Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Ethan Edwin Bickelhaupt, M.D.
(O.I. File Number 7-10-40580-9),

Petitioner,
v.

The Inspector General,
U.S. Department of Health and Human Services.

Docket No. C-12-85

Decision No. CR2554

Date: June 18, 2012
DECISION

Petitioner, Ethan Edwin Bickelhaupt, M.D., is excluded from participation in Medicare,
Medicaid, and all federal health care programs pursuant to section 1128(a)(4) of the
Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(4)), effective September 20, 2011.
There is a proper basis for exclusion. Petitioner’s exclusion for the minimum period! of
five years is mandatory pursuant to section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-

7(c)(3)(B)).
I. Background

The Inspector General (I.G.) notified Petitioner by letter dated August 31, 2011, that he
was being excluded from participation in Medicare, Medicaid, and all federal health care
programs for the minimum statutory period of five years pursuant to section 1128(a)(4)

' Pursuant to 42 C.F.R. § 1001.3001, Petitioner may apply for reinstatement only after
the period of exclusion expires. Reinstatement is not automatic upon completion of the
period of exclusion.
of the Act. The basis cited for Petitioner’s exclusion was his felony conviction in the
United States District Court for the District of Kansas of a criminal offense related to the
unlawful manufacture, distribution, prescription, or dispensing of a controlled substance
as defined under federal or state law. Act § 1128(a)(4). Petitioner timely requested a
hearing on October 25, 2011. The case was assigned to me for hearing and decision on
November 7, 2011.

On November 30, 2011, I convened a prehearing conference by telephone, the substance
of which is memorialized in my Order dated December 1, 2011. During the prehearing
conference, Petitioner did not waive an oral hearing. Counsel for Petitioner agreed that
Petitioner was convicted of two felonies by the United States District Court of Kansas.
The L.G. requested to file a motion for summary judgment prior to further development of
the case for hearing and I set a briefing schedule.

The LG. filed a motion for summary judgment and supporting brief (1.G. Br.) on January
13, 2012, with IG. exhibits (I.G. Exs.) 1 through 4. Petitioner filed a response in
opposition to the I.G. motion (P. Response) and a cross-motion for summary judgment
(P. Br.) on March 14, 2012, with Petitioner’s exhibits (P. Exs.) 2 through 4. Petitioner’s
Exhibit List dated March 14, 2012, reflects that P. Ex. 1 was the amended request for
hearing filed on January 24, 2012. Petitioner filed a supplemental exhibit list with P. Ex.
5 on April 9, 2012. The LG. filed its reply brief and opposition to Petitioner’s cross-
motion for summary judgment (1I.G. Reply) on March 30, 2012. Petitioner filed a reply in
support of its cross- motion for summary judgment on April 9, 2012 (P. Reply).

On March 14, 2012, Petitioner filed objections to and a motion to strike I.G. Exs. 3 and 4,
citing 42 C.F.R. § 1005.17(b), (c), and (d) and arguing that the exhibits are not relevant,
are more prejudicial than probative, may confuse the issues, may result in undue delay, or
may be cumulative. The I.G filed a response on March 26, 2012. Petitioner’s objection
to LG. Ex. 3 is overruled in part and granted in part. Petitioner’s objection to I.G. Ex. 4 is
overruled. I.G. Ex. 3 is the indictment in Petitioner’s criminal case. The indictment is
relevant to show the conduct that was the basis for the criminal charge and the conduct to
which Petitioner pled guilty — Counts 1 and 6 (I.G. Ex. 3, fj 1-16 and 21). To the extent
that the indictment contains charges to which Petitioner did not plead guilty (Counts 2
through 5, I.G. Ex. 3, §§ 17-20); conduct that he did not admit; and allegations for which
he was not convicted, the indictment is not considered. I.G. Ex. 4 is the plea agreement
in Petitioner’s criminal case. The plea agreement states the factual basis for Petitioner’s
guilty plea, i.e., the conduct he admitted. I.G. Ex. 3, {1-16 and 21 and LG. Ex. 4 are

> Petitioner filed amended hearing requests on January 24, 2012 and March 14, 2012.
Both amendments have been accepted in the absence of objection by the I.G.
relevant to show whether or not there is a basis for Petitioner’s exclusion. LG. Ex. 3,
1-16 and 21 and I.G. Ex. 4 are not cumulative of other evidence, even though Petitioner
has conceded the fact that he was convicted of offenses that require exclusion. I.G. Ex. 3,
4 1-16 and 21 and I.G. Ex. 4 are highly probative and not unduly prejudicial. The
motion to strike is denied and the entire exhibits remain in the record. The I.G. objects to
P. Ex. 2 on two grounds. The objection is sustained on the ground that the affidavit is not
relevant to any issue I may decide. The affidavit does not address the issue of whether
there is a basis for exclusion. There is no issue of the reasonableness of the period of
exclusion as the five-year period is the minimum period of exclusion authorized under
the Act. Further, I have no authority to consider whether or not a waiver of exclusion
may be appropriate under section 1128(c)(3)(B) of the Act. P. Ex. 2 will remain with the
record, but it is not considered for any purpose in reaching this decision. Accordingly,
LG. Exs. 1, 2, 3 fff 1-16 and 21, and 4 are admitted. P. Exs. 1, 3, 4, and 5 are admitted.

II. Discussion
A. Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) provides Petitioner the right to a
hearing by an administrative law judge (ALJ) and judicial review of the final action of
the Secretary of Health and Human Services (the Secretary).

Pursuant to section 1128(a)(4) of the Act, the Secretary must exclude from participation
in the Medicare and Medicaid programs any individual convicted of a felony criminal
offense under federal or state law, that occurred after August 21, 1996, related to the
unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.
Pursuant to section 1128(i) of the Act (42 U.S.C. § 1320a-7(i)), an individual is convicted
of a criminal offense when: (1) a judgment of conviction has been entered against him or
her in a federal, state, or local court whether an appeal is pending or the record of the
conviction is expunged; (2) there is a finding of guilt by a court; (3) a plea of guilty or no
contest is accepted by a court; or (4) the individual has entered into any arrangement or
program where judgment of conviction is withheld.

Exclusion for a minimum period of five years is mandatory for any individual or entity
convicted of a criminal offense for which exclusion is required by section 1128(a) of the
Act. Act § 1128(c)(3)(B) (42 U.S.C. § 1320a-7(c)(3)(B)). Pursuant to 42 C.F.R. §
1001.102(b), an individual’s period of exclusion may be extended based on the presence
of specified aggravating factors. Only if aggravating factors justify an exclusion of
longer than five years, are mitigating factors considered as a basis for reducing the period
of exclusion to no less than five years. 42 C.F.R. § 1001.102(c). The LG. does not cite
any aggravating factors to extend the period of exclusion beyond the statutory minimum
of five years. Thus, I cannot consider mitigating factors to reduce Petitioner’s period of
exclusion in this case.
Petitioner bears the burden of going forward with the evidence and the burden of
persuasion on any affirmative defenses or mitigating factors. The I.G. bears the burden
on all other issues. 42 C.F.R. § 1005.15(b), (c). The burden of persuasion is judged by a
preponderance of the evidence. 42 C.F.R. §§ 1001.2007(c), 1005.15(d). Petitioner may
not obtain review of, or collaterally attack on procedural or substantive grounds, a
criminal conviction or civil judgment of a federal, state, or local court, or another
government agency that is cited in this forum as the basis for exclusion. 42 C.F.R. §
1001.2007(d).

B. Issues
The Secretary has by regulation limited my scope of review to two issues:
Whether there is a basis for the imposition of the exclusion; and
Whether the length of the exclusion is unreasonable.
42 CFR. § 1001.2007(a)(1).
C. Findings of Fact, Conclusions of Law, and Analysis

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

1. Petitioner’s request for hearing was timely and I have jurisdiction.
2. Summary judgment is appropriate in this case.
There is no dispute that Petitioner timely requested a hearing and that I have jurisdiction.

Pursuant to section 1128(f) of the Act, a person subject to exclusion has a right to
reasonable notice and an opportunity for a hearing. The right to a hearing before an ALJ
is accorded to a sanctioned party by 42 C.F.R. §§ 1001.2007(a) and 1005.2, and the rights
of both the sanctioned party and the LG. to participate in a hearing are specified by

42 C.F.R. § 1005.3. Either or both parties may choose to waive appearance at an oral
hearing and to submit only documentary evidence and written argument for my
consideration. 42 C.F.R. § 1005.6(b)(5). Petitioner did not waive an oral hearing.

An ALJ may also resolve a case, in whole or in part, by summary judgment. 42 C.F.R. §
1005.4(b)(12). Summary judgment is appropriate, and no hearing is required where
either: there are no disputed issues of material fact, and the only questions that must be
decided involve application of law to the undisputed facts; or the moving party prevails
as a matter of law, even if all disputed facts are resolved in favor of the party against
whom the motion is made. A party opposing summary judgment must allege facts that, if
true, would refute the facts that the moving party relied upon. See, e.g., Fed. R. Civ. P.
56(c); Garden City Med. Clinic, DAB No. 1763 (2001); Everett Rehab. & Med. Ctr.,
DAB No. 1628, at 3 (1997) (finding in-person hearing required where non-movant shows
there are material facts in dispute that require testimony); Thelma Walley, DAB No. 1367
(1992); see also New Life Plus Ctr., DAB CR700 (2000); New Millennium CMHC, DAB
CR672 (2000).

Petitioner does not dispute but concedes the facts material to the issue of whether there is
a basis for his exclusion under section 1128(a)(4) of the Act. Further, there are no issues
of fact related to the reasonableness of the period of exclusion, as the period imposed by
the I.G. is the minimum period authorized for an exclusion under section 1128(a) of the
Act. Petitioner raises only issues of law challenging the Act and regulations on
constitutional grounds and on grounds that the Secretary engaged in rule-making without
complying with the Administrative Procedures Act. Summary judgment is appropriate in
this case as there is no genuine dispute as to any material fact and the issues raised by
Petitioner must be resolved against Petitioner as a matter of law. Accordingly, the I.G.’s
motion for summary judgment is granted and Petitioner’s cross-motion for summary
judgment is denied.

3. There is a basis for Petitioner’s exclusion pursuant to section
1128(a)(4) of the Act.

Section 1128(a)(4) of the Act requires that the Secretary exclude from participation in
Medicare, Medicaid, and all federal health care programs any individual or entity: (1)
convicted of a felony criminal offense under federal or state law; (2) where the offense
occurred after August 21, 1996; and (3) the criminal offense related to the unlawful
manufacture, distribution, prescription, or dispensing of a controlled substance.

Petitioner expressly “concedes that he was convicted of a felony, occurring after August
1996, relating to the manufacture, distribution, prescription, or dispensing of a controlled
substance.” P. Response at 1; P. Br. at 2, 11-12. Petitioned does not dispute that on
September 2, 2010, he was convicted pursuant to his guilty pleas of: between about June
27 and 29, 2006, knowingly and intentionally distributing and dispensing Percocet
(Oxycodone), a controlled substance, outside the scope of professional practice and for
no legitimate medical purpose in violation of 21 U.S.C. § 841(a)(1) and (b)(1)(C) and 18
U.S.C. § 2 (Count 1); and on or about July 6, 2006, knowingly and intentionally
obtaining and acquiring Adderall (amphetamine), a controlled substance, by
misrepresentation, fraud, deception, and subterfuge by using a fraudulent prescription
(Count 6). I.G. Ex. 2, at 1; I.G. Ex. 3, at 6, 8-9; I.G. Ex. 4, at 2; P. Ex. 3, at 3. Petitioner

was sentenced to three years probation; he was required to participate in an approved
program for substance abuse; he was prohibited from practicing medicine while on
probation; and he was required to perform 300 hours of community service. I.G. Ex. 2;
P. Ex. 3, at 93-94.

The term “conviction” as defined in the Act includes the entry of a finding of guilty, as
well as deferred adjudications and similar programs where a judgment of conviction is
withheld by the court. Act § 1128(i)(4). Petitioner was convicted within the meaning of
the Act when his guilty plea was accepted. Act § 1128(i); LG. Ex. 2. The offenses of
which Petitioner was convicted were felonies as each offense carried a possible sentence
of more than one year in prison. 18 U.S.C. § 3559(a); LG. Ex. 4, at 2; P. Ex. 3, at 93.
Petitioner also concedes that he was convicted of felonies. P. Br. at 2; P. Response at 1.
There is no dispute that the offenses of which Petitioner was convicted were related to the
unlawful manufacture, distribution, prescription, or dispensing of controlled substances.
LG. Ex. 4, at 2-4.

Accordingly, all the elements for mandatory exclusion pursuant to section 1128(a)(4) of
the Act are satisfied.

Petitioner argues that the I.G.’s notice of intent to exclude (P. Ex. 4) and the notice of
exclusion (I.G. Ex. 1) could have been better. Petitioner does not specifically request
relief on this ground, recognizing that he conceded that there is a basis for exclusion. P.
Br. at 11-13; P. Reply at 2-3. Whether or not the I.G. accepts Petitioner’s advice, both
notices were clearly effective to give Petitioner notice that he was being excluded, the
basis for the exclusion, the potential effect of exclusion, of the right to request a hearing,
and the notices otherwise met the requirements of 42 C.F.R. §§ 1001.2001 and
1001.2002. Petitioner clearly had no difficulty determining which convictions the LG.
cited as the basis for the decision to exclude. P. Br. at 11-16. Petitioner has articulated
no prejudice and I conclude that he was not prejudiced by any defect in the notices.

Petitioner raises several additional challenges regarding the lawfulness of the Act and
regulations and their application to his case. I am required to comply with the Act and
regulations. I do not have the authority to “[f]ind invalid or refuse to follow Federal
statutes or regulations or secretarial delegations of authority.” 42 C.F.R. § 1005.4(c)(1).
I will not address the merits of Petitioner’s challenges to the lawfulness of the Act and
regulations, as I have no jurisdiction or authority to conduct the review he requests on
those grounds.

Accordingly, I conclude that there is a basis for exclusion and Petitioner’s exclusion is
mandated by section 1128(a)(4) of the Act.
4. Pursuant to section 1128(c)(3)(B) of the Act, five years is the
minimum period of exclusion pursuant to section 1128(a) of the Act.

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

Five years is the minimum authorized period for a mandatory exclusion pursuant to
section 1128(a). Act § 1128(c)(3)(B). I have found there is a basis for Petitioner’s
exclusion pursuant to section 1128(a)(4) of the Act. Accordingly, the minimum period of
exclusion is five years, and that period is not unreasonable as a matter of law.

II. Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare,
Medicaid, and all federal health care programs for five years pursuant to section
1128(a)(4) of the Act, effective September 20, 2011.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Krish Venoo, M.D.,
(NPI: 1487829834),
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-12-223
Decision No. CR2553

Date: June 15, 2012

DECISION AND REMAND

Petitioner, Krish Venoo, M.D., is an Illinois physician. The Centers for Medicare &
Medicaid Services (CMS) granted his Medicare enrollment application effective August
1, 2011. Petitioner here challenges that effective date, and CMS has moved for summary
judgment. However, Petitioner has come forward with evidence which, drawing all
reasonable inferences in Petitioner’s favor, suggests that material facts are in dispute and
raises additional issues, which CMS has not previously addressed.

For the reasons discussed below, I deny CMS’s motion for summary judgment. Pursuant
to 42 C.F.R. § 498.56(d), I remand this matter to CMS to consider new issues and issue a
new determination.

Discussion
CMS is not entitled to summary judgment because

Petitioner has come forward with evidence of specific facts
showing that a dispute exists. 1

' [make this one finding of fact/conclusion of law.
Initially, this case appeared to be a straight-forward challenge to CMS’s determination as
to the effective date for Petitioner’s participation in the Medicare program. CMS
submitted a copy of Petitioner’s paper application, along with evidence that the Medicare
contractor, Wisconsin Physician Services (WPS) received it on August 1, 2011. CMS
Exs. 1, 2. Based on this, a contractor hearing officer determined, on reconsideration, that,
under 42 C.F.R. § 424.520(d), the effective date of Petitioner’s Medicare enrollment must
be August 1, 2011, the date Petitioner filed a subsequently-approved enrollment
application. The hearing officer also concluded, without further explanation, that “[t]he
contractor correctly deactivated the . . . supplier’s Medicare billing privileges due to 12
consecutive months of non-billing. . . .” CMS Ex. 6 at 1. CMS explained that Petitioner
Venoo earlier participated in the Medicare program, but that his program participation
was deactivated effective January 6, 2007 because of “12 consecutive months of non-
billing.” CMS Ex. 4 at 1.

At the outset of this case, Petitioner was not represented by counsel. He did not timely
respond to CMS’s motion for summary judgment nor submit an acceptable prehearing
exchange (due March 7, 2012). See Acknowledgment and Initial Pre-hearing Order
(December 29, 2011). On March 2, 2012, he asked for a one-week extension of time in
which to file his exchange. I granted the request but warned that no further extensions
would be granted. On March 13, 2012, Petitioner submitted an unsigned and undated
letter along with a stack of un-marked documents. By letter dated March 14, 2012, we
returned the submission and directed Petitioner to file within ten days an amended
exchange that complied with Civil Remedies procedures and my December 29, 2011
order. Petitioner did not comply, but apparently retained an attorney.

In a letter dated March 26, 2012, received March 28, 2012, Petitioner’s newly-retained
counsel sought an additional extension of time. I would not formally grant additional
time, but suggested that Counsel could submit Petitioner’s response, accompanied by a
motion to file out-of-time, which I would consider if received before I issued my
decision.” Finally, in a letter dated June 6, 2012, we directed Petitioner to submit, prior

> In cases involving denial of an enrollment application, an Administrative Law Judge
(ALJ) must issue a decision no later than the end of the 180-day period beginning from
the date the appeal was filed. 42 C.F.R. § 498.79. Whether this regulatory deadline
applies here is an open question. On the one hand, Petitioner’s enrollment application
was granted, not denied. Further, if the time limit’s purpose is to assure that
providers/suppliers timely learn whether they can expect to be paid for future Medicare-
covered services, that purpose is not served here; Petitioner is enrolled and knows that,
going forward, he will be paid for providing covered services. On the other hand, the
Board has ruled, albeit in a different context, that “approval of enrollment with a
particular effective date is in essence a denial of enrollment for an earlier period.”
Alvarez, DAB No. 2325 at 3 (2010). So it seems wise to err on the side of caution and
assume the regulation applies. Unfortunately, the regulation allows for no exceptions,
to the close of business June 7, any documentation or argument that he wished me to
consider.

In response, Petitioner’s counsel filed an appearance, and submitted five exhibits,
including a statement from Petitioner Venoo. In his statement, Petitioner Venoo said that
his Medicare enrollment application was processed in 2009 and, thereafter, he was not
advised that his enrollment had been revoked. P. Ex. 5. He included a November 9,
2009 letter from WPS approving his October 26, 2009 enrollment application with an
effective billing date of July 8, 2009. P. Ex. 1.

CMS was unavailable to participate in a timely conference to discuss the new evidence,
but claimed, via e-mail and without supporting evidence, that Petitioner’s 2009 Medicare
enrollment is “entirely unrelated to the provider enrollment under [Petitioner’s] own
name.” CMS counsel also suggested that I could meet the regulatory deadline (if
applicable) by entering “judgment in CMS’s favor, under the facts presented here.” CMS
asserted that “[t]here is no basis here for challenging either the correctness of the [2007]
deactivation at the time that it was made or the determination of the effective date... .” I
cannot grant CMS summary judgment based on unsupported representations included in
an e-mail. Further, in considering CMS’s motion for summary judgment, I must draw all
reasonable inferences in Petitioner’s favor. Livingston Care Center v. Dep't. of Health &
Human Services, 388 F.3d 168, 172 (6" Cir. 2004); 18661CPayday, L.L.C., DAB No.
2289 at 3 (2009). Petitioner comes forward with a November 2009 letter approving his
Medicare enrollment. On its face, the letter does not establish that it is “entirely
unrelated to the provider enrollment under [Petitioner’s] own name.” It refers to
Petitioner personally, without mentioning any group practice. It describes a “CMS 855
Medicare enrollment application,” generally, without specifying a category of
application, e.g., basic physician enrollment (8551), group practice (855B), reassignment
of benefits (855R).

Thus, Petitioner’s submissions raise additional issues regarding his earlier Medicare
enrollments and the circumstances under which one or more enrollment was deactivated:

e When and why did the contractor deactivate Petitioner’s program participation?
What is the effect of Petitioner’s 2009 enrollment and what happened thereafter to
cause him to submit an application in August 2011?

e In light of 42 C.F.R. § 424.540(c), which says that deactivation of Medicare
billing privileges “does not have any effect on a supplier’s participation agreement
or any conditions of participation,” why is Petitioner not able to bill for services he
provided while his enrollment was deactivated?

even where, as here, parties miss deadlines, request multiple extensions of time, raise
new issues as the deadline looms, and are unavailable for conferences.
e If Petitioner’s program participation was deactivated for nonsubmission of a
claim, why was Petitioner required to submit a new enrollment application? 42
C.F.R. § 424.540(b) explicitly exempts from filing a new enrollment application
providers/suppliers deactivated for nonsubmission of a claim. See 71 Fed. Reg.
20,762; 20,769. Is Petitioner entitled to an opportunity to rebut his deactivation?
If so, has he been given that opportunity? 42 C.F.R. §§ 424.545(b), 405.374.

e Finally, CMS suggests that, due to the passage of time since his deactivation,
section 424.540 does not apply here. What is the rationale for this claim and how
much time must pass before the regulation no longer applies? If, in fact, Petitioner
was not required to submit a new enrollment application, what was he required to
do in order to preserve his billing privileges?

Conclusion

Drawing all reasonable inferences in the light most favorable to the non-moving party, I
find that material facts are in dispute here and deny CMS’s motion for summary
judgment. I also find that Petitioner raises issues not previously addressed by the
contractor or CMS regarding his deactivation and his 2009 Medicare enrollment.
Pursuant to 42 C.F.R. § 498.56(d), I remand this case to CMS to consider these issues
and address them in a new determination. If dissatisfied with CMS’s new determination,
Petitioner may request review as provided for in 42 C.F.R. § 424.545 and 42 C.F.R. Part
498.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Michael K. Nunn, D.O.,
(O.L. File Number 4-04-403 12-9)
Petitioner,

v.

The Inspector General.
Docket No. C-12-319
Decision No. CR2552

Date: June 15, 2012

DECISION

This matter is before me on the Inspector General’s (1.G.’s) Motion for Summary
Disposition affirming the I.G.’s determination to exclude Petitioner pro se Michael K.
Nunn, D.O., from participation in Medicare, Medicaid, and all other federal health care
programs for a period of 12 years. The I.G.’s Motion and determination are based on
section 1128(b)(15) of the Social Security Act (Act), 42 U.S.C. § 1320a-7(b)(15).

The undisputed facts of this case demonstrate that the I.G. is authorized to impose the 12-
year exclusion against Petitioner, and that the length of that period of exclusion is not
unreasonable. Accordingly, I grant the I.G.’s Motion for Summary Disposition.

I. Procedural Background
Petitioner Nunn is an osteopathic physician licensed to practice in North Carolina. He

organized his practice as a professional corporation, Michael K. Nunn, P.C. (MKNPC) in
1995 and thereafter conducted business in the name Community Wellness Center (CWC)
in three North Carolina communities.! At the time of the events described below, CWC
was enrolled as a provider in the Medicare and North Carolina Medicaid programs, as
well as the Veterans Administration Fee-Basis Program.

As early as January 2001, potential irregularities in CWC’s Medicare and Medicaid
billing practices had come to the attention of the fiscal intermediaries assigned to service
CWC’s claims. In 2004 the current fiscal intermediary referred allegations of fraudulent
practices by CWC to federal law enforcement officials, who conducted an investigation
that included the execution of a search warrant and the seizure of records from CWC’s
facility in New Bern, North Carolina.

That investigation resulted in CWC’s conviction of two federal crimes. On April 25,
2011, in the United States District Court for the Eastern District of North Carolina, CWC
pleaded guilty to, was found guilty of, and was sentenced on one count of Health Care
Fraud, in violation of 18 U.S.C. § 1347, and one count of Money Laundering, in violation
of 18 U.S.C. § 1957(a) and (b). The crimes CWC admitted took place over a 20-month
period between May 2003 and December 2004. The guilty pleas and convictions were
the result of a negotiated agreement signed on behalf of CWC by Petitioner Nunn, who
by the terms of that agreement assumed joint liability with CWC for $297,215.00 in
restitution to the government agencies that had been defrauded.

On December 30, 2011, the I.G. took steps to exclude both CWC and Petitioner Nunn
individually from participation in the Medicare and Medicaid programs. The I.G. sent a
notice-of-exclusion letter to CWC on that date, relying on the terms of section 1128(a)(1)
and (a)(3) of the Act, 42 U.S.C. § 1320a-7(a)(1) and (a)(3), to exclude CWC for 12 years.
The I.G. also sent a notice-of-exclusion letter to Petitioner Nunn on December 30, 2011.
In that letter, the I.G. relied on the terms of section 1128(b)(15) of the Act, 42 U.S.C.

§ 1320a-7(b)(15), and set the period of Petitioner Nunn’s exclusion at 12 years.

Acting pro se, Petitioner Nunn sought review of the I.G.’s determination as to himself in
a request for hearing received by the Civil Remedies Division on January 30, 2012.
Petitioner’s request for hearing admits that the business entity CWC was convicted, but
points out that he had “not received any charges or convictions concerning healthcare
fraud or money laundering.”

No hearing request has been filed by CWC, and by operation of law the I.G.’s
determination to exclude the business entity for 12 years became final on or about
January 19, 2012.

' At every relevant point in the record before me, the business names MKNPC and CWC
appear either jointly or interchangeably. For purposes of clarity, however, I use only the
name CWC hereafter in this discussion.
I convened a prehearing conference by telephone on February 13, 2012, pursuant to 42
C.F.R. § 1005.6, in order to discuss procedures for addressing the issues presented by this
case. By Order of that date I established a schedule for the submission of documents and
briefs.

The evidentiary record on which I decide the issues before me contains 34 exhibits. The
1.G. proffered 15 exhibits marked I.G. Exhibits 1-15 (1.G. Exs. 1-15). Petitioner
proffered 20 exhibits, marked Petitioners’ Exhibits 1-20 (P. Exs. 1-20). In the absence of
objection, I have admitted all proffered exhibits as designated by the offering party,
except one. P. Ex. 18 as proffered is a copy of the I.G.’s Motion for Summary
Disposition and supporting Brief-in-Chief; those pleadings are part of the record in this
case but are not evidence, and thus are not to be treated as an exhibit.

The record in this case closed for purposes of 42 C.F.R. § 1005.20(c) on May 21, 2012,
by the terms of numbered paragraph 8 of the Order of February 13, 2012.

II. Issues

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

a. Whether the LG. has a basis for excluding Petitioner from participating
in Medicare, Medicaid, and all other federal health care programs pursuant
to section 1128(b)(15) of the Act; and

b. Whether the 12-year length of the proposed period of exclusion is
unreasonable.

I decide these issues in favor of the I.G.’s position. Sections 1128(a)(1) and (a)(3) of the
Act mandated the exclusion of CWC. That exclusion and its 12-year period have become
final by operation of law. Because of his relationship with CWC, Petitioner Nunn is
subject to the same 12-year period of exclusion by operation of the terms of section
1128(b)(15) of the Act and 42 C.F.R. § 1001.1051(c)(1). The length of this proposed
period of exclusion is reasonable as a matter of law.

III. Controlling Statutes and Regulations

Section 1128(b)(15)(A) of the Act, 42 U.S.C. § 1320a-7(b)(15)(A), authorizes the
exclusion from participation in Medicare, Medicaid, and all other federal health care
programs of “Any individual — (i) who has a direct or indirect ownership or control
interest in a sanctioned entity and who knows or should know . . . of the action
constituting the basis for the conviction or exclusion described in subparagraph B; or (ii)
who is an officer or managing employee . . . of such an entity.” The regulatory language
of 42 C.F.R. § 1001.1051(a) affirms the statutory provision.

The statute’s term “should know” is defined at section 1128A(i)(7) as meaning that “a
person, with respect to information — (A) acts in deliberate ignorance of the truth or
falsity of the information; or (B) acts in reckless disregard of the truth or falsity of the
information, and no proof of specific intent to defraud is required.”

Section 1126(b) of the Act defines “managing employee” to include “an individual,
including a general manager, business manager, administrator, and director, who
exercises operational or managerial control over the entity, or who directly or indirectly
conducts the day-to-day operations of the entity.”

The definition of “sanctioned entity” appears at section 1128(b)(15)(B) of the Act, and
that definition includes any entity convicted of any offense listed in section 1128(a) of the
Act, or excluded from participation in a health care program under Title XVIII of the Act
(Medicare) or a state health care program.

Exclusions under section 1128(b) are permissive and discretionary with the I.G., and the
1.G.’s decision to exercise that discretion is not subject to review. 42 C.F.R.

§ 1005.4(c)(5). Individuals excluded under section 1128(b)(15) generally must be
excluded for the same period as the excluded entity. 42 C.F.R. § 1001.1051(c)(1).

IV. Findings and Conclusions
I find and conclude as follows:

1. CWC pleaded guilty to and was convicted of one count of Health Care Fraud, in
violation of 18 U.S.C. § 1347, and one count of Money Laundering, in violation of 18
U.S.C. § 1957(a) and (b), in the United States District Court for the Eastern District of
North Carolina on April 25, 2011. LG. Exs. 6, 7, 8.

2. The I.G. relied on sections 1128(a)(1) and 1128(a)(3) of the Act to exclude CWC from
participation in Medicare, Medicaid, and all other federal health care programs for a
period of 12 years, effective on or about January 19, 2012. I.G. Ex. 2.

3. CWC is a “sanctioned entity” within the meaning of section 1128(b)(15)(A)(i) and (ii)
of the Act, and 42 C.F.R. § 1001.1051(a). Act, section 1128(b)(15)(B).

4. Petitioner Michael K. Nunn, D.O., is the owner, incorporator, sole director, registered
agent and authorized Medicare and Medicaid representative of CWC. I.G. Exs. 4, 5, 10,
11, 12, 15.
5. Petitioner knew or should have known of the criminal activities constituting the basis
for the conviction and exclusion of CWC described above in Findings 1-3. I.G. Exs. 4, 7,
13, 14.

6. Because Petitioner is the owner, incorporator, sole director, registered agent and
authorized Medicare and Medicaid representative of CWC, and because Petitioner knew
or should have known of the criminal activities constituting the basis for the conviction
and exclusion of CWC, a basis exists for the I.G.’s exercise of authority to exclude
Petitioner from participation in Medicare, Medicaid, and all other federal health care
programs. Act, section 1128(b)(15).

7. The I.G.’s exclusion of Petitioner Nunn for a period of 12 years is not unreasonable.
42 CFR. § 1001.1051(c)(1).

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

V. Discussion

The exclusion of an individual based on section 1128(b)(15) of the Act, 42 U.S.C.

§ 1320a-7(b)(15), is a derivative action, and depends upon proof of two essential
elements. It depends first on a showing that a business entity is a “sanctioned entity” that
has been convicted of an offense described in sections 1128(a)(1)-1128(a)(4) or
1128(b)(1)-1128(b)(3) of the Act, or has been excluded from participation in a program
under Title XVIII of the Act (Medicare) or a state health care program.

If that first showing is made, then the individual is subject to exclusion on the further
showing that he or she bears a relationship of responsibility, defined in detail at sections
1126(b) and 1128(b)(15)(A) of the Act, to that sanctioned business entity. When that
relationship is one of “direct . . . ownership or control” specified at 1128(b)(15)(A)(i),
then the I.G. must show that the individual “knows or should know . . . of the action” for
which the business entity has been sanctioned. Specific intent is explicitly not required in
meeting that standard: section 1128A(i)(7) provides that the knowledge standard is met
when the individual acts “in deliberate ignorance” or in “reckless disregard” of
information relating to the action.

In this case, the 1.G. has made the first showing. CWC has been convicted of the
offenses described in sections 1128(a)(1) and 1128(a)(3) and has been excluded from all
federal health care programs for 12 years. I.G. Exs. 2, 4, 6, 7, and 8. That exclusion and
the underlying conviction are final, and are not subject to challenge or revision in these
proceedings. Petitioner’s Answer Brief concedes the finality of both. P. Ans. Br. at 6, 7.
The first essential element is established in this record.

The L.G. has made both parts of the second showing as well. Petitioner acknowledged
ownership of CWC to the North Carolina Medical Board. LG. Ex. 4, at 1. His role as
incorporator, sole director, and registered agent of CWC is affirmed in other official
filings in North Carolina state offices. IG. Exs. 4, 5, 15. He appears as the official
authorized to submit the applications by which CWC became eligible to provide services
though the Medicare and Medicaid programs. I.G. Exs. 10, 11, 12. Thus, the evidence
shows that Petitioner’s organizational relationships to CWC are among those defined at
section 1128(b)(15)(A).

Petitioner does not deny that he was the owner, incorporator, director, registered agent,
and authorized Medicare signatory for CWC. What he does deny is having any personal
knowledge that CWC had bilked the protected programs for $297,215.00 between May
2003 and December 2004, an average of over $14,000.00 per month. He denies any
responsibility for the conduct of CWC’s business affairs, and most particularly denies
any role whatsoever in its coding and billing practices.

While such an argument may test credulity, it is not necessary that I assay it here. It is
true, as the I.G. points out, that virtually all of Petitioner’s defense to the exclusion rests
on his claims that disgruntled, incompetent, dishonest, or vindictive employees of CWC
were simultaneously responsible for the fraudulent billings and for keeping him from
finding out about the scheme. Were it necessary to sift out the truth in any of Petitioner’s
accusations and explanations, that very exercise of weighing evidence and assessing
credibility would place this decision beyond the reach of the summary disposition
mechanism. However, such an exercise is unnecessary here.

Instead, there are three salient matters of undisputed material fact proving that Petitioner
knew or should have known of the criminal activity at CWC.

First, Petitioner acknowledged to the North Carolina Medical Board that he was under a
professional obligation to see that coding and billing operations at CWC were truthful
and accurate, and that he failed to fulfill his responsibility to ensure that CWC billed
correctly. IL.G. Ex. 4, at 2. Put in slightly different terms, Petitioner admitted to the
Medical Board that he should have known that fraudulent billing was rampant at CWC
and did nothing to stop it.

Next, in executing the plea agreement, Petitioner implicitly admitted receiving the
proceeds of the scheme by “agreeing that Dr. Michael Nunn will be jointly and severally
responsible with the corporate defendant for the payment of restitution.” I.G. Ex. 7, at 2.
This implicit admission is reinforced by the interesting language of Count II of the
Information — the money-laundering count — describing how $38,000.00 of the
scheme’s proceeds were transferred from the CWC account “into a personal bank
account.” I.G. Ex. 6, at 10. Nothing in this record suggests that anyone other than
Petitioner was authorized to make that transfer. But whether Petitioner got the
$38,000.00 in proceeds or not, his participation in the plea negotiations and the plea itself
are clear evidence of his familiarity with and authority over CWC’s financial affairs,” and
that in holding such a position he knew or should have known of the fraudulent coding
and billing, and of the laundering of CWC’s criminally-derived cash.

And finally, there is no doubt that after January 2002, Petitioner could have been unaware
of the scheme only through “deliberate ignorance” or “reckless disregard” of the
warnings conveyed to him after the consultation performed by Ms. Loebl. LG. Exs. 13,
at 2, and 14, at 4-8.

Because the I.G. has established a basis for the exclusion of Petitioner pursuant to section
1128(b)(15) of the Act, his exclusion for 12 years is authorized by 42 C.F.R.

§ 1001.1051(c)(1). That period is reasonable as a matter of law, based as it is on the 12-
year exclusion imposed on CWC. Petitioner’s request that I limit the effect of the
exclusion is explicitly beyond my authority. 42 C.F.R. § 1005.4(c)(5).

VI. Conclusion

For the reasons set forth above, the I.G.’s Motion for Summary Disposition should be,
and it is, GRANTED. The I.G.’s exclusion of Petitioner Michael K. Nunn, D.O., from
participation in Medicare, Medicaid, and all other federal health care programs for a
period of 12 years pursuant to the terms of section 1128(b)(15) of the Act, 42 U.S.C.
§ 1320a-7(b)(15), is sustained.

/s/
Richard J. Smith
Administrative Law Judge

* He was certainly in a position of authority sufficient to execute employment contracts
on behalf of CWC (P. Ex. 16) at least in 1998, and to complain to his congressman about
CWC’s financial relationship with the Veterans Administration (P. Ex. 19) at least in
2002.


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Linda Staiger, M.D., P.C.,
Petitioner,
v.
Centers for Medicare and Medicaid Services.
Docket No. C-12-258
Decision No. CR2551

Date: June 29, 2012

DECISION

Linda Staiger, M.D., P.C., (Petitioner) appeals the determination of Palmetto GBA
(Palmetto), a Medicare contractor, that she was not eligible for enrollment in the
Medicare program as a supplier’ earlier than September 19, 2011, and could not submit
retrospective claims for payment earlier than August 20, 2011. I grant the Centers for
Medicare and Medicaid Services’ (CMS’s) motion for summary judgment finding that
Petitioner’s effective date of enrollment was September 19, 2011, with a retrospective
billing period starting on August 20, 2011.

I. Background

Petitioner is a medical practice located in Fork Union, Virginia, which is owned by Linda
Staiger, M.D., an orthopedic surgeon. CMS Exhibit (Ex.) 4; Petitioner’s Hearing

' The Medicare statute defines the term “supplier” to mean “a physician or other
practitioner, a facility, or other entity (other than a provider of services) that furnishes
items or services” under the Medicare statute. Social Security Act § 1861(d), 42 U.S.C. §
1395x(d). See also 42 C.F.R. § 400.202.
2
Request. On April 21, 2011, Petitioner submitted a Medicare enrollment application to
the internet-based Provider Enrollment, Chain and Ownership system (PECOS), as a
previously enrolled supplier reactivating Medicare enrollment or billing privileges, which
she requested be reassigned to her new business entity. CMS Ex. 4 at 4, 33; CMS Ex. 9.
On June 23, 2011, Palmetto returned Petitioner’s application and informed her that she
needed to re-submit her application because there was no signed certification statement.
CMS Ex. 7. In lieu of re-submitting on PECOS, Petitioner submitted a paper enrollment
application (CMS Form 855]) which Palmetto received on September 19, 2011. CMS
Exs. 2, 4. On October 6, 2011, Palmetto informed Petitioner that her Medicare
enrollment application was approved. Palmetto determined the effective date to be
September 19, 2011, with a retrospective billing date of August 20, 2011.7 CMS Ex. 1.
Petitioner requested Palmetto reconsider the effective date to be June 1, 2011, as
Petitioner had begun seeing patients in mid-June 2011 in anticipation of Medicare
participation. CMS Ex. 3. On December 2, 2011, Palmetto issued an unfavorable
decision, finding that Petitioner’s initial application was received in Palmetto’s mailroom
on September 19, 2011, the filing date controlling the effective date.* Petitioner’s
Exhibit (P. Ex.) 3; CMS Ex. 8.

On January 2, 2012, Petitioner filed a hearing request with the Civil Remedies Division
(CRD) of the Departmental Appeals Board (DAB). An Acknowledgment and Pre-
earing Order was sent to the parties on January 10, 2012. On January 30, 2012,
Petitioner filed a letter asking that the case be decided based on her hearing request in
lieu of testimonial evidence. Petitioner stated that she had no other evidence to present.
Petitioner included with this letter a document entitled “PECOS Application Status.” On
February 9, 2012, CMS filed a Motion for Summary Judgment and Brief (CMS Br.),
accompanied by nine proposed exhibits (CMS Exs. 1-9). On April 10, 2012, Petitioner
filed a letter reiterating that she would not be submitting any other evidence or argument
to dispute CMS’s position. I mark the document titled “PECOS Application Status” as P.
Ex. 1. The documents included with Petitioner’s hearing request are a May 3, 2011 letter

> CMS’s October 6, 2011 letter erroneously referred to the effective date of Petitioner’s
enrollment as August 20, 2011. CMS Ex. 1. Palmetto received Petitioner’s enrollment
application on September 19, 2011. CMS Exs. 2, 4. The applicable regulations, as
discussed below, require the receipt date of the application to control as the effective date
of enrollment while permitting a supplier to retrospectively bill for 30 days prior to the
effective date. 42 C.F.R. § 424.521(a)(1). Thus, I treat August 20, 2011 as the earliest
date on which Petitioner could begin submitting claims because under law the effective
date of Petitioner’s enrollment must be September 19, 2011.

* While properly noting that Palmetto received Petitioner’s enrollment application on
September 19, 2011, and reciting that the law requires that the effective date is the date of
filing, the reconsideration decision also incorrectly cites August 20, 2011, the
retrospective billing date, as the effective date.
3
from Palmetto to Petitioner, which I mark as P. Ex. 2; a copy of the December 2, 2011
reconsideration decision, which I mark as P. Ex. 3; and a list of Petitioner’s patients seen
from June 21 through November 1, 2011, which I mark as P. Ex. 4. Absent any
objection, I admit all proposed exhibits into evidence.

II. General Authority

The Social Security Act (Act) authorizes the Secretary of Health and Human Services
(Secretary) to promulgate regulations governing the enrollment process for providers and
suppliers. Act §§ 1102, 1866(j); 42 U.S.C. §§ 1302, 1395cc(j). Under the Secretary’s
regulations, a provider or supplier that seeks billing privileges under Medicare must
“submit enrollment information on the applicable enrollment application. Once the
provider or supplier successfully completes the enrollment process . . . CMS enrolls the
provider or supplier into the Medicare program. 42 C.F.R. § 424.510(a). A provider or
supplier must submit a complete enrollment application and supporting documentation to
the designated Medicare fee-for-service contractor,” and the application must include
“complete . . . responses to all information requested within each section as applicable to
the provider or supplier type.” 42 C.F.R. § 424.510(d)(1)-(2). The effective date of
enrollment for physicians is set as follows:

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

42 C.F.R. § 424.520(d). The filing date is when the Medicare contractor receives a
signed application that is able to be processed to approval. See 73 Fed. Reg. 69,726,
69,769. In addition, CMS permits limited retrospective billing as follows:

Physicians . . . and physician . . . organizations may retrospectively bill for
services when a physician or... a physician . . . organization have met all
program requirements, including State licensure requirements, and services were
provided at the enrolled practice location for up to—

(1) 30 days prior to their effective date if circumstances precluded enrollment in
advance of providing services to Medicare beneficiaries, or

(2) 90 days prior to the effective date [in certain emergencies not applicable here].

42 CFR. § 424.521 (a).

A physician can apply for enrollment in Medicare or make a change in enrollment
information using either PECOS or a paper enrollment application process (e.g., CMS
Form 8551). A physician must complete an enrollment application if, among other
4
things, the physician needs to make changes to enrollment information (i.e., adding or
changing a practice location) or the physician has formed a professional corporation,
professional association, or limited liability company of which the physician is the sole
owner. See 42 C.F.R. § 424.540(a)(2) & (b)(1); CMS Ex. 4, at 2.

II. Issue

The issue in this case is whether CMS had a legitimate basis for determining September
19, 2011, as the effective date for Petitioner’s Medicare enrollment and billing privileges.

IV. Analysis

My findings of fact and conclusions of law are set forth in italics and bold in the decision
captions of this decision.

a. This case is appropriate for summary judgment.

CMS argues that it is entitled to summary judgment. Board Members of the Appellate
Division of the DAB (the Board) explained the standard for summary judgment:

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

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

An Administrative Law Judge’s (ALJ’s) role in deciding a summary judgment motion
differs from the ALJ’s role in resolving a case after a hearing. The ALJ should not assess
credibility or evaluate the weight of conflicting evidence. Holy Cross Vill. at Notre
Dame, Inc., DAB No. 2291, at 5 (2009). The Board has further stated, “[i]n addition, it is
appropriate for the tribunal to consider whether a rational trier of fact could regard the
parties’ presentation as sufficient to meet their evidentiary burdens under the relevant
substantive law.” Dumas Nursing and Rehab., L.P., DAB No. 2347, at 5 (2010).
5
CMS argues that it is entitled to summary judgment because “there is no genuine dispute
as to any material fact in this matter [and] . .. CMS is entitled to summary judgment as a
matter of law.” CMS Br. at 1. Petitioner’s filings are limited to her hearing request and
her letters of January 30 and April 10, 2012. Petitioner never responded specifically to
CMS’s motion for summary judgment, only stating in both her January 30 and April 10
letters that she was relying on the hearing request and the documents of record as her
only evidence and argument. Petitioner’s evidence and argument do not place in dispute
any fact material to the resolution of the case. Therefore, summary judgment is
appropriate.

b. Palmetto’s receipt of Petitioner’s complete enrollment application on
September 19, 2011, necessarily determines the effective date and retrospective
billing privileges.

On April 21, 2011, Petitioner submitted an enrollment application through PECOS. P.
Ex. 1; CMS Ex. 9. On May 3, 2011, Palmetto notified Petitioner that the application was
incomplete because the required electronic certification statement had not been received.
It also requested that Petitioner resubmit an electronic funds transfer agreement and a
pre-voided check. P. Ex. 2; CMS Ex. 5. On May 20, 2011, Palmetto notified Petitioner
that the application could not be processed without a WEB certification statement. CMS
Ex. 6. On June 23, 2011, Palmetto returned Petitioner’s application due to a problem
with the signature on the certification statement, and informed Petitioner that she needed
to resubmit her application on-line. CMS Ex. 7. On October 6, 2011, Palmetto approved
the paper Medicare enrollment application CMS Form 8551, which Palmetto received
from Petitioner on September 19, 2011. CMS Exs. 1, 4. Petitioner timely requested
reconsideration of her effective date, which request was denied by Palmetto on December
2, 2011. P. Ex. 3; CMS Ex. 8.

In Petitioner’s hearing request, Petitioner asserts that the PECOS system did not “allow
[Petitioner] to delete or change the original application that was rejected.” Petitioner “felt
forced,” after multiple calls to PECOS and Medicare to resolve her issues with the on-
line application, to file a paper application in September 2011. While Palmetto approved
the paper application, Palmetto gave Petitioner an effective date of September 19, 2011,
and a retrospective billing date of August 20, 2011, both after the mid-June 2011 time
period when Petitioner “in good faith” began seeing Medicare patients. Petitioner asks
that I change the effective date (or at least the retrospective billing date) to June 1, 2011,
so that she can be paid for services she rendered from June 1, 2011 through August 20,
2011. If the effective date cannot be changed, Petitioner asks that as a “special
consideration” she be paid for the claims reflected in P. Ex. 4 between June | and August
20, 2011.
6
The effective date of billing privileges for physicians, among others, is “the /ater of the
date of filing of a Medicare enrollment application that was subsequently approved by a
Medicare contractor or the date an enrolled physician . . . first began furnishing services
at a new practice location.” 42 C.F.R. § 424.520(d) (emphasis added). The “date of
filing” is the date that Palmetto “receives” a signed provider enrollment application that
Palmetto is able to process to approval. See 73 Fed Reg. 69,726, 69,769 (Nov. 19, 2008).
While the PECOS system may be used in lieu of the paper Medicare enrollment
application to submit an enrollment application, Palmetto did not receive a signed
application from Petitioner via the PECOS system that could be processed to approval. It
was not until Palmetto received Petitioner’s signed September 19, 2011 paper application
that it had a complete application that could be processed to approval. Thus, by law, the
earliest effective date Palmetto could give Petitioner is September 19, 2011.

Petitioner requests, as a “special consideration,” that Medicare pay her for the claims
reflected in P. Ex. 4, which are based on her treatment of patients between June | and
August 20, 2011. CMS does not dispute, and for summary judgment purposes I will
infer, that Petitioner treated these patients in good faith and in the expectation of
Medicare reimbursement. I am without authority, however, to order either Palmetto or
CMS to provide an exemption to Petitioner under the circumstances, even though I may
sympathize with her predicament. Petitioner’s equitable argument gives me no ground to
grant her an earlier effective date of enrollment. See US Ultrasound, DAB No. 2302, at 8
(2010) (“[nJeither the ALJ nor the Board is authorized to provide equitable relief by
reimbursing or enrolling a supplier who does not meet statutory or regulatory
requirements.”). Moreover, I have no authority to declare statutes or regulations invalid
or ultra vires. 18661CPayday.com, L.L.C., DAB No. 2289, at 14 (2009) (“[a]n ALJ is
bound by applicable laws and regulations and may not invalidate either a law or
regulation on any ground.”).

V. Conclusion

Based on the undisputed facts that Palmetto did not receive a signed enrollment
application that it could process from Petitioner until September 19, 2011, I conclude that
Petitioner’s effective date of enrollment was September 19, 2011, with a retrospective
billing period starting on August 20, 2011. Therefore, I grant CMS’s motion for
summary judgment.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.
Pramukh Corporation d/b/a 7-Eleven #24057,
Respondent.

Docket No. C-12-474
FDA Docket No. FDA-2012-H-0305

Decision No. CR2549

Date: June 11, 2012

INITIAL DECISION AND DEFAULT JUDGMENT

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

The complaint alleges the following facts. Respondent owns an establishment in
Independence, Missouri that sells tobacco products. CTP conducted two inspections of
the establishment since May of 2011. During a May 25, 2011 inspection, an FDA-
commissioned inspector observed that Respondent “[sold] cigarettes or smokeless
tobacco to a person younger than 18 years of age, in violation of 21 C.F.R. § 1140.14(a).”
(Compl. § 10.)

On September 1, 2011, CTP issued a warning letter to Respondent specifying the
violation that the inspector observed. The letter warned Respondent that a failure to
2

correct violations could result in the imposition of civil money penalties and that it was
Respondent’s responsibility to ensure compliance with the law. (Compl. J 10.) The CTP
did not receive a response to the warning letter. (Compl. § 11.)

During a two-part inspection on December 5 and 22, 2011, an FDA-commissioned
inspector observed that “a person younger than 18 years of age was able to purchase a
package of Decade Red cigarettes on December 5, 2011, at approximately 7:08 PM
Central Standard Time.” (Compl. § 9.) CTP charged Respondent with violating

21 C.F.R. § 1140.14(a) (sale of tobacco products to a minor). Jd. CTP asked to impose a
$250 civil money penalty based on two alleged violations of the regulations in a 12-
month period. (Compl. § 13.)

In compliance with 21 C.F.R. §§ 17.5 and 17.7, CTP served Respondent with the
complaint on April 11, 2012, via United Parcel Service. Both the cover letter to the
complaint and the complaint provided detailed instructions related to filing an answer and
requesting an extension of time to file an answer. The letter and complaint stated that
failure to file an answer could result in the imposition of a civil money penalty against
Respondent. Respondent neither filed an answer nor requested an extension of time
within the 30-day time period prescribed in 21 C.F.R. § 17.9.

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

presiding officer shall assume the facts alleged in the complaint to be true,
and if such facts establish liability under the relevant statute, the presiding
officer shall issue an initial decision within 30 days of the time the answer
was due, imposing: (1) The maximum amount of penalties provided for by
law for the violations alleged; or (2) The amount asked for in the complaint,
whichever amount is smaller.

21 C.F.R. § 17.11 (a). Further, a failure to file a timely answer means that “respondent
waives any right to a hearing and to contest the amount of penalties and assessments”
imposed in the initial decision. 21 C.F.R. § 17.11(b).

Accepting the facts alleged in the complaint as true, I find that those facts establish
Respondent’s liability under the Act. See 21 U.S.C. §§ 333(f)(9), 387c(a)(7)(B), 387£(d);
21 C.F.R. § 1140.14. [also find that CTP’s request to impose a $250 civil money penalty
is permissible. See 75 Fed. Reg. 73,951, 73,954 (Nov. 30, 2010) (to be codified at

21 C.F.R. § 17.2).
Order

For the reasons stated above, Respondent is directed to pay a civil money penalty in the
amount of $250.00. This Order becomes final and binding upon both parties within
30 days of the date of its issuance pursuant to 21 C.F.R. § 17.11(b).

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.
DAL LLC d/b/a Spuds Bar & Grill,
Respondent.

Docket No. C-12-500
FDA Docket No. FDA-2012-H-0312

Decision No. CR2548

Date: June 11, 2012

INITIAL DECISION AND DEFAULT JUDGMENT

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

The complaint alleges the following facts. Respondent owns an establishment in
Phoenix, Arizona that sells tobacco products. CTP conducted inspections of the
establishment beginning in April of 2011. During an April 7, 2011 inspection, an FDA-
commissioned inspector observed that Respondent:

Fail[ed] to sell cigarettes or smokeless tobacco in a direct, face-to-face
exchange without the assistance of any electronic or mechanical device
in a facility that does not ensure that no person younger than 18 years of
2
age is present or permitted to enter, at any time, as required by 21 C.F.R.
§§ 1140.14(c) and 1140.16(c); and fail[ed] to ensure that all violative
items [were] removed or [were] brought into compliance with the
requirements of 21 C.F.R. Part 1140, as required by 21 C.F.R. § 1140.14(e).

(Compl. § 10.)

On July 7, 2011, CTP issued a warning letter to Respondent specifying the violations that
the inspectors observed. The letter warned Respondent that a failure to correct the
violations could result in the imposition of civil money penalties and that it was
Respondent’s responsibility to ensure compliance with the law. (Compl. J 10.) The CTP
did not receive a response to the warning letter. (Compl. § 11.)

During a two-part inspection on December 23 and 27, 2011, FDA-commissioned
inspectors observed that “a person younger than 18 years of age was able to purchase a
package of Newport Box cigarettes from the vending machine located in Spuds Bar &
Grill on December 23, 2011 at approximately 1:10 PM MST.” (Compl. 49.) Further,
CTP asserted that: “an employee told the inspector that minors are sometimes permitted
to enter the establishment with an adult.” Jd.

In compliance with 21 C.F.R. §§ 17.5 and 17.7, CTP served Respondent with a complaint
on April 11, 2012, via United Parcel Service. CTP charged Respondent with violating
the following regulations: 21 C.F.R. § 1140.14(a) (sale of tobacco products to a minor);
21 C.F.R. § 1140.14(b)(1) (failure to verify the age of a person purchasing tobacco
products by means of photographic identification containing the bearer’s date of birth);
21 C.F.R. § 1140.14(c) (use of a vending machine in a non-exempt facility); and

21 C.F.R. § 1140.14(e) (failure to remove all violative items or bring them into
compliance). Jd. CTP asked to impose a $5,000 civil money penalty based on five
alleged violations of the regulations in a 36-month period. (Compl. § 13.)

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

§ 17.9.

If a respondent does not file an answer within 30 days of a properly served complaint, the
regulations provide that the:
3
presiding officer shall assume the facts alleged in the complaint to be true,
and if such facts establish liability under the relevant statute, the presiding
officer shall issue an initial decision within 30 days of the time the answer
was due, imposing: (1) The maximum amount of penalties provided for by
law for the violations alleged; or (2) The amount asked for in the complaint,
whichever amount is smaller.

21 C.F.R. § 17.11(a). Further, a failure to file a timely answer means that “respondent
waives any right to a hearing and to contest the amount of penalties and assessments”
imposed in the initial decision. 21 C.F.R. § 17.11(b).

Accepting the facts alleged in the complaint as true, I find that those facts establish
Respondent’s liability under the Act. See 21 U.S.C. §§ 333(f)(9), 387c(a)(7)(B), 387£(d);
21 C.F.R. §§ 1140.1(b); 1140.14. Lalso find that CTP’s request to impose a $5,000 civil
money penalty is permissible. It is less than the maximum penalty allowed under the
regulations because CTP could have sought a $10,000 penalty based on Respondent’s six
alleged regulatory violations that occurred within 48 months. See 75 Fed. Reg. 73,951,
73,954 (Nov. 30, 2010) (to be codified at 21 C.F.R. § 17.2).

Order

For the reasons stated above, Respondent is directed to pay a civil money penalty in the
amount of $5,000. This Order becomes final and binding upon both parties within 30
days of the date of its issuance pursuant to 21 C.F.R. § 17.11(b).

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Michael Reiner, M.D.,
Petitioner
v.
Centers for Medicare and Medicaid Services.
Docket No. C-12-243
Decision No. CR2547

Date: June 11, 2012

DECISION DENYING REQUEST TO VACATE DISMISSAL

I deny the request of Petitioner, Michael Reiner, M.D., to vacate a previous order
dismissing this case. Petitioner has not shown good cause pursuant to 42 C.F.R. § 498.72
for vacating the Order Dismissing Case that I issued on April 25, 2012.

On April 30, 2012, this office received a Request to Vacate Dismissal (Request) and a
Declaration in Support of Request to Vacate Dismissal (Decl.) from Petitioner’s attorney.
This is the attorney’s first filing in this case, and she has not filed a Notice of Entry of
Appearance in accordance with my Acknowledgement and Pre-Hearing Order.

I previously issued an order dismissing this matter for abandonment pursuant to 42
C.F.R. § 498.69 after Petitioner failed to file an ordered pre-hearing exchange and
subsequently failed to respond to an Order to Show Cause. Petitioner now contends that
his failure to file a pre-hearing exchange and timely respond to an Order to Show Cause
was due to an error by his attorney. Petitioner claims he “informed his attorney . . . that
he was going out of town and would have the Order dropped off at her office. The Order
was misplaced and not calendared, and Counsel failed to timely respond.” Request at 2.
Petitioner’s attorney states:
[Petitioner] explained that the denial was due to a failure to include a re-
assignment of benefits form that was not submitted because the official

with whom he was dealing with discussed the requirements with him but

did not mention this one form. In spite of my clients [sic] clear instructions as to
the delivery and response required, my office completely failed to properly
docket, respond, and file this Order but misplaced it on the premises and to

date cannot locate said Order. When the Order to Show Cause was served, not
on counsel but on Petitioner, Petitioner sent it [to] me by email but I did not see
the email until shortly after the 10 day deadline. Upon seeing the Order to Show
Cause, I then recalled the earlier Order.

Decl. 4 4-5.'

Petitioner admits his attorney negligently failed to file a pre-hearing exchange and did not
timely respond to my Order to Show Cause issued on April 3, 2012. Request at 5.
Petitioner requests that my Order Dismissing Case be vacated and contends that
Petitioner should now be provided with the opportunity to submit his pre-hearing
exchange. Request at 5-6.

An administrative law judge (ALJ) may vacate a dismissal of a request for hearing if the
party files a request to vacate within 60 days from receipt of the dismissal notice, and the
party shows good cause for vacating the dismissal. 42 C.F.R. § 498.72. A definition of
“good cause” does not exist in the applicable regulations, and the “[Departmental
Appeals] Board has never attempted to provide an authoritative or complete definition of
the term ‘good cause’... .” Hillcrest Healthcare, L.L.C., DAB No. 1879, at 5 (2003).

Other ALJ’s have interpreted the term “good cause” as a circumstance or circumstances
beyond the party-litigant’s ability to control. See, e.g., Sedgewick Health Care Ctr., DAB
CR596 (1999); Jackson Manor Health Care, Inc., DAB CR545 (1998). One ALJ stated
that “the avoidable failure of counsel to discharge responsibilities on a [party’s] behalf or
the miscommunication between a [party] and its counsel have been found to constitute
avoidable human error, rather than circumstances beyond the [party’s] ability to control.”
Cmty. Care Ctr. of Seymour, DAB CR758 (2001). The ALJ also stated that “delays or
failures of communication caused by Petitioner’s former counsel . . . were entirely within
Petitioner’s control. It was Petitioner’s ultimate responsibility, as the party in interest, to
remain apprised of the status of its appeal ....” Id.; see also Sedgewick Health Care
Ctr., DAB CR596 (finding a misunderstanding between petitioner and its counsel
avoidable human error).

' The Declaration contains two paragraphs numbered 4.
Similarly, I find here that the lack of diligence of Petitioner’s new legal counsel does not
form the basis for a good cause determination. The circumstances Petitioner has
presented, while regrettable, were avoidable human error and not beyond Petitioner’s
ability to control. Therefore, I do not find good cause to vacate the previous dismissal
and deny Petitioner’s request.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
v.
Broadway Citgo, Inc.,
Respondent.

Docket No. C-12-439
FDA Docket No. FDA-2012-H-0258

Decision No. CR2543

Date: May 15, 2012

INITIAL DECISION AND DEFAULT JUDGMENT

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

The complaint alleges the following facts. Respondent owns an establishment in Melrose
Park, Illinois that sells tobacco products. In 2011, CTP conducted two inspections of the
establishment. During a March 24, 2011 inspection, an FDA-commissioned inspector
observed that Respondent:

Offer[ed] or caus[ed] to be offered a gift or item to any person purchasing
cigarettes or smokeless tobacco in consideration of the purchase thereof, or to any
person in consideration of furnishing evidence, such as credits, proofs-of-
purchase, or coupons, of such a purchase, in violation of 21 C.F.R. § 1140.34(b);
and fail[ed] to ensure that all violative self-service displays, advertising, labeling
and other items that are located in [Respondent’s] establishment [were] removed
2
or [were] brought into compliance with requirements of 21 C.F.R. Part 1140, as
required by 21 C.F.R. § 1140.14(e).

(Compl. § 10.)

On June 16, 2011, CTP issued a warning letter to Respondent specifying the violations
that the inspectors observed. The letter warned Respondent that a failure to correct the
violations could result in the imposition of civil money penalties and that it was
Respondent’s responsibility to ensure compliance with the law. (Compl. J 10.) The CTP
did not receive a response to the warning letter. (Compl. § 11.)

During a two-part inspection on October 31 and November 3, 2011, FDA-commissioned
inspectors observed that “a person younger than 18 years of age was able to purchase a
package of Newport Box cigarettes on November 3, 2011 at approximately 7:30 PM
CST.” (Compl. 4 9.) CTP charged Respondent with violating 21 C.F.R. § 1140.14(a)
(sale of tobacco products to a minor). Jd. CTP asked to impose a $250 civil money
penalty based on two alleged violations of the regulations in a 12-month period. (Compl.

413.)

In compliance with 21 C.F.R. §§ 17.5 and 17.7, CTP served Respondent with the
complaint on March 16, 2012, via United Parcel Service. Both the cover letter to the
complaint and the complaint provided detailed instructions related to filing an answer and
requesting an extension of time to file an answer. The letter and complaint stated that
failure to file an answer could result in the imposition of a civil money penalty against
Respondent. Respondent neither filed an answer nor requested an extension of time
within the 30 day time-period prescribed in 21 C.F.R. § 17.9.

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

presiding officer shall assume the facts alleged in the complaint to be true,
and if such facts establish liability under the relevant statute, the presiding
officer shall issue an initial decision within 30 days of the time the answer
was due, imposing: (1) The maximum amount of penalties provided for by
law for the violations alleged; or (2) The amount asked for in the complaint,
whichever amount is smaller.

21 C.F.R. § 17.11(a). Further, a failure to file a timely answer means that “respondent
waives any right to a hearing and to contest the amount of penalties and assessments”
imposed in the initial decision. 21 C.F.R. § 17.11(b).
3
Accepting the facts alleged in the complaint as true, I find that those facts establish
Respondent’s liability under the Act. See 21 U.S.C. §§ 333(f)(9), 387c(a)(7)(B), 387£(d);
21 C.F.R. §§ 1140.1(b), 1140.14. I also find that CTP’s request to impose a $250 civil
money penalty is permissible. It is less than the maximum penalty permitted under the
regulations because CTP could have sought a $500 penalty based on Respondent’s three
regulatory violations that occurred within 24 months. See 75 Fed. Reg. 73,951, 73,954
(Nov. 30, 2010) (to be codified at 21 C.F.R. § 17.2).

Order

For the reasons stated above, Respondent is directed to pay a civil money penalty in the
amount of $250.00. This Order becomes final and binding upon both parties within
30 days of the date of its issuance pursuant to 21 C.F.R. § 17.11(b).

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
v.
Mohammad Farhan, d/b/a Gas Express,
Respondent.

Docket No. C-12-438
FDA Docket No. FDA-2012-H-0257

Decision No. CR2542

Date: May 15, 2012

INITIAL DECISION AND DEFAULT JUDGMENT

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

The complaint alleges the following facts. Respondent owns an establishment in
Jackson, Mississippi that sells tobacco products. In 2011, CTP conducted two
inspections of the establishment. During a May 31, 2011 inspection, an FDA-
commissioned inspector observed that Respondent:

[Sold] cigarettes or smokeless tobacco products to a person younger than 18 years
of age, in violation of 21 C.F.R. § 1140.14(a); [and] fail[ed] to verify by means of
photographic identification, containing the bearer’s date of birth, that no person
2

purchasing cigarettes or smokeless tobacco is younger than 18 years of age, as
required by 21 C.F.R. § 1140.14(b)(1).

(Compl. § 10.)

On August 18, 2011, CTP issued a warning letter to Respondent specifying the violations
that the inspectors observed. The letter warned Respondent that a failure to correct the
violations could result in the imposition of civil money penalties and that it was
Respondent’s responsibility to ensure compliance with the law. (Compl. § 10.) The CTP
did not receive a response to the warning letter. (Compl. § 11.)

During a two-part inspection on November 17 and 29, 2011, FDA-commissioned
inspectors observed that “a person younger than 18 years of age was able to purchase a
package of Newport Box cigarettes on November 17, 2011, at approximately 5:32 PM
CST.” (Compl. 4 9.) CTP charged Respondent with violating 21 C.F.R. § 1140.14(a)
(sale of tobacco products to a minor) and 21 C.F.R. § 1140.14(b)(1) (failure to verify the
age of a person purchasing tobacco products by means of photographic identification
containing the bearer’s date of birth). Jd. CTP asked to impose a $500 civil money
penalty based on three alleged violations of the regulations in a 24-month period.
(Compl. § 13.)

In compliance with 21 C.F.R. §§ 17.5 and 17.7, CTP served Respondent with the
complaint on March 16, 2012, via United Parcel Service. Both the cover letter to the
complaint and the complaint provided detailed instructions related to filing an answer and
requesting an extension of time to file an answer. The letter and complaint stated that
failure to file an answer could result in the imposition of a civil money penalty against
Respondent. Respondent neither filed an answer nor requested an extension of time
within the 30-day time period prescribed in 21 C.F.R. § 17.9.

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

presiding officer shall assume the facts alleged in the complaint to be true,
and if such facts establish liability under the relevant statute, the presiding
officer shall issue an initial decision within 30 days of the time the answer
was due, imposing: (1) The maximum amount of penalties provided for by
law for the violations alleged; or (2) The amount asked for in the complaint,
whichever amount is smaller.

21 C.F.R. § 17.11(a). Further, a failure to file a timely answer means that “respondent
waives any right to a hearing and to contest the amount of penalties and assessments”
imposed in the initial decision. 21 C.F.R. § 17.11(b).
3

Accepting the facts alleged in the complaint as true, I find that those facts establish
Respondent’s liability under the Act. See 21 U.S.C. §§ 333(f)(9), 387c(a)(7)(B), 387£(d);
21 C.F.R. §§ 1140.1(b), 1140.14. I also find that CTP’s request to impose a $500 civil
money penalty is permissible. It is less than the maximum penalty allowed under the
regulations because CTP could have sought a $2,000 penalty based on Respondent’s four
regulatory violations that occurred within 24 months. See 75 Fed. Reg. 73,951, 73,954
(Nov. 30, 2010) (to be codified at 21 C.F.R. § 17.2).

Order

For the reasons stated above, Respondent is directed to pay a civil money penalty in the
amount of $500.00. This Order becomes final and binding upon both parties within
30 days of the date of its issuance pursuant to 21 C.F.R. § 17.11(b).

/s/
Scott Anderson
Administrative Law Judge