Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Falfurrias Nursing and Rehabilitation, L.P.,
(CCN: 67-5630),

Petitioner,

v.

Centers for Medicare & Medicaid Services.
Docket No. C-14-605
Decision No. CR3397

Date: September 30, 2014

DECISION

I sustain the determination of the Centers for Medicare & Medicaid Services (CMS) to
impose the following civil money penalty (CMP) remedies against Petitioner, Falfurrias
Nursing and Rehabilitation:

¢ $5550 per day for each day of a period that began on November 10, 2013 and that
ran through November 25, 2013; and

¢ $1000 per day for each day of a period that began on November 26, 2013 and that
ran through December 19, 2013.

I. Background

Petitioner is a skilled nursing facility doing business in the State of Texas. It participates
in the Medicare program. CMS determined to impose the remedies that I describe above
based on its conclusions that Petitioner failed to comply with several Medicare
participation requirements and that its noncompliance was so egregious as to comprise
constitute immediate jeopardy for Petitioner’s residents. Petitioner requested a hearing in

order to challenge CMS’s determination and the case was assigned to me. | directed the
parties to file briefs and proposed exhibits. The parties complied. The parties then
informed me that they did not require an in-person hearing. I allowed them to file a final
round of briefs.

CMS filed 36 proposed exhibits that it identified as CMS Ex. 1 —- CMS Ex. 36. Petitioner
filed four proposed exhibits that it identified as P. Ex. 1 — P. Ex. 4. I receive these
exhibits into the record.

IL. Issues, Findings of Fact and Conclusions of Law
A. Issues

The issues in this case are: whether Petitioner failed to comply substantially with
Medicare participation requirements; whether CMS’s determination of immediate
jeopardy level noncompliance was clearly erroneous; and whether CMS’s remedy
determinations are reasonable.

B. Findings of Fact and Conclusions of Law

CMS’s noncompliance and remedy determinations center around the care that Petitioner
gave to a resident who is identified as Resident # 1. Petitioner admitted the resident, a
69-year old man, on August 12, 2013. The resident had several medical problems and, in
addition, suffered from mild cognitive impairment. CMS Ex. 12 at 102. The resident
came to the facility with an indwelling Foley Catheter, which had been prescribed to
address problems that the resident had with urination caused, apparently, by benign
prostatic hypertrophy (enlargement of the prostate gland). Jd. at 90, 106, 134.

On November 8, 2013, Resident # 1 told Petitioner’s staff that he was sick. The staff
noted that the resident’s catheter was emitting a foul odor, that that there was blood in the
resident’s urine, and that the urine was concentrated. CMS Ex. 12 at 76; CMS Ex. 34 at
8; P. Ex. 1 at 19. The staff notified the resident’s physician, who ordered a urinalysis and
a culture and sensitivity test for the resident. CMS Ex. 12 at 156. On November 10, the
resident called for a nurse and explained that he was in so much pain that he removed his
catheter. /d.; P. Ex. 1 at 10-20.

By November 16, 2013, Resident # 1’s family noticed profound changes in the resident’s
mental state (including hallucinations and severe lethargy) and demanded that the
resident be transferred to a hospital. CMS Ex. 12 at 49; P. Ex. | at 31-32. He was
transferred later on that date and the hospital staff’s admitting assessment included
findings that the resident suffered from acute hypotension (low blood pressure) and
probably septicemia, obstruction prostatitis, and a urinary tract infection. CMS Ex. 12 at
48. The resident died on November 22, 2013. Jd. at 198.
CMS alleges that Petitioner failed in several respects to assure that the resident’s medical
needs were attended to during the period commencing on November 10, 2013, when the
resident pulled out his catheter. All of these assertions focus on the risk that Resident # 1
might retain urine in his bladder after he pulled out the catheter. That was an obvious
risk given that the catheter had been inserted to begin with because the resident was
retaining urine. Urinary retention is potentially a grave medical problem because it can
lead to severe adverse and even fatal consequences including bladder distention, kidney
failure, and sepsis. CMS Ex. 32 at 5. Moreover, these consequences can come on
suddenly when urine is retained. Jd. Thus, it is critically important that staff effectively
and accurately monitor any resident who is at risk for urine retention.

According to CMS, Petitioner’s first failure was that its staff failed to seek clarification of
a telephoned physician’s telephone order given to Petitioner’s staff on November 10,
after the resident pulled out his catheter. In that order the physician directed that the staff
not reinsert the catheter immediately, that it observe the resident for retention of urine,
and that it could reinsert the catheter if the resident retained more than 300 milliliters (ml)
of urine. CMS Ex. 12 at 76. CMS argues that the order was vague in that it did not:
clearly state the circumstances under which the staff should (as opposed to might)
reinsert the catheter; specify the frequency of checks that the staff should perform to
determine whether the resident was retaining urine; or, order an appropriate method for
the staff to assess retention. CMS argues that the staff should have identified these
ambiguities and that it should have asked the physician to clarify his order to resolve
those ambiguities.

Second, CMS contends that Petitioner failed to satisfy the professionally recognized
standard of care for dealing with residents who are at risk for urine retention. CMS
asserts that the standard of care is to use either ultrasound, or a “straight catheter” (quick
placement of a catheter in and out of the urethra) in order to measure the quantity of urine
that drains from the individual’s bladder. CMS Ex. 32 at 6. Additionally, the susceptible
individual’s input and output of fluids should be monitored. Jd. CMS argues that
Petitioner’s staff did none of this. Petitioner’s monitoring of Resident # 1 — to the extent
that any monitoring was done — consisted of relying on certified nursing assistants to
inform the staff about whether Resident # 1 was retaining urine. CMS Ex. 30 at 5; CMS
Ex. 35 at 2—3; CMS Ex. 36 at 2-4.

Third, CMS asserts that Petitioner failed to follow the resident’s physician’s order that
the resident be catheterized if he retained more than 300ml. of urine. CMS asserts that, in
fact, Petitioner’s staff never recorded how much urine the resident retained and failed to
employ any systematic or accurate measure for determining urine retention. CMS
closing brief at 10-11.

Finally, CMS argues that Petitioner never assessed Resident # 1 consistently for urine
retention. CMS argues that the clinical records that Petitioner’s staff maintained for the
resident fail to show any consistent monitoring. CMS closing brief at 11 — 12.

The record strongly supports these four allegations of misfeasance. To begin with, I
agree with CMS that the physician’s November 10 order was vague in that it did not
specify how or how precisely Petitioner was supposed to monitor the resident for urine
retention. As I find, above, urine retention is a potentially life-threatening condition. The
staff knew that Resident # 1 was at high risk for urine retention, not only because the
resident’s physician had expressed concern in ordering that the resident be monitored, but
also because the resident had a history of urine retention that necessitated that he have an
indwelling catheter. Given that, the staff should have asked for precise orders about how
to monitor the resident. At the very least, the staff should have planned what it was going
to do to protect Resident # 1 and that would have entailed asking the physician to be
more specific. But, the staff did nothing of the kind.

Petitioner does not rebut CMS’s allegations concerning the need for clarification of the
physician’s order. As I shall discuss in more detail below, Petitioner recites at length the
care that it provided for Resident # 1. But, on the issue of interaction with the resident’s
physician Petitioner says nothing that responds to CMS’s allegations. Indeed, Petitioner
concedes that the order was “poorly written,” a concession that is reinforced by the
testimony of Petitioner’s own expert. Petitioner’s pre-hearing brief at 11; P Ex. 3 at 3.
But, given that Petitioner’s staff received a poorly written and ambiguous order from the
resident’s physician, it imposed on the staff the duty to clarify the order and get more
precise instructions. Petitioner’s staff failed to do so and Petitioner offers no excuse for
that failure.

Likewise, Petitioner does not provide any meaningful rebuttal to CMS’s assertion that it
failed to comply with professionally recognized standards of care in providing care to
Resident # 1. It does not offer evidence showing that the standard of care is other than
what CMS contends it to be. It does not deny that ultrasound or a straight catheter can
and ought to be used to determine whether a resident is retaining urine.

Petitioner goes to some lengths to assert that measuring urine output is an exercise in
futility and, from that, it argues that it would have been useless for its staff to attempt to
do so in the case of Resident # 1. Thus, according to Petitioner: “In an incontinent
patient, it is not possible to measure urine output precisely, since the urine is not collected
in a container.” Petitioner’s pre-hearing brief at 19. From this, Petitioner argues that it
was reasonable for Petitioner’s staff to conclude that if the resident was passing any urine
ie was not experiencing an obstruction.

Petitioner’s argument boils down to this: it was difficult to measure the resident’s output
so it was useless to try to do it. That is no excuse, particularly with a resident such as
Resident # 1 who is at high risk for urine retention and potentially lethal consequences.
Petitioner never explains why, if it could not collect and measure urine from the resident,
it did not employ ultrasound to determine whether there was urine being retained in the
resident’s bladder. Nor does Petitioner explain its failure to use a straight catheter to
determine whether the resident was retaining urine.

Petitioner argues further that, since Resident # 1 was passing some urine after November
10, it was reasonable to conclude that there was no significant obstruction present in the
resident’s urinary tract. Petitioner’s pre-hearing brief at 19. That argument is a red
erring. The issue that Petitioner’s staff needed to deal with was the possibility that the
resident was retaining urine. The fact that he was passing quantities of urine did not
mean that he was successfully voiding and the risk to the resident from not successfully
voiding was potentially lethal, which is certainly significant, as I have discussed.

Petitioner also has not offered a persuasive response to CMS’s allegation that it failed to
follow the physician’s order to catheterize Resident # 1 if he retained more than 300ml.
of urine. At no point after November 10 did Petitioner’s staff attempt to catheterize the
resident. And, of course, it had no way of knowing whether catheterization was
necessary in that the staff wasn’t monitoring the resident for urine retention.

Petitioner argues that it could not catheterize Resident # 1 because the resident refused to
be catheterized. It characterizes the care that it gave to the resident as merely acceding to
the resident’s wishes. According to Petitioner, the resident’s wishes trump what might be
medically most appropriate for the resident. Thus, according to Petitioner, what it could
do for Resident # 1 was very much limited by what the resident was willing to allow
Petitioner’s staff to do for him.

However, Petitioner points to nothing in the resident’s record that establishes that
Petitioner presented the resident with the option of being catheterized and the resident
refused. There is no entry in the nursing notes for Resident # 1 offered by Petitioner that
establishes that. P. Ex. 1. One would expect that the notes would have reflected the
resident’s desire that was potentially a life-threatening decision, if it had been voiced.
That is particularly the case inasmuch as the staff dutifully recorded other refusals by the
resident such as his refusal to receive influenza vaccine. Jd. at 20.

What Petitioner seems to be relying on as evidence that the resident refused being treated
with a catheter is his removal of the catheter on November 10. But, and as Petitioner’s
records show, the resident acted on that occasion due to his complaints of pain. There is
nothing to show that the staff subsequently approached the resident about reinserting a
catheter and offered him appropriate pain medication to alleviate his pain. There is
likewise nothing to show that the resident would have refused reinsertion of the catheter
under those circumstances. P. Ex. 1. It is evident, and I find, that Petitioner’s staff
simply never brought up the subject of catheterization after the resident pulled the
catheter out on November 10 and never considered that re-catheterizing him might be
medically necessary.

There are numerous entries in the resident’s nursing notes to the effect that the resident
“voided.” P. Ex. 1. Ido not interpret these entries to mean that the staff actually
determined that the resident emptied his bladder. Rather, they signify only that the
resident excreted some quantity of urine. In order to determine whether the resident had
actually voided the staff would have had to perform some of the tests — ultrasound or
straight catheterization — that were devised to determine whether voiding had occurred.
Staff never performed these tests, so the assertion that the resident “voided” is, at best,
guesswork.

Petitioner did not assign its nursing staff the duty of monitoring the resident for retention
of urine. Rather — and astonishingly — it assigned that responsibility to certified nursing
assistants, individuals who lacked the necessary professional training. None of these
individuals could have performed the kind of tests or treatments, such as an ultrasound or
catheterization, which might have been required, because they lacked the qualifications to
do so. Moreover, it is clear that Petitioner’s nursing assistants had no idea what it was
that they were supposed to do in order to monitor the resident systematically for urine
retention. That is made evident by the statement of one of Petitioner’s nursing assistants,
who averred that she measured an incontinent resident’s urine output by determining the
number of times it was necessary to change the resident’s incontinence brief. CMS Ex.
35 at 2; CMS Ex. 36 at 3. The imprecision of that sort of “test” for urine retention is
obvious.

The evidence overwhelmingly supports CMS’s final assertion of misfeasance, that
Petitioner failed to assess Resident # 1 for the possibility that he was retaining urine. As I
discussed above, urine retention was a possibly life-threatening condition. It was,
therefore, critical, that Petitioner’s staff develop and implement a comprehensive
approach to determining whether the resident was retaining urine. The staff, obviously,
knew that the resident was at grave risk because he had worn a Foley Catheter during his
entire stay at the facility in order to preclude urine retention. Beginning November 10,
2013 the resident was without that device and, consequently, exceedingly vulnerable.

But, Petitioner’s staff did nothing that would assure that the resident was not retaining
urine. It did not obtain clarification from the resident’s physician about the
circumstances and the methodology for checking the resident for retention nor did it
implement measures such as ultrasound tests or straight catheterization that would
actually measure the quantity of urine in the resident’s bladder. At most, it used ad hoc
and primitive measures such as asking the facility’s nursing assistants to report whether
the resident’s incontinence briefs contained urine.

Petitioner asserts that its nursing staff dutifully recorded whether Resident # 1 was
retaining urine. Petitioner’s pre-hearing brief at 12 — 16. As alleged proof for this
assertion, Petitioner points to nursing notes that ostensibly show that the resident was not
exhibiting signs of bladder distention and was voiding, and therefore, not retaining urine.
P. Ex. 1 at 19-33.

I do not find these notes to be persuasive evidence that Petitioner was assessing the
resident for urine retention. If anything, the notes prove the opposite; that Petitioner’s
staff failed to implement the recognized measures that would have answered the question
of whether Resident # 1 was retaining urine. As I observe above, the notes frequently
contain statements that the resident was voiding. Those statements clearly were based on
the fact that the resident’s incontinence briefs were at times wet. But — and as Petitioner
itself asserts — urine in incontinence briefs is an utterly inaccurate measure of how much
urine a resident is producing and how much is retained. Indeed, Petitioner contends that
it is impossible to determine urine output by looking at what is in a resident’s briefs.
Petitioner’s pre-hearing brief at 19.

Moreover, palpating a resident’s abdomen in order to check for bladder distention is an
imprecise and often inaccurate test to determine whether a resident is retaining urine.
CMS Ex. 32 at 6. An individual can exhibit no signs of discomfort and distention and
still retain significant quantities of urine. Jd.

Furthermore, the nursing notes show that Petitioner’s staff was not even using imprecise
measures consistently to determine whether Resident # 1 was retaining urine. Petitioner
relies on 26 entries that cover the period from November 10 through November 16, 2013.
Petitioner pre-hearing brief at 12-16. But, eleven of them say nothing about whether the
resident had urinated or exhibited signs of bladder distention or discomfort. Jd.; P. Ex. 1
at 20 — 29.

CMS alleges that Petitioner’s misfeasance in caring for Resident # 1 constitutes
substantial noncompliance with four regulations. These are:

© 42C.F.R. § 483.13(c), which, among other things, requires a skilled nursing
facility staff to develop and implement policies that prevent resident neglect;

e 42C.F.R. § 483.25, which requires a facility to provide each resident with a
quality of care and services necessary to attain the highest practicable physical,
mental, and psychosocial well-being in accordance with that resident’s
comprehensive plan of care;

© 42 C.F.R. §§ 483.20(k)(3)(i) and (k)(3)(ii), which require that a facility provide
care that meets professional standards of quality and that care be furnished by
qualified persons in accordance with a resident’s written plan of care; and
© 42C.F.R. § 483.75, which requires a facility to be administered in a manner that
enables it to use its resources effectively and efficiently to attain or maintain the
highest practicable physical, mental, and psychosocial well-being of each resident.

The evidence amply, indeed, overwhelmingly supports CMS’s allegations of
noncompliance. First, it is evident that Petitioner neglected the needs of Resident # 1.
The regulatory definition of “neglect” is “failure to provide goods and services necessary
to avoid physical harm, mental anguish, or mental illness.” 42 C.F.R. § 488.301.
Petitioner’s failure to obtain clarification of the November 10 telephoned physician’s
order and its failure to implement any systematic measures to determine whether the
resident was retaining urine constituted neglect by any measure. Checking the resident
systematically for urine retention was absolutely necessary. Petitioner’s failure to do so
put the resident at risk for extremely grave consequences.

Second, the evidence establishes failure by Petitioner to provide Resident # 1 witha
quality of care necessary for him to attain his highest practicable level of functioning. It
was not simply important that the resident be monitored for urine retention; it was critical
that Petitioner’s staff perform such monitoring. The staff’s failure to do so put the
resident at risk.

Third, Petitioner did not provide Resident care that met professionally recognized
standards of care. That is made obvious by the staff’s failure to use standard measures to
monitor the resident’s urine output or to clarify the physician’s November 10 order.

Finally, Petitioner’s management failed utterly to assure that Resident # 1 received care
in accordance with recognized standards of care. In any skilled nursing facility it is the
facility management that bears ultimate responsibility for assuring that each resident
receives care that meets professional standards of quality. The failure by Petitioner’s
staff to provide such care to Resident # 1, over a period of about a week, shows a
disregard by Petitioner’s management for the performance of its staff and a failure to
assure that the staff did its job correctly.

Petitioner makes several arguments to support its assertion that it complied with
regulatory requirements. I have dealt with Petitioner’s asserted rebuttals to CMS’s
allegations of fact and will not repeat them here. But, Petitioner makes some other
arguments and I address those now.

First, Petitioner contends that it made reasonable assumptions about Resident # 1’s
condition based on the fact that he was passing urine. Petitioner asserts: “It was...
reasonable to conclude, that since Resident No. | is passing urine he does not have a
significant obstruction.” Petitioner’s pre-hearing brief at 19. That was not a reasonable
assumption, because the fact that the resident passed some urine did not mean that he was
passing ail of the urine that accumulated in his bladder. Nor did the fact that the resident
did not have a complete obstruction of his urethra mean that he was passing all of the
urine that he accumulated. Petitioner should have known that and its failure to take the
possibility that the resident was retaining urine into consideration was an error that put
the resident at risk for grave harm or death.

Second, Petitioner argues that the resident was not denied a service by Petitioner’s staff.
“At worst,” according to Petitioner, “he was denied a perfect service.” Petitioner’s pre-
hearing brief at 19. Petitioner asserts that lack of perfection is not neglect. That
argument is wrong in fact and as a matter of law. It is wrong in fact because Petitioner
was denied a service. Petitioner did nothing effective to monitor the resident’s urine
output or to determine systematically if the resident was retaining urine. It is wrong also
as a matter of law because “neglect” has never been interpreted to mean a complete
denial of a service. Partial denial of a service or providing shoddy care certainly can
constitute neglect if it is significant and if it potentially adversely affects a resident.

Next, Petitioner recites a litany of services that it contends its staff gave to Resident # 1.
This, according to Petitioner, proves that its staff was responsive to the resident’s needs.
The services that Petitioner contends it gave include:

e Antibiotic therapy administered to Resident # 1 after November 12, 2013;
e Honoring the resident’s wishes and directive not to be treated with a catheter;
e Monitoring the resident for signs of urine retention;

e Contacting the resident’s physician when the resident’s family demanded that he
be transferred to a hospital; and

e Honoring the resident’s initial desire not to be transferred to a hospital.

Some of these services have nothing to do with the issue of whether the staff dealt
effectively with the danger that the resident might retain urine. Providing the resident
with prescribed antibiotics and acceding to the resident’s and the resident’s family’s
wishes about transfer are elements of care that should have been provided whether or not
the resident was retaining urine. I have addressed previously Petitioner’s assertion that
Resident # 1 wished and directed that he not be treated with a catheter after November
10, 2013 and I find that assertion to be unsupported. I also find to be unsupported, for all
of the reasons that I have stated, Petitioner’s assertion that it monitored the resident for
signs of urine retention.

In its final brief Petitioner makes a long argument asserting that it was bound to follow
Resident # 1’s physician’s wishes because to do otherwise would constitute the
“corporate practice of medicine,” unlawful under Texas law. It then refers to a
10

declaration by the resident’s physician, Jose M. Lozano, M.D., as evidence that “the
physician makes clear that he discontinued the catheter and did not expect Petitioner’s
staff to use a catheter to obtain input and output.” Petitioner’s closing brief at 8; P. Ex. 4
at 1-2. From this, Petitioner suggests that it would have unlawfully engaged in the
“corporate practice of medicine” under Texas law if it had, on its own volition, re-
catheterized Resident # 1 or taken other measures to determine quantitatively whether the
resident was retaining urine.

But, no one has argued, and I do not find, that Petitioner should have violated the
resident’s physician’s orders in providing care to Resident # 1. Petitioner’s staff simply
needed to seek clarification of Dr. Lozano’s November 10, 2013 order. If the physician
had directed Petitioner not to catheterize the resident again and ruled out ultrasound or
other objective measures for determining whether the resident was retaining urine, this
would be a different case.'

But, that isn’t what happened. Dr. Lozano’s order of November 10 was, as Petitioner
concedes, ambiguous. It left it to the staff’s imagination what measures to take to protect
Resident # 1 against possible urine retention. That ambiguity imposed on the staff the
absolute duty to discuss in detail the resident’s condition and possible problems with Dr.
Lozano and they did not do that.

Moreover, despite what Dr. Lozano says now, he absolutely left open the possibility that
the staff should re-insert the resident’s catheter. His order expressly said that the staff
should do that if the resident retained more than 300ml. of urine. His assertion now that
he did not expect that the resident would be re-catheterized is not credible given the fact
that his order envisioned that possibility.

Furthermore, his assertion that the staff was adequately monitoring the resident for urine
retention based on the fact that the resident was passing some urine is utterly incredible.
How was the staff supposed to know whether the resident was retaining urine if it did no
objective measurements? How was the staff supposed to know whether to reinsert a
catheter if the resident retained more than 300ml. of urine given that the staff was doing
no objective measurements to determine whether the resident was retaining urine? Dr.
Lozano doesn’t answer these questions.

' Other quality of care issues might have been raised had Dr. Lozano explicitly ruled out
re-catheterizing Resident # 1, depending on Dr. Lozano’s relationship with Petitioner. I
do not address these possible other issues here.
11

CMS determined that Petitioner’s noncompliance with regulatory requirements put
residents of the facility at immediate jeopardy. Regulations define “immediate jeopardy”
to be noncompliance that causes, or is likely to cause, serious injury, harm, impairment,
or death to a resident or residents of a facility. 42 C.F.R. § 488.301.

The evidence strongly supports CMS’s determinations of immediate jeopardy level
noncompliance. There is no basis for me to conclude that those determinations were
clearly erroneous.

It is not necessary for me to find that Petitioner’s misfeasance caused Resident # 1 to
deteriorate or caused his death in order to find immediate jeopardy level noncompliance.
Indeed, I would find immediate jeopardy level noncompliance even if Resident # 1
suffered no adverse consequences during the period between November 10, 2013 and his
death. The issue here is whether Petitioner’s misfeasance created a likelihood that the
resident would suffer from severe adverse consequences and I find that the evidence
unequivocally supports a finding that it did.

As I have discussed, urine retention is a potentially life-threatening condition. Retained
urine can be a breeding ground for pathogenic organisms. It can lead to septicemia and
death. See CMS Exs. 32, 34. It was, therefore, critical that Petitioner’s staff knew
whether the resident retained urine after November 10, 2013. That, it could only
determine through objective tests such as ultrasound or straight catheterization.
Petitioner’s staff failed utterly to provide such care to Resident # 1. It failed to discuss
the problem of likely retention with the resident’s physician. It failed to consider whether
the resident needed more than the ad hoc and haphazard assessments that Petitioner
directed its nursing assistants to perform. And, these failures put the resident at grave
risk for suffering the consequences of retained urine. Whether or not the resident actually
retained urine is irrelevant. It is the failure to rule out that possibility that comprises
immediate jeopardy here.

Petitioner has not offered any argument or evidence to challenge CMS’s remedy
determinations except to assert that they are “punitive” based on its contention that it did
not violate regulatory requirements. | find this assertion to be without merit.

Regulations state that civil money penalties for immediate jeopardy level noncompliance
must fall within a range of from $3050 to $10,000 per day. 42 C.F.R. § 488.438(a)(1)(i).
Civil money penalties for non-immediate jeopardy level noncompliance must fall within
a range of from $50 to $3000 per day. 42 C.F.R. § 488.438(a)(1)(ii). Where within these
ranges any given penalty should fall depends on the application of factors set forth at

42 C.F.R. §§ 488.438(f)(1) — (4) and 488.404 (incorporated by reference into 42 C.F.R.

§ 488.438(f)(3)). These factors may include the seriousness of a facility’s
noncompliance, its culpability, its compliance history, and its financial condition.
12

Here, the penalties that CMS imposed are modest in terms of their daily amounts.” The
immediate jeopardy level penalties of $5550 per day imposed by CMS are only slightly
more than one half of the maximum permissible amount. The non-immediate jeopardy
level penalties of $1000 per day are only one third of the maximum permissible amount.

These modest penalties appear even more modest in light of the seriousness of
Petitioner’s noncompliance. Petitioner’s staff failed completely to deal with the
possibility that Resident # 1 was suffering from a potentially life-threatening condition.
The staff failed to recognize the problem, it failed to get meaningful treatment orders, and
it failed utterly to do the monitoring and assessments that it should have done, thereby
jeopardizing the resident’s safety and his life. The penalties imposed by CMS are
entirely reasonable given this misfeasance.

CMS alleged, and I have found, that Petitioner failed to comply substantially with several
Medicare participation requirements and that this noncompliance was so egregious as to
put residents of Petitioner’s facility at immediate jeopardy. I stress that it is not necessary
to find that Petitioner manifested immediate jeopardy level noncompliance with all of the
regulations cited by CMS. I would sustain the remedies determined by CMS if Petitioner
was noncompliant, at the immediate jeopardy level, with any one of the regulations that
CMS cited.

/s/
Steven T. Kessel
Administrative Law Judge

> Petitioner offered no argument about the duration of the penalties. In other words, it
did not contend that, if it was noncompliant, it re-attained compliance at a date earlier
than that was determined by CMS. I do not address the potential issue of duration of
noncompliance given that Petitioner has not raised it.


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Devices and Radiological Health,
Complainant,
v.
Brigitte Alzate,
Respondent.

Docket No. C-14-866
FDA Docket No. FDA-2014-H-0361

Decision No. CR3395

Date: September 30, 2014

DECISION

The Food and Drug Administration’s (FDA) Center for Devices and Radiological Health
(CDRH) filed an administrative complaint (Complaint) against Respondent, Brigitte
Alzate, alleging that she and three other respondents violated the Mammography Quality
Standards Act of 1992 (MQSA), codified at 42 U.S.C. § 263b, and its implementing
regulations. CDRH sought to impose an $83,750 civil money penalty against
Respondent. Respondent filed an answer to the Complaint that generally denied CDRH’s
allegations. Respondent also moved to dismiss the Complaint for lack of subject-matter
jurisdiction. CDRH subsequently moved for summary decision, which Respondent has
not opposed.

I consider the facts stated in CDRH’s motion for summary decision and its supporting
exhibits to be undisputed. Based on those undisputed facts, and as explained below,

I deny Respondent’s motion to dismiss the Complaint (R. Mot.), grant CDRH’s motion
for a summary decision, and impose an $83,750 civil money penalty on Respondent.
I. Background and Procedural History

CDRH issued a Complaint dated March 24, 2014, that named the following as
respondents: Brigitte Alzate, Oscar Alzate, Digital Radiology Center, Inc. (DRC), and
William B. Smith, M.D.' The Complaint alleged, among other things, that DRC violated
several provisions of the MQSA and that Respondent, as an operator and employee of
DRC, was also liable under the MQSA and subject to a civil money penalty. CDRH
sought imposition of an $83,750 civil money penalty on Respondent. On April 22, 2014,
Respondents Brigitte Alzate, Oscar Alzate, and DRC filed, pro se, a joint request for an
extension to file their answers to the Complaint. In my April 30, 2014 Acknowledgment
and Pre-hearing Order, I granted a 30-day extension and set May 27, 2014, as the date on
which those three respondents had to file their answers. Respondents Brigitte Alzate and
Oscar Alzate, now represented by the same attorney, filed a joint answer on May 27,
2014, which generally denied the allegations in CDRH’s Complaint. Respondent DRC,
however, did not timely answer the Complaint.”

On June 2, 2014, Respondents Brigitte Alzate and Oscar Alzate, through their attorney,
filed a motion to dismiss CDRH’s Complaint. Following a series of additional motions
from the parties, on June 27, 2014, I issued an omnibus order (June 27 Order), that
addressed several procedural deadlines as well as a request from Respondent’s attorney
(who also represented Oscar Alzate) to withdraw as counsel. I acknowledged the
attorney’s withdrawal and directed him to “ensure that his withdrawal is not [done] in a
way that interferes with the speedy, orderly, or fair conduct of this proceeding,” and to
“fully [comply] with his ethical obligations as a Florida attorney under Rule 4-1.16 for
the Florida Rules of Professional Conduct.” June 27 Order at 2. Based on CDRH’s
stated intent to file a motion for summary decision, I also ordered that CDRH had until

' The Director of the Civil Remedies Division (CRD) of the Departmental Appeals
Board docketed each respondent under a separate CRD docket number. Respondent
Smith filed a timely answer to the Complaint as well as a motion to dismiss the
Complaint as it pertained to him. CDRH did not oppose the dismissal. It appears that
Respondents Brigette Alzate and Oscar Alzate had been using Respondent Smith’s name,
without authorization, in matters related to DRC in order to make it appear that
Respondent Smith owned DRC. The Alzates apparently did this to avoid needing a
Florida license for DRC. If DRC had been owned by a physician, such as Respondent
Smith, the Alzates believed that Florida law did not require DRC to have a state license.
CDRH Ex. C. However, Respondent Smith did not own DRC. Therefore, on June 6,
2014, I dismissed the Complaint against Respondent Smith (CRD Docket No. C-14-868).

2 On June 24, 2014, I issued an Initial Decision and Default Judgment in which

I concluded that DRC was liable under the MQSA and imposed a $2,920,000 civil money
penalty against DRC. See Ctr. for Digital & Radiological Health v. Digital Radiology
Ctr., Inc., DAB CR3270 (2014).
July 2, 2014 to respond to Respondent’s motion to dismiss, and until July 25, 2014 to file
a motion for summary decision. June 27 Order at 2. I provided both Respondent and
Oscar Alzate 30 days to respond to any CDRH motion for summary decision. June 27
Order at 2. I stayed responses to any open discovery requests as well as all future
prehearing submissions pending the resolution of any dispositive motion. June 27 Order
at 2-3. A copy of the June 27 Order was served by U.S. mail to Respondent’s home and
business addresses in addition to her recently withdrawn attorney.

On July 3, 2014, CDRH filed a motion for summary decision and supporting brief
(CDRH Br.), which also included its opposition to Respondent’s motion to dismiss.
Counsel for CDRH certified that she served Respondent with a copy of the motion by
first-class mail to both Respondent’s withdrawn attorney and Respondent’s known
business address. Pursuant to my June 27 Order and applicable regulation, Respondent
had until August 7, 2014, to respond to CDRH’s motion for a summary decision. June 27
Order at 2; see 21 C.F.R. § 17.30(c) (providing an additional five days to respond if a
document was served by mail). Respondent did not oppose or respond in any way to the
motion for a summary decision.

IL. Issues
This case presents the following issues:

1. Whether I have subject-matter jurisdiction to decide if Respondent Brigitte Alzate
is liable for a civil money penalty under 42 U.S.C. § 263b(h);

2. Whether the undisputed facts establish Respondent Brigitte Alzate is liable
under 42 U.S.C. § 263b(h) for a civil money penalty; and

3. If there is a basis to impose a civil money penalty, whether an $83,750 civil
money penalty against Respondent Brigitte Alzate is an appropriate amount.

> CDRH filed its opposition to Respondent’s motion to dismiss one day later than the
deadline I established in my June 27 Order. However, CDRH likely did not receive the
June 27 Order in the mail until after the deadline set for CDRH to file its opposition. See
21 C.F.R. § 17.30(c). This is supported by the fact that CDRH’s opposition contains
language indicating it had not yet received my June 24 Initial Decision and Default
Judgment against DRC (DAB CR3270), and, therefore, likely had also not received the
June 27 Order at that time. See CDRH Motion for a Summary Decision at 2 n.1.
Further, Respondent has not moved to strike CDRH’s opposition. Therefore, I accept
CDRH’s opposition.
II. Statutory and Regulatory Framework

The MQSA requires a mammography facility to have a valid certificate to perform
mammography scans. 42 U.S.C. § 263b(b)(1). The Secretary of Health and Human
Services (Secretary) may issue a certificate for a maximum of three years to a facility
only after its owner or lessor provides statutorily-required information, including the
types of machines used for mammography scans, procedures used in the facility to
provide mammography, proof of an on-site medical physicist, and proof of accreditation
by an accreditation body that the Secretary, acting through the FDA, has approved.

42 U.S.C. § 263b(c), (d)(1); 21 C.F.R. § 900.11(a), (b)(1). FDA performs annual
inspections of facilities certified to perform mammography to ensure the facility’s
compliance with the MQSA including all of the “quality standards” set forth in 42 U.S.C.
§ 263b(f). 42 U.S.C. § 263b(g)(1)(E).

If upon inspection FDA determines that the quality of mammograms performed in a
facility is inconsistent with the requirements in the MQSA, FDA may impose a variety of
sanctions in lieu of suspending or revoking a valid certificate. Jd. § 263b(h)(1). The
MQSA authorizes FDA to, among other things, require the facility to notify patients who
received mammograms at the facility of the deficiencies posing a risk, the potential harm,
and any remedial steps to be taken. Jd. § 263b(h)(2). The MQSA also permits FDA to
assess a civil money penalty not to exceed $11,000 for:

(A) failure to obtain a certificate as required by subsection (b) of this
section,

(B) each failure by a facility to substantially comply with, or each day on
which a facility fails to substantially comply with, the standards established
under subsection (f) of this section or the requirements described in
subclauses (I) through (III) of subsection (d)(1)(B)(ii) of this section,

(C) each failure to notify a patient of risk as required by the Secretary
pursuant to paragraph (2), and

(D) each violation, or for each aiding and abetting in a violation of, any
provision of, or regulation promulgated under, this section by an owner,
operator, or any employee of a facility required to have a certificate.
42 U.S.C. § 263(h)(3); see 21 C.F.R. § 17.2. The MQSA requires the Secretary to
“develop and implement procedures with respect to when and how each of the sanctions
is to be imposed under paragraphs (1) through (3),” which must include proper notice to
the facility owner or operator as well as an opportunity to respond and appeal a sanction
determination. 42 U.S.C. § 263(h)(4). The Secretary has promulgated these procedures
in 21 C.F.R. pt. 17.

IV. Jurisdiction

Respondent argues in her motion to dismiss the Complaint that I do not have “subject
matter jurisdiction” over her case. R. Mot. at 3. Respondent asserts that she is making a
“factual attack on the tribunal’s power to consider this matter,” because she was never the
“owner, operator, or employee” of DRC, and therefore cannot be the subject of a civil
money penalty action taken pursuant to the MQSA. R. Mot. at 4.

“Subject matter jurisdiction” refers to a tribunal’s jurisdiction “over the nature of the case
and the type of relief sought.” Black’s Law Dictionary 870 (8th ed. 2004). In a “factual
attack” of a tribunal’s subject-matter jurisdiction, “the presumption of truthfulness
afforded a plaintiff under Federal Rule of Civil Procedure 12(b)(6) does not attach, and
the [tribunal] is free to weigh the evidence.” Lawrence v. Dunbar, 919 F.2d 1525, 1529
(11th Cir. 1990). However, if a factual attack of subject-matter jurisdiction implicates an
element of the underlying claim then the “proper course of action for the [tribunal] . . . is
to find that jurisdiction exists and deal with the objection as a direct attack on the merits
of the plaintiffs case .... Judicial economy is best promoted when the existence of a
federal right is directly reached and, where no claim is found to exist, the case is
dismissed on the merits.” Jd. (quoting Williamson v. Tucker, 645 F.2d 404, 412 (Sth Cir.
1981)).

The Secretary may impose civil money penalties on a facility that conducts breast cancer
screening or diagnosis through mammography activities if it fails to comply with MQSA
requirements. 42 U.S.C. § 263b(h)(3). The Secretary may also impose civil money
penalties on the “owner, operator, or any employee of a facility required to have a
[MQSA] certificate” if that individual aids and abets a facility’s violation of the MQSA.
Id. § 263b(h)(3)(D).

The Secretary has delegated her authority to bring civil money penalty actions under the
MQSA to FDA, and, in turn, CDRH. If CDRH files a Complaint seeking a civil money
penalty under the MQSA, then the procedures in 21 C.F.R. pt. 17 apply. 21 C.F.R.

§ 17.1(h); see also 42 U.S.C. § 263b(h)(4). Those regulations require that an
administrative law judge, qualified under the Administrative Procedure Act, be assigned
to preside over any case initiated with the filing of a Complaint. 21 C.F.R. §§ 17.3(c),
17.5(d). Under an agreement between FDA and the Departmental Appeals Board, CDRH
filed its Complaint against Respondent with the Civil Remedies Division (CRD). The
CRD director administratively assigned this case to me for adjudication. The regulations
vest me with subject-matter jurisdiction to determine whether CDRH has a basis to
impose a civil money penalty under the MQSA.

In considering this motion, I note that the regulations governing this proceeding do not
include a provision for dismissal of the Complaint, except as a sanction. See 21 C.F.R.

§ 17.35(e). Although this does not mean that I do not have authority to dismiss a case for
reasons other than as a sanction, I am mindful that the regulations do not provide a
standard for dismissal, and I will not do so unless it appears entirely appropriate. In the
present case, Respondent premises her motion to dismiss on the fact that she was never
an owner, operator, or employee of DRC, yet she did not present any evidence with her
motion that supports her assertions. More importantly, whether an individual is an
owner, operator, or employee of a acility subject to MQSA requirements is a critical
element of a civil money penalty claim against that individual. 42 U.S.C.

§ 263b(h)(3)(D). Respondent’s argument directly questions the merits of CDRH’s claims
against her, which cannot be disposed of through dismissal for want of jurisdiction. See
Lawrence, 919 F.2d at 1529. CDRH has the authority to bring an action for a civil
money penalty pursuant to the MQSA and, as discussed above, I have the authority to
hear and decide such a case. Respondent’s factual challenge to my subject-matter
jurisdiction is unsupported and hinges on an element of CDRH’s claim against her.
Therefore, I deny Respondent’s motion to dismiss for lack of subject-matter jurisdiction.

V. Discussion of the Merits
A. Summary decision is appropriate.

Summary decision is appropriate if “the pleadings, affidavits, and other material filed in
the record, or matters officially noticed, show that there is no genuine issue as to any
material fact and that the [moving] party is entitled to summary decision as a matter of
law.” 21 C.F.R. § 17.17(b). Here, CDRH moved for a summary decision and provided
affidavits and supporting exhibits. Respondent did not respond to or, in any other way,
dispute the affiants’ claims or any of the supporting documentation, even though she
expressly has the right to do so. See id. § 17.17(a). Thus, this evidence is undisputed.
The only remaining issue is whether the facts established by this undisputed evidence
demonstrate that CDRH is entitled to judgment as a matter of law. As discussed below, I
conclude that it does. Therefore, summary decision is proper in this case.
B. The undisputed facts demonstrate that Respondent Brigitte Alzate
violated the MQSA and is subject to a civil money penalty.

As noted above, Respondent did not oppose CDRH’s motion for a summary decision.
But even if a motion is unopposed, “the moving party still bears the burden of identifying
‘the pleadings, depositions, answers to interrogatories, and admissions on file, together
with the affidavits, if any,’ which it believes demonstrates the absence of a genuine issue
of material fact.” Mann v. Taser Intl., Inc., 588 F.3d 1291, 1301 (11th Cir. 2009) (citing
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). A tribunal cannot merely grant
summary disposition because a motion is unopposed, but “must consider the merits of the
motion.” United States v. One Piece of Real Property Located at 5800 SW 74th Ave.,
Miami, Florida, 363 F.3d 1099, 1101 (11th Cir. 2004). The tribunal “need not sua sponte
review all of the evidentiary materials on file at the time the motion is granted, but must
ensure that the motion itself is supported by evidentiary materials. At the least, the
tribunal] must review all of the evidentiary materials submitted in support of the motion
for summary judgment.” Jd. at 1101-02.

The motion for summary decision, supporting brief, and supporting exhibits establish the
following facts: DRC was incorporated on August 2, 2010, in Florida, with Respondent
listed as DRC’s President until May 2012.* DRC, Inc. is the corporate owner of the DRC
facility that requires MQSA certification. Oscar Alzate told the FDA that he was the
manager and Respondent the assistant manager of the DRC facility. CDRH Ex. B 4 10.
Respondent was also listed on corporate documents as DRC’s treasurer. See R. First
Request for Judicial Notice, Ex. D. On August 19, 2010, FDA issued a provisional
certificate to the DRC facility so that it could obtain clinical images and test materials as
part of the accreditation process. CDRH Ex. A § 23. On February 16, 2011, FDA
notified DRC that the DRC facility failed the initial accreditation process and had to
cease performing mammography services. CDRH Ex. A § 24, Attach. 7. Soon
thereafter, DRC sought reinstatement from the American College of Radiology (ACR) an
FDA-approved accreditation body. In the reinstatement application, Respondent was

* CDRH provided evidence that Respondent and Oscar Alzate previously managed a
mammography facility named Medisound, but the Medisound facility did not comply
with MQSA standards. CDRH Ex. A §§ 15-19; CDRH Ex. B, Attach. 2. In 2009 and
2010, inspectors found that the Medisound facility performed mammography 213 times
after its MQSA certificate expired. CDRH Ex. A § 19. FDA directed Medisound to
notify all at-risk patients of the risk problems, but Medisound failed to do so. CDRH Ex.
A420. FDA then issued a “Safety Notification” about the mammography issues at the
Medisound facility. CDRH Ex. A § 20. Medisound notified the American College of
Radiology on August 10, 2010, that it had ceased performing mammography. CDRH Ex.
A421. CDRH points out that the DRC facility is at the same location as the Medisound
facility, but uses a different side of the building for its street address. CDRH Br. at 9;
CDRH Ex. B 47.
listed as the “Facility president or CEO” and as the facility contact. CDRH Ex. A § 25,
Attach. 8, at 4. On April 20, 2011, the Florida Bureau of Radiation Control, under
contract with FDA, conducted an inspection of the DRC facility to ensure compliance
with MQSA. The inspectors found that the DRC facility did not comply with the MQSA
and provided Respondent with a copy of the inspection report and noncompliance
finding. CDRH Ex. B § 8, Attach. 4. On May 12, 2011, Respondent sent a facsimile to
ACR under the DRC letterhead, which stated that in August 2010, DRC had purchased
the mammography equipment from Medisound, Inc., and that DRC “continued to employ
Brigitte Alzate ....” CDRH Ex. A § 26, Attach. 9, at 2.

ACR notified DRC on May 24, 2011, that the DRC facility’s MQSA accreditation was
denied effective June 3, 2011, and recommended that DRC cease conducting
mammography services. CDRH Ex. A § 27, Attach. 10. ACR copied Respondent on the
notice letter. ACR determined that the DRC facility was “essentially operating as the
previously revoked mammography facility, Medisound, Inc.” CDRH Ex. A § 27. On
June 6, 2011, FDA notified DRC that it was no longer certified because it did not meet
the MQSA certification requirement and that it must cease performing mammography.
CDRH Ex. A § 28. FDA also warned DRC that if the facility continued to perform
mammography without the appropriate certification, it could be subject to a civil money
penalty of up to $10,000 per day. CDRH Ex. A, Attach. 11, at 2. The DRC facility
received the FDA notice letter on June 8, 2011, which was signed for by “ALZATE.”
CDRH Ex. A, Attach 11, at 4.

One year later, on June 6, 2012, Respondent and Oscar Alzate faxed a letter to ACR titled
“LETTER DISPUTING INFORMATION ON OUR FACILITY”; Respondent’s and
Oscar Alzate’s names are both on the letter, although Oscar Alzate was listed as the DRC
facility’s manager. CDRH Ex. A, Attach. 12.

From September 6 to September 12, 2012, two FDA investigators, along with an
inspector from the Florida Bureau of Radiation Control, conducted an unannounced
inspection of DRC. CDRH Ex. B § 10. Oscar Alzate identified himself to the
investigators as the manager of DRC and Respondent as the assistant manager of DRC,
who assisted him in the day-to-day operations of the facility, “including requesting and
receiving mammography assessment results needed to correlate biopsy results with the
interpreting physician’s findings, working the front desk, taking phone calls, and helping
check in patients.” CDRH Ex. B 4 10. Oscar Alzate provided the FDA inspectors with a
report showing that the DRC facility performed at least 1,922 mammograms between
August 1, 2011, and September 10, 2012, the period that the DRC facility did not have
the required MQSA certificate. Oscar Alzate told investigators that approximately ten
percent of the patients provided mammography films from another facility to the DRC
facility for review. CDRH Ex. B, Attach. 6. The investigators concluded that the DRC
facility performed 1,730 mammograms from June 8, 2011, when the DRC facility
received the FDA’s notice letter, to September 6, 2012, the last date the DRC facility
performed mammography, for a total of 315 business days. CDRH Ex. B § 11.

The FDA investigators also determined that DRC failed to implement and document a
quality assurance and quality control program that substantially complied with MQSA
quality standards. CDRH Br. 12; CDRH Ex. B ff 12-14. The investigators documented
15 “Level 2” observations” including: the use of an unaccredited mammography unit; the
failure to follow the manufacturer-recommended quality control procedures for the
mammography unit, monitor, and laser printer; the failure to obtain biopsy results for
mammograms performed; and the failure to produce documents verifying that training
requirements for interpreting physicians had been met. Investigators also found
documents in a shred bin that DRC was required to maintain. CDRH Ex. B§ 14. The
inspectors found three “Level 3” violations. The FDA investigators provided Oscar
Alzate with a copy of the inspection report on September 12, 2012. CDRH Ex. B § 15.

On September 12, 2012, Oscar Alzate provided the FDA investigators with a written
affidavit, in which he again identified himself as the manager of the DRC facility and
“responsible for all of the activities related to mammography at this location.” CDRH
Ex. B, Attach. 5.° He acknowledged that he was responsible for all of the administrative
duties of the facility as well as for its day-to-day operations. He admitted in the affidavit
that he “knowingly allowed Digital Radiology Center to conduct mammography without
certification from August 2011 until September 6, 2012.” CDRH Ex. B, Attach. 5.
Oscar Alzate again stated that Respondent was the DRC facility’s assistant manager.
CDRH Ex. B, Attach. 5, at 1.

On October 15, 2012, FDA directed the DRC facility to notify all patients that received
mammography services between June 8, 2011 and September 12, 2012, that DRC had
performed the mammograms without proper certification. CDRH Ex. A, Attach. 16.
However, the DRC facility never provided the required notifications. CDRH Ex. A 4 36.

> A “Level 1” observation occurs when a facility fails ina key MQSA requirement that
may compromise mammography quality (for example, operating without accreditation or
certification). A “Level 2” observation occurs when a facility fails to meet at least one
significant mammography quality item. A “Level 3” observation occurs when a facility
meets all major MQSA requirements with only minor problems. CDRH Ex. A § 11.

° It is not clear from Oscar Alzate’s affidavit whether he drafted the language himself or
simply agreed to it. He handwrote on the last page: “I read this Statement and agree. It
is truth [sic].” CDRH Ex. B, Attach. 5, at 4.
10

CDRH alleged in its Complaint that Respondent violated the MQSA because she was the
owner, operator, or an employee of DRC and, in that role, aided and abetted the DRC
facility’s multiple violations of the MQSA. CDRH has sought to impose the following
civil money penalties against Respondent:

e $5,000 pursuant to 42 U.S.C. § 263b(h)(3)(D), for Respondent’s aiding and
abetting DRC’s failure to obtain an MQSA certification; and

© $78,750, pursuant to 42 U.S.C. § 263b(h)(3)(D) for Respondent’s aiding and
abetting DRC’s failure to comply substantially with MQSA quality standards
on each of at least 315 business days ($250 per day for 315 days).

CDRH Br. at 3.

As explained above, the MQSA permits CDRH to assess a civil money penalty not to
exceed $11,000 “for each aiding and abetting in a violation of, any provision of, or
regulation promulgated under [42 U.S.C. § 263b] by an owner, operator, or any employee
of a facility required to have a certificate.” 42 U.S.C. § 263b(h)(3); 21 C.F.R. § 17.2.
The DRC facility was an entity that conducted breast cancer screening through
mammography activities, and was thus a “facility” that required certification pursuant to
the MQSA. 42 U.S.C. § 263b(a)(3)(A), (b)(1). It is undisputed that the DRC facility
violated the MQSA by performing mammography without obtaining a required MQSA
certificate for 315 business days, and failing to notify 1,730 at-risk patients of the risk
posed, which the FDA required it to do. Jd. § 263b(d)(1)(A)(iv); CDRH Ex. B § 11,
Attach. 5-8. The DRC facility also violated the MQSA by using an unaccredited
mammography unit, failing to implement and document a quality assurance and quality
control program that complied with MQSA standards, failing to follow the manufacturer-
recommended quality control procedures for the mammography unit, monitor, and laser
printer, and failing to obtain biopsy results for mammograms performed. CDRH Ex. B
49 14-15, Attach. 8.

The undisputed evidence further establishes that Respondent was an operator and
employee of the DRC facility. An “operator” is “a person who uses and controls
something (such as a machine, device, or business) ... .”. Merriam-Webster Dictionary
(Online), at http://www.merriam-webster.com/dictionary/operator (last visited Sept. 29,
2014). Respondent signed documents as the President or CEO of the DRC facility.
CDRH Ex. A §f 22, 25, Attachs. 6, at 3, 4, 6; 8, at 1, 4. She also submitted letters to
ACR as the contact person for the DRC facility. CDRH Ex. A § 28, Attach. 8.
Respondent’s father, Oscar Alzate, admitted in a sworn affidavit to FDA investigators
that he was the manager responsible for the day-to-day activities of the DRC facility and
that Respondent, as assistant manager, helped him with those day-to-day tasks. CDRH
Ex. B ¥ 10, Attach. 5, at 1; see also CDRH Ex. C § 14; Whether Respondent had an
ownership interest in the facility is not dispositive. Respondent’s role as “assistant
11

manager,” which including helping with the day-to-day activities of the DRC facility,
establishes that she exercised some control over the DRC facility, and was therefore its
“operator” during the period CDRH has cited. In addition, documents that DRC
submitted to ACR and FDA described Respondent as an “employee” of the DRC facility.
CDRH Ex. A, Attach. 9, at 2; see also CDRH Ex. A, Attachs. 6, at 12 (signing document
on DRC’s behalf); 12, at 2 (signing letter on DRC’s behalf); CDRH Ex. B, Attach. 3, at 6
(designated to provide DRC records to an investigator).

As an operator and employee of the DRC facility who exerted some control over its day-
to-day activities, Respondent was in a position to, and in fact did, aid and abet the
numerous violations of the MQSA that the DRC facility committed. The MQSA does
not define the elements of “aiding and abetting,” although the ordinary meaning of “aid
and abet” is to “assist or facilitate the commission of a crime, or to promote its
accomplishment.” Black’s Law Dictionary 76 (8th ed. 2004). Respondent was part of
the facility’s failed attempts to obtain certification and accreditation and aware of FDA’s
direction to cease all mammography activities. CDRH Ex. A §§ 25-27. Oscar Alzate
acknowledged to FDA investigators that he (as manager) and Respondent (as assistant
manager) allowed the DRC facility to continue performing mammography for 315 days
without having the required MQSA certificate. CDRH Ex. B § 10, Attach. 5. By
assisting the DRC facility in performing mammography despite being aware of the
FDA’s order to cease such activities, Respondent facilitated the DRC facility’s ongoing
violations of the MQSA from June 8, 2011 to September 6, 2012.

While the MQSA applies to mammography facilities, and so the DRC facility was the
entity that directly violated the statute (see 42 U.S.C. § 263b(a)(3), (b)(1)), Respondent,
as assistant manager, was undoubtedly directly involved in the facility’s administrative
functions and therefore “aiding and abetting” the DRC facility’s significant violations of
various MQSA requirements. I conclude that the undisputed facts establish that
Respondent aided and abetted the DRC facility’s violations the MQSA while she was an
operator and employee of that facility, and therefore subject to a civil money penalty
pursuant to the MQSA. See 42 U.S.C. § 263b(b)(1), (f), (h)(3)(D).

C. An $83,750 civil money penalty against Respondent Brigitte Alzate is
appropriate.

The civil money penalty that CDRH has sought to impose, $83,750, may appear as a
substantial sum but is comparatively low when faced with the possible civil money
penalty that the MQSA authorizes. Respondent facilitated the DRC facility’s operation
without an MQSA certificate or accreditation for 315 days. For each day that an operator
12

aids and abets a facility in violating the statute, the MQSA authorizes an $11,000 civil
money penalty against that operator. Thus, for those 315 violations Respondent could be
liable for $3,465,000 in the form of a civil money penalty.

Addressing violations similar to the current case, a federal circuit court of appeal stated:

Moreover, KRA lost its certification not because of a failure
to comply with a reporting requirement or some similar
“technicality,” but because its equipment did not produce an
image of adequate quality. The seriousness of that deficiency
cannot be over-emphasized. Breast cancer is most curable at
its earliest stages. If mammography equipment does not
produce an image of acceptable quality, early-stage breast
cancer may not be detected, thus depriving the patient of the
best chance for cure. Under these circumstances, it would be
impossible to conclude that a single $3,000 penalty would be
grossly disproportionate to the gravity of a single offense.

This case, of course, does not involve a single violation of the
MQSA. It involves 193 violations committed by Korangy
and 193 violations committed by KRA, resulting in a
combined penalty of more than $1,000,000. While we
recognize that this is a substantial penalty, the amount of the
penalty is the direct result of the number of individual
offenses committed by Korangy and KRA. Contrary to the
suggestion of the petitioners, the gravity of their offenses
does not diminish because they repeatedly committed the
same offense. To the contrary, the repeat offenses mean that
more early cancers may have been missed and more patients
may have missed their best chance for a cure. Because the
petitioners committed very grave violations of the MQSA, a
substantial penalty was warranted.

Korangy v. United States Food & Drug Admin., 498 F.3d 272, 278 (4th Cir. 2007)
(internal citations omitted). I agree that a substantial penalty is warranted in the present
case as well.

However, instead of imposing the substantial penalties available, CDRH has sought the
relatively minor amount of $250 for each day Respondent aided and abetted the facility in
performing mammography without certification. Indeed, the $83,750 civil money
penalty is less than two and a half percent of the total authorized civil money penalty.

The mere fact that the total civil money penalty is large only serves to demonstrate the
broad and prolonged scope of Respondent’s improper conduct. Each individual civil
13

money penalty is modest when considering that Respondent permitted the DRC facility to
conduct mammography knowing that it did so without the required accreditation and
certification. Respondent repeatedly, and with full knowledge of the circumstances,
thwarted the requirements of the MQSA and put a substantial number of individuals at
risk by doing so. Mammography provides a potentially life-saving function;
Respondent’s repeated and knowing disregard of the law that Congress enacted to ensure
quality mammography services demonstrates a callous indifference for the lives and
safety of the DRC facility’s patients. The lenience of CDRH in this case is difficult to
understand given that Respondent was already involved in committing the same offense
at the same address using a different business name. CDRH Ex. B §{ 4-7, Attachs. 2, 3.

Respondent argued in her motion to dismiss that the civil money penalty is “penal in
nature.” R. Mot. at 5. CDRH responded that “MQSA civil money penalties are intended
to promote compliance with the MQSA by taking the profit out of non-compliance, not to
punish violators.” CDRH Br. at 22 (citing 60 Fed. Reg. 38,612, 38,613 (July 27, 1995)).
I agree with CDRH. The plain language of the MQSA provides that violators are subject
to a “civil money penalty,” not a criminal fine, which demonstrates Congress’ intent that
the sanctions are of a civil, rather than penal nature. The MQSA on its face is remedial
and the actions taken pursuant to it are the same.

Although comparatively low, I conclude that CDRH’s request to impose an $83,750 civil
money penalty against Respondent is not inappropriate. See 42 U.S.C. § 263b(h)(3)(A)-
(C); 21 C.F.R. § 17.34.

VI. Conclusion

Based on the foregoing, I conclude that the undisputed facts of this case establish that
Respondent was an operator or employee of the DRC facility and aided and abetted that
facility’s violations of the MQSA. I also conclude that an $83,750 civil money penalty
against Respondent is appropriate. Therefore, I order Respondent to pay a civil money
penalty in the amount of $83,750.’

/s/
Scott Anderson
Administrative Law Judge

7 Respondent must make payment to CDRH and the FDA in the manner specified in
21 C.F.R. § 17.54.


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2014-H-1022)

Complainant
v.

Corner Convenience LLC,
Respondent.
Docket No. C-14-1509
Decision No. CR3394

Date: September 29, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Corner Convenience LLC, at 160 West Main Street, Meriden,
Connecticut 06451, and by filing a copy of the complaint with the Food and Drug
Administration’s (FDA) Division of Dockets Management. The complaint alleges that
Corner Convenience LLC impermissibly sold cigarettes to a minor and failed to verify,
by means of photo identification containing date of birth, that a tobacco purchaser was 18
years of age, thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21
U.S.C. § 301 et seq., and its implementing regulations, 21 C.F.R. pt. 1140. The
complaint likewise alleges that Respondent Corner Convenience LLC previously
admitted to two violations of regulations found at 21 C.F.R. pt. 1140 and, therefore, CTP
seeks to impose a $2,000 civil money penalty against Respondent Corner Convenience
LLC.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on July 29, 2014, CTP served the
complaint on Respondent Corner Convenience LLC by United Parcel Service. In the
complaint and accompanying cover letter, CTP explained that, within 30 days,
Respondent should pay the penalty, file an answer, or request an extension of time in
which to file an answer. CTP warned Respondent that, if it failed to take one of these
actions within 30 days, the Administrative Law Judge could, pursuant to 21 C.F.R.

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

Respondent Corner Convenience LLC has neither filed an answer within the time
prescribed, nor requested an extension of time within which to file an answer. Pursuant
to 21 C.F.R. § 17.11, L assume that the facts alleged in the complaint (but not its
conclusory statements) are true. Specifically:

¢ CTP previously issued a warning letter to Respondent Corner Convenience LLC
on February 28, 2013, citing violations’ of 21 C.F.R. pt. 1140 on February 6,
2013, at Respondent’s business establishment, 160 West Main Street, Meriden,
Connecticut 06451;

¢ On October 22, 2013, CTP initiated a previous civil money penalty action, CRD
Docket Number C-14-29, FDA Docket Number FDA-2013-H-1238, against
Respondent for two violations of 21 C.F.R. pt. 1140 within a twelve-month period.
CTP alleged those violations to have occurred on February 6, 2013, and May 14,
2013;

e The previous action concluded when Ali Aziz, Respondent’s authorized
representative, settled the claims on Respondent’s behalf. On December 17, 2013,
Mr. Aziz signed an Acknowledgment Form in which he “admitt[ed] that the
violations . . . occurred, waiv[ed] his ability to contest the violations in the future,
and stat[ed] that he understood that that violations may be counted in determining
the total number of violations for purposes of future enforcement actions.” The
Administrative Law Judge closed the case on January 7, 2014;

e At approximately 9:24 AM on January 24, 2014, at Respondent’s business
establishment, 160 West Main Street, Meriden, Connecticut 06451, FDA-
commissioned inspectors documented Respondent’s staff selling a package of
Maverick Box 100s cigarettes to a person younger than 18 years of age. The

' Tn the complaint, CTP describes the actions that took place at Respondent Corner
Convenience LLC’s business establishment on February 6, 2013, as both “a violation”
and as “violations.” Complaint § 10. In a previous administrative complaint initiated on
October 22, 2013, and attached to the present complaint, CTP described two discrete
violations at Respondent Corner Convenience LLC’s business establishment on February
6, 2013: a violation of 21 C.F.R. § 1140.14(a) and a violation of 21 C.F. R.

§ 1140.14(b)(1). Therefore, I infer that CTP’s description in the present complaint of “a
violation” occurring on February 6, 2013, was a typographical error.
inspectors also documented that Respondent’s staff failed to verify, by means of

photo identification containing the
purchaser was 18 years of age or 0

bearer’s date of birth, that the cigarette
der.

These facts establish Respondent Corner Convenience LLC’s liability under the Act. The
Act prohibits misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product

is misbranded if sold or distributed in vio!

ation of regulations issued under section 906(d)

of the Act. 21 U.S.C. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b).
The Secretary of the U.S. Department of Health and Human Services issued the

regulations at 21 C.F.R. pt. 1140 under sei
see 21 U.S.C. § 387£(d)(1); 75 Fed. Reg.

ction 906(d) of the Act. 21 U.S.C. § 387a-1;
3,225, 13,229 (Mar. 19, 2010). Under 21

CFR. § 1140.14(a), no retailer may sell cigarettes to any person younger than 18 years
of age. Retailers are required to verify, by means of photo identification containing the
purchaser’s date of birth, that no purchaser of cigarettes or smokeless tobacco is younger
than 18 years of age. 21 C.F.R. § 1140.14(b)(1).

Under 21 C.F.R. § 17.2, a $2,000 civil money penalty is permissible for four violations of
the regulations found at 21 C.F.R. pt. 1140.

Order

For these reasons, I enter default judgment in the amount of $2,000 against Respondent
Corner Convenience LLC. Pursuant to 21 C.F.R. § 17.11(b), this order becomes final
and binding upon both parties after 30 days of the date of its issuance.

/s/
Catherine Ravinski
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Willie Smith
d/b/a Rocky Bluff Grocery,

Respondent.

Docket No. C-14-1555
FDA Docket No. FDA-2014-H-1067

Decision No. CR3392

Date: September 29, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint)
against Respondent, Willie Smith d/b/a Rocky Bluff Grocery 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 tobacco
products to minors and failed to verify, by means of photo identification containing a date
of birth, that a tobacco purchaser was 18 years of age or older, thereby violating the
Federal Food, Drug, and Cosmetic Act (Act) and its implementing regulations, found at
21 CFR. pt. 1140. CTP seeks a civil money penalty of $250.
On July 29, 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 issue an initial decision by default 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), 1 am 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
CFR. § 17.11(a). Specifically, CTP alleges the following facts in its Complaint:

e Respondent owns Rocky Bluff Grocery, an establishment that sells tobacco
products and is located at 2030 North Main Street, Sumter, South Carolina 29153.
Complaint § 3.

e During an inspection of Respondent’s establishment on August 20, 2013, at
approximately 5:43 PM, an FDA-commissioned inspector observed that “a person
younger than 18 years of age was able to purchase a package of Newport Box
cigarettes .. .[.]” The inspector also observed that “the minor’s identification was
not verified before the sale... .” Complaint J 10.

¢ On October 17, 2013, CTP issued a Warning Letter to Respondent regarding the
inspector’s observations from August 20, 2013. The letter explained that the
observations constituted violations of regulations found at 21 C.F.R. § 1140.14(a)
and (b)(1), and that the named violations were not necessarily intended to be an
exhaustive list of all violations at the establishment. The Warning Letter went on
to state that if Respondent failed to correct the violations, regulatory action by the
FDA or a civil money penalty action could occur and that Respondent is
responsible for complying with the law. Complaint § 10.

e Inan October 18, 2013 letter, Willie Smith, the Respondent’s owner, responded to
the Warning Letter on Respondent’s behalf. Mr. Smith “stated that he terminated
the employee responsible for the sale and reminded the remaining employees of
the importance of verifying [a] customer[’][s] age before selling tobacco
products.” Complaint § 11.

e During a subsequent inspection of Respondent’s establishment conducted on
December 16, 2013, 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 4:19 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 regulations prohibit the sale of
cigarettes to any person younger than 18 years of age. 21 C.F.R. § 1140.14(a). The
regulations also require retailers to verify, by means of photo identification containing a
purchaser’s date of birth, that no cigarette purchasers are younger than 18 years of age.
21 CFR. § 1140.14(b)(1).

Taking the above alleged facts as true, Respondent violated the prohibition against selling
cigarettes to persons younger than 18 years of age, 21 C.F.R. § 1140.14(a), on August 20,
2013 and December 16, 2013. Additionally, on August 20, 2013, Respondent violated
the requirement that retailers verify, by means of photo identification containing a
purchaser’s date of birth, that no tobacco product purchasers are younger than 18 years of
age. 21 C.F.R. § 1140.14(b)(1). Therefore, Respondent’s actions constitute violations of
law that merit a civil money penalty.

CTP has requested a fine of $250, which is a permissible fine under the regulations. 21
C.F.R. § 17.2. Therefore, I find that a civil money penalty of $250 is warranted and so
order one imposed.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2014-H-1034)

Complainant
v.

Downtown Corner | LLC
d/b/a Downtown Corner and Variety,

Respondent.
Docket No. C-14-1522
Decision No. CR3391

Date: September 29, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Downtown Corner | LLC d/b/a Downtown Corner and
Variety, at 966 Main Street, Bridgeport, Connecticut 06604, and by filing a copy of the
complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The complaint alleges that Downtown Corner and Variety impermissibly
sold cigarettes to minors and failed to verify, by means of photo identification containing
a date of birth, that the purchasers were 18 years of age or older, thereby violating the
Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its
implementing regulations, 21 C.F.R. pt. 1140. CTP seeks to impose a $500 civil money
penalty against Respondent Downtown Corner and Variety.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on July 30, 2014, CTP served the
complaint on Respondent Downtown Corner and Variety by United Parcel Service. In
the complaint and accompanying cover letter, CTP explained that, within 30 days,
Respondent should pay the penalty, file an answer, or request an extension of time in
which to file an answer. CTP warned Respondent that, if it failed to take one of these
actions within 30 days, the Administrative Law Judge could, pursuant to 21 C.F.R.
§ 17.11, issue an initial decision ordering it to pay the full amount of the proposed
penalty.

Respondent Downtown Corner and Variety has neither filed an answer within the time
prescribed, nor requested an extension of time within which to file an answer. Pursuant
to 21 C.F.R. § 17.11, L assume that the facts alleged in the complaint (but not its
conclusory statements) are true. Specifically:

e At approximately 11:51 a.m. on August 26, 2013, at Respondent’s business
establishment, 966 Main Street, Bridgeport, Connecticut 06604, an FDA-
commissioned inspector observed Respondent’s staff selling a package of Pall
Mall Menthol 100’s cigarettes to a person younger than 18 years of age. The
inspector also observed that staff failed to verify, by means of photographic
identification containing a date of birth, that the purchaser was 18 years of age or
older;

e Ina warning letter dated October 24, 2013, CTP informed Respondent of the
inspector’s August 26, 2013 observations, and that such actions violate federal
law, 21 C.F.R. § 1140.14(a) and (b)(1). The letter further warned that
Respondent’s failure to correct its violations could result in a civil money penalty
or other regulatory action;

e At approximately 1:03 p.m. on January 27, 2014, at Respondent’s business
establishment, 966 Main Street, Bridgeport, Connecticut 06604, FDA-
commissioned inspectors documented Respondent’s staff selling a package of Pall
Mall Blue 100’s cigarettes to a person younger than 18 years of age. The
inspectors also documented that staff failed to verify, by means of photographic
identification containing a date of birth, that the purchaser was 18 years of age or
older.

These facts establish Respondent Downtown Corner and Variety’s liability under the Act.
The Act prohibits misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco
product is misbranded if sold or distributed in violation of regulations issued under
section 906(d) of the Act. 21 U.S.C. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R.
§ 1140.1(b). The Secretary of the U.S. Department of Health and Human Services issued
the regulations at 21 C.F.R. pt. 1140 under section 906(d) of the Act. 21 U.S.C. § 387a-
1; see 21 U.S.C. § 387£(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). Under 21
CFR. § 1140.14(a), no retailer may sell cigarettes to any person younger than 18 years
of age. Under 21 C.F.R. § 1140.14(b)(1), retailers must verify, by means of photographic
identification containing a purchaser’s date of birth, that no cigarette purchasers are
younger than 18 years of age.

A $500 civil money penalty is permissible under 21 C.F.R. § 17.2.
Order

For these reasons, I enter default judgment in the amount of $500 against Respondent
Downtown Corner 1 LLC d/b/a Downtown Corner and Variety. Pursuant to 21 C.F.R.
§ 17.11 (6), this order becomes final and binding upon both parties after 30 days of the
date of its issuance.

/s/
Catherine Ravinski
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2014-H-1078)

Complainant
v.

Conant, Inc.
d/b/a Conant Caniff Market,

Respondent.
Docket No. C-14-1572
Decision No. CR3389

Date: September 29, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Conant, Inc. d/b/a Conant Caniff Market, at 11303 Conant
Street, Hamtramck, Michigan 48212, and by filing a copy of the complaint with the Food
and Drug Administration’s (FDA) Division of Dockets Management. The complaint
alleges that Conant Caniff Market impermissibly sold cigarettes to minors and failed to
verify, by means of photo identification containing a date of birth, that a cigarette
purchaser was 18 years of age or older, thereby violating the Federal Food, Drug, and
Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its implementing regulations, 21 C.F.R.
pt. 1140. CTP seeks to impose a $500 civil money penalty against Respondent Conant
Caniff Market.

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

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

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

e At approximately 1:40 p.m. ET on March 3, 2013, at Respondent’s business
establishment, 11303 Conant Street, Hamtramck, Michigan 48212, an FDA-
commissioned inspector observed Respondent’s staff selling a package of
Newport Box 100s cigarettes to a person younger than 18 years of age;

e Ina warning letter dated March 21, 2013, CTP informed Respondent of the
inspector’s March 3, 2013 observation, and that such actions violate federal law,
21 CFR. § 1140.14(a). The letter further warned that Respondent’s failure to
correct its violation could result in a civil money penalty or other regulatory
action;

e At approximately 3:42 p.m. on February 1, 2014, at Respondent’s business
establishment, 11303 Conant Street, Hamtramck, Michigan 48212, FDA-
commissioned inspectors documented Respondent’s staff selling a package of
Newport Box 100s cigarettes to a person younger than 18 years of age. The
inspectors also documented that staff failed to verify, by means of photographic
identification containing a date of birth, that the purchaser was 18 years of age or
older.

These facts establish Respondent Conant Caniff Market’s liability under the Act. The
Act prohibits misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product
is misbranded if sold or distributed in violation of regulations issued under section 906(d)
of the Act. 21 U.S.C. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21 CFR. § 1140.1(b).
The Secretary of the U.S. Department of Health and Human Services issued the
regulations at 21 C.F.R. pt. 1140 under section 906(d) of the Act. 21 U.S.C. § 387a-1;
see 21 U.S.C. § 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). Under 21
CFR. § 1140.14(a), no retailer may sell cigarettes to any person younger than 18 years
of age. Under 21 C.F.R. § 1140.14(b)(1), retailers must verify, by means of photographic
identification containing a purchaser’s date of birth, that no cigarette purchasers are
younger than 18 years of age.

A $500 civil money penalty is permissible under 21 C.F.R. § 17.2.
Order

For these reasons, I enter default judgment in the amount of $500 against Respondent
Conant, Inc. d/b/a Conant Caniff Market. Pursuant to 21 C.F.R. § 17.11 (b), this order
becomes final and binding upon both parties after 30 days of the date of its issuance.

/s/
Catherine Ravinski
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

American Generations Home Health, Inc.
(NPI No.: 1548435142)
(PTAN: 10-9271),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-1198
ALJ Ruling No. 2014-45

Date: September 25, 2014

ORDER DENYING MOTION TO DISMISS

The Centers for Medicare & Medicaid Services (CMS) revoked the Medicare billing
privileges of Petitioner, American Generations Home Health, Inc., because Petitioner
failed to comply with Medicare enrollment requirements. Petitioner disputed the
revocation and filed a request for hearing (RFH). CMS subsequently filed a motion to
dismiss Petitioner’s RFH because CMS obtained evidence that Petitioner closed its
facility. Although Petitioner admits it is now closed, it disputes the date on which CMS
indicates it closed. For the reasons stated below, I deny CMS’s motion to dismiss. I also
order the parties to submit their pre-hearing exchanges by the dates stated below.

Petitioner, a home health agency (HHA), was a provider in the Medicare program. Ina
December 23, 2013 initial determination, a CMS administrative contractor stated that it
was revoking Petitioner’s Medicare billing privileges effective January 16, 2014.
Revocation was based on a statement in which Dr. Manual Fernandez-Gonzalez claimed
that he did not sign documentation ordering home health services that Petitioner
submitted to CMS when it billed CMS for services provided to 20 Medicare
beneficiaries. The initial determination stated that revocation was warranted because
Petitioner failed to comply with Medicare enrollment requirements when Petitioner
submitted bills for services for which there was no valid physician order. The initial
determination established a three-year reenrollment bar. CMS Exhibit (Ex.) 1.

Petitioner requested reconsideration of the initial determination. On March 25, 2014,
CMS issued a reconsidered determination upholding the revocation of Petitioner’s
Medicare billing privileges effective January 16, 2014. RFH, Attach.

In its RFH, Petitioner asserted that it provided evidence to CMS that Dr. Fernandez-
Gonzalez in fact treated the Medicare beneficiaries referenced in CMS’s initial
determination and that CMS failed to consider that evidence. On June 4, 2014, I issued
an Acknowledgment and Pre-hearing Order (Pre-hearing Order). In response to the Pre-
hearing Order, CMS filed a motion to dismiss Petitioner’s RFH. CMS alleges in the
motion to dismiss that Petitioner ceased operations in January 2014. CMS, therefore,
argues that Petitioner’s RFH is moot because even if I reverse the revocation, Petitioner
cannot be reinstated as a provider. CMS submitted seven exhibits (CMS Exs. 1-7) in
support of the motion to dismiss, including: statements from two CMS surveyors who
attempted to conduct a site visit of Petitioner’s office on June 30, 2014, but found
Petitioner’s facility to be vacant (CMS Exs. 2-3); a site visit report with pictures of
Petitioner’s vacant facility (CMS Ex. 4); and documentation showing that Petitioner
turned in its license to operate as an HHA to the state. CMS Exs. 6-7.

Petitioner asserts in opposition to the motion to dismiss that it was open until May 1,
2014. Petitioner points out that CMS’s evidence that Petitioner has been closed since
January 2014 was based on the June 30, 2014 site visit in which the CMS surveyors
spoke with an individual who stated that Petitioner vacated its office space about six
months earlier. However, the CMS surveyors presumed that the person with whom they
spoke worked for the company that owns or manages the building in which Petitioner’s
office had been located. CMS Exs. 2 7; 3 §7. Petitioner also submitted cancelled
checks from the first several months of 2014 purporting to show proof of payment for
rent for Petitioner’s office, and for internet and phone services provided by Comcast.
Supporting Documentation accompanying Petitioner’s August 6, 2014 letter at 13-23.

CMS’s motion to dismiss is based on the theory that Petitioner’s case is moot. Although
CMS cites federal court opinions as support, CMS does not cite to applicable regulations
or any administrative decisions on this issue. Since the regulations do not mention
mootness, I interpret CMS’s argument to seek dismissal on the grounds that Petitioner
“does not... have a right to a hearing.” 42 C.F.R. § 498.70(b).

A provider whose Medicare billing privileges have been revoked has the right to seek a
hearing before an administrative law judge. 42 C.F.R. §§ 498.3(b)(17), 498.5(1)(2). Such
a provider is considered an “affected party” (see 42 C.F.R. § 498.40(a)), which “means a
provider . . . that is affected by an initial determination or by any subsequent
determination ....” 42 C.F.R. § 498.2 (definition of Affected party). CMS’s argument is
that because Petitioner is no longer a licensed and operating HHA, Petitioner cannot
benefit from further adjudication of this case. If I were to interpret CMS’s argument in
regulatory terms, it would probably be that Petitioner is no longer an affected party with
earing rights because Petitioner ceased operations in January 2014, the same month that
CMS’s revocation of Petitioner’s billing privileges became effective.

CMS has failed to provide sufficient evidence to show that Petitioner ceased operations
in January 2014. Although Petitioner admits that it is no longer licensed or operating,
Petitioner asserts this occurred on May 1, 2014. Based on Petitioner’s admission, CMS is
correct that if Petitioner prevails in proving that it was in compliance with Medicare
enrollment requirements, I would not be able to reinstate Petitioner as a provider because
Petitioner is no longer licensed as an HHA or operating. However, this does not mean
that Petitioner is not an affected party with a right to a hearing.

Petitioner continues to be affected by CMS’s revocation. Although no longer operating,
Petitioner could receive important relief if I reverse the revocation in this case. For
example, Petitioner might have continued to provide home health services to Medicare
beneficiaries for several months after the effective date of revocation and would be able
to submit claims for services provided during that time period. 42 C.F.R. §§ 405.806(c),
424.545(a)(2). Further, if Petitioner prevails, Petitioner will not be barred for three years
from seeking enrollment and Medicare billing privileges because a reenrollment bar is
only imposed following revocation of billing privileges. See 42 C.F.R. § 424.535(c).
Finally, even if Petitioner does not prevail on the merits of its case, Petitioner might
succeed in obtaining a later effective date of revocation because the effective date is
supposed to be 30 days after CMS or its contractor mails the initial determination and, in
this case, CMS set the effective date 24 days following mailing of the initial
determination. See 42 C.F.R. § 424.535(g). A change in the effective date could result in
Petitioner submitting claims for additional services. Because Petitioner is still an affected
party entitled to a hearing, CMS’s motion to dismiss is denied.

CMS filed a motion to dismiss without its pre-hearing exchange. CMS is ordered to file
its pre-hearing exchange, as specified in my Pre-hearing Order, by October 10, 2014.
Petitioner will file its pre-hearing exchange by October 30, 2014.

It is so ordered.

/s/
Scott Anderson
Administrative Law Judge