Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Christopher Keegan,
(OI File No. 4-08-40761-9),

Petitioner,
v.
The Inspector General.
Docket No. C-14-452
Decision No. CR3242

Date: May 27, 2014

DECISION

Petitioner, Christopher Keegan, owned a pharmaceutical company, National Respiratory
Services, that was headquartered in the State of Kentucky. He was convicted of
introducing misbranded drugs into interstate commerce. Based on his conviction, the
Inspector General (I.G.) has excluded him for ten years from participating in the
Medicare, Medicaid, and all federal health care programs, as authorized by section
1128(a)(1) of the Social Security Act (Act). Petitioner now challenges the exclusion. For
the reasons discussed below, I find that the I.G. properly excluded Petitioner and that the
ten-year exclusion falls within a reasonable range.

I. Background

Petitioner Keegan was the owner and majority shareholder in National Respiratory
Services, a pharmaceutical company. I.G. Ex. 3 at 2. He was charged in federal district
court with one count of health care fraud and one count of introducing misbranded drugs
into interstate commerce. I.G. Ex. 2. He pled guilty to a misdemeanor count of
introducing misbranded drugs into interstate commerce, specifically, he caused “sub-
potent, super-potent, and non-sterile” drugs, which were therefore “misbranded and
adulterated,” to be sent to patients through interstate commerce, in violation of the Food,
Drug & Cosmetics Act, 21 U.S.C. §§ 331(a), 333(a)(1), and 352(a). I.G. Ex. 3. The
court entered judgment against him on July 23, 2013. I.G. Ex. 4.

In a letter dated November 29, 2013, the I.G. notified Petitioner that he was excluded
from participation in Medicare, Medicaid, and all federal health care programs for a
period of ten years, because he had been convicted of a criminal offense related to the
delivery of an item or service under the Medicare or state health care program. The letter
explained that section 1128(a)(1) of the Act authorizes the exclusion. LG. Ex. 1.
Petitioner requested review, and the matter is before me for resolution.

Neither party submits any witness testimony, and they agree that an in-person hearing is
not necessary. I.G. Br. at 14; P. Br. at 6. Each party submitted an initial brief (I.G. Br.;
P. Br.). The I.G. submitted five exhibits (I.G. Exs. 1-5) and Petitioner submitted two
exhibits (P. Exs. 1-2). The LG. submitted a reply brief (I.G. Reply). In the absence of
any objection, I admit into evidence I.G. Exs. 1-5 and P. Exs. 1-2.

IL. Issues

The issues before me are: 1) was Petitioner convicted of a criminal offense related to the
delivery of an item or service under Medicare or a state health care program, within the
meaning of section 1128(a)(1), thus providing a basis for excluding him from program
participation; and 2) if so, is the length of the exclusion (ten years) reasonable.

III. Discussion

A. Petitioner must be excluded from program participation,
because he was convicted of a criminal offense related to
the delivery of an item or service under Medicare or a state
health care Program, within the meaning of section
1128(a)(1).

Under section 1128(a)(1) of the Act, the Secretary of Health and Human Services (HHS)
must exclude an individual who has been convicted under federal or state law of a
criminal offense related to the delivery of an item or service under Medicare or a state
health care program. See also 42 C.F.R. § 1001.101(a).

Petitioner concedes, as he must, that he was convicted of a criminal offense, but he
argues that his offense was not related to the Medicare program. According to Petitioner,

' My findings of fact and conclusions of law are set forth, in italics and bold, in the
discussion captions of this opinion.

the I.G. should consider the “language of the statute” under which he was convicted, not
the underlying bases for his guilty plea. In Petitioner’s view, introducing misbranded
drugs into interstate commerce does not suggest an offense “directly related to the
delivery of items or services” under Medicare. His offense should therefore not be
subject to exclusion under section 1128(a)(1). P. Br. at 3-5.

But it is well-settled that, in determining whether a conviction is program-related within
the meaning of section 1128(a)(1), I look beyond the language of the statute under which
the individual was convicted and the precise wording of his plea. An offense is related to
the delivery of an item or service under Medicare or a state health care program, if there
is “a nexus or common-sense connection” between the conduct giving rise to the offense
and the delivery of the item or service. Lyle Kai, R.Ph., DAB No. 1979 at 5 (2005);
Berton Siegel, D.O., DAB No. 1467 at 5 (1994). The LG. may rely on extrinsic evidence
to explain the circumstances underlying a conviction. The regulations specifically
provide that evidence of “crimes, wrongs, or acts other than those at issue in the instant
case is admissible in order to show motive, opportunity, intent, knowledge, preparation,
identity, lack of mistake, or existence of a scheme.” 42 C.F.R. § 1005.17(g); see
Narendra M. Patel, DAB No. 1736 (2000); Tanya A. Chuoke, R.N., DAB No. 1721
(2000); Bruce Lindberg, D.C., DAB No. 1280 (1991).

Petitioner’s plea agreement leaves no doubt that his conviction was related to the
Medicare program. He not only admitted that he (and others) introduced adulterated and
misbranded drugs into interstate commerce, he also admitted that he “then submitted or
caused to be submitted” to Medicare “false and fraudulent billings,” claiming that the
medications were non-compounded and FDA-approved, when they were not. CMS Ex. 3
at 2. His duplicity cost the Medicare program $2,030,343.11, and his company was
ordered to pay that amount in restitution to the Centers for Medicare & Medicaid
Services (CMS), the HHS division that administers the Medicare program. CMS Ex. 4 at
4-5,

Thus, Petitioner was convicted of a program-related crime and must be excluded for at
least five years. I now consider whether the length of his exclusion, beyond five years,
falls within a reasonable range.

B. Based on the aggravating factors present in this case, the
ten-year exclusion falls within a reasonable range.

An exclusion under section 1128(a)(1) must be for a minimum period of five years. Act
§ 1128(c)(3)(B); 42 C.F.R. §§ 1001.102(a), 1001.2007(a)(2). Federal regulations set
forth criteria for lengthening exclusions beyond the five-year minimum. 42 C.F.R.

§ 1001.102(b). Evidence that does not pertain to one of the aggravating or mitigating
factors listed in the regulation may not be used to decide whether an exclusion of a
particular length is reasonable.
Among the factors that may serve as bases for lengthening the period of exclusion are
two relied on by the LG. in determining the length of Petitioner’s exclusion: 1) the acts
resulting in the conviction, or similar acts, resulted in a financial loss to Medicare and
state health care programs of $5,000 or more; and 2) the acts that resulted in the
conviction, or similar acts, were committed over a period of one year or more. 42 C.F.R.
§ 1001.102(b). The presence of an aggravating factor or factors not offset by any
mitigating factor or factors justifies lengthening the mandatory period of exclusion.

Program financial loss (42 C.F.R. § 1001.102(b)(1)). Petitioner’s actions resulted in
program financial losses more than 400 times greater than the $5,000 threshold for
aggravation. As noted above, Petitioner admitted that his criminal activity caused
Medicare program losses of $2,030,343.11, which the court ordered be paid in restitution
to CMS. LG. Ex. 3 at 2, I.G. Ex. 4 at 4-5. Restitution has long been considered a
reasonable measure of program losses. Jason Hollady, M.D., DAB No. 1855 (2002).
Because the financial losses were significantly in excess of the threshold amount for
aggravation, the I.G. may justifiably increase significantly Petitioner’s period of
exclusion. See Jeremy Robinson, DAB No. 1905 at 9 (2004); Donald A. Burstein, Ph.D.,
DAB No. 1865 at 12 (2003).

Duration of crime (42 C.F.R. § 1001.102(b)(2)). Petitioner was convicted of criminal
acts that were committed over a period of more than two years, from July 2006 through
August 2008. I.G. Ex. 2 at 2; see LG. Ex. 4 at 2.

C. No mitigating factors justify decreasing the period of
exclusion.

The regulations consider mitigating just three factors: 1) a petitioner was convicted of
three or fewer misdemeanor offenses, and the resulting financial loss to the program was
less than $1,500; 2) the record in the criminal proceedings demonstrates that a petitioner
had a mental, physical, or emotional condition that reduced his culpability; and 3) a
petitioner’s cooperation with federal or state officials resulted in others being convicted
or excluded, or additional cases being investigated, or a civil money penalty being
imposed. 42 C.F.R. § 1001.102(c). Characterizing a mitigating factor as “‘in the nature
of an affirmative defense,” the Departmental Appeals Board has ruled that a petitioner
has the burden of proving any mitigating factor by a preponderance of the evidence.
Barry D. Garfinkel, M.D., DAB No. 1572 at 8 (1996).

Petitioner claims that he was suffering from a substance abuse problem during the period
of criminal conduct, so could not be responsible for his company’s actions. P. Br. at 5.
But nothing in the record of criminal proceedings suggests that Petitioner’s mental,
physical, or emotional condition reduced his culpability. In its judgment, the court
explicitly suspended any drug-testing condition “based on [its] determination that the
defendant pose[d] a low risk of future substance abuse,” which shows that the court did
not find that Petitioner had a significant history of substance abuse. CMS Ex. 4 at 3.
Further, as part of his plea agreement, Petitioner “accepted responsibility” for his
misconduct. CMS Ex. 3 at 4.

So long as the period of exclusion is within a reasonable range, based on demonstrated
criteria, I have no authority to change it. Joann Fletcher Cash, DAB No. 1725 at 7
(2000) (citing 57 Fed. Reg. 3298, 3321 (1992)). In this case, Petitioner’s crime
demonstrates that he presents significant risks to the integrity of health care programs.
He engaged in illegal conduct that cost the Medicare program a significant amount of
money. His criminal conduct lasted more than a year. No mitigating factors offset the
aggravating factors. I therefore find that the ten-year exclusions falls within a reasonable
range.

IV. Conclusion

For these reasons, I conclude that the I.G. properly excluded Petitioner from participation
in Medicare, Medicaid and all federal health care programs, and I sustain as reasonable
the period of exclusion.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Kossi Klassou / Wintergreen Mobil Inc.
d/b/a Wintergreen Mobil,

Respondent.

Docket No. C-14-854
FDA Docket No. FDA-2014-H-0372

Decision No. CR3241
Date: May 27, 2014
INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint
(Complaint) against Respondent, Kossi Klassou / Wintergreen Mobil Inc. d/b/a
Wintergreen Mobil, alleging facts and legal authority sufficient to justify imposing
a civil money penalty of $250. Respondent did not timely answer the Complaint,
nor did Respondent request an extension of time within which to file an answer.
Therefore, I enter a default judgment against Respondent and order that
Respondent pay a civil money penalty in the amount of $250.

CTP began this case by serving a Complaint on Respondent and filing a copy of
the Complaint with the Food and Drug Administration’s (FDA) Division of
Dockets Management. The Complaint alleges that Respondent’s staff unlawfully
sold cigarettes to minors 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.
On April 3, 2014, CTP served the Complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and
accompanying cover letter, CTP explained that within 30 days Respondent should
pay the penalty, file an answer, or request an extension of time within which to file
an answer. CTP warned Respondent that if it failed to take one of these actions
within 30 days an Administrative Law Judge could, pursuant to 21 C.F.R.

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

Respondent has not filed an answer within the time provided by regulation, nor
has it requested an extension. Therefore, pursuant to 21 C.F.R. § 17.11(a), lam
required to issue an initial decision by default if the Complaint is sufficient to
justify a penalty. Accordingly, I must determine whether the allegations in the
Complaint establish violations of the Act.

For purposes of this decision, I assume the facts alleged in the Complaint are true.
21 C.F.R. § 17.11(a). Specifically, CTP alleges the following facts in its
Complaint:

e Respondent owns Wintergreen Mobil, an establishment that sells tobacco
products and is located at 890 Rockville Pike, Rockville, Maryland 20852 .
Complaint §[ 3.

e On November 16, 2012, an FDA-commissioned inspector observed that ‘“‘a
person younger than 18 years of age was able to purchase a package of
Newport Box cigarettes . . . at approximately 3:33 PM ET.” Complaint
q 10.

e On December 6, 2012, CTP issued a Warning Letter to Mobil explaining
that the inspector’s November 16, 2012 observation constituted a violation
of a regulation found at 21 C.F.R. § 1140.14(a).' In addition to describing
the violation, the letter advised Respondent that the FDA may initiate a
civil money penalty action or take other regulatory action against
Respondent if it failed to correct the violation. The letter also stated that it
was Respondent’s responsibility to comply with the law. Complaint § 10.

* In the Complaint, CTP alleges that it issued a Warning Letter to “Mobil at 890
Rockville Pike, Rockville, MD 20852.” Because this address is the same address
listed for Wintergreen Mobil, I infer that CTP is referring to the same retail outlet.
e The FDA did not receive a response to the Warning Letter, but delivery
records show that an individual named “Amdrave” received it on December
7, 2012. Complaint 11.

e On August 19, 2013, during a subsequent inspection of Respondent’s
establishment, FDA-commissioned inspectors documented that “a person
younger than 18 years of age was able to purchase a package of Newport
Box cigarettes . . . at approximately 1:58 PM.” Complaint § 1.

These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is
misbranded if sold or distributed 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). Under

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

Here, Respondent violated 21 C.F.R. § 1140.14(a) on November 16, 2012, and
August 19, 2013, when its staff sold cigarettes to minors. Therefore, Respondent’s
actions on two separate occasions at the same retail outlet constitute violations of
law that warrant a civil money penalty. Accordingly, I find that a civil money
penalty of $250 is permissible under 21 C.F.R. § 17.2.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

South Sound Radiology of Lewis County,
(PTAN: G8918611)
(NPI: 1255677118),

John C. Edwards, M.D.,
(PTAN: G8919283)
(NPI: 1619961570),

Terence T. Chan, M.D.,
(PTAN: G8918909)
(NPI: 1871689794),

Peter Ping Hu, M.D.,
(PTAN: G8918910)
(NPI: 1841350618),

Petitioners,
v.
Centers for Medicare & Medicaid Services

Docket No. C-14-385

Decision No. CR3240

Date: May 23, 2014

DECISION

Petitioners here include a Washington State radiology group medical practice, South
Sound Radiology of Lewis County, and three of its physicians: Drs. John C. Edwards,
Terence T. Chan, and Peter Ping Hu. South Sound Radiology and the individual

physicians separately applied for enrollment in the Medicare program. The Medicare
contractor, acting on behalf of the Centers for Medicare & Medicaid Services (CMS),
approved the group practice’s application, with an effective billing date of January 1,
2013. It approved the physicians’ applications effective May 1, 2013 (with a billing date
of April 1, 2013).

Petitioners do not object to the January 1 effective date for the group practice, but
challenge the May 1, 2013 effective date for the individual physicians. In reconsidered
determinations, dated October 8, 2013, the contractor affirmed the May | dates, and
Petitioners appealed.

The parties have filed cross-motions for summary judgment (CMS Br., P. Br.) and briefs
in opposition. CMS filed ten exhibits and Petitioners filed four. For the reasons set forth
below, I grant Petitioners’ motion and deny CMS’s.

Discussion

The effective date for the physician-petitioners’
reassignments is January 1, 2014, the date they began
rendering services with South Sound Radiology.'

To receive Medicare payments for services furnished to program beneficiaries, a
Medicare supplier must be enrolled in the Medicare program. 42 C.F.R. § 424.505.
“Enrollment” is the process used by CMS and its contractors to: 1) identify the
prospective supplier; 2) validate the supplier’s eligibility to provide items or services to
Medicare beneficiaries; 3) identify and confirm a supplier’s owners and practice location;
and 4) grant the supplier Medicare billing privileges. 42 C.F.R. § 424.502. To enroll in
Medicare, a prospective supplier must complete and submit an enrollment application.
42 C.F.R. §§ 424.510(d)(1); 424.515(a). An enrollment application is either a CMS-
approved paper application or an electronic process approved by the Office of
Management and Budget. When CMS determines that a physician or physician
organization meets the applicable enrollment requirements, it grants Medicare billing
privileges, which means that the physician/physician organization can submit claims and
receive payments from Medicare for covered services provided to program beneficiaries.
42 CFR. § 424.502.

In this case, on May 1, 2013, South Sound Radiology submitted a Medicare enrollment
application for a group practice, Form CMS-855B, to the Medicare contractor, Noridian
Healthcare Solutions.” On the same day, Drs. Edwards, Chan, and Hu submitted to the

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

> South Sound Radiology apparently filed an earlier application that the contractor
rejected. CMS Exs. 1, 2; see 42 C.F.R. § 424.525. Enrollment applications that are
rejected are not afforded appeal rights. 42 C.F.R. § 424.525(d).
contractor their individual 855R applications. CMS Exs. 4, 5, 6. Form 855R is submitted
by currently-enrolled physicians in order to reassign their Medicare benefits to a different
supplier. Medicare Program Integrity Manual (MPIM), CMS Pub. 100-08, ch. 15

§ 15.1.2 (rev. 412, eff. Apr. 30, 2012). See, e.g., CMS Ex. 4 at 5. The contractor
approved all of the applications, but gave South Sound Radiology an effective date of
January 1, 2013, and gave the physicians a May 1, 2013 effective date, with a billing date
of April 1, 2013. See 42 C.F.R. § 424.521(a)(1) (allowing a physician or physician
organization to bill retrospectively for up to “30 days prior to their effective date if
circumstances precluded enrollment in advance of providing services to Medicare
beneficiaries,” so long as program requirements are met).

Citing 42 C.F.R. § 424.520(d), CMS argues that May | is the appropriate effective date
for the individual physicians. According to that section, the effective date for Medicare
billing privileges “is the /ater of the date of filing” a subsequently approved enrollment
application or “the date an enrolled physician . . . first began furnishing services at a new
practice location.” 42 C.F.R. § 424.520(d) (emphasis added).

Petitioners, on the other hand, maintain that section 424.520(d) does not apply to
currently-enrolled suppliers who apply for reassignment of benefits, and, citing the
MPIM, argue that the physicians’ effective date should be the date they began providing
services at South Sound Radiology.

As a threshold matter, I am not sure why the group practice application, also filed on May
1, entitled South Sound Radiology to a January | effective date. CMS claims that the
“effective date for an 855B group application is not restricted by regulations and a date
may be assigned by request.” CMS Br. at 5. But section 424.520(d) applies to
“physician and nonphysician practitioner organizations.” See MPIM ch. 15 § 15.1.2
(instructing that the CMS-855B application should be completed by supplier
organizations that will bill Medicare for Part B services). A “physician practitioner
organization” is defined as “an entity that enrolls in the Medicare program as a sole
proprietorship or organizational entity.” 42 C.F.R. § 424.502. CMS does not explain
why a group practice, like South Sound, is not a physician practitioner organization.
Nevertheless, the question of the group practice’s enrollment date is not before me, and,
to the extent the contractor erred and CMS has (through counsel) accepted that error,
CMS will have to live with it?

> Had the contractor given South Sound Radiology an enrollment date of May 1, this
case could be resolved easily. As CMS points out, both parties must currently be
enrolled in the Medicare program before reassignment can take effect. CMS Opposition
at 2.
I see nothing in the plain language of section 424.520 to suggest that it does not apply to
an application for reassignment filed by a currently-enrolled supplier (855R). A supplier
may otherwise be enrolled in the program, but unless he has billing privileges, his
enrollment is meaningless. In fact, the regulations list, as part of the enrollment process,
“granting the . . . supplier Medicare billing privileges.” 42 C.F.R. § 424.502. To get
their billing privileges assigned to South Sound, the physicians here had to file
applications. According to subsection 424.520(d), if a supplier files such an application,
the effective date for Medicare billing privileges is no earlier than the date of filing.

The problem is that CMS seems to have interpreted this regulation differently. In its
section on CMS-855R applications, the MPIM does not parrot the language of the
regulation, but provides that “the effective date of a reassignment is the date on which the
individual began or will begin rendering services with a reassignee.” MPIM ch. 15

§ 15.5.20.E5 (rev. 416, eff. Feb. 27, 2012).* CMS has not explained this provision, so I
accept it as the agency’s interpretation of its own regulation and defer to it. CMS has not
challenged the petitioners’ assertions that they began providing services on January 1.

Thus, January 1, 2013 is the effective date for the physician-petitioners’ Medicare billing
privileges.

Conclusion

For the reasons set forth above, I deny CMS’s motion for summary judgment and grant
Petitioners’. January 1, 2013 is the physician-petitioners’ effective date for Medicare
billing privileges.

/s/
Carolyn Cozad Hughes
Administrative Law Judge

4 Although MPIM ch. 15 § 15.5.20.E5 was later revised (rev. 490, eff. Jan. 1, 2014), this
subsection was unchanged.


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Optimart, Inc. d/b/a Optimart, Inc. #02,
(Supplier Number: 0895780021),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-744
Decision No. CR3238

Date: May 22, 2014

DECISION

I reverse the determination of the Centers for Medicare & Medicaid Services, as
affirmed on reconsideration, to revoke the Medicare billing privileges of
Petitioner, Optimart, Inc. d/b/a Optimart, Inc. #02. CMS alleged that Petitioner
failed in two respects to comply with Medicare participation requirements: (1) it
had allowed its comprehensive liability insurance policy to expire, in violation of
the requirements of 42 C.F.R. § 424.57(c)(10); and (2) it was not operating at the
location that was on file with a Medicare contractor as Petitioner’s business
address, in violation of the requirements of 42 C.F.R. § 424.57(c)(7). However,
the preponderance of the evidence proves that Petitioner has maintained
continuous liability insurance and that it notified CMS when it changed its
business address to its current location.
I. Background

On September 3, 2013, CMS notified Petitioner that its Medicare billing privileges
were being revoked. Petitioner requested reconsideration. CMS’s determination
was affirmed on reconsideration and Petitioner then requested a hearing. The case
was assigned to me.

CMS moved for summary judgment, asserting that the undisputed material facts of
the case supported its initial determination. Petitioner opposed the motion. CMS
filed five exhibits in support of its motion, which it identified as CMS Ex. 1 —
CMS Ex. 5. Petitioner filed three exhibits in opposition, which it identified as P.
Ex. A, P. Ex. B, and P. Ex. C.

I receive the parties’ exhibits into the record. I rule that good cause exists to
receive Petitioner’s exhibits even though Petitioner did not offer these exhibits at
reconsideration.

In a case such as this one I am required to rule whether good cause exists for any
documentary evidence offered by a provider or a supplier that it did not offer at
reconsideration. 42 C.F.R. § 498.56(e). I find that Petitioner would likely have
been misled by the language of the notice letter sent to it by CMS on September 3,
2013 into believing that it was not imperative to submit new evidence on
reconsideration. The notice letter not only does not advise Petitioner of the
requirement to submit all relevant documentary evidence, in speaking of
reconsideration it contains the following misleading language: “You may submit
additional information with the reconsideration that you believe may have a
bearing on the decision.” CMS Ex. | at 2-3 (emphasis added). That language
clearly suggests to an unsophisticated party that it has discretion to submit
additional evidence at reconsideration and it contains nothing warning of adverse
consequences later on if that evidence is not submitted. Furthermore, that
sentence is offered in the context of several other sentences in the same paragraph,
governing timing of a reconsideration request and the contents of the request,
which talk about what a party must do. The additional language reinforces the
impression that submission of additional documentary evidence at reconsideration
is a penalty-free choice.

The three exhibits that I receive from Petitioner create a dispute as to the material
facts of the case and for that reason I deny CMS’s motion for summary judgment.
However, I am proceeding to decide this case on the merits and evaluating the
parties’ evidence without an in-person hearing because neither party requested that
I convene one. Petitioner has not proposed calling any witnesses and it has not
asked to cross-examine CMS’s one witness. See CMS Ex. 3; Acknowledgement
and Pre-Hearing Order at {fj 9-11.
II. Issue, Findings of Fact and Conclusions of Law
A. Issue

The issue is whether Petitioner failed to comply with Medicare participation
requirements governing suppliers and providers, thereby justifying CMS’s
determination to revoke Petitioner’s Medicare billing privileges.

B. Findings of Fact and Conclusions of Law

CMS contends, first, that Petitioner allowed its liability insurance policy to lapse
on May 1, 2008 and that Petitioner failed to prove that its policy was renewed.
However, Petitioner presented evidence, consisting of a summary of its insurance
coverage from the Continental Insurance Company, showing that it has been
covered continuously for liability since May 1, 2008. P. Ex. B. I find, based on
that evidence, that Petitioner remains in compliance with the requirements of 42
C.F.R. § 424.57(c)(10).

CMS also argues that on July 29, 2013, a site inspector employed by the Medicare
contractor went to Petitioner’s place of business and discovered that Petitioner’s
office suite was empty and that Petitioner was not operating. CMS Ex. 2 at 6.

The evidence offered by Petitioner establishes that it was, in fact, open for
business and operating on July 29, 2013. On March 1, 2013, Petitioner signed a
lease for a new business location and it began operations there on June 1, 2013. P.
Ex. C. The evidence establishes further that Petitioner made a good-faith effort on
April 29, 2013 to notify CMS of its change of address. On that date Petitioner
completed a Medicare Enrollment Application, Form 8558S, and mailed it to CMS.
P. Ex. A. Thus, all of Petitioner’s evidence suggests that it maintained a physical
office location and was in compliance with the requirements of 42 C.F.R.

§ 424.57(c)(7) on July 29, 2013.

CMS contends that it has no record of ever having received the change of business
address information from Petitioner. I do not doubt CMS’s assertion. But, I
conclude based on the evidence presented that Petitioner provided CMS with the
requisite notification of its change of address by mailing the form to CMS. That
the form may have been lost in either the mail or in processing is not a basis to
revoke Petitioner’s Medicare billing privileges.’

' At no point in the case (in the initial revocation letter, the reconsideration
decision, or in CMS’s Motion for Summary Judgment) has CMS specifically
alleged Petitioner was in violation of 42 C.F.R. § 424.57(c)(2), for not reporting to
I am not just taking Petitioner’s word that it mailed the change of address
information to CMS on April 29. All of the evidence supports the conclusion that
Petitioner remained operating continuously in 2013. It is unlikely that Petitioner
would continue to pay liability insurance premiums if it had ceased operating and
it unlikelier still that it would have executed a lease for new premises if it had
ceased operating. There is no reason to believe that the copy of the Form 855S
provided by Petitioner was backdated to make it appear after the fact that
Petitioner had attempted to notify CMS of its change of address. I find, based on
that evidence, that CMS has not shown that Petitioner failed to maintain a physical
facility on an appropriate site in violation of the requirements of 42 C.F.R.

§ 424.57(c)(7).

/s/
Steven T. Kessel
Administrative Law Judge

CMS any changes in Medicare enrollment information on file with CMS within 30
days of the change, and therefore this issue is not properly before me.


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.
Goose Creek Market N Pub LLC,

Respondent.

Docket No. C-14-841
FDA Docket No. FDA-2014-H-0368

Decision No. CR3237
Date: May 20, 2014
INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint
(Complaint) against Respondent, Goose Creek Market N Pub LLC, alleging facts
and legal authority sufficient to justify imposing a civil money penalty of $250.
Respondent did not timely answer the Complaint, nor did Respondent request an
extension of time within which to file an answer. Therefore, I enter a default
judgment against Respondent and order that Respondent pay a civil money penalty
in the amount of $250.

CTP began this case by serving a Complaint on Respondent and filing a copy of
the Complaint with the Food and Drug Administration’s (FDA) Division of
Dockets Management. The Complaint alleges that Respondent’s staff unlawfully
sold smokeless tobacco to minors 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.

On April 2, 2014, CTP served the Complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and
accompanying cover letter, CTP explained that within 30 days Respondent should
pay the penalty, file an answer, or request an extension of time within which to file
an answer. CTP warned Respondent that if it failed to take one of these actions
within 30 days an Administrative Law Judge could, pursuant to 21 C.F.R.

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

Respondent has not filed an answer within the time provided by regulation, nor
has it requested an extension. Therefore, pursuant to 21 C.F.R. § 17.11(a), lam
required to issue an initial decision by default if the Complaint is sufficient to
justify a penalty. Accordingly, I must determine whether the allegations in the
Complaint establish violations of the Act.

For purposes of this decision, I assume the facts alleged in the Complaint are true.
21 C.F.R. § 17.11(a). Specifically, CTP alleges the following facts in its
Complaint:

e Respondent owns Goose Creek Market N Pub, an establishment that sells
tobacco products and is located at 6161 Office Road, French Village,
Missouri 63036. Complaint § 3.

© On June 6, 2013, an FDA-commissioned inspector observed that “a person
younger than 18 years of age was able to purchase a package of Grizzly
Long Cut Premium Wintergreen smokeless tobacco . . . at approximately
10:53 AM.” Complaint § 10.

e¢ On June 27, 2013, CTP issued a Warning Letter to Goose Creek Market N
Pub explaining that the inspector’s June 6, 2013 observation constituted a
violation of a regulation found at 21 C.F.R. § 1140.14(a). In addition to
describing the violation, the letter advised Respondent that the FDA may
initiate a civil money penalty action or take other regulatory action against
Respondent if it failed to correct the violation. The letter also stated that it
was Respondent’s responsibility to comply with the law. Complaint § 10.

e The FDA did not receive a response to the Warning Letter, but United
Parcel Service records show that an individual named “Friend” received it
on June 28, 2013. Complaint § 11.

e¢ On November 2, 2013, during a subsequent inspection of Respondent’s
establishment, FDA-commissioned inspectors documented that “a person
younger than 18 years of age was able to purchase a package of Grizzly
Long Cut Premium Wintergreen smokeless tobacco . . . at approximately
1:02 PM.” Complaint § 1.

These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is
misbranded if sold or distributed 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). Under

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

Here, Respondent violated 21 C.F.R. § 1140.14(a) on June 6, 2013, and November
2, 2013, when its staff sold smokeless tobacco to minors. Therefore, Respondent’s
actions on two separate occasions at the same retail outlet constitute violations of
law that warrant a civil money penalty. Accordingly, I find that a civil money
penalty of $250 is permissible under 21 C.F.R. § 17.2.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Jaimy H. Bensimon, M.D., P.A.,
(PTANs: K6871, 61229U, and 61229T;
NPIs: 1932110897, 1497726962),
Petitioner,

Vv.

Centers for Medicare & Medicaid Services,
Respondent

Docket No. C-14-254
Decision No. CR3236

Date: May 20, 2014

DECISION

There is no basis for the revocation of the Medicare enrollment and billing privileges of
Petitioner, Jaimy H. Bensimon, M.D., P.A.

I. Procedural Background
The Medicare contractor, First Coast Service Options (FCSO), notified Petitioner! by

letter dated August 9, 2013, that his Medicare billing privileges and enrollment were
being revoked effective September 8, 2013. FCSO cited 42 C.F.R. § 424.535(a)(8)° as

' The billing privileges of both Dr. Bensimon and his practice are involved in this case.

> Citations are to the revision of the Code of Federal Regulations (C.F.R.) in effect at the
time of the revocation, unless otherwise stated.
the basis for revocation. FCSO also notified Petitioner that he was subject to a three-year
bar to reenrollment in Medicare pursuant to 42 C.F.R. § 424.535(c). Centers for
Medicare & Medicaid Services (CMS) Exhibit (Ex.) 5.

Petitioner requested a Corrective Action Plan by letter dated August 26, 2013, which was
denied by FCSO on October 28, 2012.* CMS Exs. 2, 3. Petitioner requested
reconsideration of the initial determination to revoke by letter dated August 28, 2013.
CMS Ex. 4. FCSO notified Petitioner by letter dated October 31, 2013, that revocation
was upheld on reconsideration. CMS Ex. 1.

Petitioner requested review by an administrative law judge (ALJ) by letter dated
November 13, 2013. The case was assigned to me for hearing and decision on November
21, 2013, and an Acknowledgement and Prehearing Order (Prehearing Order) was issued
at my direction. On December 20, 2013, CMS filed a motion for summary judgment, a
memorandum in support of the motion, and CMS Exs. | through 10. On January 15,
2014, Petitioner filed his prehearing brief and a cross-motion for summary judgment,
with Petitioner’s exhibits (P. Exs.) 1 through 5. On February 5, 2014, Petitioner filed a
memorandum of law in support of his prehearing brief and cross-motion for summary
judgment. On February 10, 2014, CMS filed its reply to Petitioner’s prehearing brief.
Also on February 10, 2014, Petitioner filed a motion to strike CMS’s reply for late filing.
On March 6, 2014, Petitioner filed a sixth exhibit, P. Ex. 6. On March 18, 2014,
Petitioner filed a supplement to his prehearing brief. On March 27, 2014, I issued a
ruling denying the cross-motions for summary judgment and I ordered that the parties file
a joint status report advising me when the parties would be available to participate in a
two-day hearing to be conducted by video teleconference (VTC). The parties filed a joint
status report on April 10, 2014. On April 17, 2014, Petitioner filed a waiver of his right
to an oral hearing requesting a judgment upon the pleadings and documentary evidence
previously filed. Petitioner represented that CMS counsel had no objection to the waiver
of oral hearing. Petitioner’s counsel advised me by email dated April 17, 2014, that he
did not intend to submit any further briefs or documents. CMS did not request an
opportunity to file further submissions. By Order dated May 2, 2014, I accepted the
waiver of oral hearing and closed the record. I proceed to a decision based on written
submissions and the documentary evidence. No objections were made to my
consideration of the offered exhibits and CMS Exs. | through10 and P. Exs. | through 6
are admitted and considered as evidence.

> Action by CMS on a corrective action plan is not an initial determination and,
therefore, not subject to my review. 42 C.F.R. §§ 405.809, 424.545(a), 498.3(b)(17);
Conchita Jackson, M.D., DAB No. 2495 at 5-7 (2013); Pepper Hill Nursing & Rehab.
Ctr., LLC, DAB No. 2395 at 8 (2011); DMS Imaging, Inc., DAB No. 2313 at 5-8 (2010).
IL. Discussion
A. Statutory and Regulatory Program Requirements

Section 1831 of the Social Security Act (42 U.S.C. § 1395j) establishes the
supplementary medical insurance benefits program for the aged and disabled known as
Medicare Part B. Administration of the Part B program is through contractors such as
FCSO. Act § 1842(a) (42 U.S.C. § 1395u(a)). Payment under the program for services
rendered to Medicare-eligible 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)). Petitioner is a physician and a supplier. Subject to some
limitations, qualified physician services are covered by Medicare Part B for those
physicians enrolled in Medicare. Act §§ 1832(a) (42 U.S.C. § 1395k(a)), 1861(s)(1)

(42 U.S.C. § 1395x(s)(1)); 42 C.F.R. § 410.20. “Physician’s services” are professional
services performed by physicians, including surgery, consultation, and home, office, and
institutional calls also subject to some exceptions. Act § 1861(q) (42 U.S.C. § 1395x(q));
42 CFR. § 410.20.

The Act requires the Secretary of Health and Human Services (Secretary) to issue
regulations that establish a process for the enrollment in Medicare of providers and
suppliers, including the right to a hearing and judicial review of certain enrollment
determinations, including revocation of enrollment and billing privileges. Act § 1866(j)
(42 U.S.C. § 1395cc(j)).

Pursuant to 42 C.F.R. § 424.505, a supplier such as Petitioner must be enrolled in the
Medicare program to be reimbursed for services provided to Medicare beneficiaries.
Participation in Medicare imposes obligations upon a supplier. Suppliers must submit
complete, accurate and truthful responses to all information requested in the enrollment

* A “supplier” furnishes services under Medicare and includes physicians or other
practitioners and facilities that are not included within the definition of the phrase
“provider of services.” Act § 1861(d) (42 U.S.C. § 1395x(d)). A “provider of services,”
commonly shortened to “provider,” includes hospitals, critical access hospitals, skilled
nursing facilities, comprehensive outpatient rehabilitation facilities, home health
agencies, hospice programs, and a fund as described in sections 1814(g) and 1835(e) of
the Act. Act § 1861(u) (42 U.S.C. § 1395x(u)). The distinction between providers and
suppliers is important because they are treated differently under the Act for some
purposes.
application. 42 C.F.R. § 424.510(d)(2). Pursuant to 42 C.F.R. §§ 424.502 and
424.510(d)(3), a supplier’s application to enroll in Medicare must be signed by an
authorized official, that is, one with authority to bind the supplier both legally and
financially. The regulation provides that the signature attests to the accuracy of
information provided in the application. The signature also attests to the fact that the
supplier is aware of and agrees to abide by all applicable statutes, regulations, and
program instructions. 42 C.F.R. § 424.510(d)(3). Suppliers must meet basic
requirements depending on their type of service. 42 C.F.R. §§ 424.505, .516, .517.
Suppliers are also subject to additional screening requirements depending upon the type
of service they provide. 42 C.F.R. § 424.518.

Once enrolled, the supplier receives billing privileges and is issued a billing number that
is required to receive payment for services rendered to a Medicare beneficiary. 42 C.F.R.
§ 424.505. The supplier is subject to a five-year revalidation of enrollment cycle and
CMS is authorized to perform off-cycle revalidations for a number of reasons. CMS has
the right to perform on-site inspections to verify that the information CMS receives is
correct. CMS contacts the supplier directly when it is time to revalidate enrollment
information. A supplier must submit the applicable enrollment information, with
complete and accurate information and supporting documentation, within 60 calendar
days of CMS’s notification. 42 C.F.R. § 424.515.

CMS or its Medicare contractor has been delegated authority to revoke an enrolled
provider or supplier’s Medicare enrollment and billing privileges and any provider or
supplier agreement for any of the reasons listed in 42 C.F.R. § 424.535(a). In this case,
Petitioner was notified that his enrollment and billing privileges were being revoked
pursuant to 42 C.F.R. § 424.535(a)(8), which authorizes revocation if a provider or
supplier “submits a claim or claims for services that could not have been furnished to a
specific individual on the date of service.” The regulation provides examples to clarify
its application as follows: “[t]hese instances include but are not limited to situations
where the beneficiary is deceased, the directing physician or beneficiary is not in the
State or country when services were furnished, or when the equipment necessary for
testing is not present where the testing is said to have occurred.” 42 C.F.R.

§ 424.535(a)(8).

A supplier who has been denied enrollment or whose enrollment and billing privileges
have been revoked has a right to request a hearing by an ALJ and further review by the
Departmental Appeals Board (the Board). 42 C.F.R. §§ 424.545, 498.3(b)(17), 498.5. A
hearing on the record, also known as an oral hearing, is required under the Act.
Crestview Parke Care Ctr. v. Thompson, 373 F.3d 743, 748-51 (6th Cir. 2004).
B. Issue

Whether there was a basis for revocation of Petitioner’s billing privileges
and enrollment in Medicare.

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

My conclusions of law are set forth in bold text followed by my findings of fact and
analysis. The findings of fact are based upon the exhibits admitted. I have carefully
considered all the evidence and the arguments of both parties, though not all may be
specifically discussed in this decision. I discuss in this decision 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. Charles H. Koch, Jr., Admin. L.
and Prac. § 5:64 (3d ed. 2013).

1. Judgment on the written pleadings and documentary evidence is
permissible in this case.

Pursuant to 42 C.F.R. § 498.66(a), an affected party, such as Petitioner, may waive its
right to appear and present evidence at an oral hearing by filing a written waiver. When a
written waiver is filed by a petitioner, an ALJ need not conduct an oral hearing except in
two circumstances: the ALJ concludes witness testimony is necessary to clarify facts at
issue; or CMS shows good cause for presenting oral testimony. 42 C.F.R. § 498.66(b).
Petitioner waived his right to an oral hearing consistent with the requirements of

42 C.F.R. § 498.66(a). After review of the evidence and pleadings of the parties, I
conclude that oral testimony is not necessary for clarification of the facts at issue. CMS
has not argued that oral testimony is necessary or otherwise shown good cause to
convene an oral hearing. In fact, in completing its prehearing exchanges as required by
the Prehearing Order § II.D, CMS identified no witnesses it proposed to call at an oral
hearing.

> “Credible evidence” is evidence that is worthy of belief. Black’s Law Dictionary 596
(18"" ed. 2004). The “weight of evidence” is the persuasiveness of some evidence
compared to other evidence. Id. at 1625.
6

In accordance with 42 C.F.R. § 498.66, the record of the hearing in this case without oral
testimony consists of the documentary evidence admitted and the parties’ pleadings. The
parties also had a reasonable opportunity for rebuttal as reflected by their various filings.

Accordingly, this decision is on the merits and not based on summary judgment.

2. The evidence does not establish an abuse of billing privileges within
the meaning of 42 C.F.R. § 424.535(a)(8).

3. CMS made a prima facie showing of a basis for the revocation of
Petitioner’s billing privileged and Medicare enrollment but Petitioner
rebutted the prima facie showing.

a. CMS’s Evidence

CMS revoked Petitioner’s Medicare enrollment and billing privileges effective
September 8, 2013, pursuant to 42 C.F.R. § 424.535(a)(8) based on an alleged abuse of
billing privileges. Petitioner was barred from re-enrolling in Medicare for three years.
CMS Ex. 5. According to the August 9, 2013 FCSO notice, the initial determination that
there was abuse of billing privileges was based on data analysis of claimed services
furnished to Medicare beneficiaries by Petitioner on 93 dates of service between January
2011 and August 2012. FSCO concluded that Petitioner billed from 16 to 62 hours of
services per day. The initial determination states that it was calculated that Petitioner
billed for 16 to 62 hours of services per day based on “time estimates per procedure.”
CMS Ex. 5 at 2. The initial determination states that Petitioner claimed to have delivered
the excessive hours of services in multiple locations including his office, assisted living
facilities (ALFs), skilled nursing facilities (SNFs) or nursing homes (NFs), and in private
iomes. CMS Ex. 5 at 2-3. The initial determination also states that Petitioner provided a
statement that he was the only member of his practice who billed Medicare for services.
FSCO concluded that it was impossible for Petitioner to have furnished the claimed
services to specific individuals on the 93 dates of service for which the claims were
submitted. CMS Ex. 5. The reconsideration hearing officer upheld the revocation
pursuant to 42 C.F.R. § 424.535(a)(8), with no discussion of the evidence upon which she
relied. CMS Ex. 1.

The evidence shows that this case was triggered by a probe medical review, the results of
which are reported in a March 25, 2013 Probe Medical Review Summary. CMS Ex. 9.
The review considered 55 claims for evaluation and management services billed to
Medicare by Petitioner for a 24 hour period, specifically April 4, 2012. The claims
included 58 services for 55 beneficiaries at four places of service: home, SNFs/NFs,
ALFs, and Petitioner’s office. The purpose of the review was to determine if services
billed were documented as performed, appropriately coded, medically necessary, and

covered by Medicare. The probe considered select Current Procedural Terminology
(CPT) codes each of which lists the time physicians typically spend face-to-face with the
patient or family or caregiver; or at bedside on the patient’s floor or unit. The CPT codes
and usual times were: 99213, 15 minutes face-to-face with the patient and/or family;
99214, 25 minutes face-to-face with the patient and/or family; 99305, 35 minutes at the
bedside and on patient’s facility floor or unit; 99308, 15 minutes at the bedside and on
patient’s facility floor or unit; 99309, 25 minutes at the bedside and on patient’s facility
floor or unit; 99335, 25 minutes with the patient and/or family or caregiver; 99336, 40
minutes with the patient and/or family or caregiver; 99348, 25 minutes face-to-face with
the patient and/or family; 99354, prolonged service beyond usual first hour; and 99406, 3
to 10 minutes. CMS Ex. 9 at 1-3, 13. The Probe Medical Review Summary states, citing
the 2012 CPT Professional Edition, that:

It should be recognized that the specific times expressed in
the visit code descriptors are averages, and, therefore,
represent a range of times that may be higher or lower
depending upon actual clinical circumstances.

CMS Ex. 9 at 3. The Probe Medical Review Summary also sets forth provisions of the
Medicare Claims Processing Manual CMS Pub. 100-04, ch. 12, § 30.6B, which show that
physicians are instructed to select the CPT code for evaluation and management services
(CPT codes 99201-99499) based on the content of the service and that duration is an
ancillary factor, except in cases when more than 50 percent of face-to-face time or more
than 50 percent of floor time is spent counseling or coordinating care. CMS Ex. 9 at 5.
The Probe Medical Review Summary lists several findings. The most pertinent to the
case before me is that Petitioner billed evaluation and management services in the office,
SNF/NF, ALF, and home “which amounted to 1600 minutes” which is 24 hours and 20
minutes. CMS Ex. 9 at 15. Other findings of the probe are not the bases for the
allegation of abuse of billing privileges and are, therefore, not relevant. The Probe
Medical Review Summary concluded that Petitioner had a 17.8 percent error rate for the
claims examined and remedial action was imposed including an overpayment and
prepayment review for CPT codes 99213, 99214, 99308, and 99309. CMS Ex. 9 at 18-
19.

On July 29, 2013, SafeGuard Services, LLC (SGS), a Zone Program Integrity Contractor
(ZPIC), requested that Petitioner’s Medicare enrollment and billing privileges be revoked
based on 42 C.F.R. § 424.535(a)(8) for abuse of billing privileges. CMS Ex. 10. The
July 29 ZPIC Revocation Request refers to a Timed Code Report (CMS Ex. 8) for the
period January 2011 through August 2012, which purports to list those 93 days on which
Petitioner’s Medicare claims were for 16 or more hours of service. The ZPIC Revocation
Request notes that 28 of the days with hours amounting to 16 to 62.83 hours per day were
Sundays; that there were four “most egregious days” during which claimed services
amounted to 47.17 to 62.83 hours of services delivered in locations including ALFs and
homes: specifically, on Sunday, June 19, 2011 Petitioner billed for services to 99
beneficiaries in ALFs amounting to 62.83 hours; on May 5, 2013 Petitioner billed
Medicare for home and office visits for 104 unique beneficiaries amounting to 49.08
hours; on Sunday, November 20, 2011, Petitioner billed Medicare for home visit to 73
beneficiaries in ALF and private homes amounting to 47.67 hours; and on Sunday,
December 18, 2011, Petitioner billed Medicare for home visits to 72 unique beneficiaries
in ALFs and private homes amounting to 47.17 hours. CMS Ex. 10 at 1-3. The ZPIC
Revocation Request states that Petitioner told investigators that he was the only member
of his practice that billed Medicare and that the services billed were delivered by him.
CMS Exs. 6; 7 at 2; 10 at 3-4. The ZPIC Revocation Request concludes that revocation
is appropriate for the following reasons: Petitioner told investigators that he was the only
supplier who billed Medicare using his Medicare numbers; data analysis for dates of
service between January 2011 and August 2012 revealed that on 93 dates of service
Petitioner “billed for 16 to 62 hours of service per day based on time estimates per
procedure;” Petitioner delivered services in ALFs, SNFs/NFs, private homes, and his
office; and “it was impossible for him to have rendered the services billed on these 93
dates of service.” CMS Ex. 10 at 4.

Petitioner told investigators during his interview on December 5, 2012, that he worked
from 8:30 a.m. to 9:00 p.m. Sunday through Friday, seeing approximately 55 patients per
day but, he did not normally work on Saturdays. He told investigators that he had 35
appointments per day with an average of 20 walk-ins. He told investigators that he has
thousands of patients, the majority of whom are Medicare beneficiaries. Petitioner stated
that the services billed to Medicare were only for patients that he had seen himself. CMS
Exs. 6, 7 at 2. Petitioner told the investigators that he treats patients in his office, ALFs,
SNFs/NFs, and in private homes. He has a staff of seven to eight. Petitioner gave the
investigators a list of 13 ALFs, and SNFs/NFs where he provides services to patients.
Petitioner is also the Medical Director at Edward J. Heely Nursing Home. CMS Ex. 7 at
2-4. CMS presented no evidence that rebuts Petitioner’s assertions to the investigators.

b. Petitioner’s Evidence

Petitioner filed his affidavit as P. Ex. 2. He testifies that he is able to provide the services
claimed because of: the nature of his practice, which is mostly geriatric and he sees the
same patients and problems repeatedly; the close proximity of a number of ALFs and
SNFs/NFs to his office and home so that he generally sees a significant number of ALF
and SNF/NF patients each day both before and after his regular office hours; his 33 years
of medical experience; he states that he does his consultations more quickly than the
average time listed in the CPT codes; he is a medical director at three of the nearby
facilities; he works all day Sunday; and spends about 15 minutes with new patients and
five minutes with established patients. Petitioner states that he typically sees 55 patients
in office each day, 80 percent are follow-ups and 20 percent are initial visits. He does not
generally work sundown Friday to sundown on Saturday. He works Sunday, 7:00 a.m. to

8:30 p.m., and generally sees 60 to 70 ALF patients on Sundays. Petitioner states that he
is:

able to see this volume of patients each day, in part because
my office staff are able to handle preliminary work (i.e.
reception, paper work, take vital signs, discuss chief
complaint, take EKGs and ultrasounds, blood work and urine
samples as needed), thereby limiting time for diagnosis,
treatment and counseling and allowing me to focus on each
patient I see.

P. Ex. 2. Petitioner states that medical assistants and nurse practitioners in the ALF are
well trained and handle much of the preliminary work so that he can get right to the
patient’s complaint. He states often he merely needs to confirm the diagnosis suggested
by the nurse practitioner. He states that the design of ALFs and SNFs/NFs are such that
he can see a large number of patients in a short-time. Also, he can see multiple patients
in each room at ALFs and SNFs/NFs reducing the time significantly when he is at an
ALF or a nursing home. Petitioner testified that he works long-hours and can provide
consultations quickly and efficiently without sacrificing the quality of his work. P. Ex. 2.
CMS offered no evidence to rebut Petitioner’s affidavit.

Petitioner filed the affidavit of Lorraine Molinari, her curriculum vitae, and her report as
P. Ex. 3. Ms. Molinari is a consultant with LMA, Inc., a consulting firm that specializes
in Medicare coding, billing, and documentation requirements. She states that her
company conducts seminars for physicians, office managers, and practice management
professionals regarding Medicare national and local coverage determination requirements
for Medicare Part B, including proper billing of evaluation and management codes under
the CPT. Ms. Molinari started her company in 1991. Ms. Molinari formerly worked for
FCSO as a Professional Relations Representative, in which capacity she provided much
the same kind of advice as her company currently provides. She states that she has been
qualified and testified as an expert witness in administrative and judicial cases involving
Medicare coding and reimbursement. Ms. Molinari states that she was retained by
Petitioner to review the billing records for Petitioner for the days CMS alleges abusive
billing occurred. She states that she did not review every day but rather three days on
which Petitioner saw the greatest number of patients, June 19, 2011, March 5, 2012, and
August 28, 2011. P. Ex. 3 at 1. Ms. Molinari testified she determined, based on
Petitioners billing records, that on Sunday June 19, 2011, Petitioner saw 106 patients and
if he spent the average time estimate of the CPT manual he would have worked 67.42
hours, which was impossible. But by seeing new patients only 15 minutes and
established patients for only 5 minutes he worked only 15.83 hours, which is neither
impossible nor unreasonable. P. Ex. 3 at 2-3. She determined that on March 5, 2012,
Petitioner saw 119 patients and if he spent the average time under the CPT manual he
would have worked 56.52 hours but, by averaging only 15 minutes with new patients and
5 minutes with established patients he worked only 9.38 hours, which is not impossible or
unreasonable. P. Ex. 3 at 3. She determined that on August 28, 2011, Petitioner saw 108
patients and if he spent the average time under the CPT manual he would have worked
45.5 hours but by seeing new patients only 15 minutes and established patients for 5
minutes he worked only 9.33 hours, which is not impossible or unreasonable. P. Ex. 3 at
3. She testified that typical times for evaluation and management services in the CPT
manual are averages and actual times may vary significantly depending on circumstances.
Time is only one of the components to be considered for billing evaluation and
management services and not one of the key components. She opined that it would be
reasonable for Petitioner to spend 15 minutes with new patients and five minutes with
established patients. She opined based on her review that it was not impossible or
unreasonable for Petitioner to see the number of patients on each day listed in the Timed
Code Report. P. Ex. 3 at 3. CMS presented no evidence to rebut the affidavit of Ms.
Molinari and the CMS argument intended to discredit her testimony is ineffective. CMS
Reply at 3 n.1.

SGS informed Dr. Bensimon by letter dated May 23, 2013, that he was removed from
prepayment review effective May 15, 2013, due “to the high percentage of claims
allowed.” P. Ex. 5 at 2.

c. Analysis

CMS is delegated authority to revoke Medicare enrollment and billing privileges for
abuse of billing privileges as follows:

(8) Abuse of billing privileges. The provider or supplier
submits a claim or claims for services that could not have
been furnished to a specific individual on the date of service.
These instances include but are not limited to situations where
the beneficiary is deceased, the directing physician or
beneficiary is not in the State or country when services were
furnished, or when the equipment necessary for testing is not
present where the testing is said to have occurred.

42 C.F.R. § 424.535(a)(8) (emphasis added).

This regulation provides Petitioner notice that billing privileges and Medicare enrollment
may be revoked for an abuse of billing privileges. 5 U.S.C. §§ 551(4), 552(a)(1). The
elements of the CMS prima facie case for revocation based on the language of 42 C.F.R.
§ 424.535(a)(8) are: (1) the provider or supplier submits one or more claims for services;
and (2) the services for which a claim or claims were submitted could not have been
delivered to a Medicare beneficiary on the date the service was claimed to have been
delivered. Realhab, Inc., DAB No. 2542 at 16-17 (2013). Subsection 424.535(a)(8) was
added to Title 42 as a basis for revocation of billing privileges by a final rule issued on
June 27, 2008, with an effective date of August 26, 2008. 73 Fed. Reg. 36,448 (June 27,
2008). The regulatory history states that the subsection was proposed to permit Medicare
contractors to revoke billing privileges when “a provider or supplier submits a claim or
claims for services that could not have been furnished to a beneficiary.” Jd. at 36,450
(emphasis added). The drafters state that it is “both appropriate and necessary that
[CMS] have the ability to revoke billing privileges when services could not have been
furnished by a provider or supplier.” Jd. at 36,455. “This revocation authority is not
intended to be used for isolated occurrences or accidental billing errors. Rather, this basis
for revocation is directed at providers and suppliers who are engaging in a pattern of
improper billing.” Jd. The drafters state that revocation on this basis will not be issued
absent sufficient evidence of abusive billing patterns and that billing privileges will not
be revoked unless there are at least three instances where billings privileges have been
abused. Jd. The regulation does not specifically state that revocation is limited to cases
where the evidence is sufficient to show a pattern of abusive billing. However, the
regulatory history strongly states that that limitation was intended by the drafters.
Therefore, I conclude that it is necessary for CMS to show as part of its prima facie case
that there was more than one claim for a service that could not have been delivered.®

CMS has the burden of coming forward with evidence sufficient to make a prima facie
showing of a basis for the enforcement action. The quantum of evidence necessary for a
prima facie showing is not specified in the regulations or specifically resolved by prior
decisions of the Board. But, the Board has stated that CMS must come forward with
“evidence related to disputed findings that is sufficient (together with any undisputed
findings and relevant legal authority) to establish a prima facie case of noncompliance
with a regulatory requirement.” Evergreene Nursing Care Ctr., DAB No. 2069 at 7
(2007); Batavia Nursing & Convalescent Ctr., DAB No. 1904 (2004). “Prima facie”
means generally that the evidence is “[s]ufficient to establish a fact or raise a presumption
unless disproved or rebutted.” Black’s Law Dictionary 1228 (18th ed. 2004). In Hillman
Rehab. Ctr., the Board described the elements of the CMS prima facie case in general
terms as follows:

® The drafters also state that only CMS and not a Medicare contractor will make the
determination to revoke pursuant to 42 C.F.R. § 424.535(a)(8). 73 Fed. Reg. 36,448,
36,455. Both the initial and reconsideration determinations in this case were issued by
the contractor, not CMS. The evidence does not show that CMS initiated or reviewed
either action prior to issuance. Therefore, the CMS action in this case is inconsistent with
its clearly articulated policy in the regulatory history of 42 C.F.R. § 424.535(a)(8).
HCFA [now known as CMS] must identify the legal criteria
to which it seeks to hold a provider. Moreover, to the extent
that a provider challenges HCFA’s findings, HCFA must
come forward with evidence of the basis for its determination,
including the factual findings on which HCFA is relying and,
if HCFA has determined that a condition of participation was
not met, HCFA’s evaluation that the deficiencies found meet
the regulatory standard for a condition-level deficiency.

DAB No. 1611 at 8. Thus, CMS has the initial burden of coming forward with sufficient
evidence to show that its decision to impose an enforcement remedy is legally sufficient
under the statute and regulations. To make a prima facie case that its decision was
legally sufficient, CMS must: (1) identify the statute, regulation or other legal criteria to
which it seeks to hold the provider; (2) come forward with evidence upon which it relies
for its factual conclusions that are disputed by the petitioner. In Evergreene Nursing
Care Center, the Board explained its “well-established framework for allocating the
burden of proof on the issue of whether the SNF was out of substantial compliance” as
follows:

CMS has the burden of coming forward with evidence related
to disputed findings that is sufficient (together with any
undisputed findings and relevant legal authority) to establish
a prima facie case of noncompliance with a regulatory
requirement. If CMS makes this prima facie showing, then
the SNF must carry its ultimate burden of persuasion by
showing, by a preponderance of the evidence, on the record
as a whole, that it was in substantial compliance during the
relevant period.

Evergreene at 7. CMS makes a prima facie showing of noncompliance if the credible
evidence CMS relies on is sufficient to support a decision in its favor absent an effective
rebuttal.

In this case, CMS made a prima facie showing of a basis for revocation under 42 C.F.R.
§ 424.535(a)(8). As to the first element and third elements, it is undisputed that
Petitioner submitted multiple claims for Medicare payment for services to Medicare
beneficiaries on dates of service as alleged by CMS. The second element is that the
services for which claims were submitted could not have been provided to a Medicare
beneficiary on the date of service claimed.’ SGS and FSCO determined and CMS argued
before me that it was impossible for Petitioner to deliver the services claimed on the dates
of service. The SGS, FSCO, and CMS determinations were made by multiplying the
number of services claimed under evaluation and management CPT codes, by the average
times listed in the CPT codes, resulting in hours that exceeded 24 hours, which is of
course, impossible. Considering only the CMS evidence, CMS made a prima facie
showing that Petitioner submitted claims for services on dates of services that it was
impossible for him to deliver. Petitioner argued in his supplemental brief that CMS
failed to make a prima facie showing of noncompliance citing in support of its argument
D & G Holdings, LLC d/b/a Doctor’s Lab, DAB CR3120 (2014). The present case is
unlike D & G in which I concluded that CMS’s failure to present evidence such as
“actual claim forms, requests for reimbursement, death certificates, or other evidence . . .
to show that claims were actually filed” prevented CMS from meeting its burden to
establish a prima facie case. In this case, I note that CMS Exs. 9 and 10 were neither
signed nor sworn to by the authors of these exhibits. Normally this failure might have
influenced my conclusion whether or not CMS had made a prima facie case. CMS also
did not request an opportunity to present either author as a witness at hearing to support
these exhibits. However, unlike in D&G, Petitioner in this case does not dispute that he
submitted the claims for services on the dates of service alleged. The issue in this case is
whether CMS can make a prima facie showing by simply multiplying the average times
for evaluation and management CPT codes by the services claimed to have been
delivered on certain dates of service. I conclude that the CMS reliance on CPT code time
averages is a sufficient basis to establish a prima facie case. The CPT codes are
maintained, developed, and updated annually by the American Medical Association. The
CPT codes are regularly used by CMS in their normal course of business to evaluate
claims for reimbursement. The Board has accepted the use by CMS of CPT codes.
Reathab, Inc., DAB No. 2542 (2013). Petitioner also does not allege that the average
times stated in the CPT codes in issue are in error or otherwise unreliable.

7 CMS makes allegations regarding findings contained in the Probe Review Summary
that have no bearing upon revocation pursuant to 42 C.F.R. § 424.535(a)(8). CMS Br. at
4. CMS also mischaracterized the evidence by asserting that Petitioner claimed to
provide a certain number of hours of treatment on July 19 and July 24, 2011 and that
Petitioner told investigators that he did not work on Sunday. CMS Br. at 5. CMS argues
that if Petitioner routinely provided services in less than the average time listed in the
CPT codes he should have submitted documentation to FSCO, but CMS cites no
authority for such a requirement. CMS also mischaracterized Petitioner’s argument
alleging that Petitioner does not dispute that he “submitted claims to Medicare for 16 to
62 hours of services on each of 93 dates of service.” CMS Reply at 1.
However, Petitioner has rebutted the CMS prima facie case by a preponderance of the
evidence with his unrebutted evidence. Both the CMS evidence and Petitioner’s
evidence shows that the times listed in the CPT codes are averages that may be higher or
lower depending upon actual clinical circumstances. The CMS evidence clearly shows
that the times listed in the CPT codes are not minimum times required for billing using a
particular evaluation and management CPT code, but are included to assist the physician
in selecting the appropriate level of evaluation and management services for which to
bill. The Probe Medical Review Summary includes the following:

The inclusion of time in the definitions of levels of E/M [Evaluation
and Management] services has been implicit in prior editions of the
CPT codebook. The inclusion of time as an explicit factor beginning
in CPT 1992 is done to assist physicians in selecting the most
appropriate level of E/M services. It should be recognized that the
specific times expressed in the visit code descriptors are averages
and, therefore, represent a range of times that may be higher or
lower depending on actual clinical circumstances.

CMS Ex. 9 at 3. (Emphasis added.).

Petitioner’s affidavit and that of his expert are credible and unrebutted. Petitioner’s
unrebutted evidence clearly establishes that it was possible for him to see the numbers of
patients he claimed to see on the dates of service he claimed to see them. The proximity
of Petitioner’s office to the multiple SNFs/NFs and ALFs, his long work hours six days
per week, his ability to rely upon staff to minimize his time with each patient, his
significant years of experience, and the fact that the majority of his patients are geriatric,
all support the credibility of his testimony that he can generally see a new patient in 15
minutes and an established patient in 5 minutes. Although, I certainly do not intend to
endorse such brief periods of physician-patient interaction, the Act, regulations, and CMS
policy do not appear to establish minimum interaction times for evaluation and
management services.

Petitioner has successfully rebutted CMS’s prima facie showing of abusive billing under
42 C.F.R. § 424.535(a)(8). Accordingly, I conclude that there is no basis for revocation
of Petitioner’s Medicare enrollment and billing privileges pursuant to the authority of
42 CFR. § 424.535(a).
II. Conclusion

For the foregoing reasons, I conclude that there is no basis for the revocation of
Petitioner’s Medicare enrollment and billing privileges.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

East Cooper Surgical Associates,
(PTAN: 2193; NPI 1265442958),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-335
Decision No. CR3235

Date: May 20, 2014

DECISION REMANDING AND DISMISSING CASE

This case is remanded to the Centers for Medicare & Medicaid Services (CMS) pursuant
to 42 C.F.R. § 498.56(d),' for processing of Petitioner’s application for reactivation of its
billing privileges in accordance with 42 C.F.R. § 424.540 and the CMS policies discussed
in the following opinion. This case is dismissed pursuant to 42 C.F.R. § 498.70(b) to
permit action by CMS in accordance with current CMS policy and because Petitioner
does not presently have a right to a hearing. This dismissal is without prejudice to any
right of Petitioner to request a hearing as to a determination by CMS on remand that
triggers such a right.

Either party may request in writing that I vacate, for good cause, the dismissal within 60
days of the date of this Order. 42 C.F.R. § 498.72. Any other objection to this Order
must be filed within ten days of the date of this Order.

' References are to the revision of the Code of Federal Regulations (C.F.R.) in effect at
the time of the initial and reconsideration determinations, unless otherwise stated.
I. Procedural History and Findings of Fact

Palmetto GBA (Palmetto) is a Medicare contractor. Petitioner is East Cooper Surgical
Associates. On September 30, 2011, Palmetto sent Petitioner a letter requesting that
Petitioner revalidate its Medicare enrollment information and stating that if Petitioner
failed to submit a complete enrollment application and all supporting documentation
within 60 days, Petitioner’s Medicare billing privileges may be deactivated. CMS
Exhibit (Ex.) 1. On April 5, 2012, Palmetto notified Petitioner by letter that its Medicare
billing privileges were deactivated effective April 5, 2012, because Petitioner failed to
timely submit a complete Medicare enrollment application in response to the September
30, 2011 Palmetto revalidation request. The April 5, 2012 Palmetto deactivation letter
states:

The deactivation of Medicare billing privileges is considere
an action to protect from the misuse of your billing number
and to protect the Medicare Trust Funds from unnecessary
overpayments. This deactivation does not have any effect on
your participation agreement and/or any conditions of
participation.

CMS Ex. 4 at 3.

On May 9, 2013, Palmetto received an enrollment application from Petitioner. CMS Ex.
10 at 7; CMS Ex. 3 J 10. Palmetto notified Petitioner by letter dated July 2, 2013, that
Petitioner’s enrollment application was approved with a period for retroactive filing of
claims beginning April 23, 2013. CMS Exs. 7, 9.

Petitioner requested reconsideration of Palmetto’s initial determination. CMS Ex. 8. On
October 3, 2013 a Palmetto hearing officer notified Petitioner by letter that the request for
an earlier effective date was denied. The hearing officer cited 42 C.F.R. §§ 424.520-.521
as the basis for her decision and she reasoned that Petitioner’s effective date of Medicare
enrollment could be no earlier than Palmetto’s receipt on May 23, 2013, of Petitioner’s
application that could be processed to completion. CMS Ex. 9. The hearing officer’s
reasoning is fatally flawed. Petitioner submitted the CMS-855] application received by
Palmetto on May 9, 2013, not for the purpose of enrollment as it was already enrolled in
Medicare and its enrollment was never revoked. Rather, the CMS-855I was submitted by
Petitioner to reactive its billing privileges that had been deactivated on April 5, 2012.

Petitioner requested a hearing before an administrative law judge (ALJ) on November 29,
2013. The case was assigned to me for hearing and decision and on December 6, 2013,
an Acknowledgment and Prehearing Order (Prehearing Order) was issued at my
direction.
On January 6, 2014, CMS filed a motion for summary judgment with CMS exhibits
(CMS Exs.) 1 through 10. On January 28, 2014, Petitioner filed a response

in opposition to the CMS motion for summary judgment with Petitioner’s exhibits (P.
Exs.) | through 3.’ On February 20, 2014, CMS filed a reply brief with CMS Exs. 11
and 12. The parties have not objected to my consideration of the proffered exhibits and
all are admitted and considered.

II. Discussion
A. Applicable Law

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-eligible
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)).
Administration of the Part B program is through contractors such as Palmetto. Act

§ 1842(a) (42 U.S.C. § 1395u(a)).

The Act requires the Secretary of Health and Human Services (the Secretary) 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)).

> CMS failed to assemble and mark its exhibits and failed to submit a list of exhibits as
directed by the Prehearing Order §] I1.D.1. Petitioner also failed to mark its exhibits in
accordance with the Prehearing Order § II.D.2 and failed to submit a list of exhibits. I
will not delay this case simply to impose sanctions or otherwise compel counsel to
comply with procedural regulations, the CRDP, and my Prehearing Order. However,
counsel for the parties are admonished to read and comply with the regulations, the
Prehearing Order, and the CRDP in every case.

> Petitioner is a “supplier” under the Act and the regulations. A “supplier” furnishes
services under Medicare and the term supplier applies to physicians or other practitioners
and facilities that are not included within the definition of the phrase “provider of
services.” Act § 1861(d) (42 U.S.C. § 1395x(d)). A “provider of services,” commonly
shortened to “provider,” includes hospitals, critical access hospitals, skilled nursing
facilities, comprehensive outpatient rehabilitation facilities, home health agencies,
hospice programs, and a fund as described in sections 1814(g) and 1835(e) of the Act.
Act § 1861(u) (42 U.S.C. § 1395x(u)). The distinction between providers and suppliers is
important because they are treated differently under the Act for some purposes.

Pursuant to 42 C.F.R. § 424.505, 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 a Medicare eligible beneficiary. The effective
date of enrollment in Medicare of a physician, nonphysician practitioner, and physician
and nonphysician practitioner organizations is governed by 42 C.F.R. § 424.520(d). The
effective date of enrollment for a physician or nonphysician practitioner may only be the
later of two dates: the date when the physician filed an application for enrollment that
was subsequently approved by a Medicare contractor charged with reviewing the
application on behalf of CMS; or the date when the physician first began providing
services at a new practice location. Jd. The date of filing of the enrollment application is
the date when a signed enrollment application that is ultimately process to completion is
received by the designated Medicare contractor. 42 C.F.R. § 424.510(d)(1); 73 Fed. Reg.
69,725; 69,769 (Nov. 19, 2008). An enrolled physician or nonphysician practitioner may
retrospectively bill Medicare for services provided 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
pursuant to 42 U.S.C. §§ 5121-5206. 42 C.F.R. § 424.521.

The Secretary has authorized CMS to deactivate a provider or supplier’s Medicare billing
privileges if the provider or supplier does not submit any Medicare claims for 12
consecutive calendar months. 42 C.F.R. § 424.540(a)(1). CMS may also deactivate a
provider or supplier’s billing privileges if the provider or supplier does not report certain
changes of information, such as a change in practice location or change of any managing
employee, within 90 calendar days of when the change occurred, or does not provide
complete and accurate information within 90 days of CMS’s request for such
information. 42 C.F.R. § 424.540(a)(2), (3). A provider or supplier “deactivated for any
reason other than nonsubmission of a claim” is required to “complete and submit a new
enrollment application to reactivate its Medicare billing privileges or, when deemed
appropriate, at a minimum, recertify that the enrollment information currently on file with
Medicare is correct.” 42 C.F.R. § 424.540(b)(1). A provider or supplier who is
“deactivated for nonsubmission of a claim” for 12 months is “required to recertify that
the enrollment information currently on file with Medicare is correct and furnish any
missing information as appropriate. The provider or supplier must meet all current
Medicare requirements in place at the time of reactivation, and be prepared to submit a
valid Medicare claim.” 42 C.F.R. § 424.540(b)(2). Deactivation of Medicare billing
privileges is to protect the provider or supplier from misuse of their billing privileges and
the Medicare Trust Funds. Deactivation does not have any effect upon the provider’s or
supplier’s participation in Medicare. 42 C.F.R. § 424.540(c).

B. Analysis

The CMS evidence shows that on about September 30, 2011, Palmetto requested that the
Petitioner revalidate its Medicare enrollment. Palmetto also advised Petitioner that if it
failed to submit the requested information in 60 days, its Medicare billing privileges may
be deactivated. Palmetto then notified Petitioner by letter dated April 5, 2012, that its
billing privileges were deactivated on that date because it had not submitted the requested
revalidation information. CMS Ex. 4. There is no evidence that Palmetto advised
Petitioner that its enrollment in Medicare would be revoked if it failed to timely submit
the requested information. Petitioner submitted the information requested by Palmetto
using a new CMS-855I, which Palmetto received on May 9, 2013. CMS Ex. 7; CMS Ex.
3 10. The evidence shows that Palmetto treated the CMS-855] as an application to
enroll in Medicare rather than an application to reactivate billing privileges and to
complete the revalidation initiated by Palmetto in September 2011. I infer from the fact
that Palmetto requested Petitioner to revalidate its Medicare enrollment information in
September 2011, that it was enrolled at that time. There is no evidence that CMS ever
revoked Petitioner’s Medicare enrollment or was authorized to do so by 42 C.F.R.

§ 424.535 or any other provision of the Act or regulations. Therefore, Palmetto erred by
attempting to determine a new effective date for Petitioner’s enrollment in Medicare.
The issue that must be decided is the effective date for the reactivation of Petitioner’s
billing privileges. The issue should be resolved favorably for Petitioner under current
CMS policy.

The relevant CMS policy is found in the Medicare Program Integrity Manual (MPIM),
ch. 15, § 15.27 (rev. 474, issued July 5, 2013, effective October 8, 2013).4 The
substantial revision to MPIM, ch. 15, § 15.27 significantly clarifies and refines the CMS
policy regarding deactivations and reactivations of provider and supplier billing
privileges. On its face, the new policy seems to be consistent with and supportive of the
Secretary’s regulation which provides that deactivation of Medicare billing privileges is
to protect the provider or supplier from misuse of their billing privileges and the
Medicare Trust Funds and does not have any effect upon the provider’s or supplier’s
participation in Medicare. 42 C.F.R. § 424.540(c) (emphasis added). Because the new
policy was issued prior to my decision in this case it is appropriate to remand to ensure
that CMS has the opportunity to apply its interpretation of the applicable regulations and
provisions of the Act. I note some important provisions of the revised policy to facilitate

* Although the MPIM is a statement of policy that does not have the force or effect of a
statute or regulation, it is important to ensure that the agency interpretation of its
regulations and enabling statutes is given appropriate weight. Therefore, it is appropriate
to treat CMS and its counsel as being bound by public statements of CMS policy to the
extent the policy is consistent with the law.
prompt action by Petitioner and CMS or its contractor related to reactivation of
Petitioner’s billing privileges. MPIM, ch. 15, § 15.27.1.1 sets forth CMS policy
regarding deactivations and § 15.27.1.2 sets forth policy regarding reactivations. CMS
policy states:

If the contractor approves a provider or supplier’s reactivation
pplication or reactivation certification package (RCP), the
reactivation effective date shall be the provider or
supplier’s date of deactivation.

2

MPIM, ch. 15 § 15.27.1.2 (emphasis added). According to CMS policy, a deactivated
provider or supplier reactivates its billing privileges by submitting a complete Medicare
enrollment application or by recertifying that enrollment information currently on file
with Medicare is correct. MPIM, ch. 15, § 15.27.1.2.1-2. The documents that must be
submitted for reactivation following deactivation for reasons other than nonsubmission of
a claim are specified in MPIM, ch. 15, § 15.27.1.2.1 B and are referred to as the
“reactivation certification packages” (RCPs). Pursuant to MPIM, ch. 15, § 15.27.1.2.1,a
provider or supplier may elect to reactivate its billing number by submitting a completed
Form CMS-855 enrollment application rather than a RCP. The supplier must also submit
a copy of the claim or information for the claim it plans to submit when billing privileges
are reactivated. MPIM, ch. 15, § 15.27.1.2.3 B. The Medicare contractor is required to
permit an opportunity for a supplier or provider requesting reactivation to correct any
deficient or incomplete RCP, and I infer, any enrollment application submitted in lieu of
aRCP. MPIM, ch. 15, § 15.27.1.2.1.A.2 and B.2.

Pursuant to 42 C.F.R. § 498.56(d), I may remand a case to CMS for consideration of a
new issue and a new determination. In this case, the new CMS policy must be considered
and effectuated consistent with the dictates of the Act and the Secretary’s regulations.
The new issue that requires determination is the effective date of Petitioner’s reactivation
of its billing privileges. CMS should apply its current policy when making the
letermination.

Accordingly, this case is remanded to CMS for processing in accordance with the Act,
regulations, and the current CMS policy controlling deactivation and reactivation of
Petitioner’s billing privileges. The parties may request that an order dismissing a case be
vacated within 60 days for good cause shown pursuant to 42 C.F.R. § 498.72. If CMS
completes its action on this case more than 60 days from the date of this Order and
Petitioner desires my further review, Petitioner will file a request for hearing referring to
this case with a copy of this Order attached.
III. Conclusion

For the foregoing reasons, this case is remanded to CMS pursuant to 42 C.F.R.

§ 498.56(d), for processing of Petitioner’s application for reactivation of its billing
privileges in accordance with 42 C.F.R. § 424.540 and current CMS policies regarding
deactivation and reactivation of billing privileges. This case is dismissed.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Rafael Ramirez
d/b/a Tete Supermarket,

Respondent.

Docket No. C-14-857
FDA Docket No. FDA-2014-H-0375

Decision No. CR3234
Date: May 20, 2014
INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint
(Complaint) against Respondent, Rafael Ramirez d/b/a Tete Supermarket, alleging
facts and legal authority sufficient to justify the imposition of a civil money
penalty of $250. Respondent did not timely answer the Complaint, nor did
Respondent request an extension of time within which to file an answer.
Therefore, I enter a default judgment against Respondent and assess a civil money
penalty of $250.

CTP initiated this case by serving a Complaint on Respondent and filing a copy of
the Complaint with the Food and Drug Administration’s (FDA) Division of
Dockets Management. The Complaint alleges that Respondent’s staff unlawfully
sold a regulated tobacco product to a person younger than 18 years of age on two
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.
On April 4, 2014, CTP served the Complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and
accompanying cover letter, CTP explained that within 30 days Respondent must
take one of the following three actions: pay the penalty, file an answer, or request
an extension of time within which to file an answer. CTP further explained that if
Respondent did not comply with one of the actions within 30 days, an
Administrative Law Judge could issue an initial decision ordering Respondent to
pay the full amount of the proposed penalty. 21 C.F.R. § 17.11.

Respondent has not filed an answer within the time provided by regulation, nor
has it requested an extension. Therefore, pursuant to 21 C.F.R. § 17.11(a), lam
required to issue an initial decision by default if the Complaint is sufficient to
justify a penalty. Accordingly, I must determine whether the allegations in the
Complaint establish violations of the Act.

For purposes of this decision, I assume the facts alleged in the Complaint are true.
21 C.F.R. § 17.11(a). Specifically, CTP alleges the following facts in its
Complaint:

e Respondent owns Tete Supermarket, an establishment that sells tobacco
products and is located at 3468 E Street, Philadelphia, Pennsylvania 19134 .
Complaint §[ 3.

e During a June 5, 2013 inspection of Respondent’s establishment, an FDA-
commissioned inspector observed that “a person younger than 18 years of
age was able to purchase a package of Newport Box 100s cigarettes . . . at
approximately 4:23 PM.” Complaint § 10.

e On June 27, 2013, CTP issued a Warning Letter to Tete Supermarket
regarding the inspector’s observation from June 5, 2013. The letter
explained that the named violation was not necessarily intended to be an
exhaustive list of all violations at the establishment. The Warning Letter
also stated that if Respondent failed to correct the violation, regulatory
action by the FDA or a civil money penalty action could occur and that
Respondent is responsible for complying with the law. Complaint § 10.

e United Parcel Service records indicate that an individual named “Ramirez”
received the Warning Letter on June 28, 2013, however, the FDA did not
receive a response to the warning letter. Complaint § 11.

e On October 27, 2013, during another inspection of Respondent’s
establishment, FDA-commissioned inspectors documented that “a person
younger than 18 years of age was able to purchase a package of Newport
Box 100s cigarettes . . . at approximately 2:16 PM.” Complaint § 1.

These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is
misbranded if sold or distributed 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 to any person younger than
18 years of age. 21 C.F.R. § 1140.14(a).

Taking the above alleged facts as true, Respondent violated the prohibition against
selling cigarettes to persons younger than 18 years of age on June 5, 2013, and
October 27, 2013. Therefore, Respondent’s actions constitute violations of law
that merit a civil money penalty.

CTP has requested a fine of $250, which is a permissible civil money penalty
under the regulations. 21 C.F.R. § 17.2. Accordingly, I order Respondent to pay a
civil money penalty in the amount of $250.

/s/
Steven T. Kessel
Administrative Law Judge