Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Robert Kanowitz, D.P.M.,
(O.L. File Number 3-09-40161-9)

Petitioner
v.

The Inspector General,

Docket No. C-12-1086

Decision No. CR2702

Date: February 5, 2013

DECISION

Petitioner, Robert Kanowitz, is excluded from participating in Medicare, Medicaid, and
all federal health care programs pursuant to section 1128(a)(1) of the Social Security Act
(Act) (42 U.S.C. § 1320a-7(a)(1)) effective July 19, 2012, based upon his conviction of a
criminal offense related to the delivery of an item or service under Medicare or a state
health care program. There is a proper basis for exclusion. Petitioner’s exclusion for the
minimum period’ of five years is mandatory pursuant to section 1128(c)(3)(B) of the Act
(42 U.S.C. § 1320a-7(c)(3)(B)).
I. Background

The Inspector General (1.G.) for the Department of Health and Human Services (HHS)
notified Petitioner by letter dated June 29, 2012, that he was being excluded from

' Pursuant to 42 C.F.R. § 1001.3001, Petitioner may apply for reinstatement only after
the period of exclusion expires. Reinstatement is not automatic upon completion of the
period of exclusion.
participation in Medicare, Medicaid, and all federal health care programs for a period of
five years, the minimum statutory period. The I.G. advised Petitioner that he was being
excluded pursuant to sections 1128(a)(1) and 1128(a)(3) of the Act. The section
1128(a)(1) exclusion was based on Petitioner’s conviction in the Court of Common Pleas
of Montgomery County, Pennsylvania, of a criminal offense related to the delivery of an
item or service under Medicare or a state health care program. On October 16, 2012, the
I.G. amended its June 29, 2012 notice letter and notified Petitioner that his exclusion is
based solely on section 1128(a)(1) of the Act. LG. Ex. 4.

Petitioner requested a hearing by an undated letter (Hearing Request) that was received at
the Departmental Appeals Board on July 13, 2012. The case was assigned to me for
hearing and decision. A prehearing telephone conference was convened on August 29,
2012, the substance of which is memorialized in my Prehearing Conference Order and
Schedule for Filing Briefs and Documentary Evidence dated August 29, 2012. During
the prehearing conference, the parties agreed that Petitioner’s undated hearing request
was timely; Petitioner did not waive an oral hearing; and the I.G. requested an
opportunity to file a motion for summary judgment. Accordingly, I set a briefing
schedule for the parties.

The LG. filed a motion for summary judgment (I.G. Br.) on October 12, 2012, with a
supporting memorandum and LG. exhibits (I.G. Exs.) 1 through 3. On November 15,
2012, Petitioner filed a response to the I.G.’s motion for summary judgment

(P. Response) with a number of unmarked documents consisting of the “Proposed
Adjudication and Order of the State Board of Podiatry of the Commonwealth of
Pennsylvania,” which I have labeled Petitioner’s exhibit (P. Ex.) 1, and ten other
locuments which I have labeled collectively as P. Ex. 2.’ The LG. filed a reply brief on
December 11, 2012 with LG. Ex. 4. No objections have been made to my consideration
of any of the offered exhibits and all are admitted as evidence. Petitioner filed a letter
lated January 23, 2013 with additional documents attached but unmarked which I treat as
P. Ex. 3. On February 1, 2013, the 1.G. moved for leave to reply to Petitioner’s letter

* [refer to the individuals who executed the documents filed by Petitioner that I have
lesignated P. Ex. 2 by initials only. The documents filed by Petitioner include: a June 8,
2012 letter from Petitioner’s patient JG; a June 5, 2012 email from NP, the Administrator
of an assisted living facility; a May 1, 2012 letter from Petitioner’s patient RP; a May 1,
2012 letter from a colleague SL; a June 6, 2012 letter from AV, the president of an
assisted living facility; an undated letter from GD; a June 20, 2012 letter from LS, a
billing office manager; a June 13, 2012 letter from DR, owner/managing director of a
senior living facility; a June 7, 2012 letter from AV, director of a nursing home; and a
June 9, 2012 letter from Petitioner’s patient JJ.

with a reply. The motion for leave is granted and the I.G. sur-reply is accepted. The LG.
does not specifically object to my consideration of P. Ex. 3, however, the documents that
comprise P. Ex. 3 are not relevant to any issue that I may decide, as discussed more fully
hereafter, and P. Ex. 3 is not admitted as evidence.

IL. Discussion
A. Applicable Law

Petitioner’s rights to an administrative law judge (ALJ) hearing and judicial review of the
final action of the HHS Secretary (Secretary) are provided by section 1128(f) of the Act
(42 U.S.C. § 1320a-7(f)).

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

lefenses or mitigating factors, and the I.G. bears the burden on all other issues.
42 CFR. § 1005.15(b).

B. Issue

The Secretary has by regulation limited my scope of review to two issues:
Whether there is a basis for the imposition of the exclusion; and
Whether the length of the exclusion is unreasonable.

42 CFR. § 1001.2007(a)(1).

C. Findings of Fact, Conclusions of Law, and Analysis

My conclusions of law are set forth in bold followed by the pertinent findings of fact and
analysis.

1. Petitioner’s request for hearing was timely, and I have jurisdiction.

2. Summary judgment is appropriate in this case.

There is no dispute that Petitioner timely requested a hearing; and I have jurisdiction to
hear the case. Pursuant to section 1128(f) of the Act, a person subject to exclusion has a
right to reasonable notice and an opportunity for a hearing. The right to a hearing before
an ALJ is accorded to a sanctioned party by 42 C.F.R. §§ 1001.2007(a) and 1005.2, and
the rights of both the sanctioned party and the LG. to participate in a hearing are specified
by 42 C.F.R. § 1005.3. Either or both parties may choose to waive appearance at an oral
earing and to submit only documentary evidence and written argument for my
consideration. 42 C.F.R. § 1005.6(b)(5). An ALJ may also resolve a case, in whole or in
part, by summary judgment. 42 C.F.R. § 1005.4(b)(12). Summary judgment is
appropriate, and no hearing is required where either: (1) no disputed issues of material
fact exist and the only questions that must be decided involve application of law to the
undisputed facts; or (2) the moving party prevails as a matter of law, even if all disputed
facts are resolved in favor of the party against whom the motion is made. A party
opposing summary judgment must allege facts, which, if true, would refute the facts that
the moving party relied upon. See, e.g., Fed. R. Civ. P. 56(c); Garden City Med. Clinic,
DAB No. 1763 (2001); Everett Rehab. and Med. Ctr., DAB No. 1628, at 3 (1997)
(holding in-person hearing required where non-movant shows material facts are in
dispute that require testimony); Thelma Walley, DAB No. 1367 (1992); see also New
Millennium CMHC, DAB CR672 (2000); New Life Plus Ctr., DAB CR700 (2000).

There are no genuine issues of material fact in dispute in this case. There is no dispute
that Petitioner was convicted of a criminal offense related to the delivery of an item or
service under Medicare or a state health care program and sentenced as described
hereafter. The minimum period of exclusion is fixed by the Act. The issues that
Petitioner raised must be resolved against him as a matter of law. Accordingly, summary
judgment is appropriate.

3. There is a basis to exclude Petitioner pursuant to section 1128(a)(1)
of the Act.

On December 9, 2009, an investigating grand jury in the Court of Common Pleas,
Montgomery County, Pennsylvania charged Petitioner, a podiatrist, with theft by
deception, Medicaid fraud, and receiving stolen property. The charges were based on
Petitioner submitting claims for nail avulsion, a surgical procedure involving partial
removal of the toenail, when he was actually trimming patient’s toenails and therefore
billing Medicaid for services not rendered. I. G. Ex. 3 at 9-19. On November 22, 2010,
Petitioner pled nolo contendere (no contest), pursuant to the terms of a plea agreement, to
one count of theft by deception, in violation of 18 Pa. Cons. Stat. Ann. § 3922, and one
count of Medicaid fraud, in violation of 62 Pa. Stat. Ann. § 1407(a)(9) both third-degree
felonies. P. Response at 2; I. G. Exs. 2, 3. Petitioner was convicted pursuant to his plea;
placed on probation for three years; and ordered to pay restitution of $36,000. I.G. Ex. 2
at 2.

The LG. cites section 1128(a)(1) of the Act as the basis for Petitioner’s mandatory
exclusion. The statute provides:

(a) MANDATORY EXCLUSION. The Secretary shall
exclude the following individuals and entities from
participation in any Federal health care program (as defined
in section 1128B(f)):

(1) Conviction of program-related crimes. Any
individual or entity that has been convicted of a
criminal offense related to the delivery of an item or
service under title XVIII or under any State health care
program.

The elements that must be proven by I.G. for an exclusion pursuant to the statute are:
(1) the individual or entity was convicted of a criminal offense, whether a felony or a
misdemeanor; (2) the offense is related to the delivery of an item or service; and (3) the
delivery of the item or service was under Medicare or a state health care program.

Pursuant to section 1128(i) of the Act, an individual is “convicted” of a criminal offense
when: (1) a judgment of conviction has been entered by a federal, state, or local court
whether or not an appeal is pending or the record has been expunged; (2) there has been a
finding of guilt in a federal, state, or local court; (3) a plea of guilty or no contest has
been accepted in a federal, state, or local court; or (4) an accused individual enters a first
offender program, deferred adjudication program, or other arrangement where a judgment
of conviction has been withheld. In this case, the evidence shows that Petitioner pled
nolo contendere, the plea was accepted, and a judgment of conviction was entered based
on the accepted plea. Accordingly, I conclude that Petitioner was “convicted” as that
term is defined by section 1128(i) of the Act for purposes of exclusion pursuant to section
1128(a)(1) of the Act, based on the court’s acceptance of his no contest plea. CMS Ex. 2
at 1.

I also conclude that Petitioner’s conviction is program-related within the meaning of
section 1128(a)(1) of the Act and under the Medicaid program. Petitioner pled no contest
to one count of Medicaid Fraud (count six), in violation of 62 Pa. Stat. Ann. § 1407(a)(9),
a third-degree felony. P. Response at 2; I. G. Exs. 2, 3. This statute provides that it is
unlawful for any person to submit a claim for a service or item which was not rendered
by the provider. I G. Ex. 2; 62 Pa. Stat. Ann. § 1407(a)(9). Petitioner was convicted of
Medicaid fraud, specifically the submission of a claim to Medicaid for services or items
that were not rendered by Petitioner. Petitioner pled no contest to the charge that alleged
e submitted claims to Americhoice and Keystone Mercy Health Plan, Pennsylvania
Medicaid Health Maintenance Organizations, and Highmark, the Medicare
Administrative Contractor. I. G. Ex. 3 at 9-10. Petitioner’s no contest plea means that he
accepted that the government could produce evidence to prove the charge. Petitioner was
paid $155,770.52 by Medicare and Medicaid for nail avulsions allegedly performed on

is patients between January 2005 and January 2008. I.G. Ex. 3 at 11. I conclude based
on the undisputed facts that there is a clear “nexus or common-sense connection” here
between Petitioner’s criminal conduct and the delivery of an item or service under

Medicaid. Timothy Wayne Hensley, DAB No. 2044 (2006); Lyle Kai, R.Ph., DAB No.
1979 (2005); Berton Siegel, D.O., DAB No. 1467 (1994); Thelma Walley, DAB No. 1367
(1992); Tanya Chuoke, R.N., DAB No. 1721 (2000). Accordingly, I conclude that
elements of section 1128(a)(1) of the Act are satisfied, there is a basis for Petitioner’s
exclusion, and exclusion is required.

Petitioner argues that the evidence against him in the underlying case was false and that
he pled nolo contendere for financial and personal reasons. P. Response at 1-2.
Petitioner also admits that he did his own billing and did not keep up with billing changes
and that was the cause of his legal problems. P. Response 1-2. Petitioner’s arguments
are collateral attacks on the underlying conviction. I may not review the underlying
conviction and Petitioner may not collaterally attack or challenge the conviction in this
proceeding. 42 C.F.R. § 1001.2007(d); Peter J. Edmonson, DAB No. 1330 (1992).

Petitioner has submitted statements from patients and other individuals attesting to his
care and qualifications as a podiatrist. Recommendations concerning Petitioner’s
professional care and qualifications are not relevant to the case before me. Congress
requires exclusion in this case under section 1128(a)(1) of the Act. The I.G. and I have
no discretion not to exclude Petitioner.

4. Pursuant to section 1128(c)(3)(B) of the Act, five years is the
minimum period of exclusion pursuant to section 1128(a) of the Act.

5. Petitioner’s exclusion for five years is not unreasonable as a matter
of law.

Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section
1128(a) of the Act shall be for a minimum period of five years. Pursuant to 42 C.F.R.

§ 1001.102(b), the period of exclusion may be extended based on the presence of
specified aggravating factors. Only if the aggravating factors justify an exclusion of
longer than five years are mitigating factors considered as a basis for reducing the period
of exclusion to no less than five years. 42 C.F.R. § 1001.102(c). The I.G. does not cite
any aggravating factors in this case and does not propose to exclude Petitioner for more
than the minimum period of five years. Therefore, the reasonableness of the period of the
exclusion is not subject to my review.

I have concluded that Petitioner’s exclusion is required by section 1128(a)(1) of the Act.
Accordingly, the minimum period of exclusion is five years, and that period is not
unreasonable as a matter of law.

Petitioner argues in his letter dated January 23, 2013, that the effective date of his
exclusion from Medicare should be November 22, 2010, the date of his conviction and
sentencing, and the effective date of his termination from participation in various private
insurance companies according to letters in P. Ex. 3. It is well established that I have no
authority or discretion under the Act or regulations to adjust the beginning date of a
period of exclusion. Randall Dean Hopp, DAB No. 2166, at 2 (2008); Kevin J. Bowers,
DAB No. 2143, at 5 (2008); Kailash C. Singhvi, M.D., DAB No. 2138, at 3 (2007);
Thomas Edward Musial, DAB No. 1991, at 4-5 (2005).°

II. Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare,
Medicaid, and all federal health care programs for the minimum statutory period of five
years effective July 19, 2012.

/s/
Keith W. Sickendick
Administrative Law Judge

> Petitioner enclosed with his January 23, 2013 letter, a copy of a December 12, 2012
reconsideration decision from a Medicare contractor hearing officer upholding the initial
decision to revoke Petitioner’s participation in Medicare. Requests for review of such
reconsideration decisions are submitted to and assigned to ALJs in my office for hearing
and decision pursuant to 42 C.F.R. Parts 424 and 498. Out of an abundance of caution to
ensure that Petitioner’s rights to ALJ review are not prejudiced, I have referred
Petitioner’s January 23, 2013 letter and enclosures for docketing as a request for review
of the December 12, 2012 Medicare contractor’s reconsideration decision.


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division

Inspector General, Social Security Administration
Petitioner,

Vv.

Gibson McCarty,
Respondent.

Docket No. C-12-137

Decision No. CR2701

Date: January 31, 2013
DECISION

Pursuant to section 1129(a)(1) of the Social Security Act (the Act) (42 U.S.C. § 1320a-
8(a)(1)) a total civil money penalty (CMP) of $140,000 for withholding information
regarding residence address and assets for 22 months, including December 2006 through
September 2008; and for 6 false statements regarding residence address and assets and
resources; and an assessment of $7,658, twice the amount of the overpayment of
Supplemental Security Income (SSI) benefits received from December 2006 through
September 2008; are imposed against Respondent, Gibson McCarty.

I. Background
Respondent timely requested a hearing by an administrative law judge (ALJ) pursuant to

20 C.F.R. § 498.202, by letter dated November 11, 2011.' Respondent requests a hearing
before an ALJ based on the notice of the Social Security Administration (SSA) Inspector

' References are to the version of the Code of Federal Regulations (C.F.R.) in effect at
the time of the SSA LG. action, unless otherwise indicated.
General (I.G.) that proposes imposition of a CMP of $140,000 and an assessment in lieu
of damages in the amount of $7,658 pursuant to section 1129 of the Act (42 U.S.C. §
1320a-8).

The request for hearing was received at the Civil Remedies Division (CRD) of the
Departmental Appeals Board (DAB) and assigned to me for hearing and decision on
November 23, 2011. On December 20, 2011, I convened a telephonic prehearing
conference to discuss and establish the schedule to hearing in this case. The substance of
the prehearing conference is set forth in my Scheduling Order and Notice of Hearing
dated December 22, 2011. The Order was amended on January 27, 2012. On April 13,
2012, a second prehearing conference was conducted, the substance of which is reflected
in my Order Following Prehearing Conference dated April 16, 2012. On May 17, 2012, a
third and final prehearing conference was convened, the substance of which is reflected
in my Order Following Prehearing Conference dated May 18, 2012.

On May 24 and 25, 2012 a hearing was convened by video teleconference (VTC). The
SSA I.G. appeared by VTC from Baltimore; Respondent appeared by VTC from
Honolulu; I participated by VTC from Kansas City; and some witnesses testified by VTC
from Baltimore, Honolulu, and Santa Ana, California. Joscelyn Funnié, Esquire,
appeared on behalf of Petitioner, the SSA I.G. Respondent appeared pro se after being
advised of his right to counsel and waiving the right. Transcript (Tr.) 5. The L.G. offered,
and I admitted, SSA exhibits (SSA. Ex.) 1 through 13, subject to the limitations discussed
on the record at hearing. Tr. 25-38. Respondent offered, and I admitted Respondent’s
exhibit (R. Ex.) 1. Tr. 20. The SSA LG. called the following witnesses: Chad Bungard,
Counsel to the Inspector General, SSA I.G.; Investigator Dixon Chow, Hawaii
Department of Human Services; David Rodriquez, a staff attorney in the Office of
Counsel for the SSA I.G.; Kim Matsuoka-Chun, SSA Operations Supervisor; and Special
Agent Yolanda Campos, SSA I.G. Respondent did not testify and called no witnesses.
Tr. 251-52.

A 261-page transcript of the hearing was prepared and provided to the parties. The SSA
1G. filed a post-hearing brief (SSA Br.) on August 6, 2012. Respondent filed his post-
hearing brief (R. Br.) on November 30, 2012. The SSA LG. filed a post-hearing reply
brief on January 23, 2013, arguing the Respondent’s post-hearing brief should be stricken
because it was untimely and not properly served. The LG. motion to strike is denied.

IL. Discussion
A. Applicable Law
Pursuant to title II of the Act, an individual who has worked in jobs covered by Social

Security for the required period of time, who has a medical condition that meets the
definition of disability under the Act, and who is unable to work for a year or more
because of the disability, may be entitled to monthly cash disability benefits. 20 C.F.R.
§§ 404.315-404.373. Pursuant to title XVI of the Act, certain eligible individuals are
entitled to the payment of Supplemental Security Income (SSI) on a needs basis. To be
eligible for SSI payments, a person must meet U.S. residency requirements and must be:
(1) 65 years of age or older; (2) blind; or (3) disabled. Disability under both programs is
determined based on the existence of one or more impairments that will result in death or
that prevent an individual from doing his or her past work or other work that exists in
substantial numbers in the economy for at least one year. 20 C.F.R. §§ 416.202, 416.905,
416.906. Additionally, a person must have limited income and resources to be eligible
for SSI. 20 C.F.R. §§ 416.202(c) and (d), 416.1100-.1182, 416.1201-.1266. All assets,
other than a car and a primary residence, are considered resources when determining
whether an individual has “limited” resources. 20 C.F.R. § 416.1210. The income and
resources of a spouse or other individuals in a household are also subject to being
considered. 20 C.F.R. §§ 416.1201-.1204; 416.1802.

Section 1129(a)(1) of the Act authorizes the imposition of a CMP or an assessment
against:

(a)(1) Any person . . . who —

(A) makes, or causes to be made, a statement or
representation of a material fact, for use in determining any
initial or continuing right to or the amount of monthly
insurance benefits under title II or benefits or payments under
title VIII or XVI, that the person knows or should know is
false or misleading,

(B) makes such a statement or representation for such use
with knowing disregard for the truth, or

(C) omits from a statement or representation for such use, or
otherwise withholds disclosure of, a fact which the person
knows or should know is material to the determination of any
initial or continuing right to or the amount of monthly
insurance benefits under title II or benefits or payments under
title VIII or XVI, if the person knows, or should know, that
the statement or representation with such omission is false or
misleading or that the withholding of such disclosure is
misleading ....

The authority to impose CMPs and assessments is delegated to the LG. 20 C.F.R.
§ 498.102. A material fact is a fact that the Commissioner of the Social Security
Administration (the Commissioner) may consider in evaluating whether an applicant is
entitled to benefits or payments under titles II, VIII, or XVI of the Act. Act § 1129(a)(2);
20 C.F.R. § 498.101. Individuals who violate section 1129 are subject to a CMP of not
more than $5,000 for each false or misleading statement or representation of material fact
or failure to disclose a material fact. Violators are also subject to an assessment in lieu of
damages, of not more than twice the amount of the benefits or payments made as a result
of the statements, representations, or omissions. Act § 1129(a)(1).

The Commissioner has delegated enforcement authority to the SSA I.G. as authorized by
section 1129(i) of the Act. In determining the amount of a CMP, the I.G. must consider:
(1) the nature of the subject statements and representations and circumstances under
which they occurred; (2) the degree of culpability of the person committing the offense;
(3) the person’s history of prior offenses; (4) the person’s financial condition; and (5)
such other matters as justice requires. Act § 1129(c); 20 C.F.R. §498.106.

Section 1129(b)(2) specifies that the Commissioner shall not decide to impose a CMP or
assessment against a person until that person is given written notice and an opportunity
for the determination to be made on the record after a hearing at which the person is
allowed to participate. The Commissioner has provided by regulations at 20 C.F.R. Part
498 that a person against whom a CMP is proposed by the I.G. may request a hearing
before an ALJ of the DAB. The ALJ has jurisdiction to determine whether the person
should be found liable for a CMP and/or an assessment and the amount of each. 20
C.F.R. §§ 498.215(a) and 498.220. The person requesting the hearing, the Respondent,
has the burden of going forward and the burden of persuasion with respect to any
affirmative defenses and any mitigating circumstances. 20 C.F.R. § 498.215(b)(1). The
1.G. has the burden of going forward as well as the burden of persuasion with respect to
all other issues. 20 C.F.R. § 498.215(b)(2). The burdens of persuasion are to be judged
by a preponderance of the evidence. 20 C.F.R. § 498.215(c).

B. Issues

Whether there is a basis for the imposition of a CMP and assessment
pursuant to section 1129(a)(1) of the Act.

Whether the CMP and assessment proposed are reasonable considering the
factors specified by section 1129(c) of the Act.
C. Findings of Fact, Conclusions of Law, and Analysis

My conclusions of law are set forth in bold followed by the statement of pertinent facts
and my analysis. I have carefully considered all the evidence and the arguments of both
parties, although not all may be specifically discussed in this decision. I discuss the
credible evidence given the greatest weight in my decision-making.” I also discuss any
evidence that I find is not credible or worthy of weight. The fact that evidence is not
specifically discussed should not be considered sufficient to rebut the presumption that I
considered all the evidence and assigned such weight or probative value to the credible
evidence that I determined appropriate within my discretion as an ALJ. There is no
requirement for me to discuss the weight given every piece of evidence considered in this
case, nor would it be consistent with notions of judicial economy to do so.

1. Respondent made three false statements of material fact on about
August 16, 2007, on a “Statement for Determining Continuing
Eligibility for Supplemental Security Income Payments,” statements
that he knew or should have known were false.

2. Respondent caused an individual to make a false statement on about
August 22, 2007, in connection with the determination of Respondent’s
continuing eligibility for SSI benefits, a statement that Respondent
knew or should have known to be false.

3. Respondent made a false statement of material fact in his
application for SSI on about October 1, 2010, which he knew or should
have known to be false.

4. Respondent made a false statement of material fact in his
application for SSI on November 18, 2010, which he knew or should
have known to be false.

5. Respondent knowingly failed to report material facts between
December 2006 and September 2008, and he knew or should have
know that the failure to report was misleading.

> “Credible evidence” is evidence that is worthy of belief. Black's Law Dictionary 596
(18th ed. 2004). The “weight of evidence” is the persuasiveness of some evidence
compared to other evidence. Id. at 1625.
a. Allegations

The L.G. notified Respondent by letter dated July 1, 2011, that he was considering
imposing a CMP and an assessment. SSA Ex. 7; Tr. 53-54. The LG. notified
Respondent by letter dated October 11, 2011, that the I.G. proposed to impose a CMP of
$140,000 and an assessment in lieu of damages of $7,658 pursuant to section 1129 of the
Act. The notice stated that the action was based upon Respondent’s failure between
January 1999 and September 2008, to notify SSA that Respondent owned real property,
bank accounts, stock, and that Respondent lived in several different locations. The I.G.
cited in its notice the following false statements to SSA:

(i.) Respondent falsely reported that he lived at 350 Ward Avenue,
#106, Honolulu, Hawaii since June 15, 2007 in a Statement for
Determining Continuing Eligibility for Supplemental Security
Income Payments (August 16, 2007 Continuing Eligibility
Statement) completed on August 16, 2007.

(ii.) Respondent falsely reported that he had one bank account with
the Bank of Hawaii with an average daily balance of $200 since June
2005, in the August 16, 2007 Continuing Eligibility Statement.

(iii.) Respondent falsely reported that all his assets were listed on
the August 16, 2007 Continuing Eligibility Statement.

(iv.) Respondent caused Jean Campbell to falsely report to SSA that
she rented Respondent a room at 350 Ward Avenue, #106, Honolulu,
Hawaii for $395 per month, in a Statement of Claimant or Other

Person completed on August 22, 2007.

(v.) Respondent falsely reported that he lived at 350 Ward Avenue,
#106, Honolulu, Hawaii in a reapplication for SSI benefits that he
filed on October 1, 2010.

(vi.) Respondent falsely reported that he lived at 350 Ward Avenue,
#106, Honolulu, Hawaii in a reapplication for SSI benefits that he
filed on November 18, 2010.

SSA Ex. 8; Tr. 55. The IG. stated in footnotes in the notice that the $140,000 CMP was
calculated as $5,000 for each of the 22 months that Respondent failed to report or
withheld information and $5,000 for each of the six false statements. The $7,658
assessment was twice the amount of SSI benefits Respondent received during the six
years prior to the notice and within the statute of limitations. SSA Ex. 8.
The LG. alleged at hearing and in his post-hearing brief the same six false statements
included in the I.G.’s October 11, 2011 notice and that Petitioner withheld and failed to
report material facts for the 22 months from December 2006 through September 2008.
SSA Br. at 2. Counsel for the SSA LG. agreed at hearing that no action may be
maintained based on Respondent’s conduct prior to October 11, 2005, due to the
application of the statute of limitations. Tr. 21-23, 52; Act § 1129(b)(1) (Commissioner
may not initiate an action later than 6 years after the date the violation was committed);
20 C.F.R. § 498.132(b) (LG. may initiate action within six years from the date on which
the violation was committed). Counsel for the SSA LG. also explained at hearing that
there were no charges for withholding or failure to report material information prior to
December 2006, as the effective date of 20 C.F.R. § 498.102(a)(3) was November 26,
2006. Tr. 23-25, 33, 51; 71 Fed. Reg. 28574, 28575 (May 17, 2006). The I.G. seeks
approval of a CMP of $110,000 for Respondent’s failure to disclose or report material
facts for the 22 months from December 2006 through September 2008 calculated at the
maximum authorized CMP of $5,000 for each of the 22 months. The I.G. seeks approval
of a $5,000 CMP for each of the six false statements. The I.G. also seeks approval of the
assessment of $7,658, which is twice the amount of SSI benefits Respondent received for
the months December 2006 through September 2008. Tr. 26-27; SSA Br. at 2. There is
no issue in this case of Respondent’s entitlement to benefits under Title II of the Act,
which he continued to receive monthly at the time of hearing. Tr. 24, 218.

b. Facts

(i.) August 16, 2007 Continuing Eligibility Statement — False
Address

On August 16, 2007, Respondent signed a “Statement for Determining Continuing
Eligibility for Supplemental Security Income Payments (August 16, 2007 Continuing
Eligibility Statement). SSA Ex. 1 at 5. Under “Living Arrangements,” the document
signed states, among other things, that “I began living at 350 Ward Ave Apt 106,
Honolulu, HI 96814 on June 14, 2007.” SSA Ex. 1, at 3; Tr. 118-20. The form states
above Respondent’s signature that he understands that knowingly lying or
misrepresenting the truth or causing someone to do so is a crime that may be punished
under federal law. The form also states that the person who signs attests that
“(e]verything on this document is the truth as best I know it.” SSA Ex. 1, at 5.

Investigator Dixon Chow, Hawaii Department of Human Services, testified that the 350
Ward Avenue #106 address was actually a “small mailbox” at a business located at that
address that provided photocopy and shipping services as well as providing mailboxes.
Tr. 197-98. It is clear from the testimony of Investigator Chow that he visited the address
and personally observed the location and his testimony is given significant weight.
SSA Ex. 4, at 696 is a rental application that Respondent signed on October 17, 2006. Tr.
187. The signatures on SSA Ex. 4, at 696 and the signatures on SSA Ex. 1, at 5 and the
Request for Hearing, which are indisputably Respondent’s signatures, are all enough
alike to permit the inference they were all made by Respondent. Respondent states on the
rental application that his employer is Hawaii Physically Fit at 350 Ward Avenue, Suite
106, Honolulu, Hawaii. SSA Ex. 4, at 696. Respondent also stated on the rental
application dated October 17, 2006, that his current residence address was 1448 Young
Street, Honolulu, Hawaii with a monthly rental of $1,750 and that he had lived there
since January or February 1, 2006. SSA Ex. 4, at 696.

Respondent’s distinctive signature also appears on a Mercedes Benz Financial Credit
Application related to the lease of a 2007 Mercedes Benz E350 with 25 miles with a total
capitalized cost of $57,395 and a monthly lease payment of $902.31. Respondent states
on the form that his employer is Hawaii Physically Fit, located at 350 Ward Avenue
#106, Honolulu, Hawaii. SSA Ex. 4, at 684-86. The credit application is undated.
However, the certificate of title issued in Respondent’s name is dated December 1, 2006,
which permits me to infer that it is more likely than not that the credit application was
completed sometime in November 2006. SSA Ex. 4, at 689.

The evidence supports a finding that the address 305 Ward Avenue # 106, Honolulu,
Hawaii, was not a residential address for Respondent. | also find as facts that Respondent
did not begin living at 305 Ward Avenue #106, Honolulu, Hawaii on June 14, 2007 and
that he never resided or lived at that address. I find as fact, based upon Respondent’s
statements in the October 17, 2006 rental application, that his residence address from
january or February 2006 to October 17, 2006, was 1448 Young Street, Honolulu,

awaii with a monthly rental of $1,750. SSA Ex. 4, at 696; Tr. 187. I further find as
‘act, based upon the rental agreement dated October 20, 2006, that Respondent leased an
partment as a tenant at 1221 Victoria Street, Apartment 1702, Honolulu, Hawaii for the
eriod October 23, 2006 to October 23, 2007, at the rate of $1,800 per month. SSA Ex.
, at 695. The testimony of Investigator Chow (Tr. 187) and Special Agent Campos
upport a finding that Respondent resided at the 1221 Victoria Street address in
eptember 2008 and December 2010 (Tr. 229-31). I infer that, except for possible brief
bsences, Respondent resided at 1221 Victoria Street from October 23, 2006 to
December 2010.

pits

oe pf

an

(ii.) August 16, 2007 Continuing Eligibility Statement — False Bank
Account Information

The August 16, 2007 Continuing Eligibility Statement that Respondent signed states,
under “Resources,” that from June 1, 2005 and continuing, Respondent owned one bank
account in the Bank of Hawaii with a value of $200. SSA Ex. 1, at 3; Tr. 119.
Respondent does not deny that the evidence shows that from June 2005 through January
2007, he was listed as the owner of a savings account with the American Savings Bank,
with monthly balances ranging from a low of $1,348.29 to a high of $65,366.06 during
that period. SSA Ex. 12, at 1-2; Tr. 91.

Respondent does not deny that the evidence shows that from June 2005 through January
2007, he was listed as an owner of a “Value Checking” account with American Savings
Bank, with monthly balances ranging from a low of $0 to a high of $387,156.82, during
that period. SSA Ex. 12, at 3-4; Tr. 91-92.

Respondent does not deny that from June 2005 to January 2007, he was listed as the
owner of a “Self Service Checking” account with the Bank of Hawaii, with monthly
balances ranging from a low of $23 to a high of $4,340.38, during the period. SSA Ex.
12, at 8, Tr. 92.

(iii.) August 16, 2007 Continuing Eligibility Statement — False
Reporting of Assets

The August 16, 2007 Continuing Eligibility Statement that Respondent signed states that
ie owned no other resources from June 1, 2005 and continuing except the one bank
account in the Bank of Hawaii with a value of $200. SSA Ex. 1, at 3. The form also
states that Respondent had not received income from any source other than Social
Security. SSA Ex. 1, at 4.

Respondent does not dispute that state records show that on June 29, 2007, Respondent
sold real property for $260,000, property that he had purchased on July 20, 2005. SSA
Ex. 11, at 1; Tr. 85-86. Respondent does not dispute that on about July 27, 2005, a sale
of an interest in real property was recorded with him listed as seller and that he received a
payment from an escrow service in the amount of $408,998.64 that he deposited in a
checking account with American Savings Bank. SSA Ex. 11, at 4-6; SSA Ex. 4, at 604,
636-41, 652-54, 660, 667; Tr. 88-89.

Respondent does not dispute that he did not report in the August 16, 2007 Continuing
Eligibility Statement assets and resources available to him from June 1, 2005 to August
16, 2007, specifically the sale of the property on June 29, 2007, the ownership of that
property from July 20, 2005 to June 29, 2007, or the receipt of funds represented by the
check from the escrow service on or about July 27, 2005.

Respondent does not dispute that he did not disclose the two American Savings Bank
checking accounts and the American Savings Bank savings account for which he was
listed as owner. SSA Ex. 12, at 1-4.
10

Respondent stated in a rental application dated October 17, 2006, that he received a
monthly salary of $4,000 from Hawaii Physically Fit. He also reported bank accounts at
the American Savings Bank and the Bank of Hawaii. SSA Ex. 4, at 696; Tr. 187. In the
Mercedes Benz Financial Credit Application from November 2006, Respondent stated
that he was the owner of Hawaii Physically Fit with a gross monthly income of $10,000.
SSA Ex. 4, at 684-89. Respondent does not deny that he failed to report his ownership
and income from Hawaii Physically Fit in the August 16, 2007 Continuing Eligibility
Statement.

(iv.) August 22, 2007 Statement of Claimant or Other Person —
False Report of Rental by Jean Campbell

On August 22, 2007, a person listed as Jean Campbell completed a “Statement of
Claimant or Other Person” on which it is stated that she rented a room to Respondent for
$395 per month and had done so since June 2007. The form advises that one who makes
or causes to be made a false statement or representation of material fact in an application
or for use in determining eligibility under the Act is subject to criminal prosecution
under federal law. The form also states that the person who signs affirms that all
information in the form is true. SSA Ex. 2; Tr. 120-21.

I have found, based upon the rental agreement dated October 20, 2006, that Respondent
leased an apartment as a tenant at 1221 Victoria Street (referred to as the Admiral
Thomas), Apartment 1702, Honolulu, Hawaii for the period October 23, 2006 to
October 23, 2007. SSA Ex. 4, at 695. The testimony of Investigator Chow (Tr. 187)
and Special Agent Campos support a finding that Respondent resided at the 1221
Victoria Street address in September 2008 and December 2010 (Tr. 229-31).
Respondent states in his request for hearing that he rented the property for the four years
prior to filing his request for hearing on November 11, 2011. I infer that, except for
possible brief absences, Respondent resided at 1221 Victoria Street from October 23,
2006 to December 2010.

I find that the statement that bears the name of Jean Campbell is, therefore, false. I infer
absent evidence to the contrary that the statement was for the benefit of Respondent and
thus induced or caused by him.

(v.) October 1, 2010 SSI Application — False Address

Respondent does not deny that on October 1, 2010, he filed an application for SSI and at
that time reported that his address was 350 Ward Avenue, Apartment 106, Honolulu,
Hawaii 96814. SSA Ex. 3, at 11; Tr. 144. 211-12. I have found for reasons already
discussed, that Respondent did not reside at the address he reported in his application to
be his residential address.
11

(vi.) November 18, 2010 SSI Application — False Address

Respondent does not deny that on November 18, 2010, he filed an application for SSI
and at that time reported that his address was 350 Ward Avenue, Apartment 106,
Honolulu, Hawaii 96814. SSA Ex. 3, at 69; Tr. 215. Ihave found for reasons already
discussed, that Respondent did not reside at the address he reported in his application to

be his residential address.

(vii.) December 2006 through September 2008 — 22 Months Failure
to Report

Based upon the foregoing findings of fact, I find that Respondent omitted or failed to
report the following material facts from December 2006 through September 2008:

During the 22 months from December 2006 through
September 2008, Respondent lived at 1221 Victoria Street,
Apartment 1702 in December 2006 and continued to do so
through September 2008, with a monthly rental expense of
$1,800.

In December 2006, Respondent held a lease on a 2007
Mercedes Benz E350, with a monthly lease payment of
$902.31.

In December 2006 and January 2007, Respondent had bank
accounts with both the American Savings Bank and the Bank
of Hawaii. The ending balance for his American Savings
Bank savings account was $37,442.67 in December 2006 and
$35,438.45 in January 2007. SSA Ex. 12, at 2. The ending
balance for one of his American Savings Bank checking
accounts (Value Checking Account) was $0 in December
2006 and $9,918.41 in January 2007. SSA Ex. 12, at 4. The
ending balance for his Bank of Hawaii “Self Service
Checking” account was $23 in December 2006 and $466 in
January 2007. SSA Ex. 12, at 8.

On June 29, 2007, Respondent sold real property for
$260,000. SSA Ex. 11, at 1-3; Tr. 85-86.
12

(viii.) Overpayment Amount from December 2006 through
September 2008.

In December 2006, Respondent received a payment of $168 as his SSI benefit. For
January 2007 through October 2007, Respondent received SSI benefits of $173 per
month. For November and December 2007, Respondent received SSI benefit payments
of $173.50 per month. Respondent received payments of $176 per month for January
2008 through September 2008. Respondent received SSI benefit payments totaling
$3,829 for the period December 2006 through September 2008. SSA Ex. 6; Tr. 123-26.

c. Analysis

Congress specified in the Act that the Commissioner shall not make a determination
adverse to any person under section 1129 until the person has been given written notice
and an opportunity for a hearing. Act § 1129(b)(2); 20 C.F.R. § 498.109(a)(2).
Respondent received the required notice and exercised his right to a hearing before an
ALJ. A hearing was conducted as required by 20 C.F.R. §§ 498.202-.219. This decision
is issued in accordance with 42 C.F.R. § 498.220.

Having determined that Respondent made or caused to be made false statements and that
he omitted to report facts, it is necessary to determine whether the false statements and
omitted facts were material to determining whether Respondent was entitled to
continuing payment of SSI benefits or the amount of those benefits; and Respondent
knew or should have known the facts he reported, caused to be reported, and omitted to
report were false or misleading or that he made the false statements with knowing
disregard for the truth. Act § 1129(a)(1).

A material fact is a fact that the Commissioner may consider in evaluating whether an
applicant is entitled to benefits or payments under titles II, VII, or XVI of the Act. Act
§ 1129(a)(2); 20 C.F.R. § 498.101. I conclude that the facts Respondent reported that
were false and the facts that he failed to report were material to a determination by SSA
regarding Respondent’s right to continue to receive payment of SSI benefits and the
amount of those benefits.

Eligibility for SSI benefits and the amount of those benefits is clearly dependent upon the
beneficiary’s income and resources. 20 C.F.R. § 416.203-.262. Pursuant to 20 C.F.R.

§ 416.704(a)(1), as a recipient of SSI payments, Respondent was responsible to make
reports to SSA. The regulations specifically state that it is important for the beneficiary to
report because continuing eligibility for SSA benefits or the amount of the benefits may
be affected. 20 C.F.R. § 416.701(a). Pursuant to 20 C.F.R. § 416.708, Respondent was
required to report a change of address, a change in living arrangements, a change in
income, and a change in resources, among other things. The regulatory requirement to
report the specified events is consistent with a conclusion that the facts of these events

13

are material to a determination of initial and continuing eligibility. The testimony of Kim
Matsuoka-Chun, Operations Supervisor, SSA, supports my conclusion that the false facts
Respondent reported or caused to be reported and the facts he failed to report are material
within the meaning of the Act and regulation. Tr. 103, 105, 108, 110, 201-10.

I also conclude that Respondent knew or should have known that the facts he reported or
caused to be reported and omitted to report were false or misleading and that he made the
false statements with knowing disregard for the truth. Respondent knew or should have
known exactly where he resided at the time he made his false statements or
representations regarding his residence address. The evidence shows that he bought and
sold real estate and entered into lease agreements. The evidence shows that he executed a
lease for a Mercedes Benz. The evidence also shows that he maintained more than one
active bank account in two different banks. Respondent argues in his request for hearing
that he had diminished mental capacity at the time the false statements were made or
caused to be made and when he failed to report. However, that assertion is inconsistent
with his financial activities at the time the false statements were made and his failure to
report as reflected in the evidence.

I conclude that the elements of section 1129(a)(1) of the Act are satisfied in this case and
a CMP and assessment are authorized.

6. A $140,000 CMP and an assessment of $7,658 are reasonable in this
case.

A maximum CMP of $5,000 for each false statement or representation of material fact
and for each month of withholding or failure to report a material fact is authorized by
section 1129(a)(1) of the Act and 20 C.F.R. §§ 498.102(a) and 498.103(a). Also
authorized is an assessment of not more than twice the amount of benefits or payments
received as a result of the false statements, representations, omissions or failure to report
material facts. Act 1129(a)(1); 20 C.F.R. § 498.104.

Pursuant to 20 C.F.R. § 498.220(b), I have the authority to affirm, deny, increase, or
reduce the penalties or assessment proposed by the SSA I.G. In determining the amount
of penalties or assessment, my review is de novo, and, just as the I.G. did when proposing
penalties, I must consider the factors specified by section 1129(c) of the Act:

(1) the nature of the statements, representations . . . and the
circumstances under which they occurred; (2) the degree of
culpability, history of prior offenses, and financial condition
of the person committing the offense; and (3) such other
matters as justice may require.

Act § 1129(c).
14

(a) Nature of the statements and representations and the
circumstances under which they occurred.

Respondent’s conduct was egregious. He clearly lied on the August 16, 2007 Continuing
Eligibility Statement about where he lived and his assets and resources. He also clearly
failed to report facts related to his income and resources during the period December
2006 through September 2008. There can be no doubt that Respondent misrepresented
and omitted to report material facts to ensure that he continued to receive his SSI
payments that ranged from $168 to $176 per month, while he drove a new Mercedes
during at least part of the pertinent period. Respondent alleges in his request for hearing
that he suffered from diminished mental capacity due to medication at the time.
However, his activities during the period show that his actions were knowing and
deliberate, including obtaining a false statement of another to support his false
statements. Egregious conduct of this nature is not acceptable and cannot be tolerated
due to the risk it poses to the limited resources of Social Security that must be allocated
among the truly eligible. Deterrence of Respondent and others may also be furthered by
imposition of the maximum CMP and assessment in egregious cases such as this.

(b) Degree of culpability, history of prior offenses, and financial
condition of Respondent.

The simple definition for culpability is blameworthiness. Black’s Law Dictionary 406
(18th ed. 2004). Respondent is clearly culpable for his false statements and his failure to
report material facts. He has offered no medical evidence from the period when the false
statements and omissions were made that support a finding of diminished mental capacity
and reduced culpability. R. Ex. 1. There is evidence that Respondent pled no contest and
was convicted in state court of one count of second degree theft and six counts of medical
assistance fraud in February 2010. Tr. 74; SSA Ex. 13. However, it is not clear from the
testimony of Investigator Chow or the record of the conviction that the charges were
based upon the same conduct of Respondent that is before me for consideration. I have
no other evidence of the specifics of the charges to which Respondent pled no contest.
Thus, I give no weight to the prior state court conviction. Respondent has presented no
current financial data upon which to judge his ability to pay and I find his unsworn
statements that he is destitute an inadequate basis to reduce the CMP or the assessments
from the maximum authorized.

Accordingly, I conclude that the maximum CMP permitted under the Act of $5,000 for
each of the 6 false statements and each of the 22 months of failure to report material facts
as well as an assessment of twice the amount of benefits received due to the false
statements and failure to report are appropriate in this case.
15

II. Conclusion

For the foregoing reasons, I conclude that a CMP of $140,000 and an assessment of
$7,658, are appropriate in this case.

/s/
Keith W. Sickendick
Administrative Law Judge

STATEMENT OF APPEAL RIGHTS PURSUANT TO 20 C.F.R. § 498.221

(a) Any party may appeal the decision of the ALJ to the DAB
by filing a notice of appeal with the DAB within 30 days of
the date of service of the initial decision. The DAB may
extend the initial 30-day period for a period of time not to
exceed 30 days if a party files with the DAB a request for an
extension within the initial 30-day period and shows good
cause.
ek KK

(c) A notice of appeal will be accompanied by a written brief
specifying exceptions to the initial decision and reasons
supporting the exceptions, and identifying which finding of
fact and conclusions of law the party is taking exception to.
Any party may file a brief in opposition to exceptions, which
may raise any relevant issue not addressed in the exceptions,
within 30 days of receiving the notice of appeal and
accompanying brief. The DAB may permit the parties to fi
reply briefs.
(d) There is no right to appear personally before the DAB, or
to appeal to the DAB any interlocutory ruling by the ALJ.
(e) No party or person (except employees of the DAB) wil
communicate in any way with members of the DAB on any
matter at issue in a case, unless on notice and opportunity for
all parties to participate. This provision does not prohibit a
person or party from inquiring about the status of a case or
asking routine questions concerning administrative functions
or procedures.

(f) The DAB will not consider any issue not raised in the
parties' briefs, nor any issue in the briefs that could have been,
but was not, raised before the ALJ.

fo)

16

(g) If any party demonstrates to the satisfaction of the DAB
that additional evidence not presented at such hearing is
relevant and material and that there were reasonable grounds
for the failure to adduce such evidence at such hearing, the
DAB may remand the matter to the ALJ for consideration of
such additional evidence.

OK Kk
(i) When the DAB reviews a case, it will limit its review to
whether the ALJ's initial decision is supported by substantial
evidence on the whole record or contained error of law.(j)
Within 60 days after the time for submission of briefs or, if
permitted, reply briefs has expired, the DAB will issue to
each party to the appeal and to the Commissioner a copy of
the DAB's recommended decision and a statement describing
the right of any respondent who is found liable to seek
judicial review upon a final decision.

Respondent’s request for review by the DAB automatically stays the effective date of this
decision. 20 C.F.R. § 498.223.


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Vandu, Inc.
d/b/a Romeoville Shell,

Respondent.

Docket No. C-13-224
FDA Docket No. FDA-2012-H-1229

Decision No. CR2700

Date: January 31, 2013

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint
(Complaint) against Respondent that alleges facts and legal authority sufficient to
justify the imposition of a $250 civil money penalty. 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, Vandu, Inc. d/b/a Romeoville Shell, and assess a civil money penalty
of $250.

CTP began this case by serving the Complaint on Respondent and filing a copy of
the same with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The Complaint alleges that Respondent impermissibly sold tobacco
products to a minor on two separate occasions, thereby violating the Federal Food,
Drug, and Cosmetic Act (Act) and its implementing regulations found at 21 C.F.R.
Part 1140. CTP seeks a civil money penalty of $250 for these two violations.
On December 24, 2012, 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 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 issue an initial
decision ordering Respondent to pay the full amount of the proposed penalty,
pursuant to 21 C.F.R. § 17.11.

Respondent has neither filed an Answer within the time provided by regulation nor
timely requested an extension. Pursuant to 21 C.F.R. § 17.11(a), 1am required to
“assume the facts alleged in the complaint to be true, and, if such 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 that:

e Respondent owns Romeoville Shell, an establishment that sells tobacco
products and is located at 1 Alexander Circle, Romeoville, Illinois 60446.
Complaint 3.

¢ On December 21, 2011, an FDA-commissioned inspector performed an
inspection of Shell Food Mart and observed the “sale of cigarettes or
smokeless tobacco to a person younger than 18 years of age, in violation of
21 C.F.R. § 1140.14(a).” Complaint § 10.

e CTP issued a warning letter to Shell Food Mart on February 9, 2012,
informing Respondent of the violation that the FDA-commissioned
inspector had observed on December 21, 2011, at that establishment. The
letter advised that it was not intended to provide an exhaustive list of
violations and that the failure to correct violations could result in the
imposition of a civil money penalty or other regulatory action. Moreover,
the letter informed Respondent that Shell Food Mart maintained the
responsibility to ensure that it complied with the law. Complaint § 10.

e United Parcel Service records indicate that “Patel” received the February 9,
2012 warning letter on February 20, 2012, but Respondent did not contact
CTP in response thereto. Complaint 4 11.

e Pursuant to a two-part inspection of Romeoville Shell, FDA-commissioned
inspectors noted that “a person younger than 18 years of age was able to
purchase a package of Newport Box cigarettes on August 9, 2012, at
approximately 11:16 AM CT[,]” in violation of 21 C.F.R. § 1140.14(a).
Complaint § 1.

e Thereafter, on August 14, 2012, CTP informed Respondent of the August
9, 2012, inspection and documented violation through a Notice of
Compliance Check Inspection. The Notice warned “that other potential
violations of federal tobacco law may have been observed,” and that FDA
may notify Respondent if it determined there had been violations of federal
law. Complaint { 2.

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).

Here, Respondent sold tobacco products to a minor in violation of the foregoing
regulations on two separate occasions. Most recently, Respondent sold tobacco
products to a minor at Romeoville Shell on August 9, 2012. The Complaint
alleges a previous violation on December 21, 2011, also for the sale of tobacco
products to a minor. CTP alleges that this violation occurred at Shell Food Mart.
Although the Complaint does not state that Shell Food Mart is also known as or is
a prior name of Romeoville Shell, I infer that the two names refer to the same
retail outlet. Therefore, Respondent’s actions on two separate occasions at the
same retail outlet constitute violations of law for which a civil money penalty is
merited.

The regulations require the imposition of 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). CTP has requested and the
regulations authorize a penalty of $250. Complaint { 1; 21 C.F.R. § 17.2.
Therefore, I find that a civil money penalty of $250 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
Steven Barry Greenman,
(OI File Number: H-11-42412-9),
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-12-1077
Decision No. CR2699

Date: January 29, 2013

DECISION

Petitioner, Steven Barry Greenman, was a physician, licensed in the State of Wisconsin,
whose medical license was suspended. Pursuant to section 1128(b)(4) of the Social
Security Act (Act), the Inspector General (I.G.) has excluded him from participation in
Medicare, Medicaid, and all federal health care programs until he regains his license.
Petitioner now appeals the exclusion.

For the reasons set forth below, I find that the Wisconsin licensing authority revoked
Petitioner’s medical license for reasons bearing on his professional competence and
performance, so the I.G. has appropriately excluded him from program participation.

Background

Ina letter dated April 30, 2012, the I.G. advised Petitioner Greenman that he was
excluded from participation in Medicare, Medicaid, and all federal health care programs
because his licenses to practice medicine or provide health care as a medical doctor in the
State of Wisconsin was revoked, suspended, or otherwise lost or was surrendered while a
formal disciplinary proceeding, bearing on his professional competence, professional
performance, or financial integrity, was pending before the Wisconsin Department of
Regulation and Licensing. The letter explained that section 1128(b)(4) authorizes the
exclusion. I.G. Ex. 3. Petitioner Greenman requested review.

The I.G. submitted its brief (I.G. Br.) and four exhibits (I.G. Exs. 1-4). In the absence of
any objection, I admit into evidence I.G. Exs. 1-4.

Describing Petitioner’s somewhat scattered submissions is, unfortunately, far more
complicated. Pursuant to my scheduling order, his submissions were due October 18,
2012. Based on his claim that he did not receive the I.G. submissions until October 10,
2012, I extended that deadline to November 13. See October 15, 2012 email from Sapper
to Greenman. In November, Petitioner submitted his brief (P. Br.), two additional
documents titled “Answer to 1B” and “Prosecutorial Misconduct by Wisconsin Medical
Examining Board Dept. of Regulation and Licensing,” along with 26 exhibits (P. Exs. 1-
26). In the absence of any objection, I admit into evidence P. Exs. 1-26.

Attached to his brief is a note requesting 14-21 more days in which to submit his “final
statements.” I gave him until December 11 to complete his submissions. Thereafter,
owever, Petitioner Greenman called this office, to say that he wanted a full three-week
extension. See November 27, 2012 email from Sapper to Greenman. Then, on
December 14, he asked leave to supplement his exchange and submitted an additional 16
and-written, un-numbered pages of argument (P. 12/14 Supp.). Among those pages, he
asked for an additional week in which to provide “better, more cogent oral arguments as
well as enter other exhibits which are not patient records.” P. 12/14 Supp. at 6.

With his December 14 supplemental exchange, Petitioner submitted several CDs, which
identified as P. Exs. 31-36.’ According to Petitioner, these exhibits contain patient
medical records that the state licensing board relied on when it suspended his license. By
letter dated December 19, 2012, we advised Petitioner that we would treat those
confidential medical records as sealed documents and would not include them in our
electronic filing system. We have, however, retained them as part of a paper file. For the
reasons that I discuss below, I decline to admit P. Exs. 31-36, because they are irrelevant.
42 CFR. § 1005.17(c).

On December 26, Petitioner submitted twelve additional pages of argument (P. 12/26
Supp.), a two-page document titled “Principles of Medical Ethics,” labeled P. Ex. 37, and
a nine-page document labeled P. Ex. 38. In the absence of any objection, I admit into
evidence P. Ex. 37. P. Ex. 38 consists of a hand-written cover sheet (P. Ex. 38 at 1) with
an 8-page patient record attached. The cover sheet describes the exhibit as a transcription
he dictated and presented to the state licensing board. Again, because the document is a
confidential medical record, we treated it as sealed and did not include it in the electronic

' Petitioner filed no documents labeled P. Exs. 27-30.
file, although we have retained it as part of the paper file. For reasons discussed below, I
decline to admit P. Ex. 38 into evidence, because it is irrelevant.

Finally, Petitioner filed a written request for another extension of time (until February 19,
2013) in which to supplement his exchange. On January 7, 2013, I denied his request for
additional time, and closed the record.

I directed the parties to indicate in their briefs whether an in-person hearing would be
necessary, and, if so, to “describe the testimony it wishes to present, the names of the
witnesses it would call, and a summary of each witnesses’ proposed testimony.” I
specifically directed the parties to explain why the testimony would be relevant.” The
1.G. indicates that an in-person hearing is not necessary. LG. Br. at 5.

Petitioner, on the other hand, contends that an in-person hearing is necessary and refers to
a “witness list.” P. Br. at 3. However, he submitted no such list. He did not describe any
proposed testimony or suggest any other reason for conducting a hearing. I therefore
decline to schedule a hearing that would serve no purpose.

Discussion

I. Because Wisconsin’s medical examining board revoked
Petitioner Greenman’s medical license for reasons
bearing on his professional competence or performance,
the I.G. may appropriately exclude him from
participation in Medicare, Medicaid, and other federally
funded health care programs.

The Act authorizes the Secretary of Health and Human Services to exclude from program
participation an individual whose license to provide health care “has been revoked or
suspended by any State licensing authority” for reasons bearing on the individual’s
“professional competence, professional performance, or financial integrity.” Act

§ 1128(b)(4)(A); see also 42 C.F.R. § 1001.501.

? These instructions are included in the “short form brief,” which I directed the parties to
complete and submit. Order and Schedule for Filing Briefs and Documentary Evidence
(August 14, 2012). Although a copy was attached to my August 14, 2012 scheduling
order and mailed to Petitioner Greenman, and he subsequently completed and filed it,
CRD staff failed to enter the attachment to the scheduling order into the electronic file.

* My findings of fact/conclusion of law are set forth, in italics and bold, in the discussion
captions of this opinion.
Here, the undisputed evidence establishes that, on March 16, 2011, the Wisconsin
Medical Examining Board suspended Petitioner Greenman’s license to practice medicine
pending a final decision and order in disciplinary proceedings against him. I.G. Ex. | at
12-13. Following a hearing before a state administrative law judge (ALJ), the State of
Wisconsin revoked his license to practice medicine on September 7, 2011. 1.G. Ex. 2. In
a lengthy opinion, the state ALJ detailed the uncontroverted facts regarding Petitioner
Greenman’s patient care. Based on these facts, the judge concluded that Petitioner
Greenman had “engaged in practice or conduct which tended to constitute a danger to the
health, welfare, or safety of patients or the public in his treatment of patients,” in
violation of Wisconsin law; and that he failed to maintain patient records in accordance
with the requirements of Wisconsin law. I.G. Ex. 2 at 33. Based on these findings, the
ALJ ordered his license revoked. I.G. Ex. 2 at 37.

Petitioner concedes that his professional competence was “found lacking by the
Wisconsin Medical Examining Board,” but argues that the Board applied standards that
are “arbitrary and unfair.” Answer to 1B at 1. He attacks the state agency’s tactics and
defends the practices the state cited as evidence of the danger he poses to patient safety.
See generally “Prosecutorial Misconduct”; P. Exs. 13, 16-22; P. 12/14 Supp. at 1-2; P.
12/26 Supp. at 8. But Petitioner may not use this forum to challenge the state
proceedings. The regulations explicitly preclude any such collateral attack:

When the exclusion is based on . . . a determination by
another Government agency, or any other prior determination
where the facts were adjudicated and a final decision was
made, the basis for the underlying . . . determination 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 Donna Rogers, DAB No. 2381 at 4-5 (2011). For this
reason, the proffered medical records, P. Exs. 31-36 and 38, are irrelevant.

Petitioner also discusses the hardships brought on by his exclusion. As the Departmental
Appeals Board observed in Donna Rogers, such arguments are not relevant. My
authority is constrained by the regulations, and I may not review the I.G.’s decision to
impose an exclusion under section 1128(b)(4) on the ground that the excluded person is
suffering from the loss of his vocation. DAB No. 2381 at 6.

Petitioner raises some Constitutional challenges that I have no authority to review. DAB
No. 2381 at 5; see 42 C.F.R. § 1005.4(c)(1).
2. The period of Petitioner’s exclusion may not be less than the period
during which his medical license is revoked.

Petitioner challenges the length of his exclusion, contending that he is not likely to regain
his medical license, so he has been effectively excluded for life. The statute, however,
absolutely requires that Petitioner Greenman’s period of exclusion “shall not be less than
the period during which [his] . . . license. . . is .. . revoked.” Act § 1128(c)(3)(E); see
also 42 C.F.R. § 1001.501(b)(1).

Conclusion

For the above reasons, I conclude that the I.G. properly excluded Petitioner Greenman
from participation in Medicare, Medicaid, and all other federal health care programs for
so long as his medical license is revoked.

/s/
Carolyn Cozad Hughes
Administrative Law Judge