Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Springhill Senior Residence,
(CCN: 01-5435),

Petitioner,
v.
Centers for Medicare and Medicaid Services.
Docket No. C-11-765
Decision No. CR2653

Date: October 24, 2012

DECISION

Petitioner, Springhill Senior Residence (Petitioner or facility), is a long-term care facility
located in Mobile, Alabama, that participates in the Medicare program. Based on a
complaint investigation survey completed on June 24, 2011, the Centers for Medicare and
Medicaid Services (CMS) determined that Petitioner was not in substantial compliance
with Medicare participation requirements. CMS imposed against Petitioner a civil money
penalty (CMP) of $5,550 per day effective May 2 through June 23, 2011, and a CMP of
$100 per day effective June 24 through June 30, 2011. Petitioner also lost its approval to
conduct a nurse-aide training program (NATCEP).

For the reasons set forth below, I sustain CMS’s determinations. Petitioner was not in
substantial compliance with the requirements for participation at 42 C.F.R. § 483.15(a)
(Tag F241, Quality of Life, Dignity); 42 C.F.R. § 483.10(e) (Tag F164, Resident Rights,
Privacy and Confidentiality); and 42 C.F.R. § 483.75(1)(4) (Tag F164, Administration,
Clinical Records). I also find that the CMP that CMS imposed is reasonable, and with
this finding, the law requires Petitioner’s loss of approval to conduct a NATCEP.!

I. Background

The Social Security Act (Act) sets forth requirements for skilled nursing facility and
nursing facility participation in the Medicare program. The Act authorizes the Secretary
of Health and Human Services (Secretary) to promulgate regulations implementing those
statutory provisions. Act §1819 (42 U.S.C. § 1395i-3). The Secretary’s regulations are
found at 42 C.F.R. Part 483. To participate in the program, a 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 C.F.R. § 488.301.

The Secretary contracts with state agencies to conduct periodic surveys to determine
whether skilled nursing facilities are in substantial compliance. Act § 1864(a) (42 U.S.C.
§ 1395aa(a)); 42 C.F.R. §§ 488.10; 488.20. The Act and regulations require that facilities
be surveyed on average every 12 months, and more often if necessary, to ensure that
identified deficiencies are corrected. Act § 1819(g)(2)(A) (42 U.S.C. § 1395i-
3(g)(2)(A)); 42 C.F.R. §§ 488.20(a), 488.308.

Surveyors from the Alabama Department of Public Health, State Survey Agency (state
agency) conducted a survey of Petitioner from June 21 through 24, 2011. Based on their
findings, CMS determined the facility was not in substantial compliance with the three
participation requirements cited above. CMS notified Petitioner by letter dated July 15,
2011 (notice letter) that based on this noncompliance it was imposing a CMP of $5,550
per day from May 2 through June 23, 2011 (assessed due to CMS’s determination that
immediate jeopardy existed during this period), and a CMP of $100 per day from June
24, 2011, until Petitioner achieved substantial compliance or its provider agreement was
terminated. In the notice letter, CMS also informed Petitioner that it was losing its
approval to offer a NATCEP. CMS found Petitioner returned to substantial compliance
as of July 1, 2011. The period of substantial noncompliance thus ran from May 2 through
June 30, 2011.

On September 8, 2011, Petitioner timely requested a hearing contesting all findings of
noncompliance and related remedies set forth in CMS’s notice letter. The case was
assigned to me for hearing and decision. On September 13, 2011, I issued an
acknowledgment and initial prehearing order establishing a briefing schedule. In

' A state may not approve, and must withdraw any prior approval of, a SNF’s NATCEP
that has been, among other things, assessed a CMP of not less than $5,000. 42 C.F.R.
§ 483.151(b)(2).
accordance with the schedule, the parties filed prehearing exchanges, including
prehearing briefs (CMS Br. and P. Br., respectively), exhibit and witness lists, and
proposed exhibits.

I held a prehearing conference, by telephone, on February 15, 2012. During the
conference, the parties declined the opportunity to request cross-examination of each
other’s witnesses and agreed that I should decide the case based on an exchange of
written briefs and the documentary evidence of record. I documented this understanding
in my February 15, 2012 Order following the prehearing conference (February 15 Order).
During the conference I also admitted into the record the exhibits the parties exchanged
(CMS exhibits (CMS Exs.) 1-28 and Petitioner’s exhibits (P. Exs.) 1-10) and set a
briefing schedule. Both parties submitted response briefs (CMS R. Br. and P. R. Br.,
respectively).

IL. Issues
The issues stated in my February 15 Order, as agreed to by the parties, are:
1) Whether Petitioner failed to comply substantially with the requirements of:

a) 42 C.F.R. § 483.15(a) (Quality of Life, Dignity) (Tag F241) with regard
to Residents 1 — 4;

b) 42 C.F.R. § 483.10(e) (Resident Rights, Privacy and Confidentiality)
(Tag F164) with regard to Residents 1 — 4;

c) 42 C.F.R. § 483.75(1)(4) (Administration, Clinical Records) (Tag F164)
with regard to Residents 1 — 4;

2) With regard to this alleged noncompliance, whether CMS’s assessment of
immediate jeopardy was clearly erroneous; and

3) Whether the CMP that CMS imposed is reasonable in amount and duration.
III. Discussion

My findings and conclusions are set forth in the bold italicized headings and supported by
the discussions in the sections below.

A, Petitioner was not in substantial compliance with 42 C.F.R. § 483.15(a)
(Quality of Life, Dignity) (Tag F241) with regard to Residents 1 — 4.
B. Petitioner was not in substantial compliance with 42 C.F.R. § 483.10(e)
(Resident Rights, Privacy and Confidentiality) (Tag F164) with regard to
Residents 1 — 4.

C. Petitioner was not in substantial compliance with 42 C.F.R. § 483.75()(4)
(Administration, Clinical Records) (Tag F164) with regard to Residents 1 — 4.

I discuss the deficiencies together because I base my findings on the same set of facts. P.
Br. at 1-12; CMS Br. at 1-10; see P. Ex. 10.

On June 20, 2011, the state agency received a CD from the Trussville Police Department,
Trussville, Alabama, containing videos and other images of elderly nursing home
residents of the facility. These images had been downloaded from a cell phone found in a
bar in New Orleans, Louisiana. CMS Ex. 16, at 8-9; CMS Ex. 17, at 49, 50. The cell
phone was traced to its owner, CNA B, a CNA employed by Petitioner. CMS Exs. 7, at

3 17, at 4. Petitioner does not dispute CMS’s and the state’s description of the images
contained in the cell phone, and therefore neither side moved to enter the CD containing
the images into evidence. February 15 Order. Below, I reference the June 24, 2011
statement of deficiencies (SOD) and other documentary evidence created during the state
agency investigation to describe the content of those images as they reference Residents

, 2,3, and 4. February 15 Order; CMS Ex. | (the SOD); CMS Ex. 16 (the state agency
investigative summary).

Resident 1: Resident 1 is an individual with diagnoses including Alzheimer’s dementia,
malnutrition, dehydration, and adult failure to thrive. She needs extensive assistance
from staff for activities of daily living, such as eating, for which she requires staff to feed
er pureed foods. CMS Ex. 12, at 4-6, 49, 55, 133, 151; CMS Ex. 17, at 29. Two of the
videos in question depict CNA B feeding Resident 1. The SOD describes one video,
recorded on May 28, 2011, at 1:17 p.m., as showing Resident | lying in bed, with oxygen
on per nasal cannula and CNA B feeding her. CNA B calls Resident 1 “tootie fruitie.”
When Resident 1 asks for more food, CNA B tells her “No” and makes Resident 1 say
“goodie good good” before giving her more food. Once Resident | repeats “goodie good
good,” CNA B gives her more food and then laughs. CMS Ex. 1, at 9-10.

The SOD describes another video, recorded on May 29, 2011, at 12:58 p.m., as showing:

RI #1 [Resident 1] . . . telling the staff that she couldn’t eat anymore; however, the
staff (EI #1) [CNA B] continued to feed RI #1. RI #1 can be heard on the video
saying “You dog.” EI #1 replied, “You’re a dog.” RI #1 asked “Why don’t you
wipe my mouth?” EI #1 answered, “No, cause you called me a dog.” EI #1
instructed RI #1 to say that she was sorry. RI #1 responded,” . .. You got me too
quick. I’m sorry. You messed me up; you hate my guts.” EI #1 replied, “Eat
mines.” As EI #1 continued to hurriedly feed RI #1 large spoonfuls of food, the

CNA (EI #1) stated, “Now, here, here some guts for you to eat; right here, guts,
more guts... Hurry up.” RI #1 screamed, “Quit!” EI #1 replied, “Dog that!”
Although RI #1 yelled that she didn’t want anymore, EI #1 continued feeding the
resident and said, “Yea! You gon get some more.” Again, RI #1 said that she
didn’t want anymore; but, EI #1 continued placing large spoonfuls of food into the
residents mouth and said, “Yep (yes), gain five pounds.” When RI #1 screamed to
be left alone, EI #1 told RI #1 to, “Shut up! ... drink up!” Also, EI #1 was seen
holding a cup of liquid pressed against RI #1’s chest while telling the resident to
“shut up! ... drink up!” Once the staff member removed the cup from RI #1’s
upper chest area, a circular indentation could be [seen] in the chest area, where the
cup had been placed; but, the indentation quickly disappeared. EI #1 referred to
RI #1 as “Tootie” and asked, “Was that good Tootie, Tootie?” RI #1 answered,
“Fruitie my butt.” EI #1 laughed and said, “Why Tootie?”

CMS Ex. 1, at 11; see CMS Ex. 1, at 3.

Resident 2: Resident 2 is an individual whose diagnoses include confusion and
dementia. CMS Ex. 13, at 17. Her past medical history shows that in the past she
underwent a right mastectomy. CMS Ex. 13, at 18. The SOD describes an image of
Resident 2:

(2) Image # 113, dated 05/02/11 at 8:56 AM, shows RI #2, a female resident who
had undergone a mastectomy (the surgical removal of a breast), sitting in a shower
room completely nude. RI #2’s head was in a downward position and there was
no indication that the resident knew she was having her picture taken.

CMS Ex. 1, at 3. During an interview with a surveyor, Resident 2 confirmed that she did
not know her picture was being taken. CMS Ex. 16, at 5.

Resident 3: Resident 3 is a cognitively intact resident. CMS Ex. 16, at 5. The SOD
describes a video of Resident 3:

(3) Video #158, dated 05/19/11 at 10:40 AM, shows RI #3 lying in bed with no
shirt on engaged in conversation with two facility staff members. A facility staff
member (later identified as EI #3) could be seen in the video assisting RI #3 to put
on a blue “muscle” shirt. Another staff member (later identified as EI #1) can be
heard saying, “I don’t know why he (RI #3) got a muscle shirt for, he ain’t got no
muscles.” While assisting RI #3 into the blue “muscle” shirt, EI #3 asked the
resident to use his arm muscles to lift himself (RI #3) up to assist with getting the
shirt on. Then EI #1 can be heard saying, “He ain’t got no muscles.” Also, a
facility staff member can be heard saying “Watch that thing.” Then, the other
facility staff member responded, “the camera.” On 06/22/11, EI #3 denied
knowing that she was being recorded. EI #3 identified EI #1 as the person who
recorded the video.

CMS Ex. 1, at 3-4. CNA W is EI #3. CMS Ex. 16, at 6. When a surveyor informed
Resident 3 that he had been videotaped without his consent, he expressed anger and
humiliation, noting he was “mad as hell” because they could put something like that on
[the internet]. CMS Ex. 16, at 6.

Resident 4: Resident 4 was admitted to the facility on February 10, 2011. CMS Ex. 15,
at 21. Resident 4 had severe confusion caused by vascular dementia and major
depression with psychotic features. CMS Ex. 15, at 17. Resident 4’s May 17, 2011
minimum data set (MDS) showed she needed the extensive assistance of two or more
staff for bed mobility, transfers and toilet use. CMS Ex. 15, at 33. The SOD describes a
video of Resident 4:

(4) Video #174, dated 06/04/11 at 8:51 AM, shows RI #4 lying in bed fully
dressed with staff present. The video shows EI #2 in the resident’s room and
another staff member can be heard calling RI #4 by name and asking the resident
to “look.” EI #2 identified the other staff member as EI #1, the person doing the
recording. EI #2 was laughing, holding her hand up to hide her face and saying,
“Don’t put that (referring to the camera) on me.” EI #1 replied that she was
“putting this on YouTube.”

CMS Ex. 1, at 4. CNA K is EI #2. CMS Ex. 17, at 13-17.

After being apprised of the videos and images on the cell phone by the state agency,
Petitioner terminated CNAs B and K, and staff counseled CNA W and provided her with
mentoring, finding that CNA W apparently did not know that CNA B was recording on
her cell phone. CMS Exs. 7; 8; 9; 17, at 45.

The regulation at 42 C.F.R. § 483.15 covers a resident’s quality of life and provides that a
“facility must care for its residents in a manner and in an environment that promotes
maintenance or enhancement of each resident’s quality of life.” The subsection at
483.15(a) references:

(a) Dignity. The facility must promote care for residents in a manner and in an
environment that maintains or enhances each resident’s dignity and respect in full
recognition of his or her individuality.

CMS argues that the facility was not in substantial compliance with this regulation when
it failed to ensure that Resident 1 was fed in a dignified manner; failed to prevent a nude
picture of Resident 2 being taken without her knowing the picture was being taken; failed
to ensure that Resident 3 was not ridiculed and humiliated by comments about his
physical appearance and the videotaping of that incident; and failed to prevent Resident
4’s “dehumanization” when facility staff asked him to look at the camera in order to post
his face on the internet. CMS Br. at 8-9.

The regulation at 42 C.F.R. § 483.10 discusses resident rights, and the subsection at
483.10(e) states:

(e) Privacy and confidentiality. The resident has the right to personal privacy and
confidentiality of his or her personal and clinical records . . .

(1) Personal privacy includes accommodations, medical treatment, written
and telephone communications, personal care, visits, and meetings of family and
resident groups....

(2)... the resident may approve or refuse the release of personal and
clinical records to any individual outside the facility... .

The regulation at 42 C.F.R. § 483.75 discusses facility administration, and the subsection
at 42 C.F.R. § 483.75(1) discusses clinical records, with the subsection at 483.75(1)(4)
stating:

(4) The facility must keep confidential all information contained in the resident’s
records, regardless of the form or storage method of the records, except when
release is required....

CMS argues Petitioner was not in substantial compliance with these regulatory
requirements when its staff violated facility policies and showed no respect or concern
for the four residents’ right to privacy by videotaping images of residents that were
private and personal and failing to safeguard the images from public disclosure. CMS Br.
at 7. CMS asserts that at the time they were hired, Petitioner’s employees were required
to execute confidentiality agreements stating that they would not copy or in any manner
disclose resident medical records or any other information concerning a resident. CMS
Exs. 20, 21,22. These agreements required staff to agree to access confidential
information only when necessary to perform their job-related duties and to obtain resident
consent or a properly executed release of medical information to disclose private
information and clinical records to individuals outside the facility. CMS Ex. 20, at 3.
Here, facility staff did not obtain the residents’ consent to be photographed or videotaped
and the images taken were not necessary for the staff to perform their job-related duties.
CMS Exs. 7, 8, 9.

Petitioner concedes that its staff took inappropriate images of these four residents and
does not contest that the CNAs’ conduct was noncompliant with any of the three
regulatory requirements at issue. Petitioner admits that CNAs B and K were involved in
the inappropriate imaging of residents and that CNA B inappropriately spoke to residents.
P. Br. at 1, 11-12. For the reasons advanced by CMS noted above, | find that their
conduct was noncompliant with the specified regulations [with regard to dignity, by
Petitioner’s failure to feed Resident | in a dignified manner, failure to prevent a nude
photo of Resident 2 being taken without her knowledge, failure to protect Resident 3
from being ridiculed and humiliated by comments about his physical appearance and
videotaping the incident, and failure to prevent Resident 4’s dehumanization by staff
having him look at the camera so that they could purportedly post his image on the
internet; with regard to resident rights and clinical records by Petitioner’s failure to not
only protect residents by preventing the videotaping of them but also to fail to discover
and intercept these videos before that were disclosed and discovered in a public
establishment].

Although conceding that staff’s actions were not compliant, Petitioner argues the real
issue in the case is whether CNAs B and K’s failure to follow Petitioner’s policies and
expectations with respect to resident privacy and dignity should be imputed to Petitioner.
Petitioner asserts that it should be insulated from deficiency findings because it took all
reasonable and necessary steps to protect its residents from known or reasonably
foreseeable inappropriate actions by its staff with respect to dignity and personal privacy.
Petitioner asserts that the CNAs’ actions are separate from the actions of the facility.
Petitioner asserts that both CNAs B and K were appropriately screened, trained in-depth
both in a classroom and via an intensive preceptorship program, and were then
appropriately supervised. Moreover, Petitioner asserts it has strong policies and
procedures regarding residents’ rights to privacy and dignity. Because of this vigorous
training and supervision, Petitioner argues that no reasonable person could reach the
conclusion that the CNAs involved were untrained regarding resident privacy and
resident care.

Moreover, Petitioner asserts that its administration and other staff were not aware of the
situations involving these two CNAs, and the images taken of Residents 1 — 4, until state
agency surveyors apprised them of the videos on June 21, 2011. Petitioner asserts that as
soon as it learned of the conduct, it took all appropriate and necessary measures to ensure
resident safety and that there was thus no “action or failure of action” on its part.
Petitioner argues that, despite its rigorous screening and extensive training, these two
CNAs purposely chose to engage in actions in direct opposition to Petitioner’s policy and
practice and their extensive training. Petitioner argues that CMS did not identify any
other measures Petitioner could have taken to protect these residents, nor did CMS
dispute that Petitioner did not know about their actions until the state agency apprised
them of the CD containing their staff’s actions. P. Br. at 1-11; P. R. Br. at 1-12.

Petitioner argues further that if I uphold the remedies CMS imposed it will be based on
an inappropriate application of a strict liability standard. In support, Petitioner references
regulations regarding staff treatment of residents prohibiting abuse and neglect at 42
C.F.R. § 483.13(c) and infers that the general intent of the regulations is to ensure that a
facility is doing all that is within its control to prevent occurrences of abuse and neglect,

not that a facility should be found strictly liable for any instance of abuse or neglect
attributable to its staff alone. P. Br. at 12-13. Petitioner also cites an administrative law
judge’s (ALJ) decision in the case of Oakwood Manor Nursing Center, DAB CR818
(2001), for the proposition that an isolated instance of abuse should not render a facility
deficient automatically with respect to participation requirements. Petitioner also
references the Departmental Appeals Board’s (Board) decision in Mary & Martha
Lutheran Services, DAB No. 2147, at 6 (2008), requiring that pursuant to 42 C.F.R.

§ 483.25(h)(2), a facility is to “implement ‘all reasonable efforts to protect residents
against adverse events that are reasonably foreseeable.’” Although the regulatory
sections cited by Petitioner are not directly applicable here, Petitioner references them to
argue that the actions of its staff members were not reasonably foreseeable, and it should
not be found liable for them. Petitioner argues that it screens its employees (including
CNAs B and K) before hiring, teaches them about its policies and procedures regarding
privacy and dignity, tests their understanding of these concepts, and requires clinical
preceptorship training for new direct care staff.

I accept that Petitioner took some immediate steps to protect its residents once it was
made aware of the videos and images, including placing CNAs B and K on
administrative leave pending an investigation of the images on CNA B’s phone and
terminating their employment at the completion of the investigation. P. Br. at 12. I
would expect no less of any facility faced with such evidence. However, the public
discovery of these abhorrent videos, involving three of Petitioner’s staff members, clearly
suggests Petitioner had not taken all reasonable steps to prevent abuse in its facility at the
time.

Despite Petitioner’s assertions regarding the vigilance of its screening, training, and
supervision, the Act and regulations hold a facility accountable for the actions of its staff.
The Board has consistently held that a facility cannot disavow responsibility for the
actions of its employees as Petitioner attempts to do here. A “facility acts through its
staff, and is correspondingly responsible for their actions as employees.” Royal Manor,
DAB No. 1990, at 12 (2005). Employees are the agents of their employers, “empowered
to make and carry out daily care decisions.” Emerald Oaks, DAB No. 1800, at 7 n.3
(2001). The fact that Petitioner investigated and then terminated the offending
employees’ does not insulate it from a finding of noncompliance. Sunshine Haven
Lordsburg, DAB No. 2456, at 16-17 (2012); Franklin Care Center, DAB No. 1900, at 8
n.4 (2003). What a facility’s employees do or do not do comprises a facility’s
compliance or noncompliance with the regulations. When an employee errs, that error

> Petitioner did not terminate the employment of CNA W because it found she was not
aware of the videotaping of the incident involving Resident 3. CMS Ex. 17, at 45-46.
However, despite a “zero tolerance” policy for any type of abuse (P. Ex. 10, at 4, 6), it is
not clear why Petitioner did not terminate her employment for not reporting the
mistreatment of Resident 3.
10

must be evaluated as if committed by the facility itself. See Life Care Center of
Gwinnett, DAB No. 2240, at 13 n.9 (2009).

Petitioner argues that a reasonable person could not disagree that its CNAs were
appropriately trained. Petitioner’s argument, however, does not completely comport with
the facts. Here the images on CNA B’s cell phone show a chilling pattern of resident
mistreatment, involving several residents and CNAs B, K, and W, lasting over a period of
almost two months. Despite what Petitioner regards as its rigorous employee training and
supervision, at the very minimum, Petitioner cannot explain how its vaunted training
program failed in application based on the conduct of the CNAs, particularly CNA B, and
in the failure of the other two CNAs to report CNA B’s misconduct. P. Br. at 1-11. It
was sheer serendipity that her cell phone was found, the CNAs’ misconduct discovered,
and Petitioner’s residents finally protected from further abuse.

D. CMS’s determination of immediate jeopardy is not clearly erroneous.

CMS asserts that Petitioner was out of substantial compliance with participation
requirements at a level of immediate jeopardy. Immediate jeopardy exists if a facility’s
noncompliance has caused, or is likely to cause, serious injury, harm, impairment, or
death to a resident. 42 C.F.R. § 488.301. The regulation does not require that a resident
actually be harmed. Lakeport Skilled Nursing Center, DAB No. 2435, at 8 (2012). I
must uphold CMS’s determination as to the level of a facility’s substantial
noncompliance (which includes an immediate jeopardy finding) unless it is “clearly
erroneous.” 42 C.F.R. § 498.60(c). The Board directs that the “clearly erroneous”
standard imposes on facilities a heavy burden to show no immediate jeopardy and has
sustained determinations of immediate jeopardy where CMS presented evidence “from
which ‘[o]ne could reasonably conclude’ that immediate jeopardy exists.” See, e.g.,
Barbourville Nursing Home, DAB No. 1962, at 11 (2005); Florence Park Care Center,
DAB No. 1931, at 27-28 (2004), citing Koester Pavilion, DAB No. 1750 (2000).

Here, CMS has shown that the forcible manner in which CNA B fed Resident | placed
Resident 1’s physical health in serious danger because Resident 1 was at risk for
aspiration. CMS Ex. 12, at 33. Her care plan required that staff feed her pureed food in
accordance with facility guidelines. CMS Ex. 6; CMS Ex. 16, at 3. However, CNA B
fed Resident 1 in a manner inconsistent with facility guidelines. /d.; CMS Ex. 12, at 133;
CMS Ex. 17, at 51. This left Resident 1 at risk of inhaling food into her lungs, which
could have led to aspiration pneumonia or death. CMS Ex. 16, at 3-4. I may sustain
CMS’s finding of immediate jeopardy based only on CNA B’s treatment of Resident |
during feeding.

CMS has also further shown, though, that each of the four residents’ dignity and self-
respect was compromised by their treatment at the CNAs’ hands, as well as by the
exposure of the videos to public view (which lasted until CNA B’s cell phone was turned
11

over to the police). The videotaping of the residents, and the potential exposure of these
videotapes to public view, was likely to harm the residents’ psychosocial well-being.
CMS Exs. 26, 27, 28. Resident 3, who was cognitively intact, sustained actual
psychosocial harm, in that he told the surveyors he was humiliated and angry that he had
been videotaped without his consent. CMS Ex. 16, at 6. Although Residents 1, 2, and 4
had little discernable response to the breach of their privacy due to their cognitive
deficits, a facility’s obligation is to protect the health and safety of every resident,
including those that are incapable of perception or are unable to express themselves. This
presumes that instances of abuse of any resident, whether the resident is cognizant or not,
causes physical harm, pain, or mental anguish. 59 Fed. Reg. 56,116, 56,130 (Nov. 10,
1994).

Petitioner does not directly contest that the CNAs actions did not constitute immediate
jeopardy. Petitioner instead asserts that it took all necessary, reasonable and appropriate
measures to ensure resident safety and privacy and that no action or failure on its part
constituted immediate jeopardy. P. Br. at 11. It reiterates that CNAs B and K purposely
chose to engage in actions in opposition to their training and facility policy, other staff
were not aware of their actions, and that, after finding out about their actions, Petitioner
took immediate action to protect its residents. This argument, as noted above, is
unavailing. Petitioner bears the burden of proving that CMS’s determination of
immediate jeopardy is clearly erroneous, and I find it has not done so.

E. The CMP that CMS imposed is reasonable in duration and amount.

The regulations provide that remedies continue until “[t]he facility has achieved
substantial compliance, as determined by CMS or the State based upon a revisit or after
an examination of credible written evidence that [CMS or the State] can verify without an
on-site visit; or... CMS or the State terminates the provider agreement.” 42 C.F.R.

§ 488.454(a). The facility has the burden of proving that it achieved substantial
compliance on a date earlier than that determined by CMS. Kenton Healthcare, LLC,
DAB No. 2186, at 24-25 (2008).

CMS assessed the immediate jeopardy level CMP beginning the day the first video was
taken, May 2, 2011, and ended that period on June 23, 2011, when Petitioner interviewed
all residents and found no additional violations, conducted staff training, and began
randomly monitoring staff while they gave care to residents. CMS asserts Petitioner
remained out of substantial compliance at a non-immediate jeopardy level from June 24
through 30, 2011, and that it fully came into substantial compliance only after CMS
found Petitioner had time to monitor and revise its corrective actions. CMS Ex. 1, at 39;
P. Ex. 1, at 1; CMS Br. at 2, 13-14.

Petitioner argues that if any period of immediate jeopardy noncompliance can be said to
exist, that period of noncompliance should run only from June 21, 2011, when the facility
12

first became aware of CNAs B and K’s actions, and run through June 23, 2011, when the
parties agree that the immediate jeopardy was abated (the “D” level deficiencies ending
on June 30, 2011). P. Br. at 14. I disagree. May 2, 2011, is when the period of
noncompliance first occurred (the day Resident 2 was photographed in the shower) and it
is not unreasonable, and within CMS’s discretion, to begin the period of noncompliance
from that date. Moreover, it is reasonable to require a period of time for Petitioner to
monitor and revise their corrective actions before finding Petitioner back in substantial
compliance. Thus, concluding the period of noncompliance on June 30, 2011, is also
reasonable considering the facility needed to complete retraining of its staff on the
facility’s abuse protocol and the use of cell phones in the facility.

With regard to the amount of the CMP, I examine whether a CMP is reasonable by
applying the factors listed in 42 C.F.R. § 488.438(f): 1) the facility’s history of
noncompliance; 2) the facility’s financial condition; 3) the factors specified in 42 C.F.R.
§ 488.404; and 4) the facility’s degree of culpability, which includes neglect,
indifference, or disregard for resident care, comfort, or safety. The absence of culpability
is not a mitigating factor. The factors listed in 42 C.F.R. § 488.404 include: 1) the scope
and severity of the deficiency; 2) the relationship of the deficiency to other deficiencies
resulting in noncompliance; and 3) the facility’s prior history of noncompliance in
general and specifically with reference to the cited deficiencies.

The regulations specify that a CMP that is imposed against a facility on a per day basis
will fall into one of two ranges of penalties. 42 C.F.R. §§ 488.408; 488.438. The upper
arrange of a CMP, $3,050 per day to $10,000 per day, is reserved for deficiencies that
pose immediate jeopardy to a facility’s residents and, in some circumstances for repeated
deficiencies. 42 C.F.R. § 488.438(a)(1)(i); 488.438(d)(2). The lower range of CMP, $50
per day to $3,000 per day, is reserved for deficiencies that do not pose immediate
jeopardy, but either cause actual harm to residents, or cause no actual harm but have the
potential for causing more than minimal harm. 42 C.F.R. § 488.438(a)(1)(ii).

With regard to the amount of the CMP here, CMS has imposed a $5,550 per day CMP for
the period of immediate jeopardy noncompliance and a $100 per day CMP for the period
of non-immediate jeopardy noncompliance. Petitioner believes the total CMP imposed is
not reasonable and is “extraordinarily high.” P. Br. at 14. Petitioner notes that the state
agency recommended only a $1,000 per instance CMP and argues that CMS
unreasonably failed to adopt the state’s recommendation.

As Petitioner recognizes, the state agency’s suggestion of a per instance CMP is only a
recommendation. However, I must consider whether the evidence presented supports a
finding that the CMP amount is at a level reasonably related to an effort to produce
corrective action by a provider with the kind of deficiencies found and in light of the
other factors involved. The state agency’s recommendation is surprisingly low and
would hardly yield corrective action.

13

The regulations leave the decision regarding the choice of remedy to CMS, and the
amount of the remedy to CMS and the ALJ, requiring only that the regulatory factors at
42 C.F.R. §§ 488.438(f) and 488.404 be considered when determining the amount of a
CMP within a particular range. 42 C.F.R. §§ 488.408; 488.408(g)(2); 498.3(d)(11); see
also 42 C.F.R. § 488.438(e)(2); Alexandria Place, DAB No. 2245, at 27 (2009); Kenton
Healthcare, LLC, DAB No. 2186, at 28-29. Under this standard, CMS has generously
imposed a CMP for the period of immediate jeopardy in the lower half of the range of
immediate jeopardy and in the very low part of the range for the period of non-immediate
jeopardy.

Unless a facility contends that a particular regulatory factor does not support the CMP
amount, the ALJ must sustain it. Coquina Center, DAB No. 1860 (2002). With respect
to its financial condition, it is Petitioner’s responsibility to show if it cannot pay the
CMP. Petitioner was free to call any witnesses to testify to its financial condition or to
submit any documentary evidence regarding its financial condition. However, Petitioner
provided no evidence to show that its financial condition hinders it from paying the
proposed CMP. Petitioner has also not contested CMS’s assertion that it has past non-
compliance from a 2010 survey, also relating to quality of care for residents. CMS Br. at
13.

I do find the amount of the CMP especially reasonable given the scope and severity of the
noncompliance. As CMS showed, Petitioner failed to protect the health, dignity, and
privacy of four residents when members of its staff ridiculed and videotaped them
without their consent and forcibly fed one resident. The exposure of these vulnerable
residents to staff who could subject them to abuse with such impunity is highly
concerning. Although I base my decision on the videotaped abuse, I do fear for what
occurred to the facility’s residents once staff turned the camera off.

For the reasons set forth above, I find the CMP to be reasonable and Petitioner’s loss of
approval to conduct a NATCEP to be required by law.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.

Francisco Taveras and David Moya
d/b/a South Broadway Market,

Respondent.

Docket No. C-12-1138
FDA Docket No. FDA-2012-H-0903

Decision No. CR2652

Date: October 19, 2012

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) initiated the above-captioned matter when it
filed an Administrative Complaint for Civil Money Penalties (Complaint) with the
Departmental Appeals Board, Civil Remedies Division (CRD) and the Food and Drug
Administration’s (FDA) Division of Dockets Management. CTP seeks to impose civil
money penalties under the Federal Food, Drug, and Cosmetic Act (Act) and the Act’s
implementing regulations.

The Complaint alleges the following facts. Respondents own an establishment in
Lawrence, Massachusetts that sells tobacco products. Complaint § 2. CTP conducted
three inspections of the establishment. Complaint § 8. During an April 26, 2011
inspection, an FDA-commissioned inspector observed the “sale of individual cigarettes”
at Respondents’ establishment. Complaint § 9.
On July 7, 2011, CTP issued a warning letter to Respondent specifying the violation that
the inspector observed. The letter warned Respondent that a failure to correct the
violation could result in the imposition of civil money penalties and that it was
Respondent’s responsibility to ensure compliance with the law. Complaint J 9. On July
25, 2011, Mr. David Moya responded on behalf of Respondent and acknowledged receipt
of the warning letter and Respondent’s continuing obligation to comply with the Act and
its implementing regulations. Complaint § 10.

During a subsequent inspection, an FDA-commissioned inspector documented that “a
person younger than 18 years of age was able to purchase a package of Newport Box

100s cigarettes on April 17, 2012, at approximately 11:09 AM.” Complaint § 1. The
inspector also documented that “the minor’s identification was not verified before the
sale... on April 17, 2012, at approximately 11:09 AM.” Complaint § 1.

In compliance with 21 C.F.R. §§ 17.5 and 17.7, CTP served Respondent with the
Complaint on August 24, 2012, via United Parcel Service. CTP charged Respondent
with violating 21 C.F.R. § 1140.14(a) (sale of tobacco products to a minor), 21 C.F.R.

§ 1140.14(b)(1) (failure to verify the age of a person purchasing tobacco products by
means of photographic identification containing the bearer’s date of birth), and 21 C.F.R.
§ 1140.14(d) (sale of individual unpackaged cigarettes). Complaint §{ 1,9. CTP asked
the CRD to impose a $500 civil money penalty based on three alleged violations of the
regulations in a 24-month period. Complaint § 12.

The cover letter to the Complaint and the Complaint provided detailed instructions
related to filing an answer and requesting an extension of time to file an answer. The
letter and Complaint stated that failure to file an answer could result in the imposition of
a civil money penalty against Respondent. Respondent neither filed an answer nor
requested an extension of time within the 30-day time period prescribed in 21 C.F.R.

§ 17.9.

If a respondent does not file an answer within 30 days of a properly served complaint, the
regulations provide that the:

presiding officer shall assume the facts alleged in the complaint to be true,
and if such facts establish liability under the relevant statute, the presiding
officer shall issue an initial decision within 30 days of the time the answer
was due, imposing: (1) The maximum amount of penalties provided for by
law for the violations alleged; or (2) The amount asked for in the complaint,
whichever amount is smaller.
21 C.F.R. § 17.11 (a). Further, a failure to file a timely answer means that “respondent
waives any right to a hearing and to contest the amount of penalties and assessments”
imposed in the initial decision. 21 C.F.R. § 17.11(b).

Accepting the facts alleged in the Complaint as true, I find that those facts establish
Respondent’s liability under the Act. See 21 U.S.C. §§ 333(f)(9), 387c(a)(7)(B), 387£(d);
21 C.F.R. §§ 1140.1(b), 1140.14. I also find that CTP’s request to impose a $500 civil
money penalty is permissible. See 21 C.F.R. § 17.2.

Therefore, Respondent is directed to pay a civil money penalty in the amount of $500.
This initial decision becomes final and binding upon both parties within 30 days of the
date of its issuance. 21 C.F.R. § 17.11(b).

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Haissam Elzaim, M.D.,
(NPI: 197272383),
Southern Texas Physician Network,
HSE Orthopaedic Surgery Clinic,

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-12-643
Decision No. CR2650

Date: October 17, 2012

DECISION DISMISSING CASE

This matter is before me on my own motion, sua sponte, to dismiss this matter pursuant
to 42 C.F.R. § 498.70(b) because Petitioner does not have a right to an Administrative
Law Judge (ALJ) hearing. As detailed below, the initial determination by TrailBlazer
Health Enterprises, LLC (TrailBlazer), a contractor for the Centers for Medicare &
Medicaid Services (CMS), became administratively final after Petitioner failed to timely
request reconsideration of that determination. 42 C.F.R. § 498.5(1)(2). Because
Petitioner did not timely request a reconsidered determination, he has forfeited his right
to the contractor’s reconsideration as well as to an ALJ hearing.

I. Background

On November 10, 2011, TrailBlazer issued a notice revoking Dr. Elzaim’s Medicare
enrollment and billing privileges related to his reassignment of benefits to Southern
Texas Physician Network, and instituted a one-year bar on re-enrollment. P. Ex. 3. On
February 14, 2012, Petitioner filed his request for reconsideration. P. Ex. 5A. On
March 7, 2012, the contractor denied Petitioner’s request for reconsideration due to
untimely filing. P. Ex. 7.

Soon thereafter, Petitioner requested an ALJ hearing contesting the revocation. On May
31, 2012, Petitioner filed a Motion for Summary Judgment and nine supporting exhibits
(P. Exs. 1-9). On July 16, 2012, CMS filed its Opposition to Petitioner’s Motion for
Summary Judgment, in what amounted to a cross-motion. Petitioner filed a response
entitled Petitioner’s Response to CMS’ Opposition to Summary Judgment on August 15,
2012.

Il. Discussion

Although the parties filed opposing Motions for Summary Judgment, the crux of this case
is that Petitioner did not timely request a reconsideration decision and the contractor
never issued one. Without a reconsideration decision, Petitioner does not have a right to
an ALJ hearing. 42 C.F.R. § 498.5(1)(2).

Determination of the effective date of enrollment is an “initial determination” that is
subject to the review procedures set forth in 42 C.F.R. Part 498. 42 C.F.R.

§§ 498.3(a)(1), (b)(17). Under the review procedures in Part 498, a provider or supplier
“dissatisfied with an initial determination or revised initial determination related to the
denial or revocation of Medicare billing privileges may request reconsideration in
accordance with § 498.22(a).” 42 C.F.R. § 498.5(1)(1). Section 498.22(a) states that
CMS or one of its contractors “reconsiders an initial determination that affects a
prospective provider or supplier . . . if the affected party files a written request in
accordance with paragraphs (b) and (c) of this section.” Section 498.22(b) provides, in
relevant part, that the affected party may request reconsideration if the party files the
request “[w]ithin 60 days from receipt of the notice of initial determination, unless the
time is extended in accordance with paragraph (d) of this section.” 42 C.F.R.

§ 498.22(b)(3). Section 498.22(d)(1) states that a party “unable to file the request within
60 days .. . may file a written request with CMS, stating the reasons why the request was
not filed timely.” CMS will extend the 60-day deadline for filing a request for
reconsideration “if the affected party shows good cause for missing the deadline.” If the
affected party does not request reconsideration of an initial determination, then the initial
determination is binding. 42 C.F.R § 498.20(b).

The regulations are clear that Petitioner must file a reconsideration request in accordance
with section 498.22. Without a reconsidered determination by the contractor, the initial
determination is “binding” and, therefore administratively final. 42 C.F.R. § 498.20(b).
Moreover, the regulations plainly require that CMS or one of its contractors must issue a
“reconsidered determination” before the affected party is entitled to request a hearing
before an ALJ. 42 C.F.R. § 498.5(1)(2); see Hiva Vakil, M.D., DAB No. 2460 (2012);
Denise A. Hardy, D.P.M., DAB No. 2464 (2012).
Here, the contractor’s initial determination was issued on November 10, 2011. P. Ex. 3.
About 96 days after the initial determination, Petitioner requested contractor
reconsideration in a letter dated February 14, 2012. P. Ex. 5A. The contractor denied
Petitioner’s request for reconsideration because it was not timely requested pursuant to
section 498.22. P. Ex. 7. The contractor, therefore, did not issue a “reconsidered
determination” as described by the regulations. Accordingly, the initial determination is
binding and administratively final. 42 C.F.R. § 498.20(b).

As stated, the “regulations plainly require that CMS or one of its contractors must issue a
‘reconsidered determination’ before the affected party is entitled to request a hearing
before an ALJ.” Hiva Vakil, M.D., DAB No. 2460, at 4, citing 42 C.F.R. § 498.5(1)(2).
Without a reconsidered determination, Petitioner’s initial determination is the final
administrative determination and Petitioner has no right to an ALJ hearing thereon. Hiva
Vakil, M.D., DAB No. 2460, at n.4.

Til. Conclusion

Accordingly, Petitioner’s request for hearing and this case must be, and they are,
DISMISSED pursuant to 42 C.F.R. § 498.70(b) because Petitioner does not have a right
to an ALJ hearing on this matter. The contractor’s revocation of Dr. Elzaim’s Medicare
enrollment and billing privileges related to his reassignment of benefits to Southern
Texas Physician Network, and the one-year bar on re-enrollment as announced in the
contractor’s initial determination notice are final, not subject to review, and remain in
force exactly as announced by the contractor.

/s/
Richard J. Smith
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products
(FDA No. FDA-2012-H-0901),

Complainant
v.
Lambert Enterprises, Inc. d/b/a Lamberts Marathon #3,

Respondent.

Docket No. C-12-1137
Decision No. CR2649

Date: October 17, 2012

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving a complaint on
Respondent, Lambert Enterprises, Inc. d/b/a Lamberts Marathon #3, at 1529 North
Broadway Street, Joliet, Illinois, and by filing a copy of the complaint with the Food and
Drug Administration’s (FDA) Division of Dockets Management. The complaint alleges
that Lamberts Marathon #3 impermissibly sold tobacco products to a minor, violating the
Federal Food, Drug, and Cosmetic Act (Act) and its implementing regulations, 21 C.F.R.
Part 1140. CTP seeks to impose against Respondent Lamberts Marathon #3 a $250 civil
money penalty.

As provided for in 21 C.F.R. sections 17.5 and 17.7, on August 29, 2012, CTP served the
complaint on Respondent Lamberts Marathon #3 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 Lamberts Marathon #3 has not filed an answer within the time prescribed.
Pursuant to 21 C.F.R. § 17.11, I assume that the facts alleged in the complaint (but not its
conclusory statements) are true. Specifically:

e At Respondent’s business establishment, 1529 North Broadway Street, Joliet,
Illinois, on January 3, 2012, an FDA-commissioned inspector observed the sale of
cigarettes or smokeless tobacco to a person younger than 18 years of age;

e At Respondent’s business establishment, 1529 North Broadway Street, Joliet,

Illinois, on January 3, 2012, an FDA-commissioned inspector observed staff's
failure to verify prior to sale, by means of photo identification containing the
bearer’s birth date, the age of a person purchasing tobacco products;

e Ina warning letter dated February 16, 2012, CTP informed Respondent of the
inspector’s January 3, 2012 observations, and that such actions violate federal law,
21 C-F.R. §§ 1140.14(a) and 1140.14(b). The letter further warned that
Respondent’s failure to correct its violation[s] could result in a civil money
penalty or other regulatory action;

e At approximately 5:53 p.m. (Central Time) on April 19, 2012, at Respondent’s
business establishment, 1529 North Broadway Street, Joliet, Illinois, an FDA-
commissioned inspector observed the sale of Newport Box cigarettes to a person
younger than 18 years of age.

These facts establish Respondent Lamberts Marathon #3’s liability under the Act. The
Act prohibits misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product
is misbranded if sold or distributed in violation of regulations issued under section 906(d)
of the Act. 21 U.S.C. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b).
Under 21 C.F.R. section 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. section 1140.14(b)(1), a
retailer must verify, by means of photo identification containing the bearer’s date of birth,
that no person purchasing the tobacco product is younger than 18 years of age.

A $250 civil money penalty is permissible under 21 C.F.R. section 17.2.
Order

For these reasons, I enter default judgment in the amount of $250 against Respondent
Lambert Enterprises, Inc. d/b/a Lamberts Marathon #3. Pursuant to 21 C.F.R. section
17.11(b), this order becomes final and binding upon both parties within 30 days of the
date of its issuance.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Bellmore Medical PLLC,
Petitioner,
v.
Centers for Medicare and Medicaid Services.
Docket No. C-12-625
Decision No. CR2648

Date: October 17, 2012

DECISION

Petitioner, Bellmore Medical PLLC (Bellmore or Petitioner), appeals the Centers for
Medicare and Medicaid Services (CMS) contractor reconsideration decision issued on
April 12, 2012. I grant summary judgment and sustain the determination of CMS finding
that the undisputed evidence establishes that CMS properly enrolled Petitioner in the
Medicare program effective February 13, 2012.'

' Although the contractor erroneously referred to January 15, 2012 as Petitioner’s
“effective date” (P. Exs. 2-3), regulations require the contractor to assign the date of
receipt of the application as the effective date of Petitioner’s enrollment while permitting
the contractor to grant retrospective billing privileges for up to 30 days prior to the
effective date. 42 C.F.R. § 424.521(a)(1). Thus, I am treating the contractor’s action as
if it intended to set February 13, 2012, as the effective date of Petitioner’s enrollment and
permitting Petitioner to bill retrospectively for services provided beginning on

January 15, 2012.
I. Background

Petitioner is a medical practice specializing in dermatology. On April 12, 2012, the CMS
contractor issued an unfavorable reconsideration denying Petitioner’s request that it
change Petitioner’s effective date for Medicare billing privileges to November 1, 2011,
the date that Petitioner first began providing services to Medicare patients. Petitioner
filed a hearing request (HR) with the Civil Remedies Division of the Departmental
Appeals Board on April 20, 2012 and included five accompanying unmarked exhibits
(three contractor notices dated January 17, 2012, March 20, 2012, and April 12, 2012; a
copy of Petitioner’s request for reconsideration; and a list of unpaid claims between
November 2, 2011 and January 13, 2012) I have marked the exhibits as P. Exs. 1-6
respectively. The case was assigned to me for hearing and decision.

In accordance with my Acknowledgment and Pre-hearing Order issued on May 1, 2012,
CMS filed a Motion for Summary Judgment and Pre-Hearing Brief (CMS Br.),
accompanied by two exhibits (CMS Exs. 1-2), on June 5, 2012. On July 25, 2012,
Petitioner responded to the CMS Motion for Summary Judgment (P. Br.). Petitioner did
not submit additional proposed exhibits. In the absence of objection, I admit P. Exs. 1-6
and CMS Exs. 1-2 into the record.

Section 1831 of the Social Security Act (the Act) (42 U.S.C. § 1395j) establishes the
supplementary medical insurance benefits program for the aged and disabled known as
Medicare Part B. Payment under the program for services rendered to Medicare
beneficiaries may only be made to eligible providers of services and suppliers. Act

§§ 1835(a) (42 U.S.C. § 1395n(a)); 1842(h)(1) (42 U.S.C. § 1395(u)(h)(1)). The Act
requires the Secretary of Health and Human Services to issue regulations that establish a
process for the enrollment of providers and suppliers, including the right to a hearing and
judicial review of certain enrollment determinations. Act § 1866(j) (42 U.S.C. §
1395ce(j)).

A provider or supplier must be enrolled in the Medicare program and be issued a billing
number to have billing privileges and to be eligible to receive payment for services
rendered to Medicare eligible beneficiaries. 42 C.F.R. § 424.505.
IL. Discussion

A. Issue
The issue in this case is whether CMS’s contractor and CMS had a legitimate basis for

determining the effective date of Petitioner’s enrollment and retrospective billing
privileges in the Medicare program.
B. Applicable Standard
The Departmental Appeals Board (Board) stated the standard for summary judgment:

Summary judgment is appropriate when the record shows that there is no
genuine issue as to any material fact, and the moving party is entitled to
judgment as a matter of law. ... The party moving for summary judgment
bears the initial burden of showing that there are no genuine issues of
material fact for trial and that it is entitled to judgment as a matter of law. . .
. To defeat an adequately supported summary judgment motion, the non-
moving party may not rely on the denials in its pleadings or briefs, but must
furnish evidence of a dispute concerning a material fact — a fact that, if
proven, would affect the outcome of the case under governing law. ... In
determining whether there are genuine issues of material fact for trial, the
reviewer must view the evidence in the light most favorable to the non-
moving party, drawing all reasonable inferences in that party’s favor.

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

The role of an Administrative Law Judge (ALJ) in deciding a summary judgment motion
differs from the ALJ’s role in resolving a case after a hearing. The ALJ should not assess
credibility or evaluate the weight of conflicting evidence. Holy Cross Vill. at Notre
Dame, Inc., DAB No. 2291, at 5 (2009).

C. Findings of Fact and Conclusions of Law

1) CMS’s contractor and CMS and its contractor properly
determined Petitioner’s effective date of Medicare enrollment.

The material facts in this case are not disputed, and I draw all reasonable inferences in
favor of Petitioner. On November 1, 2011, Petitioner began providing services to
Medicare beneficiaries. HR. On December 15, 2011, Petitioner submitted an application
to the Medicare contractor, National Government Services (NGS), to attain billing
privileges for services performed by Dr. Morris Westfried on behalf of Bellmore. HR.
However, on January 15, 2012, NGS informed Petitioner that the application for Dr.
Westtfried could not be processed because Bellmore itself was not yet enrolled in the
Medicare program. HR; P. Ex. 1. Petitioner subsequently submitted an application for
Bellmore to enroll as a supplier in the Medicare program. NGS received Bellmore’s
Medicare enrollment application on February 13, 2012. CMS Ex. 1. On March 20, 2012,
NGS approved Petitioner’s application to enroll as a supplier in the Medicare program
with the effective date from which Bellmore could bill for services provided beginning
January 15, 2012. P. Ex. 2.
Petitioner contends that the effective date of enrollment should be November 1, 2011, the
date it began rendering services to Medicare beneficiaries. Bellmore does not deny that
the CMS contractor received its completed enrollment application on February 13, 2012.
However, Petitioner argues that the enrollment application did not properly warn
applicants that it would “only be granted enrollment 30 days prior from the date the
application was received.” HR; P. Br. at 1. Petitioner notes that page 16 of the
application requests the date that the applicant first saw a Medicare patient and as such
believed that it would be permitted to retrospectively bill for services beginning the date
that it began providing services to Medicare patients. HR. Further, Petitioner argues that
they are a small but needed practice in the community and any loss of income would
cause financial hardship. HR.

The effective date of Medicare enrollment and billing privileges is dictated by 42 C.F.R.
§ 424.520(d). The regulation provides:

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

(Italics in original, emphasis added).

An enrolled provider or supplier may bill Medicare for services provided to Medicare
eligible beneficiaries up to 30 days prior to the effective date of enrollment, if
circumstances precluded enrollment before the services were provided. Retrospective
billing for up to 90 days prior to the effective date of enrollment is permitted only in case
of a Presidentially-declared disaster. 42 C.F.R. § 424.521.

The regulation is clear, and the effective date for Medicare billing privileges is
determined according to the later of the two dates specified by the regulation. The “date
of filing” is the date that the Medicare contractor receives a signed enrollment application
that the Medicare contractor is able to process to approval. 42 C.F.R. § 424.510(d)(1); 73
Fed. Reg. 69,726, 69,769 (Nov. 19, 2008). Because it is undisputed that the contractor
received Petitioner’s enrollment application on February 13, 2012, which is after the date
Petitioner began providing services, the regulation dictates that this is the effective date
of Petitioner’s enrollment, and I have no discretion to determine an earlier effective date.
2) Iam unable to waive the legal requirements for Petitioner.

Petitioner made various arguments for equitable relief despite not meeting the legal
requirements for an earlier effective date. Petitioner did not argue that it filed an
application on an earlier date than CMS determined or that the contractor or CMS
incorrectly applied the regulatory criteria. | am without authority to order either NGS or
CMS to provide an exemption to Petitioner under the circumstances. Even accepting all
of Petitioner’s assertions as true, Petitioner’s equitable arguments give me no ground to
grant Petitioner an earlier effective date of enrollment. See US Ultrasound, DAB No.
2302, at 8 (2010) (“Neither the ALJ nor the Board is authorized to provide equitable
relief by reimbursing or enrolling a supplier who does not meet statutory or regulatory
requirements.”). Moreover, I have no authority to declare statutes or regulations invalid
or ultra vires. 18661CPayday.com, L.L.C., DAB No. 2289, at 14 (2009) (“An ALJ is
bound by applicable laws and regulations and may not invalidate either a law or
regulation on any ground.”). Thus, I have no authority to change Petitioner’s Medicare
enrollment date based upon equitable considerations. Although it may be possible to
sympathize with aspects of Petitioner’s position, the regulations were promulgated with
the understanding that limited retrospective billing periods were a necessary means to
further program integrity. See 73 Fed. Reg. at 69,768.

Accordingly, I conclude that Petitioner’s effective date of Medicare enrollment was
February 13, 2012, the date on which NGS received Bellmore’s complete enrollment
application that could be processed to approval. Petitioner was also properly authorized
to retrospectively bill Medicare for services provided to Medicare beneficiaries up to 30
days prior to the effective date of enrollment starting on January 15, 2012.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Mary C. Manesis, DPM, PA,
Petitioner,
v.
Centers for Medicare and Medicaid Services.
Docket No. C-12-640
Decision No. CR2646

Date: October 15, 2012

DECISION DISMISSING REQUEST FOR HEARING AND
REMANDING FOR RECONSIDERATION DETERMINATION

The Centers for Medicare and Medicaid Services (CMS) revoked the Medicare billing
privileges of Petitioner Mary C. Manesis, DPM, PA, a podiatrist and supplier of durable
medical equipment, prosthetics, orthotics, and supplies. Petitioner requested a hearing,
which I do not have jurisdiction to provide at this time. In accordance with CMS’s
suggestion, I dismiss and remand this case so that a Medicare contractor may provide a
reconsidered determination to Petitioner.

In a letter dated October 13, 2011, the Medicare contractor, Palmetto GBA National
Supplier Clearinghouse (NSC), notified Petitioner it was revoking her supplier number,
retroactive to October 4, 2011, the date CMS determined that Petitioner’s practice
location was not operational. Specifically, the letter stated that its inspector attempted to
conduct an inspection of Petitioner’s facility on October 3 and 4, 2011, but the facility
had been closed during its posted hours of operation on both attempts. The letter
concluded that Petitioner was found to be not operational and in violation of 42 C.F.R.

§ 424.535(a)(5)(ii).
In response to the Medicare contractor’s letter, Petitioner submitted a letter on November
10, 2011, in which she stated “[t]his letter serves as both notification of our
reconsideration request and our Corrective Action Plan [CAP].” CMS Ex. 3. In
describing its CAP, Petitioner stated that, as an orthotics provider providing diabetic
shoes and custom inserts, she was exempted from the requirement that a supplier be open
to the public for a minimum of 30 hours per week and instead was allowed to be open
“by appointment only.” Petitioner stated that she had changed the posted hours of
operation to “By Appointment Only.” Petitioner noted that staff would be available for
consultations by appointment at the office location. Petitioner also stated that within the
next 60 days she would be finalizing plans to move the office to a better location.
Petitioner stated that once the move was finalized she would submit an application to
NSC to change the practice location. CMS Ex. 3.

By letter dated December 13, 2011, NSC informed Petitioner that it was
“acknowledg[ing] the receipt of your action plan regarding the revocation of your
supplier number.” The letter concluded that Petitioner was not operational during
attempted site inspections and that she was barred from re-enrolling in the Medicare
program for two years from the effective date of revocation. CMS Ex. 2.

Petitioner requested a hearing before an administrative law judge (ALJ) by letter dated
April 16, 2012. The case was assigned to me, and I issued a prehearing order. CMS has
filed a pre-hearing brief/motion for summary judgment (CMS Br.) with six exhibits
(CMS Exs. 1-6). Petitioner filed a pre-hearing brief with three exhibits (P. Exs. 1-3).

CMS or its agent may revoke a supplier’s Medicare billing privileges and the
corresponding supplier agreement if CMS or its agent determines upon on-site review
that the supplier is “no longer operational to furnish Medicare covered items or services,”
has failed to satisfy Medicare enrollment requirements, or has failed to furnish covered
items or services as required by statute or regulation. 42 C.F.R. § 424.535(a)(5)(ii). The
decision to revoke a supplier’s Medicare enrollment is an “initial determination” that is
subject to the review procedures set forth in 42 C.F.R. Part 498. 42 C.F.R. § 498.3(a)(1),

(b)(17).

Under those procedures, a supplier “dissatisfied with an initial determination or revised
initial determination related to the denial or revocation of Medicare billing privileges”
may request reconsideration by filing a request for reconsideration within 60 days from
receipt of the notice of initial determination, unless CMS or its agent determines there is
“good cause” for extending the deadline. 42 C.F.R. §§ 498.5(1)(1), 498.22. A supplier
“dissatisfied with a reconsidered determination . . . is entitled to a hearing before an
ALJ.” 42 C.F.R. § 498.5(1)(2). An ALJ may dismiss a hearing request “for cause” when
the requesting party “does not otherwise have a right to a hearing.” 42 C.F.R.

§ 498.70(b).
CMS states that NSC’s December 13, 2011 letter erroneously informed Petitioner that
she did not request reconsideration of the initial determination when, in fact, Petitioner
had timely requested reconsideration (CMS Ex. 3 — Petitioner’s November 10, 2011 letter
to NSC), but NSC failed to act on that request. CMS Br. at 8. Although CMS provides
arguments on the merits of NSC’s revocation, CMS alternatively suggests that this case
could be dismissed without prejudice and remanded to allow NSC to process Petitioner’s
reconsideration request. Due to jurisdictional concerns that Petitioner is not able to
properly proceed at the ALJ appeal level without a reconsideration determination, I agree
with CMS’s suggestion. See Better Health Ambulance, DAB No. 2475 (2012).

Accordingly, I dismiss Petitioner’s hearing request pursuant to 42 C.F.R. § 498.70(b) and
remand this case to the Medicare contractor pursuant to 42 C.F.R. § 498.78 to make a
reconsideration determination. If Petitioner is not satisfied with that determination, she
may then exercise her right to request an ALJ hearing in accordance with 42 C.F.R.

§ 498.40.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Big Bear Tobacco, Inc
d/b/a Smokers Choice Smoke Shop,

Respondent.

Docket No. C-12-1070
FDA Docket No. FDA-2012-H-0827

Decision No. CR2644

Date: October 15, 2012

DECISION

The Center for Tobacco Products (CTP) began this matter by serving a complaint on
Respondent, Big Bear Tobacco, Inc., d/b/a Smokers Choice Smoke Shop, at 7144 N. 35"
Ave., Phoenix, AZ 85051, and by filing a copy of the complaint with the Food and Drug
Administration’s (FDA) Division of Dockets Management. The complaint alleges that
Respondent Big Bear impermissibly sold tobacco products to a minor, failed to verify the
age of a person purchasing tobacco products, and impermissibly used a self-service
display in a non-exempt facility, violating the Federal Food, Drug, and Cosmetic Act
(Act) and its implementing regulations, 21 C.F.R. Part 1140. CTP seeks to impose
against Respondent Big Bear a $2,000 civil money penalty.

As provided for in 21 C.F.R. sections 17.5 and 17.7, on August 15, 2012, CTP served the
complaint on Respondent Big Bear 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
Administrative Law Judge could, pursuant to 21 C.F.R. § 17.11, issue an initial
ordering it to pay the full amount of the proposed penalty.

lays, the
decision

Respondent Big Bear has not filed an answer within the time prescribed. Pursuant to 21

C.F.R. § 17.11, I assume that the facts alleged in the complaint (but not its conc.
statements) are true. Specifically:

lusory

e At Respondent’s business establishment, 1903 West Thunderbird Road, Phoenix,
AZ, on September 12, 2011, an FDA-commissioned inspector observed that Big
Bear failed to limit its tobacco sales to direct, face-to-face exchanges; the facility
has in place a self-service display but does not ensure that no person under 18-

years-of-age is present or permitted to enter the premises;

e Ina warning letter dated January 12, 2012, the CTP informed Respondent of the
inspector’s September 12, 2011 observations and that such actions violate federal
law, 21 C.F.R. § 1140.16(c). The letter further warned that Big Bear’s failure to
correct its violation[s] could result in a civil money penalty or other regulatory

action;

e At Respondent’s business establishment, 1903 West Thunderbird Road, Phoenix,
AZ, on March 29, 2012, an FDA-commissioned inspector observed the sale of
American Spirit Original Blend cigarette tobacco to a person younger than 18-

years-of-age;

e At Respondent’s business establishment, 1903 West Thunderbird Road, Phoenix,
AZ, on March 29, 2012, an FDA-commissioned inspector observed staff’s failure
to verify prior to sale, by means of photo identification containing the bearer’s

birth date, the age of a person purchasing tobacco products;

¢ On March 29 and/or April 6, 2012, an FDA-commissioned inspector observed a

minor near the facility’s roll-your-own machine; a person younger than 18-years-
of-age was able to enter the establishment, retrieve a tobacco product contained in

the self-service display, and take that product to the cashier.

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

21 U.S.C. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. §1140.1(b). Under 21
C.F.R. section 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. section 1140.14(b)(1), a retailer
must verify, by means of photo identification containing the bearer’s date of birth, that no

person purchasing the tobacco product is younger than 18-years-of-age. Under 21 C.F.R.
§ 1140.16(c), unless its self-service display is located in a facility where the retailer
ensures that no person younger than 18-years-of-age is present, a retailer may sell
cigarettes and smokeless tobacco only in a direct, face-to-face exchange between retailer
and consumer.

A $2,000 civil money penalty is permissible under 21 C.F.R. section 17.2.
Order

For these reasons, I enter default judgment in the amount of $2,000 against Respondent
Big Bear Tobacco d/b/a Smokers Choice Smoke Shop. Pursuant to 21 C.F.R. section
17.11(b), this order becomes final and binding upon both parties 30 days after the date
issued.

/s/
Carolyn Cozad Hughes
Administrative Law Judge