12.

On October 17, 2013, CMS’s Center for Program Integrity (CPI) issued a decision in
response to Petitioner’s reconsideration request. CPI stated that it had reviewed the
evidence and determined that Petitioner did not abide by Medicare law, regulations, and
program instructions in submitting claims for Medicare beneficiaries without a valid
certification or plan of care. Specifically, Petitioner failed to obtain a valid order from a
physician when submitting claims using Dr. B.I.’s NPI for Medicare beneficiaries when
Dr. B.I. had not seen or referred the beneficiaries for home health services. CMS Ex. 2,
at 2-3.

Petitioner filed a timely request for an administrative law judge hearing. The case was
assigned to me for hearing and decision. I ordered the parties to file pre-hearing
exchanges including all of their arguments and evidence. CMS filed a motion for
summary judgment (CMS Br.), accompanied by 17 exhibits. Petitioner did not file a
responsive brief or any exhibits by the deadline I ordered. I ordered Petitioner to show
good cause for its omission, and then I granted its request for extension. Petitioner
eventually filed 11 exhibits, P. Exs. 1-4 and 6-12, including the affidavits of Petitioner’s
owner Obinna Ujari (filed twice, once as P. Ex. 1 and a second time as P. Ex. 12) and the
affidavit of Petitioner’s Director of Nursing, Helen Ujari (P. Ex. 11).

My pre-hearing order advised the parties that they must submit written direct testimony
for each proposed witness and that an in-person hearing is only necessary when the
opposing party affirmatively requests an opportunity to cross-examine a witness.
Acknowledgment and Pre-Hearing Order (Order) J 8, 9; see 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). Considering neither party requested the
opportunity to cross-examine any witnesses, | find that an in-person hearing in this case
is unnecessary and issue this decision on the full merits of the written record. Order

qf 10, 11.
Issue

Whether CMS had a legitimate basis to revoke Petitioner’s Medicare enrollment
and billing privileges.
Findings of Fact and Conclusions of Law

I. CMS had a legitimate basis to revoke Petitioner’s Medicare enrollment and
billing privileges because Petitioner filed Medicare reimbursement claims
containing improper physician certifications for at least three beneficiaries.

CMS’s authority to revoke a provider or supplier’s enrollment and billing privileges is
codified at 42 C.F.R. § 424.535. The pertinent subsection of the regulation states:

(a) Reasons for revocation. CMS may revoke a currently enrolled provider
or supplier’s Medicare billing privileges and any corresponding provider
agreement or supplier agreement for the following reasons:

(1) Noncompliance. The provider or supplier is determined not to be
in compliance with the enrollment requirements described in this

section, or in the enrollment application applicable for its provider or
supplier type...

The Medicare statute defines “home health services” as “items and services furnished to
an individual, who is under the care of a physician . . . under a plan (for furnishing such
items and services to such individual) established and periodically reviewed by a
physician...” 42 U.S.C. § 1395x(m). Home health services are covered by Medicare
only if “a physician . . . certifies... that .. . home health services . . . are or were
required because the individual is or was confined to his home . . . and needs or needed
skilled nursing care... .” 42 U.S.C. § 1395f(a)(2)(C); 42 U.S.C. § 1395n(a)(2)(A).
Thus, a home health agency may receive Medicare payment for home health services for
individuals only after the home health agency has obtained a valid certification from a
physician that the individual is homebound and requires home health services. Home
ealth services must be furnished while the individual is under the care of a physician,
and a physician must establish and periodically review a plan of care for furnishing the
services. 42 C.F.R. § 424.22(a)(1)(iii), (iv). Also, the certifying physician is required to
now the Medicare beneficiary’s medical status, and therefore there must be a face-to-
face encounter with the individual. 42 C.F.R. § 424.22(a); Medicare Benefit Policy
Manual; CMS Pub. 100-102, Ch. 7 (Home Health Services), § 30.5.1.1. The face-to face
encounter must be “related to the primary reason the patient requires home health
services....” 42 C.F.R. § 424.22(a)(1)(v).

To enroll in Medicare, a home health agency must complete an enrollment application,
the CMS 855A. The CMS 855A requires a home health agency, through an authorized
official, to sign a certification statement at Section 15 of the enrollment application.
Obinna Ujari signed such a statement, acknowledging that his signature, “binds this
provider to the laws, regulations, and program instructions of the Medicare program.”
CMS Ex. 3, at 3; see CMS Ex. 3, at 4-5. The certification statement he signed also
required him to certify that Petitioner would “not knowingly present or cause to be
presented a false or fraudulent claim for payment by Medicare, and will not submit
claims with deliberate ignorance or reckless disregard of their truth or falsity.” CMS Ex.
3, at 3; see CMS Ex. 3, at 4-5.

Petitioner’s owner, Obinna Ujari, testified that of the seven beneficiaries CMS cited, and
for whom Petitioner claimed payment, Dr. B.I. actually treated only three of them.

P. Exs. 1, 12. Petitioner’s Director of Nursing, Helen Ujari, testified that three of the
seven beneficiaries in question “were seen by a different doctor.” P. Ex. 11. Combined,
I find their testimony establishes that, for at least three Medicare beneficiaries for whom
Petitioner claimed payment, Dr. B.I. was not the treating physician or involved in their
care or monitoring, and thus Dr. B.I. could not be the certifying physician. It is
unnecessary for me to find that Petitioner improperly claimed payment for all seven
beneficiaries to uphold the revocation.

2. Petitioner may not avoid revocation by assigning blame to a third party biller
for its improper certifications to CMS’s contractor.

Obinna Ujari and Helen Ujari both testified that Dr. B.I. was not the treating physician
for at least three beneficiaries (Obinna Ujari testifying that Dr. B.I. only treated three of
the beneficiaries and Helen Ujari testifying that three beneficiaries for whom Petitioner
claimed payment were actually seen by a physician other than Dr. B.I., identifying those
beneficiaries as L.W., W.H., and MLS.). P. Ex. 11, at 1; P. Exs. 1, 12; CMS Ex. 9 (Home
Health Certification and Plan of Treatment for L.W.); CMS Ex. 10 (Home Health
Certification and Plan of Treatment for W.H.); and CMS Ex. 12 (Home Health
Certification and Plan of Treatment for M.S.); CMS Ex. 16. The only evidence Petitioner
offers as to why it claimed that Dr. B.I. was the certifying physician for these three
beneficiaries is that:

The independent biller hired by [Petitioner] billed under the wrong [NPI] for
[three beneficiaries]. . . . The independent biller made errors in the billing by
confusing some of the other doctor’s patients with [Dr. B.I.].

P. Ex. 11, at 1 (Director of Nursing’s affidavit).
It is a supplier or provider’s responsibility to “take the necessary steps to ensure that they

are billing appropriately for services furnished to Medicare beneficiaries.” See 73 Fed.
Reg. 36,448, 36,455 (June 27, 2008).> The Departmental Appeals Board has held:

> At least three instances of filing a claim for services that could not have been furnished
to a specific individual on the date of service may constitute a “pattern of improper
billing,” which could have constituted a separate basis for revocation. 42 C.F.R.

§ 424.535(a)(8); 73 Fed. Reg. 36,448, 36,455 (June 27, 2008).
Medicare suppliers and providers certify that they are responsible for the
accuracy of their claims for reimbursement, and the regulation contains no
exception for improper claims prepared and submitted by billing agents,
which is consistent with the preamble stating that providers and suppliers
are responsible for claims submitted on their behalf. . . . Petitioner’s
position, if adopted, would effectively shield a supplier from any
consequences for the submission of an unlimited number of improper
claims on his behalf, so long as he could point to an agreement with a
billing agent, who is not a party to the supplier’s Medicare agreement, to
submit the claims. Petitioner’s efforts to assign blame for the improper
billing to his billing agent . . . do not relieve him of his responsibility for
the improper claims or bar CMS from revoking his billing privileges.

Louis J. Gaefke, D.P.M., DAB No. 2554, at 6 (2013).

The CMS 855A application that Obinna Ujari signed on behalf of Petitioner placed
Petitioner on notice that submitting claims with reckless disregard for their truth or falsity
could lead to revocation of its enrollment and billing privileges. Simply relying on a
billing agent without checking that the claims filed are correct could clearly lead to the
submission of incorrect and invalid claims. Petitioner’s failure to assure that the claims it
submitted were correct persuades me that Petitioner submitted claims with reckless
disregard for the truth or falsity of the physician certification in at least three cases.*

Accordingly, I find that Petitioner’s evidence showing that it submitted invalid claims
due to invalid physician certifications for at least three Medicare beneficiaries, whether or
not due to its billing agent’s error, supports CMS’s revocation of its enrollment and
billing privileges.

/s/
Joseph Grow
Administrative Law Judge

* Ina separate and independent decision issued on the same date as this decision, I
upheld CMS’s revocation of another home health agency also finding its owner, Obinna
Ujari, filed improper claims based on Dr. B.I.’s physician certifications which
undisputedly never occurred. See CJN Enterprises, Inc., DAB CR3859 (2015).


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Menahil, Inc. / Shoukat Choudhry
d/b/a West Street BP,

Respondent.

Docket No. C-15-810
FDA Docket No. FDA-2014-H-2343

Decision No. CR3656

Date: February 20, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint)
against Respondent, Menahil, Inc. / Shoukat Choudhry d/b/a West Street BP that alleges
facts and legal authority sufficient to justify the imposition of a $250 civil money penalty.
Respondent did not answer the Complaint, nor did Respondent request an extension of
time within which to file an answer. Therefore, I enter a default judgment against
Respondent and assess a $250 civil money penalty.

CTP began this case by serving the Complaint on Respondent and filing a copy of the
Complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The Complaint alleges that Respondent impermissibly sold cigarettes to
minors and failed to verify that a cigarette purchaser 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. pt. 1140
(2013). CTP seeks a civil money penalty of $250.
On January 7, 2015, CTP served the Complaint on Respondent by United Parcel Service,
pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and accompanying cover letter,
CTP explained that within 30 days, Respondent should pay the proposed penalty, file an
answer, or request an extension of time within which to file an answer. CTP warned
Respondent that if it failed to take one of these actions within 30 days, an Administrative
Law Judge could, pursuant to 21 C.F.R. § 17.11, issue an initial decision ordering
Respondent to pay the full amount of the proposed penalty.

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

Specifically, CTP alleges the following facts in its Complaint:

e Respondent owns West Street BP, an establishment that sells tobacco products and
is located at 910 West Street, Annapolis, Maryland 21401. Complaint { 3.

e During an inspection of Respondent’s establishment on February 7, 2014, at
approximately 12:38 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 § 10.

© On April 24, 2014, CTP issued a Warning Letter to Respondent regarding the
inspector’s observations from February 7, 2014. 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 Although UPS records indicate that an individual named “Kumar” received the
Warning Letter, CTP did not receive a response to the Warning Letter. Complaint

ql.

e During a subsequent inspection of Respondent’s establishment on July 31, 2014,
at approximately 11:25 AM, FDA-commissioned inspectors documented that “a
person younger than 18 years of age was able to purchase a package of Newport
Box cigarettes ....” Complaint § 1.
These facts establish 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
7, 2014, and July 31, 2014. On February 7, 2014, 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 $250, which is a permissible fine under the regulations.
21 C.F.R. § 17.2. I thus find that a civil money penalty of $250 is warranted and so order
one imposed.

/s/
Steven T. Kessel
Administrative Law Judge