Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Wayne Memorial Hospital,
(CCN: 39-0125),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-1185
Decision No. CR3407
Date: October 8, 2014

DECISION

The request for hearing filed by Petitioner, Wayne Memorial Hospital, is dismissed
pursuant to 42 C.F.R. § 498.70(b), because Petitioner has no right to a hearing in this
forum.

I. Procedural Background

Petitioner is a rural community hospital operating in Wayne, Pennsylvania that is
enrolled in the Medicare program. On March 26, 2013, Petitioner submitted a request to
Novitas Solutions, Inc. (Novitas), a Medicare contractor for the Centers for Medicare &
Medicaid Services (CMS), for designation as a sole community hospital (SCH) in
accordance with the requirements at 42 C.F.R. § 412.92. CMS Exhibit (Ex.) 4. Novitas
granted Petitioner SCH classification with an effective date of December 8, 2013. CMS
Ex. | at 1.

Petitioner was dissatisfied with the effective date of December 8, 2013, and requested
reconsideration, specifically arguing for an effective date of July 1, 2013 or, at the latest,
an effective date of October 1, 2013. Petitioner’s Exhibit (P. Ex.) 5. CMS informed
Petitioner on April 7, 2014, that it would not change the effective date of Petitioner’s
SCH classification and, if Petitioner was dissatisfied with the determination, it had 60
days to request a hearing before an administrative law judge (ALJ) at the Departmental
Appeals Board (the Board). CMS Ex. 7.

Petitioner filed a request for hearing before an ALJ dated May 19, 2014, that was
received at the Civil Remedies Division (CRD) of the Board on May 21, 2014. Petitioner
requests an earlier effective date of either July 1 or October 1, 2013, for its SCH
classification. The case was assigned to me on June 3, 2014, and an Acknowledgment
and Prehearing Order was issued at my direction.

On July 2, 2014, CMS filed a motion to dismiss or, in the alternative, a motion for
summary judgment (CMS Br.) with CMS Exs. | through 5. CMS also filed a motion for
leave to file its motion to dismiss out-of-time. On July 3, 2014, CMS filed CMS Exs.

6 and 7. Petitioner filed its opposition (P. Br.) on July 18, 2014, with P. Exs. 1 through 8.
CMS filed a reply brief (CMS Reply) on July 25, 2014, and Petitioner advised me by
letter dated August 1, 2014, that it would not be filing a sur-reply. CMS Exs. | through 7
and P. Exs. | through 8, are admitted.

IL. Discussion
A. Issue
Whether Petitioner has a right to a hearing?
B. Findings of Fact, Conclusions of Law, and Analysis

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

1. Petitioner does not have a right to a hearing in this forum.

2. Pursuant to 42 C.F.R. § 498.70(b), dismissal of a hearing request is
authorized when the requesting party has no right to a hearing.

3. Petitioner’s request for hearing is dismissed.

Petitioner filed its request for hearing before an ALJ at the CRD based on the instructions
Petitioner received from CMS in its April 7, 2014 reconsidered determination. The
reconsidered determination advised Petitioner that if it was dissatisfied with the
reconsidered determination, Petitioner could request a hearing before an ALJ pursuant to
42 C.F.R. § 498.40. CMS Ex. 7. However, after Petitioner filed its May 19, 2014 request
for hearing, Novitas sent Petitioner a letter dated June 30, 2014, that advised Petitioner
that a request for review of the effective date of Petitioner’s SCH classification
determination should be submitted to Novitas pursuant to 42 C.F.R. §§ 405.1809 through
405.1833, or the Provider Reimbursement Review Board (PRRB) pursuant to 42 C.F.R.
§§ 405.1835 through 405.1883, depending on the amount in controversy. CMS Ex. 1.
CMS sent Petitioner a letter dated July 1, 2014, which withdrew its April 7, 2014 letter
that advised Petitioner of the reconsidered determination. The CMS letter further advised
Petitioner that the April 7, 2014 letter incorrectly advised Petitioner that it had a right to
request review by an ALJ of the Board. The July 1 letter further stated that “[s]ince the
effective date of SCH status impacts the amount [Petitioner] can claim on its Medicare
cost report, [Petitioner’s] appeal rights on this issue are governed by 42 C.F.R. 405
Subpart R, Provider Reimbursement Determinations and Appeals.” CMS Ex. 2.

CMS moved to dismiss this case for lack of jurisdiction. CMS Br. at 1, 3-4; CMS Reply
at 1, 3-4. Petitioner maintains that I do have jurisdiction to decide its SCH classification
effective date. P. Br. at 4-5. However, Petitioner does not cite any authority to support
its assertion, nor do I find any. I conclude that Petitioner does not have a right to ALJ
review in this forum and dismissal of its request for hearing is appropriate.

SCH classification is defined by section 1886(d)(5)(D)(iii) of the Act (42 U.S.C.

§ 1395ww(d)(5)(D)(iii)). Congress required that the Secretary of Health and Human
Services (the Secretary) promulgate standards for determining whether a hospital meets
criteria for SCH classification. Act § 1886(d)(5)(D)(iv). The Act does not specifically
establish a right to review by an ALJ, the Board, or the courts of the determination as to
whether or not a hospital meets the criteria for SCH classification. The Act also does not
specifically require that the Secretary establish regulations according a right to review of
the SCH classification determination by an ALJ.

The Secretary has promulgated regulations at 42 C.F.R. pt. 412, subpt. G. The
regulations, particularly 42 C.F.R. § 412.92, establish requirements, application
procedures, and criteria for SCH classification, including the criteria for determining the
effective date of the SCH classification. The regulations authorize CMS to adjust rates
payable for inpatient operating costs for a hospital considered to be a SCH due to such
factors as isolated location, weather conditions, travel conditions, or the absence of other
hospitals, which make the SCH the sole source of inpatient hospital services reasonably
available to Medicare beneficiaries. 42 C.F.R. §§ 412.90(a), 412.92. Classification as a
SCH may benefit a hospital by permitting an increased payment to the hospital for
inpatient operating costs. 42 C.F.R. § 412.92(b)(2)(iv) and (d). A hospital that desires
SCH classification must submit its request to its fiscal intermediary, in this case Novitas.
42 C.F.R. § 412.92(b)(1). The fiscal intermediary reviews the request and sends the
request with its recommendation to CMS. 42 C.F.R. § 412.92(b)(1)(iv). CMS reviews
the request and the fiscal intermediary’s recommendation and then advises the fiscal
intermediary whether CMS approves or disapproves the request for SCH classification.
42 C.F.R. § 412.92(b)(1)(v). The effective date of SCH classification is 30 days after the

date of the CMS written notice of approval of SCH classification. 42 C.F.R.
§ 412.92(b)(2)(i). The regulation provides an exception to the effective date
determination. The exception applies only if the following requirements are met:

e A hospital is classified as a Medicare-dependent, small rural hospital (MDH)
under 42 C.F.R. § 412.108;

e The MDH applies for SCH classification because its MDH status is expiring;

e The MDH requests SCH classification during the 30 days prior to expiration of its
MDH classification:

e The MDH specifically requests that SCH classification be effective upon
expiration of its MDH classification; and

e SCH classification is approved.

If all the requirements for the exception are met, the effective date of the SCH
classification is the day after the expiration of the MDH classification. 42 C.F.R.

§ 412.92(b)(2)(v). The Secretary’s regulations establishing the procedures for
determining whether or not a hospital qualifies for SCH classification do not establish
any right to review by an ALJ, the Board, or the courts. 42 C.F.R. § 412.92.

CMS argues that a hospital’s right to a hearing and review of its SCH status is established
by section 1878(a) of the Act and by regulations at 42 C.F.R. § 405.1835 - .1871.
Section 1878 of the Act establishes the PRRB. The jurisdiction of the PRRB appears to
be limited to reviewing provider claims related to costs and reimbursements or payments
under the Act. The regulations governing the PRRB proceedings do not specifically
mention SCH classification or state that the determination of SCH status is subject to
PRRB review. 42 C.F.R. pt. 405, subpt. R. However, it is not necessary for me to
extensively explore the jurisdiction of the PRRB. The scope of PRRB jurisdiction and
whether that jurisdiction includes review of the effective date of SCH classification is for
the PRRB to decide, not me. The issue I must decide is whether I have jurisdiction to
review the determination of the effective date of SCH classification. I conclude that I
have no jurisdiction.

ALJs of the Board are not granted general jurisdiction to decide all issues related to
Medicare. ALJs are delegated authority by statutes or regulations to render decisions in
certain types of case. Sections 205, 1866, 1869, and 1886 of the Act do not state that
determinations related to SCH classification or the effective date of such classification
are matters subject to ALJ review. The Secretary’s regulations in Titles 42 and 45 of the
C.F.R. also do not state that determinations related to SCH classification or the effective
date of SCH classifications are matters subject to ALJ review. Petitioner points to no
statutory or regulatory authority by which Congress or the Secretary delegated authority
to me to decide whether or not an entity should be granted SCH classification or the
effective date of such classification.
Petitioner argues that the effective date of SCH classification is akin to determination of
the effective date of Medicare participation, citing 42 C.F.R. § 498.3(b)(15). P. Br. at 5.
SCH classification and the effective date of such classification are subject to different
statutory and regulatory requirements than provider and supplier enrollments. SCH
classification is created by section 1886 of the Act and governed by 42 C.F.R. pt. 412.
Provider and supplier enrollment, the effective date of enrollment, and other
determinations related to provider and supplier enrollment are subject to section 1866 of
the Act and 42 C.F.R. pts. 424 and 498, which specifically provide a right to ALJ review.
Therefore, determinations related to SCH classifications are clearly not akin to
determinations related to provider and supplier enrollments given the different statutory
and regulatory bases for those determinations. I also note that 42 C.F.R. § 498.3(b),
which lists initial determinations by CMS that may be subject to ALJ review, and 42
C.F.R. § 498.5, which specifically lists appeal rights for providers and suppliers, do not
refer to SCH classification or to 42 C.F.R. pt. 412.

Petitioner also argues that the parties consented to my exercise of jurisdiction. P. Br. at 5.
Because I may only review those matters for which I am delegated authority by Congress
or the Secretary, the parties cannot grant me jurisdiction regarding matters for which I
have no delegated authority. In that same regard, even though Petitioner argues the CMS
motion to dismiss was late and should be denied (P. Br. at 3-4), I must nevertheless

sua sponte dismiss Petitioner’s request for hearing because I have no delegated authority
to decide this case. The jurisdictional defect is simply not subject to waiver.

I conclude that Petitioner has no right to a hearing before me. I am authorized to dismiss
a request for hearing when the party requesting review does not have a right to a hearing.
42 C.F.R. § 498.70(b). Accordingly, Petitioner’s request for hearing is dismissed.

III. Conclusion

For the foregoing reasons, I conclude that Petitioner does not have a right to a hearing
before an ALJ, and Petitioner’s hearing request is dismissed pursuant to 42 C.F.R.
§ 498.70(b).

/s/
Keith W. Sickendick
Administrative Law Judge


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

YCM Home Health Care, Inc.,
(PTAN: 10-9474; NPI: 1548434897),

Petitioner,
v.
Centers for Medicare & Medicaid Services.

Docket No. C-14-750

Decision No. CR3406

Date: October 7, 2014

DECISION

The Medicare enrollment and billing privileges of Petitioner, YCM Home Health Care,
Inc., are revoked pursuant to 42 C.F.R. § 424.535(a)(1),! effective November 6, 2013 for
three years.
I. Procedural Background and Jurisdiction
Palmetto GBA (Palmetto), a Medicare administrative contractor (MAC), notified
Petitioner by letter dated October 7, 2013, that its Medicare enrollment and billing
privileges were revoked effective November 3, 2013. Palmetto cited 42 C.F.R.
§ 424.535(a)(1) as the basis for the revocation. Palmetto also barred Petitioner from re-

enrolling in the Medicare program for three years, pursuant to 42 C.F.R. § 424.535(c).
Petitioner was offered the opportunity to submit a corrective action plan and notified that

' References are to the 2013 revision of the Code of Federal Regulations (C.F.R.), unless
otherwise stated.
it could request reconsideration of the revocation. Centers for Medicare & Medicaid
Services (CMS) Exhibit (Ex.) 1 at 136-37.

Petitioner requested reconsideration by letter dated December 5, 2013. CMS Ex. | at
120-86. Petitioner was notified by letter dated December 31, 2013, that the
reconsideration hearing officer declined to overturn the revocation.” CMS Ex. 1 at 1-3.

Petitioner requested a hearing before an administrative law judge (ALJ) on February 28,
2014. On March 12, 2014, the case was assigned to me for hearing and decision and an
Acknowledgement and Prehearing Order (Prehearing Order) was issued. CMS filed a
motion for summary judgment (CMS Br.) and CMS Exs. | through 14 on April 11, 2014.
Petitioner filed a cross-motion for summary judgment (P. Br.) and a letter from
Petitioner’s “President/Administrator” Crislayne Abraham on June 18, 2014. The letter
from Ms. Abraham was not properly marked as an exhibit, but I treat the letter as
Petitioner’s exhibit (P. Ex.) 1. CMS filed a reply brief on July 2, 2014 (CMS Reply) with
a motion for leave to file out-of-time, which is granted. The parties have not objected to
my consideration of P. Ex. 1 and CMS Exs. | through 14, and the offered exhibits are
admitted and considered as evidence.

IL. Discussion
A. Applicable Law

A home health agency is a public agency or private organization that is primarily engaged
in providing skilled nursing and other therapeutic services to patients in their homes.
Social Security Act (Act) § 1861(0) (42 U.S.C. § 1395x(o)). The Act sets forth
requirements for home health agencies participating in the Medicare and Medicaid
programs, and authorizes the Secretary of Health and Human Services (the Secretary) to

> Petitioner submitted a corrective action plan (CAP) on November 6, 2013. CMS Ex. |
at 187-213. The reconsidered determination acknowledged that Petitioner submitted a
CAP and states that Petitioner failed to “establish prospective compliance” and “[w]e are
not satisfied that any of the submitted information has corrected the deficient compliance
outlined in our letter of October 7, 2013.” CMS Ex. 1 at 2. The refusal of CMS or its
contractor to accept Petitioner’s CAP is not an initial determination subject to my review.
42 C.F.R. §§ 405.809, 424.545(a), 498.3(b); Conchita Jackson, M.D., DAB No. 2495 at
5-7 (2013); Pepper Hill Nursing & Rehab. Ctr., LLC, DAB No. 2395 at 9 (2011); DMS
Imaging, Inc., DAB No. 2313 at 5-8 (2010).
promulgate regulations implementing the statutory provisions. Act §§ 1861(m) and (0),
and 1891 (42 U.S.C. §§ 1395x(m) and (0), and 1395bbb).

The Act defines “home health services” as:

[I]tems and services [listed in the statute] furnished to an
individual, who is under the care of a physician, by a home
health agency or by others under arrangements with them
made by such agency, under a plan . . . established and
periodically reviewed by a physician, which items and
services are, . . . provided on a visiting basis in a place of
residence used as such individual’s home... .

Act § 1861(m). Home health services are reimbursable by Medicare only if a physician
certifies that home health services are required for that beneficiary for the reasons
specified in the Act. Act §§ 1814(a)(2)(C), 1835(a)(2)(A) (42 U.S.C.

§§ 1395f(a)(2)(C);1395n(a)(2)(A)). Section 1861(m) and (0) require that home health
services be delivered according to a plan of care established and reviewed by a physician.
Pursuant to section 1891(a)(4) (42 U.S.C. § 1395bbb(a)(4)) of the Act, a home health
agency must include the plan of care required by section 1861(m) of the Act as part of its
clinical records for a Medicare beneficiary receiving home health services. Section
1861(0)(3) of the Act requires that a home health agency maintain clinical records on all
patients.

The regulations generally applicable to ordering medical services for Medicare
beneficiaries recognize that a physician has a major role in deciding about patient
admissions, testing, drugs, and treatments. Therefore the regulations establish as a
condition for Medicare payment that a physician certify, and in some cases recertify, the
necessity of medical services. 42 C.F.R. § 424.10. The regulations state that there are no
specific procedures or forms required for physician certification and recertification, rather
the provider may adopt any procedure or form that permits verification. 42 C.F.R.

§ 424.11(b). The regulations specify that it is the responsibility of the provider,* the

> A “supplier” furnishes items or services under Medicare and the term supplier applies

to physicians or other practitioners and facilities that are not included within the
definition of the phrase “provider of services.” Act § 1861(d) (42 U.S.C. § 1395x(d)). A
“provider of services,” commonly shortened to “provider,” includes hospitals, critical
access hospitals, skilled nursing facilities, comprehensive outpatient rehabilitation
facilities, home health agencies, hospice programs, and a fund as described in sections
1814(g) and 1835(e) of the Act. Act § 1861(u) (42 U.S.C. § 1395x(u)). The distinction
(Footnote continued next page.)

home health agency in the case of home health services, to obtain required certifications
and recertifications and keep them on file for verification by CMS or its contractor, if
necessary. 42 C.F.R. § 424.11(a).

The regulations specifically applicable to home health services provide that Medicare
Part A and Part B will pay for home health services only when a physician signs a
certification that the individual needs the home health services specified in the
regulations. 42 C.F.R. §§ 409.40-.50, 424.22. The contents of the certification are
specified by 42 C.F.R. § 424.22(a). The certification must include a statement that a plan
of care for furnishing the services has been established and periodically reviewed by a
physician who is a doctor of medicine, osteopathy, or podiatric medicine. 42 C.F.R.
§ 424.22(a)(iii). A physician responsible for performing the initial certification must
document that a face-to-face patient encounter, which is related to the primary reason the
patient requires home health services, has occurred no more than 90 days prior to the

ome health start of care date or within 30 days of the start of the home health care. The
documentation must include an explanation of why the clinical findings of the encounter
support that the patient is homebound and in need of services. The face-to-face
encounter can be, but need not be, performed by the certifying physician or by a nurse
practitioner, clinical nurse specialist, certified nurse midwife, or physician assistant under
the supervision of the physician (or for patients admitted to home health direct from an
acute or post-acute stay by the physician who cared for the patient during that stay). The
documentation of the face-to-face encounter must be in a separate and distinct section of,
or an addendum to, the certification, and must be titled, dated and signed by the certifying
physician. If the certifying physician does not perform the face-to-face encounter

imself, the nonphysician practitioner or other physician who cared for the patient in an
acute or post-acute facility performing the face-to-face encounter must communicate the
clinical findings of that face-to-face encounter to the certifying physician. 42 C.F.R.

§ 424.22(a)(1)(v). Recertification is required every 60 days; must be signed and dated by
the physician who reviewed the plan of care; and contain the information specified in the
regulation. 42 C.F.R. § 424.22(b). Similar requirements for plan of care contents,
certification, and recertification for home health services subject to payment by Medicare
Part A are found at 42 C.F.R. § 409.43(b), (c), and (e). The regulations do not specify a
form for the certification and plan of care. However, for home health services the Form
CMS-485, “Home Health Certification and Plan of Care” appears to satisfy regulatory
certification and recertification requirements, if properly completed.

(Footnote continued.)

between providers and suppliers is important because they are treated differently under
the Act for some purposes. Petitioner, as a home health agency, is a provider of services.
Pursuant to 42 C.F.R. § 424.505, a provider such as Petitioner must be enrolled in the
Medicare program and be issued a billing number to have billing privileges and to be
eligible to receive payment for services rendered to a Medicare eligible beneficiary.

When a home health agency seeks to enroll in the Medicare program

as a provider it must

complete an enrollment application, the CMS-855A, an example of which was admitted
as CMS Ex. 2. Completion of the CMS-855A requires that an authorized official of the

provider sign a certification statement, found at section 15 of the app

ication. The

authorized official’s signature binds the provider “to the laws, regulations, and program
instructions of the Medicare program.” CMS Ex. 2 at 39. Instructions contained in the
CMS-855A regarding certification statements advise the applicant that by signing the
application the authorized official “binds the provider to all of the requirements listed in

the Certification Statement,” and subject the applicant to revocation
CMS Ex. 2 at 37. The home health agency, “‘agree[s] to abide by the
regulations and program instructions that apply.” CMS Ex. 2 at 38.

‘or noncompliance.
Medicare laws,

A home health agency that submits a claim for payment must identify the certifying

physician on the claim. 42 C.F.R. § 424.507(b). It is the provider fi

ing the claim that is

accountable for the validity and integrity of the information represented. 42 C.F.R.

§§ 424.5(a)(4), 424.11. Home health agencies submit a claim for payment electronically
using the Form 837] or by completing the CMS-1450 (also known as the UB-04). 42
C.F.R. § 424.32(b); CMS Pub. 100-04, Medicare Claims Processing Manual, chap.10

§ 10.A. The CMS-1450 states that the act of submitting the claim “constitutes
certification” that the information recited on the claim is “true, accurate, and complete.”

CMS Ex. 4 at 2.

Pursuant to 42 C.F.R. § 424.535(a)(1), a provider’s enrollment and billing privileges may

be revoked for:

(1) Noncompliance. The provider or supplier is determined
not to be in compliance with the enrollment requirements
described in this section, or in the enrollment application

applicable for its provider or supplier type, and has not
submitted a plan of corrective action as outlined in part
this chapter. . . .

42 CFR. § 424.535(a)(1).

488 of

A provider whose enrollment and billing privileges have been revoked may request
reconsideration and review as provided by 42 C.F.R. pt. 498. A provider submits a
written request for reconsideration to CMS or its contractor. 42 C.F.R. § 498.22(a).
CMS or its contractor must give notice of its reconsidered determination to the provider,
giving the reasons for its determination and specifying the conditions or requirements the
provider failed to meet, and informing the provider about the provider’s right to an ALJ
hearing. 42 C.F.R. § 498.25. If the reconsidered determination is unfavorable to the
provider, the provider has a right to request a hearing by an ALJ and further review by
the Departmental Appeals Board (Board). Act § 1866(j)(8) (42 U.S.C. § 1395ce(j)(8));
42 C.F.R. §§ 424.545, 498.3(b)(17), 498.5. A hearing on the record, also known as an
oral hearing, is required under the Act. Crestview Parke Care Ctr. v. Thompson, 373
F.3d 743, 748-50 (6th Cir. 2004).

The standard of proof and quantum of evidence required to prove a fact in this
proceeding is a preponderance of the evidence. CMS has the burden of going forward
with the evidence and making a prima facie showing of a basis for denial of an
application for participation, revocation of Petitioner’s billing privileges, or termination
of Petitioner’s agreement with the Secretary. Petitioner bears the burden of persuasion to
show by a preponderance of the evidence that it met participation requirements or was
not in violation of program participation requirements when the reconsidered
determination was made. 42 C.F.R. § 424.545(c); see Hillman Rehab. Ctr., DAB No.
1611 (1997), aff'd, Hillman Rehab. Ctr. v. United States Dep’t of Health and Human
Servs., Health Care Fin. Admin., No. 98-3789 (GEB), slip op. at 25 (D.N.J. May 13,
1999); Cross Creek Health Care Ctr., DAB No. 1665 (1998); Emerald Oaks, DAB No.
1800 (2001); Batavia Nursing & Convalescent Ctr., DAB No. 1904 (2004), aff'd,
Batavia Nursing & Convalescent Ctr. v. Thompson, 129 Fed. App’x. 181 (6th Cir. 2005);
Batavia Nursing & Convalescent Inn, DAB No. 1911 (2004).

B. Issue
Whether summary judgment is appropriate; and

Whether there is a basis for the revocation of Petitioner’s Medicare
enrollment and billing privileges effective November 3, 2013.

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

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

1. The parties’ motions for summary judgment are denied and I
decide the case based on the written record.

Both parties requested that I decide this case on summary judgment. However, Petitioner
also waived its right to oral hearing (P. Br. at 1), stating that “[d]ue to economic
constraints imposed . . . [Petitioner] requests that a decision be rendered based on the
record, together with relevant case law on point....” P. Br. at 1. Because Petitioner has
waived its right to oral hearing, I decide the case based on the written record, not under
the summary judgment procedure described in paragraph II.G of the Prehearing Order.

In deciding this case on the merits on the documentary record after a waiver of an oral
hearing, I make credibility determinations, weigh the evidence, and decide which
inferences to draw from the evidence.*

2. There is a basis to revoke Petitioner’s Medicare enrollment and
billing privileges pursuant to 42 C.F.R. § 424.535(a)(1).

3. The effective date of the revocation of Petitioner’s Medicare
enrollment and billing privileges is November 6, 2013.

a. Facts

Petitioner is enrolled in Medicare as a home health agency located at 15291 NW 60th
Avenue, Miami Lakes, Florida with National Provider Identifier (NPI) 1548434897.
CMS Ex. 3 at 3, 7. Petitioner’s enrollment application dated March 20, 2009, was signed
by Crislayne Abraham, who listed her title as “President.” CMS Ex. 3 at 5. The
application included the standard certification that Petitioner agreed to comply with the
Medicare laws, regulations, and program instructions that applied to Petitioner’s provider
type. The certification also states that Petitioner understood that payment of claims is
conditioned upon the claim and underlying transaction complying with the law,
regulations, and program instructions. The certification statement also states that
Petitioner acknowledged that its enrollment could be revoked for failure to meet any
requirements of the certification statement. Petitioner agreed, by signing the application,
not to knowingly present or cause to be presented a false or fraudulent claim for payment

* If I were to decide this case on summary judgment the result would be no different.
The undisputed facts are that Petitioner submitted the claims related to the 11
beneficiaries in issue; Dr. Lazo denied to federal agents that he signed the supporting
documents or ordered the home health services for the 11 beneficiaries; and Petitioner
has presented no evidence to rebut the testimony of the agents and the evidence they
collected. The CMS evidence constitutes a prima facie showing and Petitioner has failed
to present affidavits or other evidence to show a genuine dispute as to any of the material
facts. The issue that remains to be resolved is whether the undisputed evidence
constitutes a basis for revocation under 42 C.F.R. § 424.535(a)(1), an issue of law which
is resolved against Petitioner.
and not to submit claims with deliberate ignorance or reckless disregard for whether the
claims were true or false. CMS Ex. 3 at 8-9.

CMS offered as evidence the declaration’ of Cecilia Franco, the Director of the CMS
Miami Field Office. Her testimony is that her staff became aware of a large number of
orders and certifications for home health services by Dr. Angel Lazo related to claims for
such services by a number of home health agencies including Petitioner. CMS records
showed only 4 certifications of home health services by Dr. Lazo in calendar-year 2011,
but the number jumped to 168 in calendar-year 2012, and 137 as of September 2013.
CMS examined claims of Petitioner and found claims by Petitioner for home health
services to 11° Medicare beneficiaries allegedly ordered and certified by Dr. Lazo in
2012 and 2013. However, upon examining the records of the 11 beneficiaries, CMS
found no other records that showed that Dr. Lazo treated those beneficiaries. Dr. Lazo
was interviewed by CMS agents on August 27 and September 16, 2013, and showed the
ome health certification paperwork provided by Petitioner for each of the 11
beneficiaries. Dr. Lazo denied ordering home health services for any patients for several
years; he stated that the sheet from the prescription pad filed with the claims bore an
incorrect address; he denied that he ever worked at the address listed on the prescription
pad; he denied that he authorized the printing of a prescription pad with his name and the
address listed on the sheet filed with the claims; he denied that the signatures on the pad
and other records were his; and he denied he ordered home health services for any of the
11 Medicare beneficiaries involved. CMS Ex. 7. The testimony of Director Franco is
undisputed and unrebutted, credible, and entitled to weight.

CMS also presented the declaration’ of Carmen Oquendo, Health Insurance Specialist
with the CMS Miami Field Office. Ms. Oquendo states that she investigated the

> The declaration is substantially in the form required by 28 U.S.C. §1746, and is
therefore admissible as if it were sworn testimony. 42 C.F.R. § 498.62 (witness
testimony must be under oath or affirmation).

° The initial and reconsidered determinations incorrectly refer to 12 Medicare
beneficiaries. CMS Ex. 1 at 2, 136. There is no dispute that the evidence shows that
there were only 11 Medicare beneficiaries, but home health service claims were made for
one beneficiary on two separate occasions. CMS Ex. | at 12, 15, 17-119.

7 The declaration is substantially in the form required by 28 U.S.C. § 1746, and is
therefore admissible as if it were sworn testimony. 42 C.F.R. § 498.62 (witness
testimony must be under oath or affirmation).
information found on the prescription pad sheet provided with Petitioner’s claims for
home health services ordered and certified by Dr. Lazo. She found no evidence that Dr.
Lazo had ever used office space at the address listed on the prescription pad sheet or that
he had ever been assigned the telephone number listed. CMS Ex. 11. The testimony of
Ms. Oquendo is undisputed and unrebutted, credible, and entitled to weight.

A Report of Investigation (ROI) by the Miami Field Office reports an interview of Dr.
Lazo on September 16, 2013, regarding the 11 beneficiaries for which Petitioner filed
claims for home health services. The ROI is consistent with the declaration of Director
Franco. CMS Ex. | at 11-13. There is no dispute that the ROI shows that CMS obtained
the records for the 11 beneficiaries by requesting them from Petitioner. CMS Ex. | at 14-
16. The records obtained from Petitioner were admitted as evidence without objection
marked as CMS Ex. | at 17-119. Each document bears a signature that is purportedly the
signature of Dr. Lazo. Each document also bears a stamp that attests that the signature is
not that of Dr. Lazo with a signature, which is undisputed to be the signature of Dr. Lazo.
Although a lay-witness is generally thought to be competent to compare signatures, in
this case it is not possible for me to compare the alleged signatures with the actual
signatures and find that the two are not made by the same person.

Petitioner submitted with its request for reconsideration® and CAP the affidavit of
Crislayne Abraham, Petitioner’s owner and manager. Ms. Abraham testifies that she
reviewed the documents submitted to CMS related to the claims for services for the 11
Medicare beneficiaries. She states that she found nothing that raised a question regarding
the validity of Dr. Lazo’s signatures. She asserts that Dr. Lazo lied when he denied
signing the documents. She described how Petitioner verified Dr. Lazo’s identity,
license, and enrollment in Medicare, including contacting the physician’s office to
confirm the referral for home health services and the home-bound status of the patients
involved. She testified that Petitioner’s staff also assessed the individual patients to
ensure they qualify for home health services; they develop and write the plan of care; and
the written plan of care is then taken by courier to the ordering physician who is required
to sign the plan of care. She testified that all of Petitioners processing steps were
followed without incident in the cases of the 11 Medicare beneficiaries at issue. CMS
Ex. | at 142-47, 200-05.

I may not consider as substantive evidence the letter of Ms. Abraham dated June 18,
2014, which I have marked as P. Ex. 1, because it is not sworn or affirmed or executed as
a declaration. 42 C.F.R. § 498.62 (witness testimony must be under oath or affirmation);

® The request for reconsideration also incorrectly refers to 12 Medicare patients. CMS
Ex. | at 120-21.
10

28 U.S.C. § 1746 (declaration may be accepted as sworn testimony if executed in
substantially the form prescribed). However, P. Ex. 1 does not add to the information
already contained in Ms. Abraham’s affidavits which are considered as evidence.

I do not discount Ms. Abraham’s testimony regarding the procedures Petitioner followed
related to the 11 Medicare beneficiaries involved in this case. I do not find credible or
weighty Ms. Abraham’s conclusion that Dr. Lazo lied to federal agents when responding
to questions during his interview on September 16, 2013 as reflected in the ROI and the
declaration of Director Franco. Petitioner has not offered evidence to support Ms.
Abraham’s conclusion. Petitioner has not asserted that it wished to elicit testimony from
Dr. Lazo in an oral hearing or requested a subpoena for that purpose. Petitioner has not
offered the affidavit or declaration of any employee who actually visited Dr. Lazo’s
office for the purpose of obtaining his signatures or for any other purpose. Petitioner has
not requested to present testimony of its staff or requested subpoenas for that purpose.
Ms. Abraham does not state in her affidavits that she ever met Dr. Lazo or visited his
office. Petitioner also failed to offer the testimony, an affidavit, or declaration of any of
the 11 Medicare beneficiaries to establish that they were treated or evaluated by Dr. Lazo.
Therefore, the evidence is insufficient to support a finding that Dr. Lazo lied. I also have
no bases on which to discount the testimony of Director Franco or Ms. Oquendo as set
forth in their declarations.

Petitioner also offered with its request for reconsideration some copies of signatures that
purport to be those of Dr. Lazo on documents in Miami-Dade County, Florida, publically
accessible land records. CMS Ex. | at 156. Those signatures are significantly different
from the signatures that appear on the claim related records at CMS Ex. 17-119,
including both the false signatures and the known signatures of Dr. Lazo. The signatures
found in CMS Ex. | at 156 are also different from those that appear on pages of Dr.
Lazo’s Medicare enrollment application, which were admitted without objection as CMS
Ex. 9 at 4, 7. Due to the nature of Dr. Lazo’s signature very little may be found based on
comparison of the signatures.

b. Analysis

Palmetto revoked Petitioner’s Medicare enrollment and billing privileges pursuant to 42
C.F.R. § 424.535(a)(1) for noncompliance with the requirements for Medicare
enrollment. CMS argues that Petitioner billed Medicare for home health services for 11
Medicare beneficiaries without valid physician certifications. CMS alleges specifically
that the physician Petitioner identified as treating the 11 beneficiaries, Dr. Lazo, was not
involved in their treatment, care or monitoring. CMS argues that by filing claims for
home health services for the 11 beneficiaries without proper supporting documentation
with valid signatures, Petitioner failed to comply with Medicare law, regulations,
program instructions and the terms of its enrollment application. CMS Br. at 3, 14-15.
CMS presented sufficient evidence to make a prima facie showing that Petitioner billed
11

Medicare for home health services without valid supporting documentation signed by a
physician. Therefore, the burden is upon Petitioner to rebut the prima facie case, a
burden Petitioner has failed to meet. The preponderance of the evidence shows that
Petitioner filed claims for home health services for 11 Medicare beneficiaries. The
preponderance of the evidence shows that when CMS requested that Petitioner produce
the physician certifications, orders, plans of care, and other documents supporting the
claims, Petitioner produced the requested documents. The documents produced by
Petitioner purported to bear the signature of Dr. Lazo. According to Director Franco,
when Dr. Lazo reviewed the documents submitted by Petitioner, he denied that the 11
beneficiaries were his patients and he denied that he signed the documents required to
support Petitioner’s claims for home services for the 11 beneficiaries. Petitioner was
committed when enrolling in Medicare to comply with the law, regulations, program
instructions, and the terms of its enrollment agreement. Because Petitioner submitted
claims for home health services for the 11 Medicare beneficiaries that were not properly
certified by a physician, Petitioner violated the requirements of 42 C.F.R. §§ 409.40-.50;
424.10; and 424.22, all of which require physician certification of the necessity of the
medical services for which Medicare claims are submitted. Petitioner also violated the
terms of its enrollment application because Petitioner failed to ensure that the transactions
underlying its claims complied with the Medicare law, regulations, and program
instructions. CMS Ex. 3 at 8-9.

The gist of Petitioner’s defense is that Dr. Lazo lied and that Petitioner did all it could be
expected to do to ensure that it had proper certifications by Dr. Lazo. CMS Ex. | at 121-
24, 142-47, 200-05. I have no evidence other than the assertion of Ms. Abraham that Dr.
Lazo lied and her assertion is unsupported by any credible evidence. Petitioner also
argues that it had no reason to know that Dr. Lazo’s signatures were not legitimate. CMS
Ex. | at 129. Petitioner’s arguments that it did all it could to verify that the certifications
were proper and that it had no reason to know Dr. Lazo’s signatures were not legitimate
are not persuasive. There is no evidence that Petitioner verified Dr. Lazo’s address
through the publically accessible NPI registry or that Petitioner’s staff questioned why
that address differed from the address provided with the certification documents.
Although Ms. Abraham testified that a courier would have taken the plan of care and
certification to Dr. Lazo’s office for signature, there is no evidence that a courier actually
found Dr. Lazo and obtained his signature at the address listed in the certification
documents. Petitioner also fails to point to any other evidence that would support its
belief that Dr. Lazo was a physician for any of the 11 beneficiaries who could certify a
need for home health services. Considering the simple approaches Petitioner failed to
take that could have been used to verify that Dr. Lazo’s certifications were legitimate, I
cannot conclude that Petitioner did all it could or all that it could be expected to do.
Petitioner argues that the evidence I should rely upon is in the medical records. P. Br.
Petitioner filed with its request for reconsideration many pages from the clinical records
for the 11 beneficiaries. CMS Ex. 1 at 214-1395. However, Petitioner does not explain
how the medical records submitted rebut the evidence that Dr. Lazo did not sign the

12

certifications and other documents (CMS Ex. | at 17-119) that support Petitioner’s claims
for home health service for the 11 beneficiaries. Petitioner also does not explain how the
medical evidence submitted shows that Dr. Lazo lied about not signing the documents.
Petitioner objected in its request for reconsideration that it had no opportunity to test the
veracity of Dr. Lazo. CMS Ex. | at 121-22. In its brief, Petitioner argues that I should
not give Dr. Lazo’s statements any weight because they were not executed as declarations
under 28 U.S.C. § 1746. P. Br. I agree with Petitioner that the CMS case could have
been stronger had Dr. Lazo been required to swear to an affidavit or execute a declaration
under 28 U.S.C. § 1746. However, I do not rely upon Dr. Lazo’s statement to
investigators as testimony. Rather, my decision turns on the testimony of the two
investigators offered as declarations that do substantially comply with 28 U.S.C. § 1746.
I further note that Petitioner’s opportunity to test the veracity of Dr. Lazo was waived
when Petitioner failed to request that Dr. Lazo be subpoenaed to testify and then waived
the opportunity for an oral hearing to receive his testimony.

Petitioner was not in compliance with the laws, regulations, and program instructions of
the Medicare program to which it agreed to be bound when it filed claims for Medicare
payment for 11 beneficiaries without valid physician certifications. Thus, Petitioner was
not in compliance with the requirements for enrolling and maintaining enrollment in
Medicare and the terms of the enrollment application it signed. Accordingly, there was a
basis to revoke Petitioner’s enrollment and billing privileges pursuant to 42 C.F.R.

§ 424.535(a)(1).

The Palmetto notice of the initial determination to revoke Petitioner’s enrollment and
billing privileges effective November 3, 2013, was dated October 7, 2013. Absent
evidence to the contrary, I find that the letter was mailed to Petitioner on October 7,
2013. The effective date of a revocation pursuant 42 C.F.R. § 424.535(a)(1) is 30 days
after CMS or the MAC mails notice of the revocation. 42 C.F.R. § 424.535(g).
Accordingly, the effective date of revocation of Petitioner’s enrollment and billing
privileges is November 6, 2013, not November 3, 2013.

III. Conclusion

For the foregoing reasons, Petitioner’s Medicare enrollment and billing privileges are
revoked for three years beginning on November 6, 2013.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2014-H-0739)

Complainant
v.

Q Superette K, Inc. / Soudabeh Khalili
d/b/a Q Superette,

Respondent.
Docket No. C-14-1247
Decision No. CR3405

Date: October 6, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Q Superette K, Inc. / Soudabeh Khalili d/b/a Q Superette, at
3519 West Colfax Avenue, Denver, Colorado 80204, and by filing a copy of the
complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The complaint alleges that Q Superette 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
Q Superette.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on June 4, 2014, CTP served the
complaint on Respondent Q Superette 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.

Though CTP served Respondent Q Superette with the complaint on June 4, 2014, it did
not file proof of service with the Civil Remedies Division until August 8, 2014. Upon
receiving CTP’s proof of service more than two months after CTP served the
Respondent, I granted Respondent an extension of time in which to file an answer and
issued an Initial Order Establishing Procedures. Respondent Q Superette has not filed an
answer within the time I provided, nor has it requested an extension of time within which
to file an answer. Pursuant to 21 C.F.R. § 17.11, I assume that the facts alleged in the
complaint (but not its conclusory statements) are true. Specifically:

e At approximately 7:16 p.m. on June 25, 2013, at Respondent’s business
establishment, 3519 West Colfax Avenue, Denver, Colorado 80204, an FDA-
commissioned inspector observed Respondent’s staff selling a package of Camel
Blue 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 issued July 25, 2013, CTP informed Respondent of the
inspector’s June 25, 2013 observations, and that such actions violate federal law,
21 CFR. § 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 4:57 p.m. on January 10, 2014, at Respondent’s business
establishment, 3519 West Colfax Avenue, Denver, Colorado 80204, FDA-
commissioned inspectors documented Respondent’s staff selling a package of
Camel Blue 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 Q Superette’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 USC. § 387£(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 CFR. 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 C.F R.

§ 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
Q Superette K, Inc. / Soudabeh Khalili d/b/a Q Superette. 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,
Complainant,
v.

Satsang, Incorporated
d/b/a I-40 BP,

Respondent.

Docket No. C-14-1647
FDA Docket No. FDA-2014-H-1141

Decision No. CR3404

Date: October 6, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint)
against Respondent, Satsang, Incorporated d/b/a I-40 BP, alleging facts and legal
authority sufficient to justify imposing a civil money penalty of $5,000. 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 $5,000.

CTP began this case by serving a Complaint on Respondent and filing a copy of the
Complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The Complaint alleges that Respondent’s staff unlawfully sold cigarettes
to a minor and failed to verify that a cigarette purchaser was of sufficient age, thereby
violating the Federal Food, Drug, and Cosmetic Act (Act) and its implementing
regulations, found at 21 C.F.R. pt. 1140. In a previous civil money penalty action, I
found that Respondent committed four violations of the regulations found at
21 CFR. pt. 1140. Satsang, Inc. d/b/a 1-40 BP, DAB CR2997, at 3 (2013). CTP seeks a
civil money penalty of $5,000.

On August 11,2014, 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), 1am 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 I-40 BP, an establishment that sells tobacco products and is
located at 1045 South Willow Avenue, Cookeville, Tennessee 38501. Complaint
g3.

¢ CTP previously initiated a civil money penalty action, CRD Docket Number C-13-
1362, FDA Docket Number FDA-2013-H-1177, against Respondent for three
violations of 21 C.F.R. pt. 1140 within a twenty-four month period. Specifically,
those violations included an unspecified violation on April 30, 2011, and two
violations on March 26, 2013, when Respondent sold tobacco products to a minor
and failed to verify, by means of photographic identification, that the purchaser
was 18 years of age or older. Complaint J 10.

e The previous civil money penalty action concluded when I issued an Initial
Decision and Default Judgment against the Respondent on November 19, 2013,
and found Respondent to have committed four violations of the regulations found
at 21 C.F.R. pt. 1140. Complaint J 11; Satsang, Inc., DAB CR2997 at 3.

e During a subsequent inspection of Respondent’s establishment conducted on
February 15, 2014, FDA-commissioned inspectors documented that “a person
younger than 18 years of age was able to purchase a package of Marlboro Gold
Pack cigarettes . . . at approximately 12:56 PM[.] The inspectors also noted that
“the minor’s identification was not verified before the sale ....” 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 § 906(d) of the Act. 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 § 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). The regulations prohibit the sale of cigarettes or smokeless tobacco to
any person younger than 18 years of age. 21 C.F.R. § 1140.14(a). The regulations also
require retailers to verify, by means of photographic identification containing the
purchaser’s date of birth, that no cigarette purchaser is younger than 18 years of age. 21
CFR. § 1140.14(b)(1).

Here, Respondent had six violations of regulations found at 21 C.F.R. pt. 1140 within a
thirty-six month period. I found Respondent to have committed four violations of the
regulations found at 21 C.F.R. pt. 1140 in a previous civil money penalty action.
Satsang, Inc., DAB CR2997 at 3. Most recently, on February 15, 2014, Respondent sold
cigarettes to a person younger than 18 years of age, in violation of 21 C.F.R.

§ 1140.14(a). During that same transaction, Respondent failed to verify, by means of
photographic identification containing the bearer’s date of birth, that the cigarette
purchaser was 18 years of age or older, in violation of 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 $5,000, which is a permissible fine. 21 C.F.R. §§ 17.2,
17.11(a)(2). Therefore, I find that a civil money penalty of $5,000 is warranted and so
order one imposed. 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/
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-1106)

Complainant
v.
Thrifty Payless, Inc. d/b/a Rite Aid 6234,

Respondent.

Docket No. C-14-1619

Decision No. CR3403

Date: October 3, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Thrifty Payless, Inc. d/b/a Rite Aid 6234, at 20330 Ballinger
Way, Northeast, Shoreline, Washington 98155, and by filing a copy of the complaint
with the Food and Drug Administration’s (FDA) Division of Dockets Management. The
complaint alleges that Rite Aid 6234 unlawfully 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 Rite Aid
6234.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on August 5, 2014, CTP served the
complaint on Respondent Rite Aid 6234 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 Rite Aid 6234 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 Respondent’s business establishment, 20330 Ballinger Way, Northeast,
Shoreline, Washington 98155, on April 23, 2013, at approximately 3:57 PM, an
FDA-commissioned inspector observed Respondent’s staff sell a package of
American Spirit Natural cigarettes to a person younger than 18 years of age;

e Ina warning letter issued on May 9, 2013, CTP informed Respondent of the
inspector’s observations from April 23, 2013, and that such an action violates
federal law, 21 C.F.R. § 1140.14(a). The letter further warned that if Respondent
failed to correct its violation, the FDA could impose a civil money penalty or take
other regulatory action;

e At Respondent’s business establishment, 20330 Ballinger Way, Northeast,
Shoreline, Washington 98155, on February 8, 2014, at approximately 10:11 AM,
FDA-commissioned inspectors documented Respondent’s staff selling a package
of Marlboro cigarettes to a person younger than 18 years of age. The inspectors
also noted that Respondent’s staff failed to verify, by means of photo
identification containing the bearer’s date of birth, that the cigarette purchaser was
18 years of age or older.

These facts establish Respondent’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 CFR. 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 C.F R.

§ 1140.14(a), no retailer may sell cigarettes or smokeless tobacco to any person younger
than 18 years of age. Under 21 C.F.R. § 1140.14(b)(1), retailers must verify, by means of
photo identification containing the bearer’s date of birth, that no cigarette or smokeless
tobacco purchaser is 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
Thrifty Payless, Inc. d/b/a Rite Aid 6234. 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,
(FDA No. FDA-2014-H-1135)

Complainant
v.
Damen, Inc. d/b/a Damen Food and Liquor,
Respondent.
Docket No. C-14-1646
Decision No. CR3402

Date: October 3, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Damen, Inc. d/b/a Damen Food and Liquor, at 1956 West
School Street, Chicago, Illinois 60657, and by filing a copy of the complaint with the
Food and Drug Administration’s (FDA) Division of Dockets Management. The
complaint alleges that Damen Food and Liquor sold cigarettes to minors, 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 $250 civil
money penalty against Respondent Damen Food and Liquor.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on August 7, 2014, CTP served the
complaint on Respondent Damen Food and Liquor 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 Damen Food and Liquor 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 Respondent’s business establishment, 1956 West School Street, Chicago,
Illinois 60657, on August 2, 2013, at approximately 1:11 PM, an FDA-
commissioned inspector observed Respondent’s staff sell a package of Marlboro
cigarettes to a person younger than 18 years of age;

e Ina warning letter issued on September 12, 2013, CTP informed Respondent of
the inspector’s observation from August 2, 2013, and that such an action violates
federal law, 21 C.F.R. § 1140.14(a). The letter further warned that if Respondent
failed to correct its violation, the FDA could impose a civil money penalty or take
other regulatory action;

e At Respondent’s business establishment, 1956 West School Street, Chicago,
Illinois 60657, on February 12, 2014, at approximately 4:44 PM, FDA-
commissioned inspectors documented Respondent’s staff selling a package of
Newport Box cigarettes to a person younger than 18 years of age.

These facts establish Respondent’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 CFR. 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). The regulations prohibit the
sale of cigarettes or smokeless tobacco to any person younger than 18 years of age. 21
CFR. § 1140.14(a).

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

For these reasons, I enter default judgment in the amount of $250 against Respondent
Damen, Inc. d/b/a Damen Food and Liquor. 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,
(FDA No. FDA-2014-H-1084)

Complainant
v.

Sahkar LLC / Dharmendrasinh Chudasama
d/b/a Centreville BP,

Respondent.
Docket No. C-14-1577
Decision No. CR3400

Date: October 2, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Sahkar LLC / Dharmendrasinh Chudasama d/b/a Centreville
BP, at 7206 Centreville Road, Manassas, Virginia 20111, and by filing a copy of the
complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The complaint alleges that Centreville BP impermissibly sold cigarettes to
minors, 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 $250 civil money penalty against Respondent Centreville BP.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on July 31, 2014, CTP served the
complaint on Respondent Centreville BP 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 Centreville BP 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.RR.
§ 17.11, L assume that the facts alleged in the complaint (but not its conclusory
statements) are true. Specifically:

e At approximately 11:56 a.m. on April 28, 2013, at Respondent’s business
establishment, 7206 Centreville Road, Manassas, Virginia 20111, an FDA-
commissioned inspector observed Respondent’s staff selling a package of
Marlboro cigarettes to a person younger than 18 years of age;

e Ina warning letter dated May 9, 2013, CTP informed Respondent of the
inspector’s April 28, 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 3:51 p.m. on February 4, 2014, at Respondent’s business
establishment, 7206 Centreville Road, Manassas, Virginia 20111, FDA-
commissioned inspectors documented Respondent’s staff selling a package of
Marlboro cigarettes to a person younger than 18 years of age.

These facts establish Respondent Centreville BP’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.

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

' On August 11, 2014, my office received a check from Respondent made out to “FDA.”
My office returned the check to the Respondent on August 14, 2014, with a letter
explaining that all payments in civil money penalty actions must be sent directly to the
Center for Tobacco Products.
Order

For these reasons, I enter default judgment in the amount of $250 against Respondent
Sahkar LLC / Dharmendrasinh Chudasama d/b/a Centreville BP. 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