Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.

Vinsa, Inc.
d/b/a Currie's Beer Garden,

Respondent.

Docket No. C-15-571
FDA Docket No. FDA-2014-H-2088

Decision No. CR3630

Date: February 6, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint)
against Respondent, Vinsa, Inc., d/b/a Currie's Beer Garden that alleges facts and legal
authority sufficient to justify the imposition of a civil money penalty of $250.
Respondent did not answer the Complaint, nor did Respondent request an extension of
time within which to file an answer. Therefore, I enter a default judgment against
Respondent and assess a civil money penalty of $250.

CTP began this case by serving the 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 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, Cigarettes and Smokeless Tobacco,

21 C.F.R. pt. 1140 (2013). CTP seeks a civil money penalty of $250.
On December 9, 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 proposed
penalty, file an answer, or request an extension of time within which to file an answer.
CTP warned Respondent that if it failed to take one of these actions within 30 days, an
Administrative Law Judge could, pursuant to 21 C.F.R. § 17.11, issue an initial decision
ordering Respondent to pay the full amount of the proposed penalty.

Respondent has not filed an answer within the time provided by regulation, nor has it
requested an extension. Pursuant to 21 C.F.R. § 17.11(a), Iam required to “assume the
facts alleged in the [C]omplaint to be true” and, if those facts establish liability under the
Act, issue a default judgment and impose a civil money penalty. Accordingly, I must
determine whether the allegations in the Complaint establish violations of the Act.

Specifically, CTP alleges the following facts in its Complaint:

e Respondent owns Currie's Beer Garden, an establishment that sells tobacco
products and is located at 2038 Front Street, Slidell, Louisiana 70458. Complaint
q3.

e During an inspection of Respondent’s establishment on May 13, 2013, at
approximately 5:24 PM, an FDA-commissioned inspector observed that “a person
younger than 18 years of age was able to purchase a package of Benson and
Hedges 100’s Premium cigarettes ... [.]” Complaint § 10.

e On June 6, 2013, CTP issued a Warning Letter to Respondent regarding the
inspector’s observation from May 13, 2013. The letter explained that the
observation constituted a violation of regulations found at 21 C.F.R. § 1140.14(a)
and that the named violation was 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 violation, regulatory action by the FDA or a civil
money penalty action could occur and that Respondent is responsible for
complying with the law. Complaint 10.

e During a subsequent inspection of Respondent’s establishment on May 10, 2014,
at approximately 5:30 PM, FDA-commissioned inspectors documented that “‘a
person younger than 18 years of age was able to purchase a package of Marlboro
Gold Pack cigarettes... [.]” 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 distributed or offered for sale in any state in violation of regulations issued under
section 906(d) of the Act. 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b). The
Secretary 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). The regulations prohibit the
sale of cigarettes to any person younger than 18 years of age. 21 C.F.R. § 1140.14(a).

Taking the above alleged facts as true, on May 13, 2013, and May 10, 2014, the
Respondent violated the prohibition against selling tobacco products to persons younger
than 18 years of age, 21 C.F.R. § 1140.14(a). 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.

Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Carlos A. Blanco, M.D. and Surgical Services of Florida, Inc.,
(PTANs: FU159A/32084U)
(NPIs: 1043413727/1699716670),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-137
Decision No. CR3629
Date: February 6, 2015
DECISION

Petitioner, Carlos A. Blanco, M.D., is a Florida-based physician who was enrolled in the
Medicare program and doing business as Surgical Services of Florida, Inc. (Surgical
Services), a professional corporation of which he is the sole owner. First Coast Service
Options (FCSO), a Medicare contractor, revoked Petitioner’s Medicare enrollment and
billing privileges and barred him from re-enrollment for three years because Dr. Blanco
certified that he had no adverse actions when Petitioner had been previously revoked with
a two-year enrollment bar. Petitioner appeals the revocation, and I find that CMS
properly revoked Petitioner’s Medicare enrollment and billing privileges.

I. Procedural Background

FCSO notified Dr. Blanco by letter dated June 17, 2013, that pursuant to 42 C.F.R.

§ 424.535(a)(4) and effective July 17, 2013, it was revoking his Medicare enrollment and
billing privileges and those of Surgical Services, the corporation he solely owns and
which he established to bill for his Medicare Part B services. CMS Ex. 3. FCSO barred
Petitioner from re-enrollment for a period of three years for his failure to comply with
Medicare enrollment requirements because he certified as “true” misleading or false

information on his enrollment application. CMS Ex. 3. Petitioner submitted a timely
request for reconsideration. CMS Ex. 2. On August 21, 2013, FCSO upheld the
revocation and notified Petitioner that the action was in accordance with Medicare rules
and regulations. CMS Ex. 1.

Petitioner requested a hearing before an Administrative Law Judge (ALJ). See Request
for Hearing (RFH). This case was assigned to me for hearing and decision. I issued an
Acknowledgment and Pre-hearing Order on November 4, 2013. CMS filed a Prehearing
Brief and Motion for Summary Judgment (CMS Br.) with CMS Exhibits (Exs.) 1-8.
Petitioner filed a response (P. Br.) but did not submit any exhibits. On June 2, 2014,
CMS filed CMS Exs. 9 and 10 in response to my order to supplement the record.
Petitioner did not object, and I admit all of CMS’s exhibits to the record.

Neither party submitted a list of proposed witnesses nor filed written direct-testimony for
any proposed witness. Therefore, as explained in my pre-hearing order, there is no need
for cross-examination, an in-person hearing is not necessary, and I will decide this matter
on the written record.

IL. Analysis
A. Issue

The sole issue before me is whether CMS had a legitimate basis to revoke Petitioner’s
Medicare enrollment and billing privileges.

B. Findings of Fact and Conclusions of Law

I. Dr. Blanco certified as “true” that he did not have an adverse legal
action against him on his January 2013 Medicare enrollment
application even though he was the legally authorized official for
Hialeah Medical Corp., which FCSO previously revoked from the
Medicare program in September 2011.

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

' A “supplier” can furnish items or services under Medicare, and the term applies to
physicians, other non-physician 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)).
§§ 1835(a) (42 U.S.C. § 1395n(a)); 1842(h)(1) (42 U.S.C. § 1395u(h)(1)). The Act
requires the Secretary of Health and Human Services to issue regulations that establish a
process for the enrollment of providers and suppliers, including the right to a hearing and
judicial review of certain enrollment determinations. Act § 1866(j) (42 U.S.C.

§ 1395cc(j)).

When applying for enrollment in the Medicare program, a supplier is required to provide
complete, accurate, and truthful responses to all information requested within each
section on the enrollment application applicable to the supplier type. 42 C.F.R.

§ 424.510(d)(2)(i). However, Petitioner’s enrollment history shows Petitioner did not
always provide accurate information to the CMS contractor.

On April 24, 2009, Dr. Blanco submitted a CMS 855I enrollment application to FCSO to
reactivate his Medicare enrollment. CMS Ex. 10. In section 4A of his application, Dr.
Blanco stated that he was the sole owner of a professional corporation, Surgical Services,
and that he would bill Medicare through this business entity. CMS Ex. 10 at 14. The
application identified Dr. Blanco as the managing employee. CMS Ex. 10 at 20. Dr.
Blanco also listed himself as the contact person, and he provided 11341 NW 42 Terrace,
Miami, Florida 33178 as his address for correspondence related to the application. FCSO
approved the application and issued him provider transaction numbers (PTANSs).

On August 13, 2009, FCSO received an application from Dr. Blanco to add, as of August
12, 2009, a practice location to his previous PTAN for himself and Surgical Services.
CMS Ex. 9 at 7. He listed the additional practice location as Hialeah Medical Corp.,
3750 W. 17 Ave., Suite 110, Hialeah, Florida 33012. His application requested that all
special payments be sent to P.O. Box 527432, Miami, Florida 33152. CMS Ex. 9 at 8.
Dr. Blanco signed the certification statement as the authorized official. CMS Ex. 9 at 9.
FCSO approved the addition of the new practice location. CMS Ex. | at 2.

On September 8, 2011, FCSO conducted an unannounced site verification for Hialeah
Medical Corp., Petitioner’s added practice location. CMS Ex. 6. The location was
vacant and for rent. CMS Ex. 6 at 1; CMS Ex. 7. FCSO stated that Petitioner’s
application for this practice location was never updated or changed to reflect that it was
closed. CMS Ex. 6. Consequently, FCSO revoked the Medicare billing number
associated with Petitioner and Hialeah Medical Corp., effective September 8, 2011, as
well as imposed a two-year enrollment bar. CMS Ex. 6; CMS Ex. 4 at 16. The
revocation became final because no one filed a request for a reconsidered decision.

On January 13, 2012, FCSO received another CMS 8551 application from Dr. Blanco.
CMS Ex. 4 at 6, 42. The stated reason for the application was to change Dr. Blanco’s
Medicare information. CMS Ex. 4 at 4. He provided the same Medicare identification
number, NPI, and correspondence address as in his April and August 2009 8551
applications and correspondence with FCSO. CMS Ex. 4 at 4, 6, 21; CMS Ex. 9 at 4;
CMS Ex. 10 at 5, 10, 24. Section 3 on page 12 of the application required Dr. Blanco to
provide all information on any final adverse actions including any Medicare revocation of
any Medicare billing number. CMS Ex. 4 at 13 (page 12 of the CMS 855]). In response
to the question, “Have you, under any current or former name or business identity, ever
had a final adverse legal action listed on page 12 of this application imposed against
you?” Petitioner indicated “No” and did not include information regarding his September
2011 revocation involving Hialeah Medical Corp. CMS Ex. 4 at 14.

In section 4 of the application, Dr. Blanco, indicated that he was the sole owner of a
professional corporation, Surgical Services, and that he would bill Medicare through this
business entity. He indicated “No” when asked if the organization, Surgical Services,
under any current or former name or business identity, ever had any of the final adverse
legal actions listed on page 12 of the application imposed against it. CMS Ex. 4 at 15.
Dr. Blanco again did not include any information regarding the September 2011
revocation involving Hialeah Medical Corp., the additional practice location Dr. Blanco
associated with Surgical Services on his August 2009 application. Dr. Blanco indicated
that all remittance notices and special payments for services rendered at the practice
locations he listed should be sent to P.O. Box 527432, Miami, Florida 33152-7432, the
same address he listed on his August 2009 855] adding Hialeah Medical Corp. as a
practice location. CMS Ex. 4 at 20; CMS Ex. 9 at 8.

The January 2012 application listed Carlos A. Blanco, M.D., President, as the managing
employee. CMS Ex. 4 at 22. He again indicated “No” to the question of whether he, as
an individual, or under any current or former name or business identity, ever had a final
adverse legal action imposed against him. CMS Ex. 4 at 22. Dr. Blanco again did not
include any information regarding the September 2011 revocation involving Hialeah
Medical Corp. Dr. Blanco, as the individual practitioner, was the only person authorized
to sign the CMS Form 8551. By signing the certification statement, Dr. Blanco certified,
among other things, that he read the contents of the application, and the information
contained in the application was true, correct, and complete. CMS Ex. 4 at 27-28. He
also submitted a copy of the IRS Form W-9 indicating his name and the name of his
business, Surgical Services of Florida, Inc., with an address of P.O. Box 527432, Miami,
Florida, 33152-7432, again the same address Dr. Blanco associated with Hialeah Medical
Corp. CMS Ex. 4 at 32.

2. CMS legitimately revoked Petitioner’s enrollment and billing
privileges because Petitioner certified to the truthfulness of false
information on his January 2013 enrollment application.

CMS is authorized to revoke a currently enrolled supplier’s Medicare billing privileges
and any corresponding provider or supplier agreement when a supplier certifies as “true”
misleading or false information on a Medicare enrollment application. 42 C.F.R.
§ 424.535(a)(4). As discussed, Petitioner certified to the truthfulness of false information
on his January 2012 enrollment application when he did not report Petitioner’s previous
revocation involving the Hialeah practice location. Therefore CMS had a legitimate basis
for revoking the billing privileges associated with Dr. Blanco and Surgical Services.

Dr. Blanco contends that he was only briefly involved in Hialeah Medical Corp., he acted
only as its medical director before resigning, he would therefore not have received notice
of Hialeah Medical Corp.’s revocation, and he previously notified CMS of the resignation
by letter. Despite my pre-hearing order instructions, he filed no sworn affidavits as
evidence, and I do not otherwise find those explanations persuasive.

Dr. Blanco specifically contends that he only served as a medical director for Hialeah
Medical Corp., and he “never filed an application to obtain a Medicare provider number
while working as Medical Director.” CMS Ex. 2 at 1. He further contended in his
February 4, 2014, response that “there are no clear connections between Surgical
Services of Florida, Inc., and Hialeah Medical Corp.” He argues that CMS confused the
groups and revoked the wrong PTAN. However, the evidence of record shows that Dr.
Blanco himself certified, as a legally authorized official, an application to FCSO in
August 2009 to add Hialeah Medical Corp. to the PTAN for Surgical Services, the
professional corporation he established to bill Medicare. CMS Exs. 9, 10. A copy of Dr.
Blanco’s picture I.D. (Florida Driver’s License) was attached. CMS Ex. 9 at 4, 10.
Further, Dr. Blanco certified that special payments regarding the Hialeah practice
location should be sent to P.O. Box 527432, Miami Fl. 33152. CMS Ex. 9 at 8. Dr.
Blanco used this same address in the application he later submitted to FCSO in January
2012 regarding his billing entity, Surgical Services of Florida, Inc. CMS Ex. 4 at 20.

The October 6, 2011 revocation notice letter indicated that FCSO was revoking
Petitioner’s Medicare billing number and billing privileges effective September 8, 2011,
and FSCO imposed a re-enrollment bar for a period of two years because his Hialeah
practice location was no longer operational. CMS Ex. 6; CMS Ex. 4 at 16.

I do not find credible Petitioner’s explanation that he would not be aware of the
revocation because he had resigned from Hialeah Medical Corp. P. Br. at 2. Petitioner
lacks credibility because he provided inconsistent statements regarding his involvement
in applying for Medicare billing privileges for the Hialeah practice location.
Additionally, he claims he notified CMS of his resignation by letter; however, he never
provided the hearing officer or me any proof of the letter such as a copy or any proof of
mailing or receipt. Further, the October 6, 2011 notice letter to Hialeah Medical Corp.,
which Dr. Blanco contends he did not receive, was addressed to the same post office box,
P.O. Box 527432, in Miami that he later also listed on his January 2012 application.
Further, FCSO used this same post office box number to notify Dr. Blanco of the
reconsidered determination in this matter, from which he eventually filed his request for
hearing. CMS Ex. 4 at 20; CMS. Ex. | at 1.

III. Conclusion

Petitioner certified as “true” false information on an application when he indciated “No”
regarding whether there were any Medicare revocations against him or his professional
corporation, Surgical Services of Florida, Inc., under any former name or business
identity. Therefore, CMS had a legitimate basis for revoking Petitioner’s January 13,
2012 application and imposing a three-year re-enrollment bar, which was effective
starting July 17, 2013.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2014-H-2123)

Complainant
v.

Shreeyamuna LLC /
Ankur Patel and Jasminben Patel
d/b/a Woodside Mini Mart,

Respondent.
Docket No. C-15-596
Decision No. CR3627

Date: February 9, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Shreeyamuna LLC / Ankur Patel and Jasminben Patel d/b/a
Woodside Mini Mart, at 999 Woodside Avenue, Greenville, South Carolina 29611, and
by filing a copy of the complaint with the Food and Drug Administration’s (FDA)
Division of Dockets Management. The complaint alleges that Woodside Mini Mart
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 Woodside Mini Mart.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on December 10, 2014, CTP served the
complaint on Respondent Woodside Mini Mart 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 Woodside Mini Mart 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, Lassume that the facts alleged in the complaint (but not its conclusory
statements) are true. Specifically:

e At approximately 6:49 p.m. on December 16, 2013, at Respondent’s business
establishment, 999 Woodside Avenue, Greenville, South Carolina 29611, an
FDA-commissioned inspector observed Respondent’s staff selling a package of
Newport Box 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 March 13, 2014, CTP informed Respondent of the
inspector’s December 16, 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 2:25 p.m. on July 2, 2014, at Respondent’s business
establishment, 999 Woodside Avenue, Greenville, South Carolina 29611,
FDA-commissioned inspectors documented Respondent’s staff selling a package
of Newport Box 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 Woodside Mini Mart’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. § 387f(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
Shreeyamuna LLC / Ankur Patel and Jasminben Patel d/b/a Woodside Mini Mart.
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

Tammie Harder, NP,
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-15-455
Decision No. CR3626

Date: February 5, 2015

DECISION

The Centers for Medicare & Medicaid Services (CMS), through its administrative
contractor Noridian Healthcare Solutions, LLC (Noridian), denied the revalidation
enrollment application of Petitioner, Tammie Harder, as a nurse practitioner because
Petitioner does not possess a master’s degree in nursing or a Doctor of Nursing Practice
and was not previously enrolled in the Medicare program as a nurse practitioner before
January 1, 2003. Petitioner requested a hearing. For the reasons stated below, I affirm
the denial of Petitioner’s application to revalidate her enrollment.

I. Background and Procedural History

Effective May 4, 2009, Noridian enrolled Petitioner as a nurse practitioner in the
Medicare program. CMS Exhibit (Ex.) 7. On December 12, 2013, Petitioner signed an
enrollment application to revalidate her enrollment as a nurse practitioner. CMS Ex. 8.
Noridian received the application on December 16, 2013. CMS Ex. 9. On March 21,
2014, Noridian denied Petitioner’s revalidation enrollment application because Petitioner
did not possess a master’s degree in nursing or a Doctor of Nursing Practice. CMS Ex.
10.
On May 19, 2014, Petitioner requested reconsideration and argued that she meets the
grandfathering provision for enrollment without a master’s or doctoral degree because
she: has been licensed as a nurse practitioner since December 23, 1992; applied to enroll
as both a physician assistant and nurse practitioner in 2000; and was enrolled as a nurse
practitioner in the Medicare program, effective May 4, 2009. CMS Ex. 11. On
September 11, 2014, Noridian issued an unfavorable reconsidered determination
explaining that Petitioner was only enrolled in the Medicare program as a physician
assistant in 2000 and was not enrolled as a nurse practitioner until 2009; therefore,
Petitioner must possess a master’s in nursing or a Doctor of Nursing Practice in order to
revalidate her enrollment as a nurse practitioner. CMS Ex. 12.

Petitioner timely filed a request for hearing (RFH) with supporting documents. In
response to my November 25, 2014 Acknowledgement and Pre-Hearing Order (Order),
CMS filed a motion for summary disposition (CMS Mot.) and 12 exhibits (CMS Exs. 1-
12). Petitioner filed a response stating she had no other documents to submit.

II. Decision on the Record
In the absence of objection, I admit CMS Exs. 1-12.

My Order advised the parties that they must submit written direct testimony for each
proposed witness and that an in-person hearing would be necessary only if the opposing
party requested an opportunity to cross-examine a witness. Order §{ 8-10. CMS
submitted written direct testimony for a Noridian employee (CMS Ex. 1), but Petitioner
did not request to cross-examine the witness. Petitioner did not submit any written direct
testimony. Therefore, a hearing in this case is unnecessary and I issue this decision based
on the written record. Order § 11.

III. Issue

Whether CMS had a legitimate basis to deny Petitioner’s revalidation of enrollment as a
nurse practitioner under 42 C.F.R. § 424.530(a)(1).

IV. Jurisdiction

I have jurisdiction to decide this issue. 42 C.F.R. §§ 498.3(b)(17), 498.5(1)(2); see also
42 U.S.C. § 1395cc(j)(8).
V. Findings of Fact, Conclusions of Law, and Analysis’

In order to maintain Medicare billing privileges, suppliers enrolled in the Medicare
program must periodically revalidate their enrollment by submitting an enrollment
application to CMS. 42 C.F.R. § 424.515. For Medicare program purposes, nurse
practitioners are suppliers. See 42 C.F.R. §§ 400.202 (definition of Supplier); 498.2
(definition of Supplier). CMS may deny a supplier’s enrollment application in the
Medicare program if a supplier is found not to be in compliance with Medicare
enrollment requirements applicable to the type of supplier enrolling. See 42 C.F.R.
§ 424.530(a)(1).

The qualification requirements for an individual to enroll in the Medicare program as a
nurse practitioner are as follows:

(b) Qualifications. For Medicare Part B coverage of his or her
services, a nurse practitioner must be a registered professional
nurse who is authorized by the State in which the services are
furnished to practice as a nurse practitioner in accordance
with State law, and must meet one of the following:

(1) Obtained Medicare billing privileges as a nurse
practitioner for the first time on or after January 1, 2003, and
meets the following requirements:

(i) Be certified as a nurse practitioner by a recognized
national certifying body that has established standards for
nurse practitioners.

(ii) Possess a master's degree in nursing or a Doctor of
Nursing Practice (DNP) doctoral degree.

(2) Obtained Medicare billing privileges as a nurse
practitioner for the first time before January 1, 2003, and
meets the standards in paragraph (b)(1)(i) of this section.

(3) Obtained Medicare billing privileges as a nurse
practitioner for the first time before January 1, 2001

42 C.F.R. § 410.75(b).

' My findings of fact and conclusions of law in this case are set forth in italics and bold
font.
1. The University of North Dakota, School of Medicine, awarded Petitioner
a certificate on January 12, 1990 for being a Family Nurse Practitioner
Graduate. CMS Ex. 8 at 30.

2. Petitioner has been enrolled in the Medicare program as a physician
assistant since June 1992, with billing privileges that began in January
1990. CMS Ex. 1 § 4; CMS Ex. 3.

3. Petitioner has been licensed as a nurse practitioner in the state of North
Dakota since December 23, 1992. CMS Ex. 8 at 29.

4. Petitioner was first enrolled in the Medicare program as a nurse
practitioner effective May 4, 2009. CMS Ex. 7.

5. Petitioner does not possess a master’s degree in nursing or a Doctor of
Nursing Practice. CMS Ex. 11.

6. Petitioner was erroneously enrolled as a nurse practitioner in the
Medicare program effective May 4, 2009. CMS Ex. 1 4 6; CMS Ex. 7.

7. Because Petitioner was not enrolled in the Medicare program as a nurse
practitioner before January 1, 2003, Petitioner must possess a master’s
degree in nursing or a Doctor of Nursing Practice in order for her to
qualify for revalidation of enrollment in the Medicare program.

42 C.F.R. § 410.75(b).

Petitioner has been enrolled in the Medicare program as a physician assistant since mid-
1992. Petitioner is also a licensed nurse practitioner since December 1992. Because
Petitioner does not have a master’s degree in nursing or a Doctor of Nurse Practice, she
may only be enrolled in the Medicare program as a nurse practitioner if she had been
enrolled as a nurse practitioner for first time before January 1, 2001, or if a national nurse
practitioner certifying body certified Petitioner before January 1, 2003. 42 C.F.R.

§ 410.75(b).

Petitioner argues that she meets the requirement for having been enrolled in the Medicare
program before the January 1, 2001 date because, in March 2000, she filed a
reassignment application seeking enrollment as both a physician assistant and a nurse
practitioner, but that she was only enrolled as a physician assistant. RFH at 1. However,
Petitioner concedes that she filed an application for the purpose of reassignment of
benefits. A review of the application shows that Petitioner checked the box indicating the
purpose of the application was for “Adding a Reassignment.” CMS Ex. 4 at 1. Although
Petitioner indicated she was a nurse practitioner in several places on the application by
placing the letters “FNPC” on it, this provides scant support for the assertion that

Petitioner was actually seeking enrollment as a nurse practitioner using a reassignment
form. CMS Ex. 4. Petitioner also asserts that her intent to enroll as a nurse practitioner
in 2000 is shown by Petitioner’s nearly contemporaneous enrollment as a nurse
practitioner participating provider with BlueCross BlueShield of North Dakota. CMS Ex.
6. While this may provide some indication that in 2000 Petitioner wanted to be able to
bill insurance programs for nurse practitioner services, it does not prove that Petitioner
filed the proper application with Noridian to do so.

Further, as Petitioner concedes, Noridian did not actually enroll Petitioner as a nurse
practitioner. Noridian’s May 1, 2000 letter approving the reassignment lists Petitioner’s
name with a “PA” after it, evidencing that Noridian considered Petitioner enrolled as a
physician assistant. CMS Ex. 5. As a Noridian employee who researched the records
concerning Petitioner’s enrollment testified:

In March 2000, Petitioner applied to reassign her billing
benefits. Her application identified her as both a [physician
assistant] and a [nurse practitioner]. There is no record
showing she was enrolled as a [nurse practitioner] when she
applied to reassign her benefits. She was approved to
reassign her benefits as a [physician assistant].

CMS Ex. 1 5. The reconsidered determination came to the same conclusion. CMS Ex.
12 at 1. I find that the record supports this conclusion as well. Therefore, Petitioner must
possess a master’s degree in nursing or a Doctor of Nursing Practice in order to enroll as
a nurse practitioner.

VI. Conclusion

For the reasons stated above, I affirm CMS’s determination to deny Petitioner’s
revalidation enrollment application.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Oakes Family Care, LLC d/b/a The Doctor’s Office,!
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-1974
Decision Number CR3617

Date: February 4, 2015

DECISION

Oakes Family Care, LLC (Petitioner), submitted an application to enroll in the Medicare
program as a Federally Qualified Health Center (FQHC). With its application, Petitioner
requested a hardship exception from paying the required application fee. The Centers for
Medicare & Medicaid Services (CMS) denied Petitioner’s request for a hardship
exception. Petitioner requested a hearing to dispute CMS’s determination. For the
reasons stated below, I conclude that Petitioner has not sufficiently substantiated its claim
of hardship. Accordingly, I affirm CMS’s determination to deny Petitioner’s request for
a hardship exception.

' The Civil Remedies Division originally captioned this case with Luther Brandon
Oakes, M.D., as Petitioner. However, both parties have noted in their briefs that Dr.
Oakes is not properly the Petitioner in this case. Although Dr. Oaks is the owner of
Oakes Family Care, LLC (Petitioner’s Brief at 1 n.1), the relevant enrollment application
filed in this case is a CMS-855A, which is for an institutional provider, i.e., Oakes Family
Care, LLC d/b/a The Doctor’s Office, and not an individual, i.e., Dr. Oaks. Centers for
Medicare & Medicaid Services Exhibit 1. Because Oakes Family Care, LLC, is the
actual Petitioner in this case, | amend the caption as indicated above.
I. Background and Procedural History

On May 8, 2014, Petitioner filed an application to enroll in Medicare as a FQHC. CMS
Exhibit (Ex.) 1. Petitioner submitted a letter with its application asking CMS for a
hardship exception from paying the required application fee because “Oakes Family
Care, LLC is operating in its initial year and would have difficulty paying the application
fee of $542.00.” CMS Ex. | at 1. Petitioner attached a profit and loss statement from
October 1, 2013 (the business start date) through May 8, 2014 (the date the enrollment
application was signed), which Petitioner stated “reflects the company’s financial losses
of $5,145.30.” CMS Ex. | at 1-2.

On July 30, 2014, CMS denied Petitioner’s request for a hardship exception due to
“{iJnsufficient documentation demonstrating financial hardship.” CMS Ex. 2. On
August 5, 2014, Petitioner requested reconsideration, enclosing a 2013 tax document
(Form 1040, Schedule C Profit and Loss from Business) showing a loss of $28,582.
Petitioner stated that “our clinic cannot afford a $542 fee at this time since Oakes Family
Care is in its infancy with our opening date of October 1, 2013 less than one year ago.”
CMS Ex. 3.

On August 25, 2014, CMS denied Petitioner’s request for reconsideration. CMS Ex. 4.
CMS stated the following:

All of the documentation in the file for this case has been
reviewed and the decision has been made in accordance with
Medicare guidelines as outlined in this letter. The 2013 Form
1040 Schedule C does not include any financial information
for the current year, 2014, when your Medicare CMS-855A
application was submitted. Without current financial
information we are unable to determine if Oakes Family Care
meets the conditions for a hardship exception to the
application fee requirement.

CMS Ex. 4 at 1.

On September 22, 2014, the Civil Remedies Division received Petitioner’s request for
hearing (RFH). In the RFH, Petitioner asserted that:

The $542 application fee is excessive for our clinic to afford.
As you may know, we are located and serve the residents in
Greenville, Mississippi, a rural area of the country in dire
need of Physician aid. In addition, we are in our initial phase
of operations. To be deemed a Rural Health Clinic would be
greatly beneficial in further assisting the surrounding Delta
communities, but we cannot afford the $542 application fee.

RFH (emphasis in original). Enclosed with the RFH was Petitioner’s profit and loss
statement as of September 12, 2014, showing a loss of $17,252.73.

The case was assigned to me for hearing and decision. In response to my October 6,
2014 Acknowledgment and Pre-Hearing Order (Pre-Hearing Order), on November 10,
2014, CMS filed a motion for summary judgment (CMS Mot.) and four proposed
exhibits (CMS Exs. 1-4). On December 8, 2014, Petitioner filed a motion for summary
judgment (P. Mot.) and three proposed exhibits (P. Exs. 1-3). CMS filed objections to
Petitioner’s exhibits and a response to Petitioner’s motion (CMS Resp.).

Il. Evidentiary Ruling

Petitioner did not object to CMS Exs. 1-4 and CMS did not object to P. Ex. 2. Therefore,
I admit those exhibits into the record.

CMS timely objected to P. Exs. 1 and 3. P. Ex. 1 is an email exchange between Dr.
Oakes and a CMS employee concerning the type of evidence that could be used to prove
financial hardship for an exception to the enrollment application fee and Petitioner’s
profit and loss statement as of September 12, 2014, showing a loss of $17,252.73. P. Ex.
3 is an “Aging Report By Patient” that shows Petitioner has $31,197.06 in accounts
receivables that were more than 120 days old as of December 3, 2014. See P. Mot. at 3.
CMS argues that Petitioner failed to show good cause in order for me to admit evidence
at this stage of the appeal process and the exhibits are irrelevant because they are dated
after CMS rendered the reconsidered determination in this matter. CMS Resp. at 3. For
the reasons stated below, I find good cause for Petitioner’s submission of evidence at the
administrative law judge level (ALJ) of appeal and conclude that the evidence is relevant
to this case.

A provider or supplier may appeal CMS’s determination concerning a hardship exception
to an enrollment application fee in the same manner as they would appeal the denial or
enrollment or the revocation of Medicare billing privileges.” 42 C.F.R. § 424.514(h)(2).
Such appeals must follow the procedures in 42 C.F.R. Part 498. 42 C.F.R. § 405.803(a).
The regulations also direct providers and suppliers to submit all evidence they want CMS
to consider at the time they file their request for reconsideration. 42 C.F.R. § 405.803(c).

> The regulation at 42 C.F.R. § 424.514(h)(2) indicates providers and suppliers have
appeal rights in hardship exception cases as provided in 42 C.F.R. § 405.874. However,
in 2012, the Department of Health and Human Services re-codified the provisions in

42 C.F.R. § 405.874 as 42 C.F.R. §§ 405.800-405.818 but did not update the cross-
reference in 42 C.F.R. § 424.514(h)(2). 77 Fed. Reg. 29,001 (Mar. 16, 2012).
If a provider or supplier does not submit supporting evidence with the reconsideration
request, then CMS must contact the provider or supplier to obtain the evidence.

42 C.F.R. § 405.803(d). If the provider or supplier fails to submit the evidence before
CMS renders the reconsidered determination, the provider or supplier cannot introduce
evidence at the ALJ level of appeal unless good cause exists. 42 C.F.R. §§ 405.803(e);
498.56(e).

In the context of hardship exceptions, the regulations only require providers and suppliers
to “include with its enrollment application a letter that describes the hardship and why the
hardship justifies an exception.” 42 C.F.R. § 424.514(f). However, CMS, in its
Medicare Program Integrity Manual (MPIM), requires that the providers and suppliers
provide “comprehensive documentation” of their financial situation. MPIM

§ 15.19.1(C)(2). Although CMS may require a provider or supplier to provide evidence
to support the hardship request, it must first notify the provider or supplier of this
requirement and the MPIM is not sufficient to provide this notice. Dr. S.A. Brooks,
DPM, DAB No. 2615 at 9 (2015).

While the NSC Hearing Officer gave Petitioner an
opportunity to submit “additional evidence” to support her
request for reconsideration, moreover, neither NSC nor the
Hearing Officer prior to issuing the reconsideration decision
informed her about the kind of documentation that might be
needed to support her arguments or clarified the manual
provision and where it could be found. The Hearing Officer’s
reconsideration determination did quote the part of section
15.19.1.C.2. of the Program Integrity Manual that refers to
“comprehensive documentation (which may include,
without limitation, historical cost reports, recent financial
reports such as balance sheets and income statements, cash
flow statements, tax returns, etc.).” Jd. at 2 (emphasis added).
This statement, as noted above, is not entirely clear about
what documentation was required in any particular
circumstance. But, in any event, the Hearing Officer’s
determination contained no analysis of why the tax forms and
other documents Petitioner had already submitted were not
sufficient to meet this description.

Dr. S.A. Brooks, DPM, DAB No. 2615 at 15 (2015).

The present case has similarities to Brooks. The initial determination denying the
hardship waiver request merely stated that Petitioner provided insufficient documentation
demonstrating financial hardship. Although the initial determination indicated that
Petitioner could submit a reconsideration request and quoted the same portion of the
MPIM concerning comprehensive documentation as noted above in the Brooks case
(CMS Ex. 2 at 1), Brooks indicates that this quotation is not entirely clear as to what
documents ought to be submitted.

Petitioner submitted a 2013 Form 1040 Schedule C with its reconsideration request.

CMS Ex. 3. However, the reconsidered determination disregarded this evidence because
CMS stated that it was not from the then current year, 2014, and informed Petitioner that
CMS could not determine if Petitioner met the conditions for a hardship exception
without current financial information. CMS Ex. 4 at 1. Dr. Oakes emailed the CMS
employee who rendered the reconsidered determination and informed him that “I have
received varying information when calling CMS as to the documents desired and needed
for review .... Can I submit additional documents to support my case?” P. Ex. | at 2.
The CMS employee responded on September 12, 2014, stating that Petitioner may submit
evidence to the Departmental Appeals Board and that “it is recommended to include
information available to you that support the need for the [hardship] exception (this
includes current tax information, bank statements, budget information).” P. Ex. | at 2.
Dr. Oakes responded to the CMS employee asking if a profit and loss sheet generated on
September 12, 2014, which was attached to the email, was sufficient documentation to
submit. P. Ex. 1 at 1, 4-5. The CMS employee replied on September 15, 2014 and stated
that “this is information that would be useful when determining a hardship decision”; the
employee then provided Petitioner with a link to the MPIM. P. Ex. 1 at 1.

Consistent with these emails, Petitioner’s RFH specifically references its inclusion of the
September 12, 2014 profit and loss sheet Dr. Oaks provided to the CMS employee by
email because “my previous requests lack 2014 financial data.” Also, apparently
utilizing information from the MPIM, Petitioner submitted as an exhibit with its
prehearing exchange a document concerning what Petitioner has termed as its “bad
debts.” P. Mot. at 3; P. Ex. 2 at 4; P. Ex. 3.

Although Brooks involves a different issue related to notice of the requirement to submit
documentation to support a hardship exception request, I cannot overlook the concerns
raised in Brooks. Asa result, I must conclude that Petitioner has shown good cause for
filing additional evidence at the ALJ level of review.

T also find P Exs. 1 and 3 to be relevant to this case. As described above, P. Ex. 1
includes email exchanges that directly related to whether Petitioner has good cause for
submitting its documents late. Further, as discussed below in more detail, I agree with
the CMS employee who conducted the reconsidered determination that the September 12,
2014 profit and loss sheet is useful in considering whether Petitioner should receive a
hardship exception to the enrollment application fee. Further, Petitioner’s “bad debt”
documentation is potentially useful because it includes debts 120 days and older, thus
providing information concerning much of 2014. Therefore, I admit P. Exs. | and 3 into
the record. 42 C.F.R. §§ 498.56(e)(2), 498.60(b).
III. Decision on the Record

Neither party indicated that they sought to introduce testimony from witnesses. My
Order advised the parties that they must submit written direct testimony for each
proposed witness and that an in-person hearing would be necessary only if the opposing
party requested an opportunity to cross-examine a witness. Pre-Hearing Order fj 8-10.
Because neither party submitted written direct testimony, I issue a decision on the written
record. Pre-Hearing Order § 11; Marcus Singel, D.P.M., DAB No. 2609, at 5-6 (2014).
Because I am deciding this case on the written record, it is unnecessary for me to
consider whether summary judgment is appropriate.

IV. Issue

The only issue in this case is whether Petitioner is entitled to a hardship exception from
paying the $542 Medicare enrollment application fee.

V. Jurisdiction

I have jurisdiction to decide this issue. As discussed earlier, the regulations at 42 C.F.R.
§ 404.803(a) state that provider and supplier enrollment appeals are governed by the
procedures in 42 C.F.R. Part 498. Under those procedures, a provider or supplier who is
dissatisfied with a reconsidered determination related to enrollment may request a
hearing before an ALJ. 42 C.F.R. § 498.5(1), 498.40.

VI. Discussion

CMS properly exercised its discretion to deny Petitioner’s request for
hardship exception because Petitioner has failed to meet its burden to
prove hardship to pay the $542 application fees

Section 6401(a) of the Affordable Care Act requires the Secretary of Health and Human
Services (Secretary) to “include screening of providers and suppliers” as part of the
Medicare enrollment process. 42 U.S.C. § 1395cc(j)(1)(A). The Secretary “shall impose
a fee on each institutional provider of medical or other items or services or supplier . . .
with respect to which screening is conducted...” 42 U.S.C. § 1395cec(j)(2)(C)(i).. An
applicant seeking enrollment in the Medicare program as a FQHC is subject to the
application fee. 76 Fed. Reg. 5861, 5910-11 (Feb. 2, 2011). The application fee is used
“for program integrity efforts, including to cover the cost of conducting screening . . .”
42 U.S.C. § 1395cc(j)(2)((C)(iii).. The application fee is adjusted annually based on

> T make this one finding of fact/conclusion of law.
changes in the consumer price index. 42 U.S.C. § 1395cec(j)(2)(C)(i); 42 C.F.R.
§ 424.514(d)(2). The application fee for Medicare enrollment in 2014 was $542.
MPIM § 15.19.1.B.

The Secretary is authorized to except an institutional provider or supplier from imposition
of the application fee on a case-by-case basis if the Secretary “determines that the
imposition of the application fee would result in a hardship.” 42 U.S.C.

§ 1395cc(j)(2)(C)(ii). The Secretary delegated to CMS the authority to grant a hardship
exception. 42 C.F.R. § 424.514(h). The regulations allow an applicant to request a
hardship exception to the application fee at the time of filing a Medicare enrollment
application. 42 C.F.R. § 424.514(b)(2). CMS has 60 days from receipt of the application
for a hardship exception to approve or disapprove the exception.*

The most basic requirement for a hardship exception is that providers or suppliers must
provide a letter with the enrollment application “that describes the hardship and why the
hardship justifies an exception.” 42 C.F.R. § 424.514(f). In the present case, Petitioner’s
letter stated that it could not afford the $542 application fee because Petitioner “is
operating in its initial year” and that Petitioner’s financial loss from the day it opened
until the date of the request was $5,145.30. CMS Ex. | at 1. As support, Petitioner
submitted a profit and loss statement. CMS Ex. | at 2.

Petitioner’s reconsideration request stated merely that a hardship exception is necessary
because Petitioner is a new medical practice. CMS Ex. 3 at 1. As support, Petitioner
submitted a 1040 Schedule C (Profit or Loss from Business) form showing a $28,582 loss
in 2013. CMS Ex. 3 at 2.

In its RFH, Petitioner, for the first time, indicates that it serves a rural area “in dire need
of Physician aid” and that Petitioner meets the requirements to be deemed a rural health
clinic, and that such a designation would permit Petitioner to further its efforts in the
community. However, it was not until Petitioner’s motion for summary judgment that
there was some explanation of Petitioner’s service to low income individuals and an
explanation of alleged bad debts that have accumulated. P. Mot. at 3-4.

MPIM § 15.19.1.C.2 sets forth the criteria it considers when making a hardship
determination.

The application fee generally should not present a significant
burden for an adequately capitalized provider or supplier.

* Petitioner notes that CMS “failed to adhere to their standard of reply within 60 days,
exceeding this mandate by 23 days.” P. Br. at 3. However, the regulations do not
provide a remedy for a provider or supplier who receives a late determination. Therefore,
this issue does not impact this decision.
Hardship exceptions should not be granted when the provider
simply asserts that the imposition of the application fee
represents a financial hardship. The provider must instead
make a strong argument to support its request, including
providing comprehensive documentation (which may include,
without limitation, historical cost reports, recent financial
reports such as balance sheets and income statements, cash
flow statements, tax returns, etc.).

Other factors that may suggest that a hardship exception is
appropriate include the following:

(a) Considerable bad debt expenses,

(b) Significant amount of charity care/financial
assistance furnished to patients,

(c) Presence of substantive partnerships (whereby
clinical, financial integration are present) with those
who furnish medical care to a disproportionately low-
income population;

(d) Whether an institutional provider receives
considerable amounts of funding through
disproportionate share hospital payments, or

(e) Whether the provider is enrolling in a geographic
area that is a Presidentially-declared disaster under the
Robert T. Stafford Disaster Relief and Emergency
Assistance Act, 42 U.S.C. 5121-5206 (Stafford Act).

When reviewing the non-exhaustive list of factors above that may suggest hardship, I
agree with the view that “[p]lainly CMS anticipated granting exceptions in ways that
would benefit disadvantaged program beneficiaries.” Earl Braunlin, M.D., DAB
CR3499, at 4 (2014). Therefore, I believe that CMS is correct when it argues that
Petitioner’s initial reason for needing a hardship exception, i.e., that Petitioner is a new
medical practice, is insufficient because it is likely that many new providers would
experience financial constraints when starting their businesses. CMS Mot. at 5 (“If
Congress intended for CMS to waive the enrollment fee for providers and suppliers in
their first year of business, it would have provided such waiver in the statute.”).
Petitioner’s asserted losses appear to be consistent with a new practice, with Petitioner
incurring a $28,582 loss by the end of 2013, but only having a total loss of $5,145.30 by
May 8, 2014. Another profit and loss sheet from Petitioner indicates that “All

Transactions” as of September 12, 2014 resulted in a net income of “-17,252.873.”

P. Ex. 1 at 4-5. The amounts Petitioner posits as its losses in the first year of operation
appear insufficient to show financial hardship would occur if forced to pay the $542
application fee. These would not affect an adequately capitalized provider or supplier.

As indicated above, Petitioner did not have the benefit of knowing the contents of MPIM
§ 15.19.1.C.2 until Dr. Oakes’ email exchange with CMS following the issuance of the
reconsidered determination. P. Ex. 1 at 1. Therefore, it is understandable that Petitioner,
upon review of the manual provision, would indicate in the RFH that its practice involves
providing medical care in an underserved, rural area, and would include information
about alleged bad debts. Consistent with Petitioner’s assertion that its practice is meant
to help an underserved area, Petitioner indicates in various documents that it seeks
enrollment in the Medicare program as a rural health clinic and that Petitioner meets the
requirements to be enrolled as a rural health clinic.> RFH; P. Mot. at 2, 4; P. Ex. 1 at 2.
However, Petitioner provided no documentary or testimonial support for these assertions.

A review of Petitioner’s enrollment application shows that Petitioner requests enrollment
as a FQHC and not a rural health clinic.® CMS Ex. | at 8. A review of the enrollment
application also shows Petitioner is a proprietary business (i.e., not non-profit) and does
not include information that expressly shows that Petitioner serves an underserved, rural
area. CMS Ex. | at 28. While it may be true that Petitioner’s enrollment in the Medicare
program might benefit individuals in an underserved area, there is no evidence in the
record to support this.

Petitioner asserts that it has accumulated “bad debts” because its patients are often
uninsured and unable to pay for the medical services it provides. P. Mot. at 3-4.
Petitioner submitted a document purporting to show the accumulated bad debts incurred
by Petitioner through December 3, 2014. P. Ex. 3. However, aside from a limited
explanation of this somewhat ambiguous document in Petitioner’s motion for summary
judgment (the document title indicates that it is “Aging Report By Patient,” but the
document simply lists the “Grand Total” for each column displayed), there is nothing in
the record that supports Petitioner’s claim concerning bad debts or explains how or who
generated the figures in the document. Rather, the document shows that Petitioner has
accounts receivables that are aged but there is no evidence provided that Petitioner has
written off these receivables as “bad debts.” P. Ex. 3. Generally, a bad debt is “[a] debt

> A rural health clinic is a clinic that is in a rural area designated as a shortage area and is
not a rehabilitation agency or a clinic that primarily treats mental disease. 42 C.F.R.
§ 491.2 (definition of Rural health clinic).

° A FQHC is an entity that meets the requirements to receive or is receiving a Public
Health Service Act grant, or is a health facility operated by an Indian tribe. 42 C.F.R.
§ 405.2401(b) (definition of Federally qualified health center).
10

that is uncollectible; a permissive deduction for tax purposes in arriving at taxable
income. LR.C. § 166.” Black’s Law Dictionary 139 (6th ed. 1990).

My Pre-Hearing Order explained in detail the process by which a party could submit
written direct testimony through affidavit or declaration, which could have been used to
explain the “Aging Report By Patient.” See Pre-Hearing Order § 8. A proceeding before
an ALJ is a formal administrative proceeding and an ALJ’s “decision is based on the
evidence of record... .” 42 C.F.R. § 498.74(a). Although I am not implying that Dr.
Oakes or Petitioner’s representative have dissembled, I am nevertheless required to have
record support for any finding I make that is material to the outcome of the case.
Although CMS does not provide evidence disproving Petitioner’s assertions, CMS is not
obligated to do so. See Brooks, DAB No. 2615 at 17 (“[W]e do not adopt a rule requiring
CMS to investigate the allegations in a hardship exception request or to produce evidence
contravening the allegations in the request in order to support a denial of the request.”).

It is sufficient that CMS disputes Petitioner’s evidence and that the evidence is not clear
so that I can accord it significant weight in my decision. As a result, I cannot find that
the evidence submitted proves the existence of bad debts.

VII. Conclusion

Based on the written record, I affirm CMS’s determination to deny Petitioner’s request
for a hardship exception from paying the Medicare enrollment application fee.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Center for Tobacco Products,

(FDA No. FDA-2014-H-2109)
Complainant
v.

Safeway Inc.
d/b/a Safeway 1864,

Respondent.
Docket No. C-15-582
Decision No. CR3625

Date: February 4, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Safeway Inc. d/b/a Safeway 1864, at 24040 Bothell Everett
Highway, Bothell, Washington 98021, and by filing a copy of the complaint with the
Food and Drug Administration’s (FDA) Division of Dockets Management. The
complaint alleges that Safeway 1864 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 $250 civil money penalty against Respondent Safeway
1864.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on December 9, 2014, CTP served the
complaint on Respondent Safeway 1864 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 Safeway 1864 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, Lassume that the facts alleged in the complaint (but not its conclusory
statements) are true. Specifically:

At approximately 2:50 p.m. on January 24, 2014, at Respondent’s business
establishment, 24040 Bothell Everett Highway, Bothell, Washington 98021, an
FDA-commissioned inspector observed Respondent’s staff selling a package of
Marlboro 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;

In a warning letter dated April 10, 2014, CTP informed Respondent of the
inspector’s January 24, 2014 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;

At approximately 2:35 p.m. on June 10, 2014, at Respondent’s business
establishment, 24040 Bothell Everett Highway, Bothell, Washington 98021, FDA-
commissioned inspectors documented Respondent’s staff selling a package of
Marlboro Red Label cigarettes to a person younger than 18 years of age.

These facts establish Respondent Safeway 1864’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. § 387f(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 $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
Safeway Inc. d/b/a Safeway 1864. 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
Vera Vitt, RN,
(PTAN: 161685),
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-1723
Decision No. CR3623

Date: February 4, 2015

DECISION

Wisconsin Physicians Service Insurance Corporation (WPS), an administrative contractor
acting on behalf of the Centers for Medicare & Medicaid Services (CMS), denied the
Medicare enrollment application of Petitioner, Vera Vitt, RN, finding she did not meet all
Medicare requirements for nurse practitioners. Petitioner appeals this denial. I find that
WPS properly denied Petitioner’s application because she does not have a certification by
a recognized national certifying body that has established standards for nurse
practitioners.

I. Background

Ina letter dated May 21, 2014, WPS denied Petitioner’s Medicare enrollment application
because Petitioner was not certified by a recognized national certifying body that has
established standards for nurse practitioners. CMS Ex. 1. Petitioner sought
reconsideration. In the reconsidered determination, dated July 9, 2014, WPS’s hearing
officer affirmed the denial.! CMS Ex. 3.

' The reconsidered determination incorrectly cited the applicable regulation but quoted
the correct language of the applicable regulation.
Petitioner timely filed a request for hearing before an administrative law judge. The case
was assigned to me, and | issued an Acknowledgment and Pre-hearing Order (Pre-
earing Order). In accordance with my Pre-hearing Order, CMS timely filed its pre-
earing exchange consisting of a motion to dismiss, a motion for summary judgment,
supporting briefs, and CMS Exhibits (Exs.) 1-3. Petitioner did not file a response as I
directed. On November 19, 2014, I issued an order indicating that due to her failure to
respond, Petitioner appeared to have abandoned her hearing request. I directed her to
respond, showing cause why I should not dismiss her hearing request and also directed
er to explain, at a minimum, whether she disagreed with CMS’s arguments and
evidence. Petitioner responded, submitting a one-page response, a four-page attachment
consisting of a letter from the Director of Graduate Programs for the School of Nursing at
Wichita State University, and a three-page form titled “Validation of Advanced Practice
Nursing Education,” indicating the coursework and clinical hours Petitioner completed
for her concentration as a Psychiatric/Mental Health Clinical Nurse Specialist. I refer to
this attachment as P. Ex. 1.

I admit CMS’s Exs. 1-3 and P. Ex. 1 without objection from the parties. Neither party
submitted a list of proposed witnesses, nor filed written direct testimony as my Pre-
earing Order directed. Pre-hearing Order 8-10. Therefore, as explained in that order,
there is no need for cross-examination, an in-person hearing is not necessary, and I will
decide this matter on the written record. Pre-hearing Order §11; Marcus Singel, D.P.M.,
DAB No. 2609 at 5-6 (2014).

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

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

§ 1395cc(j)).

> A “supplier” can also furnish services under Medicare, and the term applies to
physicians, other non-physician 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)).
IL. Findings of Fact and Conclusions of Law

1. CMS had a legitimate basis to deny Petitioner’s application for Medicare
enrollment and billing privileges because she does not have a certification by
a recognized national certifying body that has established standards for nurse
practitioners.

The regulations for Medicare Part B coverage for nurse practitioner services at 42 C.F.R.
§ 410.75(b) provide:

Qualifications. For Medicare Part B coverage of his or her
services, a nurse practitioner must be a registered nurse who is
authorized by the State in which the services are furnished to
practice as a nurse practitioner in accordance with State law, and
must meet one of the following:

(1) Obtained Medicare billing privileges as a nurse practitioner
for the first time on or after January 1, 2003, and meets the
following requirements:
(i) Be certified as a nurse practitioner by a recognized national
certifying body that has established standards for nurse
practitioners.
(ii) Possess a master’s degree in nursing or a Doctor of Nursing
Practice (DNP) doctoral degree.

(2) Obtained Medicare billing privileges as a nurse practitioner
for the first time before January 1, 2003 and meets the standards in
paragraph (b)(1)(i) of this section.

(3) Obtained Medicare billing privileges as a nurse practitioner
for the first time before January 1, 2001.

CMS may deny a provider or supplier’s enrollment in the Medicare program if
the provider or supplier at any time is found not to be in compliance with
Medicare enrollment requirements. 42 C.F.R. § 424.530(a)(1).

Petitioner represents to me that she graduated in 2000 and received Medicare billing
privileges as a nurse practitioner for the first time in 2001. P. Ex. 1. Similarly, WPS had
no record that she had billing privileges before January 1, 2001. CMS Ex. 3, at 2. Only a
nurse practitioner who obtained Medicare billing privileges prior to January 1, 2001, is
excused from the Medicare requirement of certification by a national certifying body.
There is no dispute that Petitioner is not certified as a nurse practitioner by any national
certifying body that has established standards for nurse practitioners. Therefore, WPS
had a legitimate basis for denying Petitioner’s application for not meeting this
certification requirement.

2. State requirements for nurse practitioners do not preempt the regulatory
requirements for nurse practitioners in the Medicare program.

Petitioner argues that her lack of certification should not preclude her Medicare
enrollment. P. Ex. 1. She filed a letter signed by the Director of Graduate Programs,
Wichita State University, School of Nursing, explaining that the Kansas State Board of
Nursing does not require nurse practitioners to be nationally certified. P. Ex. 1.
However, a state’s requirements do not preempt Medicare requirements, and I am not
authorized to ignore the regulations that establish a nurse practitioner’s eligibility for
Medicare enrollment.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
A Familiar Face Home Health Services, Inc.
(NPI: 1558320218),
Petitioner,
v.

Centers for Medicare & Medicaid Services.

Docket No. C-14-1580

Decision No. CR3622

Date: February 4, 2015

DECISION

The Centers for Medicare & Medicaid Services (CMS), through its administrative
contractor Palmetto GBA, revoked the Medicare billing privileges of Petitioner, A
Familiar Face Home Health Services, Inc. Based on three attempted on-site inspections
of Petitioner’s offices, Palmetto determined that Petitioner was no longer operational to
furnish Medicare items or services and was not meeting Medicare enrollment
requirements. Petitioner requested a hearing before an administrative law judge (ALJ) to
dispute CMS’s determination. For the reasons stated below, I affirm CMS’s
determination to revoke Petitioner’s Medicare billing privileges.

I. Background and Procedural History

Petitioner is a home health agency (HHA) licensed by the state of Florida. Petitioner was
enrolled in the Medicare program as a provider. On March 27, 2014, Palmetto GBA
revoked Petitioner’s Medicare billing privileges, effective August 22, 2013, because
“(t]hree (3) activity checks conducted on August 22, 2013, November 6, 2013, and
February 5, 2014, at the practice location of 3222 17™ Street, Sarasota, Florida, revealed
that the facility was closed and unattended. The facility is not operational.” CMS
Exhibit (Ex.) 3 at 1. The revocation also resulted in the termination of Petitioner’s
Medicare provider agreement and the imposition of a two-year reenrollment bar. CMS
Ex. 3.

Petitioner sent CMS a letter dated April 8, 2014, in which Petitioner stated that the
revocation was incorrect and that the problems Petitioner had been experiencing were
corrected. CMS Ex. 2. On June 4, 2014, CMS concluded that Petitioner had not
provided sufficient evidence to show that it corrected the deficiency noted in the
revocation letter and stated that “the proposed corrective action plan/ Reconsideration are
ereby denied.” CMS Ex. | at 2.

On July 27, 2014, Annah C. Murphy, Vice President of Operations for Hometown
Homecare, LLC, requested a hearing to dispute the CMS determination to revoke
Petitioner’s Medicare billing privileges. Ms. Murphy stated that Petitioner was “under
the Management and 100% control of Hometown Homecare effective March 27, 2014.”
On August 4, 2014, I issued an Acknowledgement and Prehearing Order (Order). On
September 29, 2014, attorneys from the law firm of Baker & McKenzie, LLP, noticed
their appearance “as counsel for Hometown Homecare, LLC, in its capacity as Manager
and Operator of Petitioner, A Familiar Face Home Health Services, Inc.”

In response to my Order, CMS filed a motion for summary judgment (CMS Motion) with
ten exhibits (CMS Exs. 1-10). Petitioner filed a brief in response (P. Br.) together with
two exhibits (P. Exs. A and B).

After the pre-hearing exchange process was complete, on November 10, 2014,
Petitioner’s counsel electronically filed a notice that Hometown Homecare, in its capacity
as Manager of Petitioner, had terminated its business relationship with Petitioner and, as
a result of the termination of that relationship, the attorneys representing and appearing in
this proceeding withdrew their appearance. Upon inquiry with counsel, my office learned
that all inquiries as to Petitioner’s intentions regarding this case should be directed to Ms.
Donna Ventura. Ms. Ventura appears to be Petitioner’s sole owner. CMS Ex. 9 at 22,
24. Following the issuance of an order to show cause, Ms. Ventura timely submitted a
letter dated November 28, 2014, in which she indicated that Petitioner wanted to pursue
the appeal in this matter. On December 15, 2014, Ms. Ventura submitted a letter and
multiple documents (P. December 15 Submission).!

' These documents were not identified as exhibits, nor were they marked as required by
the Civil Remedies Division Procedures. However, the documents were identified in a
Table of Contents with a number and an explanation of each document. I note that the
first item is a letter addressed to the staff attorney assisting me in this matter and is dated
September 15, 2014, although filed on December 15, 2014. The Civil Remedies Division
had not previously received this letter.
II. Decision on the Record

I admit CMS Exs. 1-10, P. Exs. A and B, and the unmarked documents in P. December
15 Submission because neither party has objected to any of this evidence.

I decide this case on the written record. Both parties submitted written direct testimony
(CMS Ex. 4 at 2, CMS Ex. 5 at 2, CMS Ex. 7 at 2, and P. Ex. B); however, neither party
requested to cross-examine the other party’s witness as required by my Order.” Order
48-10. Therefore, no hearing is necessary. Order ¥ 11; Marcus Singel, D.P.M., DAB
No. 2609, at 5-6 (2014).

II. Issue

Whether CMS had a legitimate basis for revoking Petitioner’s Medicare billing privileges
pursuant to 42 C.F.R. § 424.535(a)(5).

IV. Jurisdiction

I have jurisdiction to decide the issues in this case. 42 C.F.R. §§ 405.803, 498.3(b)(17),
498.5(1)(2); see also 42 U.S.C. § 1395cc(j)(8).

V. Findings of Fact, Conclusions of Law, and Analysis®

To participate in Medicare program, an HHA must enroll as a provider by meeting all
enrollment requirements stated in the regulations and in the applicable enrollment
application.* 42 C.F.R. §§ 424.500, 424.510, 424.516, 424.530. One enrollment
requirement is that a provider “must be operational to furnish Medicare covered items or
services ....” Id. § 424.510(d)(6). During the enrollment process, CMS may conduct
an on-site inspection (also called an on-site review) to ascertain compliance with
enrollment requirements and to determine whether the prospective provider is
operational. Jd. § 424.510(d)(8). Once enrolled, a provider has “billing privileges,”

> Ms. Ventura’s November 28, 2014 letter appears to indicate she anticipated that a
hearing would be held in this matter; however, neither Petitioner’s previous counsel nor
Ms. Ventura requested to cross-examine any witnesses. In any event, I indicated to Ms.
Ventura in my order to show cause that I had received all prehearing submissions and this
matter was ready for decision and she did not object in her response or anytime
thereafter.

> My numbered findings of fact and conclusions of law appear in bold and italics.

+ HHAs are considered providers for purposes of the Medicare program. 42 C.F.R.
§ 400.202 (definition of Provider).
which is the right to file claims to receive Medicare payment for services provided to
Medicare beneficiaries. See id. §§ 424.502 (definition of Enroll/Enrollment), 424.505.

Enrolled providers must maintain compliance with enrollment requirements in order to
maintain billing privileges. Id. § 424.500. CMS may conduct on-site inspections “when
deemed necessary . . . to verify that the enrollment information submitted to CMS or its
agents is accurate and to determine compliance with Medicare enrollment requirements.”
Id. § 424.517(a). The results of the on-site inspection may be used to support revocation
of billing privileges. Id.

1. CMS attempted to perform on-site inspections of Petitioner’s offices at
the address on file with CMS on Thursday, August 22, 2013, at 12:15
p.m., Wednesday, November 6, 2013, at 1:28 p.m., and Wednesday,
February 5, 2014, at 12:00 p.m. to ascertain whether Petitioner was
operational and in compliance with Medicare enrollment requirements;
however, Petitioner’s offices were closed during each attempted on-site
inspection.

In January 2012, Petitioner filed a revalidation enrollment application with CMS in
which it indicated that its only practice location was 3222 17" Street, Sarasota, Florida
34235. CMS Ex. 9 at 12. CMS attempted to perform three on-site inspections at this
address.

On Thursday, August 22, 2013, an inspector from SafeGuard Services, LLC, a CMS
contractor, arrived at Petitioner’s facility at 12:15 p.m. The inspector found the main
entrance door locked, the interior ceiling lights were off (as observed through the main
door), and no employee or patient traffic. The inspector found no hours of operation
posted. The inspector observed a handwritten note attached to the main door advising,
“Please call 942-365-9474. A Familiar Face. If you need us I am out seeing patients and
our office girl is out [with] flu bug. Thank you, Donna Ventura, RN.” CMS Ex. 4 at 1,
4. The inspector also found a Florida Power and Light disconnect notice dated August
21, 2013, stating that $218.70 must be paid by the end of the day or the electrical service
would be disconnected. CMS Ex. 4 at 1, 5.

On Wednesday, November 6, 2013, at 1:28 p.m., a second SafeGuard inspector attempted
an on-site inspection of Petitioner offices at the 3222 17" Street address. CMS Ex. 5.
This inspector also found no one present; however, he saw the same handwritten note
posted to the door of Petitioner’s offices indicating that Ms. Ventura was out seeing
patients and the “‘office girl” was out with a flu bug. CMS Ex. 5 at 1, 5. He found no
hours of operation posted. CMS Ex. 5 at 1. The inspector saw that some interior lights
were on, but he thought the facility appeared inactive and that items were being placed in
boxes. CMS Ex. 5 at 1.
On Wednesday, February 5, 2014, a third inspector, this time from CMS contractor US
Investigation Services, LLC (USIS), attempted to conduct an on-site inspection at
approximately 12 p.m. CMS Ex. 6. The inspector found that “the office appears to be in
use[;] however[,] not set up for patients. The office was locked and dark at 12:00. Sign
indicated to call a posted phone number.” CMS Ex. 6 at 6; see also CMS Ex. 6 at2. A
sign with the company’s name and phone number was attached to the main door. CMS
Ex. 6 at 3.

2. CMS had a legitimate basis to revoke Petitioner’s Medicare enrollment
under 42 C.F.R. § 424.535(a)(5) because Petitioner has not shown that it
was operational to furnish Medicare covered items or services.

In both its reconsideration request and its request for hearing, Petitioner generally
disputes CMS’s finding it was not operational, arguing that it has come into compliance
since the attempted site inspections. CMS Ex. 2. Petitioner concedes its location at 3222
17" Street was not open on the three dates in question, but nevertheless contends that it
met all of the indices of operability under the regulations on the three dates of the
attempted on-site inspections and throughout Petitioner’s enrollment as a Medicare
provider.* P. Br. at 4-6; P. Ex. B at q9§ 14, 15, 18, 19, 21, and 23. Petitioner claims that it
always maintained a physical practice location even if it was not open at the time of the
attempted on-site inspections. Petitioner contends that being operational does not mean
the practice location must be open all of the time. P. Br. 4-5.

> Ms. Ventura provided information related to the problems Petitioner faced in the
summer of 2013. Petitioner was in the process of being sold to another company and that
company was serving as the management company for Petitioner. However, the
buyer/management company allegedly failed to make a variety of payments on
Petitioner’s behalf, including payroll, which led Ms. Ventura to terminate its relationship
with the buyer/management company. P. December 15 Submission at 34-53. At around
the time that Ms. Ventura was able to obtain control of Petitioner again, she suffered two
significant personal problems, one of which allegedly included an unauthorized change of
Petitioner’s business address with the United States Postal Service, resulting in further
disruption to the administration of Petitioner. P. December 15 Submission at 5, 85-96. It
is important to note that I do not have the authority to reverse CMS’s revocation because
Petitioner presents reasons why it was unavailable for CMS’s on-site inspections. CMS
determines, in its discretion, when to revoke or not revoke a provider’s billing privileges.
My review is limited to determining whether CMS had a legitimate basis for determining
that Petitioner was not operational. Ms. Ventura’s problems, while extremely
unfortunate, appear to support CMS’s conclusion that Petitioner may not have been
operational in August 2013.

CMS may revoke a provider’s Medicare billing privileges when “CMS determines, upon
on-site review” that the provider “is no longer operational to furnish Medicare covered
items or services... .” 42 C.F.R. § 424.535(a)(5). The term “operational” means:

the provider has a qualified physical practice location, is open
to the public for the purpose of providing health care related
services, is prepared to submit valid Medicare claims, and is
properly staffed, equipped, and stocked (as applicable,
based on the type of facility or organization, provider or
supplier specialty, or the services or items being rendered), to
furnish these items or services.

42 C.F.R. § 424.502 (definition of Operational) (emphasis added).

Contrary to Petitioner’s argument that an HHA may be operational even though its
offices are closed, CMS is authorized “to revoke billing privileges if a provider is not
operational when an inspector visits its address during normal business hours... .” J & S
Healthcare Services, LLC, DAB No. 2519, at 6 (2013). At that point, it is Petitioner’s
obligation to show that it was in compliance with the enrollment requirements at the time
of the site visits. 42 C.F.R. § 424.545(c). However, Petitioner did not submit such
evidence. The testimony of Ms. Ventura is insufficient to meet Petitioner’s burden of
showing that it was operational at the time of the three attempted site visits. She testified
that on all three occasions of the attempted site visits, the office administrator was
coincidentally out of the office and that Ms. Ventura was out providing services to
clients.° Petitioner provided no other documentary evidence to support these statements.

In contrast, CMS provided well-documented evidence, supported by declarations from
two of the inspectors, that on three separate occasions, months apart, Petitioner’s location
was closed. The attempted inspections took place on weekdays in the middle of each

® In addition to maintaining compliance with enrollment requirements, providers are
required to comply with conditions of participation applicable to its provider type.

42 C.F.R. § 489.53(a)(3). A condition of participation for HHAs requires that the HHA
furnish services in compliance with all applicable federal, state, and local laws and
regulations. 42 C.F.R. § 484.12(a). Florida regulations require the following of an HHA:
“When the administrator and the director of nursing are not on the premises during
designated business hours, a staff person must be available to answer the phone and the
door and must be able to contact the administrator and the director of nursing by
telecommunications. This individual can be a clerical staff person.” Fla. Admin. Code
§ 59A-8.003(10)(b). Far from assisting Petitioner’s case, Ms. Ventura’s testimony
appears to support the conclusion that Petitioner did not comply with the Florida
regulations concerning staffing on the days of CMS’s attempted on-site inspections.

day.’ The inspectors could reasonably infer that Petitioner was no longer operational
because the premises were closed, there was a Florida Power and Light disconnect notice
at the door, and the same handwritten note concerning Ms. Ventura’s absence and that of
the “office girl” who had the flu was posted in the same location on the August 22 and
November 6, 2013.° Compare CMS Ex. 4 at 4 with CMS Ex. 5 at 5.

Although Petitioner argues in its request for hearing, with attached supporting
documents, that Petitioner has subsequently returned to compliance and has passed
several other surveys of its business, this is insufficient to show that Petitioner was
operational on August 22, 2013. 73 Fed. Reg.36,448, at 36,452 (June 27, 2008)
(“Accordingly, a provider or supplier is required to furnish evidence that demonstrates
that the Medicare contractor made an error at the time an adverse determination is made,
not that the provider or supplier is now in compliance.”).

VI. Conclusion

For the reasons stated above, I affirm CMS’s revocation of Petitioner’s Medicare billing
privileges.

/s/
Scott Anderson
Administrative Law Judge

7 Ms. Ventura provides pictures of the signs indicating Petitioner’s hours of operation
that were allegedly posted at a second entrance to Petitioner’s offices that the inspectors
apparently did not observe. P. December 15 Submission at 4, 9-10, 13. Based on the
inspectors’ reports, they attempted all three visits within the normal hours of operation as
indicated in the signs submitted Ms. Ventura.

® Ms. Ventura asserts that this sign was the normal sign she would post when an office
employee was sick. P. December 15 Submission at 5. However, Ms. Ventura, who is a
registered nurse, did not explain why she would indicate that an employee had the flu
when she meant the sign to be used whenever an office employee was sick. And, no such
note or any note explaining the office closure appeared on the door at the time of the last
attempted site visit on February 5, 2014.


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.

George’s Grocery USA, LLC
d/b/a George’s USA,

Respondent.

Docket No. C-15-605
FDA Docket No. FDA-2014-H-2131

Decision No. CR3613

Date: February 2, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint)
against Respondent, George’s Grocery USA, LLC d/b/a George’s USA, alleging facts
and legal authority sufficient to justify imposing a civil money penalty of $11,000.
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
$11,000.

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 tobacco
products to a minor, sold an individual cigarette, 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 C.F.R. pt. 1140. CTP seeks a civil money penalty of $11,000.

On December 10, 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 or any other pleading within the time prescribed.
Therefore, pursuant to 21 C.F.R. § 17.11(a), I 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 C.F.R. § 17.11(a). Specifically, CTP alleges the following facts in its Complaint:

e Respondent owns George’s USA, an establishment that sells tobacco products and
is located at 2509 Main Street, Bridgeport, Connecticut 06606. Complaint § 3.

e CTP previously initiated a civil money penalty action, CRD Docket Number C-14-
1057, FDA Docket Number FDA-2014-H-0579, against Respondent for four
violations of 21 C.F.R. pt. 1140 within a 24-month period. Specifically, those
violations included unspecified violations! on June 11, 2013, and three violations
during inspections on October 7, 2013 and October 9, 2013, when Respondent
sold tobacco products to a minor, made individual cigarettes available for sale, and
failed to verify, by means of photographic identification, that a tobacco purchaser
was 18 years of age or older. Complaint § 10; May 12, 2014 Complaint § 1.

e The previous civil money penalty action concluded when Ramez Lahham,
Respondent’s authorized representative, settled the action with CTP on

‘In the complaint, CTP describes the actions that took place at Respondent George’s
Grocery USA, LLC d/b/a George’s USA’s business establishment on June 11, 2013, as
both “a violation” and as “violations.” Complaint § 10. In a previous administrative
complaint initiated on May 12, 2014, and attached to the present complaint, CTP
described two discrete violations at Respondent George’s Grocery USA, LLC d/b/a
George’s USA’s business establishment on June 11, 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 will infer that
CTP’s description in the present complaint of “a violation” occurring on June 11, 2013,
was a typographical error.

Respondent’s behalf. On June 25, 2014, Mr. Lahham signed an Acknowledgment
Form in which he “‘admitt[ed] that the violations . . . occurred, waiv[ed]
Respondent’s ability to contest the violations in the future, and stat[ed] that he
understood that the violations may be counted in determining the total number of
violations for purposes of future enforcement actions against Respondent.” The
Administrative Law Judge closed the case on July 16, 2014. Complaint § 11.

e During a subsequent inspection of Respondent’s establishment conducted on
August 19, 2014, FDA-commissioned inspectors documented that “a person
younger than 18 years of age was able to purchase an individual cigarette . . . at
approximately 11:55 AM{[.]” The inspectors also noted that “the minor’s
identification was not verified before the sale . . . [.]” Complaint § 1.

e The findings documented at the August 19, 2014 inspection comprise three
additional incidents of noncompliance in addition to the four documented
previously and admitted to by Respondent.

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 the verification, 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). Finally, the regulations prohibit retailers from breaking
or otherwise opening a cigarette package in order to sell individual cigarettes. 21 C.F.R.
§ 1140.14(d).

Here, Respondent had seven violations of regulations found at 21 C.F.R. pt. 1140 within
a 48-month period. Respondent acknowledged that three violations occurred when its
representative settled the previous civil money penalty action. Most recently, during an
inspection on August 19, 2014, Respondent sold an individual cigarette to a person
younger than 18 years of age, in violation of 21 C.F.R. § 1140.14(a) and (d). On that
same date, Respondent violated the requirement that retailers verify, by means of photo
identification containing a purchaser’s date of birth, that no tobacco product purchaser is
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 $11,000, which is a permissible fine under the regulations.
21 C.F.R. § 17.2. Therefore, I find that a civil money penalty of $11,000 is warranted
and so order one imposed.

/s/
Steven T. Kessel
Administrative Law Judge