Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Centro Radiologico Rolon, Inc.,
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-13-548
Decision No. CR3136

Date: February 28, 2014

DECISION

The Centers for Medicare & Medicaid Services (CMS) revoked the Medicare enrollment
and billing privileges of Petitioner, Centro Radiologico Rolon, Inc., an independent
diagnostic and testing facility (IDTF) located in Puerto Rico. Petitioner appealed. As
discussed below, I find Petitioner did not comply with Medicare requirements because its
employees did not have the proper qualifications, and it did not properly notify CMS ofa
change in its supervisory physician. Therefore, I affirm CMS’s revocation.

I. Background
This case has a long history. Petitioner initially was notified that its billing privileges

were being revoked in September 2011 and a reconsideration decision on that
determination was issued on December 15, 2011.' Petitioner timely submitted a request

' Pursuant to First Coast Service Options, Inc.’s (FCSO’s) September 19, 2011 letter
initially proposing revocation, Petitioner submitted a Corrective Action Plan (CAP) on
October 3, 2011. FCSO denied the CAP on November 1, 2011 because it did not receive
the additional information that it requested. CMS Ex. 15.
for hearing, and the case was docketed as C-12-382. The parties filed a joint motion for
remand, and I dismissed the case. After the dismissal, First Coast Service Options, Inc.
(FCSO), a Medicare contractor, by letter dated June 29, 2012, notified Petitioner that it
received correspondence related to the remand, removed the earlier revocation, and
reinstated Petitioner effective November 18, 2002. CMS Exhibit (Ex.) 29. On that same
day, however, FCSO sent another letter to Petitioner denying its application to enroll in
the Medicare program. CMS Ex. 28. That letter explained that it found Petitioner did not
meet the enrollment requirements related to: demonstrating the proficiency of its
interpreting and supervising physicians and technicians, timely notifying CMS of the
employment of a supervising physician within 30 days of the physician’s employment,
and maintaining a telephone number through directory assistance. CMS Ex. 28, at 2-4.
The letter further notified Petitioner of its right to request reconsideration.

By letter dated July 27, 2012, FCSO informed Petitioner that it was revoking its Medicare
billing privileges effective August 26, 2012.7 CMS Ex. 30. The bases for the revocation
were: Petitioner’s failure to show that its supervising and interpreting physicians
demonstrated proficiency pursuant to 42 C.F.R. § 410.33(b)(1) and (b)(2) and FCSO’s
Local Coverage Determination (LCD) L29330. CMS Ex. 30, at 1-2. FCSO also found
that Petitioner did not demonstrate that its technicians had the qualifications to perform
the ultrasound tests, CT scans, DEXA scans, mammography, or MRI procedures listed on
Petitioner’s application in violation of 42 C.F.R. § 410.33(c), (g)(12) and LCD L29330.
CMS Ex. 30. FCSO also found that Petitioner did not meet the regulatory requirements
at 42 C.F.R. § 410.33(g)(5)(ii) and (g)(8) because it did not have a phone number
available through directory assistance and a complete beneficiary complaint resolution
form. CMS Ex. 30, at 3. Finally, FCSO explained that Petitioner failed to report within
30 days that it had employed a supervising physician on June 1, 2010, in violation of 42
C.F.R. § 410.33(g)(2). CMS Ex. 30, at 3. Petitioner filed for a reconsideration decision.

By letter dated January 15, 2013, FCSO issued a reconsideration decision affirming
Petitioner’s revocation from the Medicare program on the bases set forth in FCSO’s
revocation determination dated July 27, 2012. CMS Ex. 32.

Petitioner filed a request for hearing before an administrative law judge (ALJ). I issued
an Acknowledgment and Pre-Hearing Order (Order). Pursuant to that Order, CMS filed

> Considering Petitioner was already enrolled in the Medicare program and was
undergoing a revalidation of its enrollment, FCSO should not have issued the notice on
June 29, 2012, “denying” Petitioner’s enrollment application. However, FCSO properly
issued the revocation notice dated July 27, 2012, revoking Petitioner’s billing privileges
effective August 26, 2012, 30 days from the date of the notice. Petitioner contends that it
did not receive the July 27, 2012 revocation notice; however, Petitioner did file a timely
request for reconsideration on August 29, 2012, albeit to the June 29, 2012 denial which
was based on the same factors. CMS Ex. 31.
its brief (CMS Br.), a motion for summary judgment, and 38 exhibits, CMS Exs. 1-38.
Petitioner submitted a motion requesting an extension of time due to power outages
closing its attorney’s office for five days, together with its pre-hearing exchange
memorandum (P. Br.) and six exhibits, P. Exs. I-VI. On June 21, 2013, received in my
office on July 11, 2013, Petitioner filed a response in opposition to CMS’s motion for
summary judgment (P. Response). I admit without objection the parties’ exhibits.

My Order specifically directed the parties that, if they proposed witnesses, they must
include as an exhibit with their exchange the written direct testimony of any proposed
witness. Order {ff 4.c.iv., 8; see Vandalia Park, DAB No. 1940 (2004); Pacific Regency
Arvin, DAB No. 1823, at 8 (2002) (holding that the use of written direct testimony for
witnesses is permissible so long as the opposing party has the opportunity to cross-
examine those witnesses). I further informed the parties that they must submit witness
statements in the form of an affidavit made under oath or as a written declaration that the
witness signs under penalty of perjury for false testimony. CMS did not propose any
witnesses. Petitioner did not comply with my Order by submitting written direct
testimony for proposed witnesses. I find, therefore, that an in-person hearing in this case
is unnecessary, and I issue this decision on the full merits of the written record.

II. Applicable Law

Enrollment Requirements

A provider or supplier must be enrolled in the Medicare program and have a billing
number in order to be eligible to receive payment for services rendered to a Medicare-
eligible beneficiary. 42 C.F.R. § 424.505. “Suppliers,” such as Petitioner, include
physicians or other practitioners and facilities “other than providers of services.”* 42
U.S.C. § 1395x(d).

To maintain Medicare billing privileges, a supplier must resubmit and recertify the
accuracy of its enrollment information every five years. 42 C.F.R. § 424.515. To
revalidate its enrollment, a supplier must submit an enrollment application and meet the
requirements outlined at 42 C.F.R. § 424.510. 42 C.F.R. § 424.515(a). The supplier
must submit the applicable enrollment application, with complete and accurate
information and supporting documentation, within 60 calendar days of the notification to
resubmit and certify the accuracy of its enrollment information. Id.

> “Providers” include hospitals, critical access hospitals, skilled nursing facilities,
comprehensive outpatient rehabilitation facilities, home health agencies, and hospice
programs. 42 U.S.C. § 1395x(u); 42 C.F.R. § 400.202.
CMS may revoke a supplier’s enrollment in the Medicare program if it finds a supplier
not to be in compliance with enrollment requirements. 42 C.F.R. § 424.535(a)(1).

Except for circumstances not applicable here, the revocation becomes effective 30 days
after CMS or the CMS contractor mails notice of its determination to the supplier. 42
C.F.R. § 424.535(g). After a supplier’s billing privileges are revoked, they are barred
from participating in the Medicare program from the effective date of the revocation until
the end of the re-enrollment bar. 42 C.F.R. § 424.535(c). The re-enrollment bar is a
minimum of | year but not greater than 3 years, depending on the severity of the basis for
revocation. Jd.

Certification Requirements for IDTFs

Medicare will pay for diagnostic procedures only when performed by a physician, a
group of physicians, an approved supplier of portable x-ray services, a nurse practitioner,
a clinical nurse specialist who performs a state-authorized test, or an IDTF. 42 C.F.R. §
410.33(a)(1). The diagnostic procedures that an IDTF may perform are listed at 42
C.F.R. § 410.32. Generally all diagnostic x-ray and other diagnostic tests covered under
Medicare, and payable under the physician fee schedule, must be furnished under the
appropriate level of supervision by a physician. 42 C.F.R. § 410.32(b). To enroll in the
Medicare program, an IDTF must certify in its enrollment application that it meets certain
credentialing standards. 42 C.F.R. § 410.33(g). These include enrolling for any
diagnostic services that it furnishes to a Medicare beneficiary; having technical staff on
duty with appropriate credentials to perform tests; demonstrating that it answers,
documents, and maintains documentation of a beneficiary’s written clinical complaint at
the physical site of the IDTF; and maintaining a primary business phone number,
including telephone or toll free telephone numbers available in a local directory and
through directory assistance. 42 C.F.R. § 410.33(g)(5), (8), (12), (16).

An IDTF must have one or more supervising physicians who are responsible for: the
direct and ongoing oversight of the quality of the testing performed, the proper operation
and calibration of equipment used to perform tests, and the qualification of non-physician
IDTF personnel who use the equipment. 42 C.F.R. § 410.33(b)(1); Medicare Program
Integrity Manual (MPIM), CMS Pub. 100-08, Ch. 15, § 15.5.19.5.4 The supervising
physician must evidence proficiency in the performance and interpretation of each type of
diagnostic procedure performed at the IDTF—

The proficiency may be documented by certification in specific medical specialties
or subspecialties or by criteria established by the carrier [i.e. Medicare contractor]
for the service area in which the IDTF is located.

4 The MPIM is available on CMS’s website at www.cms.gov/Regulations-and-
Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs. html.

42 C.F.R. § 410.33(b)(2). Thus, in its enrollment application, the prospective IDTF must
indicate the highest level of physician supervision for the tests that it intends to perform.
MPIM, CMS Pub. 100-08, Ch. 15, § 15.5.19.5.C. An IDTF may bill for services
provided by physicians who interpret the diagnostic test, but any interpreting physician
must be listed on the enrollment application and must be qualified to interpret the types
of tests, or codes listed. MPIM, Ch. 15, § 15.5.19.3.

FCSO issued a Local Coverage Determination (LCD), L29330, which further specifies
the requirements for IDTFs located within its service area of Florida, Puerto Rico and the
Virgin Islands. CMS Ex. 33, at 2. Referencing the regulatory requirement at 42 C.F.R. §
410.33(b)(2), the LCD states that a supervising physician must evidence proficiency in
the performance and interpretation of each type of diagnostic procedure the IDTF
performs. CMS Ex. 33, at 5. The LCD further provides that supervising physicians must
meet the qualification requirements as listed in the credentialing matrix attached to the
LCD. That matrix requires that the supervising physician be a Board Certified radiologist
certified by the American Board of Medical Specialties (ABMS) for the diagnostic tests
that Petitioner indicated in its enrollment application. CMS Ex. 34, at 3-25; CMS Ex. 22
(CPT Codes listed in the enrollment application). Also, the LCD requires that the
interpreting physician for a test billed by the IDTF meet the same qualification
requirements as the supervising physician of that test. CMS Ex. 34, at 1-2.

Non-physician personnel an IDTF uses to perform tests must demonstrate the basic
qualifications to perform the test in question and have training and proficiency, as
evidenced by licensure or certification by the appropriate state health or education
department. 42 C.F.R. § 410.33(c). In the absence of a state licensing board, an
appropriate national credentialing board must certify the technician. Jd. The IDTF must
have technical staff on duty with the appropriate credentials to perform tests and must be
able to produce the applicable federal or state licenses of the individuals performing these
services. 42 C.F.R. § 410.33(g)(12). FCSO’s LCD L29330 and its credentialing matrix
list the credentialing requirements for all non-physician personnel with respect to each
diagnostic test (codes) that an IDTF may perform and for which it bills Medicare. CMS
Exs. 33, 34. Some codes require only that the non-physician technician have a state
license as a general radiographer or medical physicist while other codes require
credentialing of the technician by an appropriate national organization in a particular
specialty or subspecialty.

CMS will revoke an IDTF’s billing privileges if the IDTF is found not to comply with
application certification standards in paragraph 42 C.F.R. § 410.33(g) or (b)(1). 42
C.F.R. § 410.33(h).
III. Discussion
A. Issue

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

B. Findings of Fact and Conclusions of Law

1. CMS had a legitimate basis to revoke Petitioner’s Medicare billing privileges
pursuant to 42 C.F.R. § 410.33(h) and 42 C.F.R. § 424.535(a)(1) because
Petitioner was not in compliance with Medicare requirements for an IDTF
located in Puerto Rico.*

a. Petitioner did not show that its supervising and interpreting
physicians met Medicare qualification requirements.

Enrollment requirements for IDTFs require that an IDTF have one or more supervising
physicians who are limited to providing general supervision at no more than three IDTF
sites. 42 C.F.R. § 410.33(b)(1). The supervising physician is responsible for the direct
and ongoing oversight of the quality of the testing performed, the proper calibration and
operation of the equipment used to perform tests, and the qualification of non-physician
IDTF personnel who use the equipment. MPIM, Ch. 15, § 15.5.19.5. The supervising
physician must evidence proficiency in “the performance and interpretation of each type
of diagnostic procedure performed by the IDTF.” 42 C.F.R. § 410.33(b)(2). The
proficiency is required to be “documented by certification in specific medical specialties
or subspecialties or by criteria established by the carrier for the service area in which the
IDTF is located.” Jd. The carrier, FCSO, established an LCD, L29330, in effect since
March 2, 2009, which requires that the supervising physician be a Board Certified
radiologist as certified by the American Board of Medical Specialties (ABMS). CMS Ex.
34. That LCD also requires that the interpreting physician for a test billed by the IDTF
meet the same qualification requirements as the supervising physician, and the
interpreting physician must be qualified to interpret the types of tests or codes listed. Jd.

Medicare contractors may determine the proficiency that must be established for the
performance and interpretation of each type of diagnostic procedure performed. 42
C.F.R. § 410.33(b)(2). In this instance, under LCD 29330, FSCO set forth a
credentialing matrix for supervising and interpreting physicians of tests billed by the

> The applicable regulations provide that that failure to meet even one application
certification standard or noncompliance with at least one enrollment requirement is
sufficient as a basis for revocation. Therefore, I will only address FSCO’s most
significant findings of noncompliance with the regulations and standards.
IDTF. The matrix states that for the CPT codes listed (here codes 70030-76101 and
76529-76970), both the supervising and interpreting physician qualification requirements
are for a “Board Certified (ABMS) Radiologist.” CMS Exs. 34, at 3-16; 8; 14; 22.

Petitioner does not dispute that the two physicians listed in its enrollment application as
both supervising and interpreting physicians were not Board Certified by the ABMS.
Petitioner contends, however, that its physicians’ credentials were issued by the
Department of Health of the Commonwealth of Puerto Rico. P. Response at 13.
Petitioner claims that the Junta de Licencimiento y Disciplina Medica, Departamento de
Salud (Board of Medicine License and Discipline), is a “member of the Federal State
Medical Board and as such is in compliance with state and federal law.” P. Response at
13. The licenses for both physicians state they are licensed to practice medicine and
surgery in Puerto Rico and that they hold a specialty or subspecialty certificate in
Diagnostic Radiology. P. Ex. VI.

Considering neither of Petitioner’s supervising and interpreting physicians met the
required criteria for ABMS Board Certification in Radiology, they cannot properly be
considered supervising or interpreting physicians under the regulatory and LCD criteria.
The criteria here are very specific and FCSO determined in its LCD credentialing matrix
that state or local certification in a specialty or subspecialty was insufficient and that only
national certification as a Board Certified Radiologist by ABMS would satisfy the
qualification requirements for IDTF supervising and interpreting physicians. I therefore
find that Petitioner did not meet the required certification standards for supervising and
interpreting physicians under 42 C.F.R. § 410.33(b)(1) and therefore CMS had a basis for
revocation. See 42 C.F.R. §§ 410.33(h), 424.535(a)(1).

b. Petitioner did not show that its non-physician technicians had
the appropriate credentials to perform certain tests for which
they were seeking approval.

In order to meet the regulatory standards for an IDTF, the IDTF must show that its
technical staff have the appropriate credentials to perform the tests, and the IDTF must be
able to produce the applicable federal or state licenses or certifications of the individuals
performing these services. 42 C.F.R. § 410.33(c), (g)(12). Also, non-physician
personnel the IDTF uses to perform tests must demonstrate the basic qualifications for
training and proficiency as evidenced by the appropriate state health or education
department. In the absence of a state licensing board, the non-physician personnel must
be certified by an appropriate national credentialing body. 42 C.F.R. § 410.33(c).
Further, FCSO’s LCD L29330 and its credentialing matrix list credentialing requirements
for all non-physician personnel with respect to each diagnostic test that an IDTF may
perform and for which it bills Medicare. CMS Exs. 33; 34.
The three technicians that Petitioner identifies in its enrollment application did not have
qualifications to perform certain procedures Petitioner listed it would perform on its
revalidation application. The technologists all had Puerto Rican licenses as radiology
technicians. CMS. Ex. 8, at 50-55. Under the provisions of LCD L29330 certain tests
may only be conducted by technicians credentialed by an appropriate national
organization in a particular specialty or subspecialty. The specific credentialing
organization is listed in the LCD next to the specific CPT/HCPCS codes for those tests.
Those organizations are the American Registry of Radiologic Technologists (ARRT),
American Registry of Diagnostic Medical Sonographers (ARDMS), or American
Registry of Resonance Imaging Technologists (ARMRIT). CMS Ex. 33, at 6; CMS Ex.
34. For example, for CPT codes 70542 and 70543, the technician qualifications require
credentialing by “AART for MR or by ARMRIT for MRI.” CMS Ex. 34, at 5. Other
codes such as CPT 76814 - 76970 require credentialing only by ARDMS or ARRT.
CMS Ex. 22, at 2, 13-18; CMS Ex. 34. For these tests, Puerto Rican licensure is
insufficient without the national accreditation. I find therefore that Petitioner did not
show that its three technicians were qualified to perform many of the tests that it listed in
its application, and therefore FSCO had another legitimate basis for revocation of
Petitioner’s enrollment and billing privileges pursuant to 42 C.F.R. § 410.33 (g)(12) and
42 CFR. § 410.33(h).

c. Petitioner failed to meet Medicare requirements related to
changes in general supervision because it did not timely submit
a change of information form for one of its supervisory
physicians.

Any changes in general supervision for an IDTF must be reported to the Medicare
contractor on a Medicare enrollment application within 30 calendar days of the change.
42 C.F.R. § 410.33(g)(2). Here, Petitioner first notified FCSO that it was using Dr.
Bonnet as a supervising physician when it submitted a change of information form (CMS
855B) to FCSO on August 22, 2011. CMS Ex. 6. Then Petitioner’s revalidation
application, submitted to FSCO on October 13, 2012, sought to add Dr. Bonnet as a
supervising physician providing general supervision effective June 1, 2010. CMS Ex. 14,
at 104. Thus, it appears Petitioner failed to properly inform FCSO in 2010 that Dr.
Bonnet was acting as a supervising physician within 30 days of the change as required by
the applicable regulation. Petitioner did not specifically contest this allegation.
Therefore, Petitioner failed to provide FCSO with complete and accurate information and
any changes to that information within the required 30 calendar days of the change.
Accordingly, Petitioner’s failure to report this information as required by 42 C.F.R.
410.33(g)(2) is considered a failure to meet the application certification standards and is a
legitimate basis under 42 C.F.R. § 410.33(h) for revoking Petitioner’s billing privileges.

IV. Conclusion

I find that Petitioner did not meet the standards and requirements applicable to an IDTF
because its employees did not have the proper qualifications, and it did not properly
notify CMS of a change with its supervisory physician. Therefore, I affirm CMS’s
determination to revoke Petitioner’s Medicare enrollment and billing privileges and to
impose a one-year re-enrollment bar. I further find that the revocation became effective
August 26, 2012, 30 days after the FCSO notified Petitioner by letter dated July 27, 2012
of the revocation.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD
Civil Remedies Division

Mark K. Harward, Pharm.D.,
(O.1. File Number H-13-40028-9),
Petitioner,

Vv.

Inspector General,
Department of Health and Human Services,
Respondent.

Docket No. C-13-1077
Decision No. CR3135
Date: February 28, 2014

DECISION

Petitioner, Mark K. Harward, Pharm.D., is excluded from participation in Medicare,
Medicaid, and all federal health care programs pursuant to section 1128(a)(3) of the
Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(3)), effective June 20, 2013. There is
a proper basis for exclusion. Petitioner’s exclusion for the minimum period of five years
is mandatory pursuant to section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-

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

The Inspector General of the Department of Health and Human Services (I.G.) notified
Petitioner by letter dated May 31, 2013, that he was being excluded from participation in
Medicare, Medicaid, and all federal health care programs for the minimum statutory
period of five years pursuant to section 1128(a)(3) of the Act. The basis for Petitioner’s

' Pursuant to 42 C.F.R. § 1001.3001, Petitioner may apply for reinstatement only after

the period of exclusion expires. Reinstatement is not automatic upon completion of the
period of exclusion. References to the Code of Federal Regulations (C.F.R.) are to the

2012 revision, unless otherwise stated.
exclusion was his felony conviction in the Sixth Judicial Circuit Court, Pinellas County,
Florida, of offenses related to theft in connection with the delivery of a health care item
or service. I.G. Exhibit (Ex.) 1.

Petitioner timely requested a hearing (RFH) on July 25, 2013. Petitioner filed with his
RFH 45 pages of documents marked P1 through P45. The case was assigned to me on
July 30, 2013 for hearing and decision. On August 22, 2013, I convened a prehearing
conference by telephone, the substance of which is memorialized in my Prehearing
Conference Order and Schedule for Filing Briefs and Documentary Evidence (Prehearing
Order) issued on August 23, 2013. Petitioner did not waive an oral hearing. The I.G.
requested to file a motion for summary judgment prior to further development of the case
for hearing and I set a briefing schedule.

On September 21, 2013, the I.G. filed a motion for summary judgment and supporting
brief with 15 exhibits that were incorrectly marked. On September 25, 2013, the LG.
requested leave to file a substitute memorandum in support of its motion for summary
judgment (I.G. Br.) with substitute exhibits marked correctly as I.G. Exs. 1 through 9.7
On November 21, 2013, Petitioner filed a response in opposition to the I.G.’s motion for
summary judgment (P. Response) with a supporting memorandum (P. Br.) and
Petitioner’s exhibits (P. Exs.) A through P.* The LG. filed a reply brief (I.G. Reply) on
December 5, 2013.

> The exhibits the I.G. originally filed on September 21, 2013, and cited in his
memorandum in support of summary judgment were the documents that Petitioner filed
with his request for hearing marked as P1 through P45. The I.G. remarked the documents
attached to the RFH as “Pet’r Ex.” | through 14 and, with an additional document
marked as I.G. Ex. 1, the L.G. filed those documents on September 21. On September 27,
2013, I granted the I.G.’s motion to substitute the memorandum and correctly marked
1G. exhibits. The original I.G. memorandum and incorrectly marked exhibits remain
part of the record, but they are not considered for purposes of this decision. Similarly,
the pages marked P1 through P45 filed with Petitioner’s request for hearing are not
admitted or considered as evidence as those documents have been remarked and
submitted by the parties as exhibits for my consideration.

> Petitioner’s exhibits are not marked in accordance with the Prehearing Order § 8, which
incorporates by reference the Civil Remedies Division Procedures. Because there is little
likelihood of confusion due to the incorrect marking of Petitioner’s exhibits, the
Petitioner has not been required to file correctly marked exhibits. Counsel for both
parties are encouraged to review and comply with procedural orders and local rules to
avoid possible sanctions in the future.
On January 22, 2014, Petitioner filed a motion seeking leave to file an additional exhibit,
P. Ex. Q. P. Ex. Q is a copy of a December 16, 2013 order sealing the trial court records,
the state attorney records, and the police department records related to Petitioner’s June
16, 2012 arrest. The I.G. filed a response on January 23, 2014, objecting to Petitioner’s
request and to the admission of P. Ex. Q, arguing that the order sealing Petitioner’s
criminal record pursuant to Fla. Stat. Ann. § 943.059 is not relevant or material to any
issue before me. The I.G.’s objection is overruled. P. Ex. Q is relevant to Petitioner’s
theory and will be considered even though I conclude that Petitioner’s theory is without
merit for the reasons discussed hereafter. Although the records related to Petitioner’s
conviction have now been sealed, Petitioner does not argue that the order precludes my
consideration of evidence filed by the I.G. prior to the date of the order. Petitioner cites
no authority that a state court order to seal a criminal record can prevent the I.G. from
executing the duty to exclude as mandated by Congress. No objections have been made
to my consideration of the other exhibits filed by the parties, and I.G. Exs. 1 through 9,
and P. Exs. A through Q, are admitted.

IL. Discussion
A. Applicable Law

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

Pursuant to section 1128(a)(3) of the Act, the Secretary must exclude from participation
in any federal health care program:

Any individual or entity that has been convicted for an
offense which occurred after... [August 21, 1996], under
Federal or State law, in connection with the delivery of a
health care item or service or with respect to any act or
omission in a health care program (other than those
specifically described in [section 1128(a)(1)]) operated by or
financed in whole or in part by any Federal, State, or local
government agency, of a criminal offense consisting of a
felony relating to fraud, theft, embezzlement, breach of
fiduciary responsibility, or other financial misconduct.

The Secretary has promulgated regulations implementing these provisions of the Act. 42
CFR. § 1001.101(c).

Pursuant to section 1128(i) of the Act, an individual is “convicted” of a criminal offense
when a judgment of conviction has been entered by a federal, state, or local court whether
or not an appeal is pending or the record has been expunged; or when there has been a
finding of guilt in a federal, state, or local court; or when a plea of guilty or no contest
has been accepted in a federal, state, or local court; or when an accused individual enters
a first offender program, deferred adjudication program, or other arrangement where a
judgment of conviction has been withheld. 42 U.S.C. § 1320a-7(i)(1)-(4). These
definitions can also be found at 42 C.F.R. § 1001.2.

An exclusion imposed under section 1128(a) will be for a period of not less than five
years. Act § 1128(c)(3)(B). The period of exclusion may be extended based on the
presence of specified aggravating factors. 42 C.F.R. § 1001.102(b). Only if the
aggravating factors justify an exclusion of longer than five years are mitigating factors
considered as a basis for reducing the period of exclusion to no less than five years. 42
C.F.R. § 1001.102(c).

The standard of proof in a hearing before an ALJ is a preponderance of the evidence. 42
C.F.R. § 1001.2007(c). Petitioner may not collaterally attack the conviction that provides
the basis for the exclusion. 42 C.F.R. § 1001.2007(d). Petitioner bears the burden of
proof and the burden of persuasion on any affirmative defenses or mitigating factors, and
the I.G. bears the burden on all other issues. 42 C.F.R. § 1005.15(b).

B. Issues

The Secretary has by regulation limited my scope of review to two issues:

Whether there is a basis for the imposition of the exclusion; and

Whether the length of the exclusion is unreasonable.
42 C.F.R. § 1001.2007(a)(1). When the LG. imposes only the minimum authorized five-
year period of exclusion pursuant to section 1128(a) of the Act, whether or not the period
of exclusion is unreasonable is not at issue before me. 42 C.F.R. § 1001.2007(a)(2).

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

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

1. Petitioner’s request for hearing was timely, and I have jurisdiction.
2. Summary judgment is appropriate in this case.

There is no dispute that Petitioner timely requested a hearing and that I have jurisdiction
pursuant to section 1128(f) of the Act and 42 C.F.R. pt. 1005.
Pursuant to section 1128(f) of the Act, a person subject to exclusion has a right to
reasonable notice and an opportunity for a hearing. The Secretary has provided by
regulation that a sanctioned party has the right to hearing before an ALJ, and both the
sanctioned party and the LG. have a right to participate in the hearing. 42 C.F.R.

§§ 1005.2-3. Either or both parties may choose to waive appearance at an oral hearing
and to submit only documentary evidence and written argument for my consideration. 42
C.F.R. § 1005.6(b)(5). An ALJ may also resolve a case, in whole or in part, by summary
judgment. 42 C.F.R. § 1005.4(b)(12).

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

Petitioner does not dispute that he was convicted within the meaning of section 1128(i) of
the Act, that he was convicted of felony theft, or that his conviction occurred after August
21, 1996. P. Response at 11; P. Br. at 1-2, 15. Petitioner opposes summary judgment
and his exclusion arguing that there are material facts in dispute regarding whether or not
his conviction was related to the delivery of a health care item or service. P. Response at
4-5, 11-12; P. Br. at 4, 11-15. I conclude that summary judgment is appropriate as there
are no genuine disputes as to any material facts and the LG. prevails as a matter of law on
the issue of whether there is a basis for exclusion based on the facts conceded by
Petitioner. The five-year period of exclusion is reasonable as a matter of law because
there is a basis for exclusion pursuant to section 1128(a) of the Act.

3. Petitioner’s exclusion is required by section 1128(a)(3) of the Act.
a. Facts

Petitioner does not dispute that on November 5, 2012, he appeared with counsel in the
Sixth Judicial Circuit Court of Florida, Pinellas County, and pled guilty to three felony
counts of grand theft in violation of Fla. Stat. Ann. § 812.014(2)(c)(1) and one
misdemeanor count of petit theft in violation of Fla. Stat. Ann. § 812.014(2)(e).
Petitioner does not dispute that the court accepted his guilty plea; ordered him to pay
restitution to Kmart in the amount of $3,186.38; and entered an order withholding
adjudication of guilt and placing him on probation for 12 months. RFH at 1-2; P. Br. at
6-7; P. Response at 1, 11; 1G. Ex. 2, at 1-2, 5-8; I.G. Ex. 4.

Petitioner held pharmacy licenses in both Florida and Utah. RFH at 1; P. Br. at 6. From
June 2010 to June 2012, he was employed as a traveling pharmacist for Kmart. I.G. Ex.
3. Petitioner admits he was arrested on June 19, 2012 after taking money from the Kmart
pharmacy cash register. P. Br. at 6. Petitioner admits that:

While working at the cash register in the store pharmacy, [he]
would not ring in the full amount the customers handed him
for their medications and other items purchased at the store
pharmacy. This would result in a cash overage. At the end of
the day, the resulting cash overage in the till was removed by
[him] and kept by him.

RFH at 2; P. Br. at 8; .G. Ex. 2, at 1-2. Petitioner concedes that it is likely that
some of the transactions involved sales of medication and other pharmacy items.
P. Br. at 10.

l accept as true for purposes of ruling on summary judgment Petitioner’s
assertions that: Petitioner did not obtain the money he was convicted of taking by
submission of false or fraudulent claims to any healthcare program; Petitioner
stole no medications; customers received the items for which they paid; no health
plan member was deprived of a benefit; and no health plan or beneficiary of a plan
suffered harm as a result of Petitioner’s conduct. Petitioner’s operation of the cash
register was not part of dispensing medications. Dispensing and delivery of
medications was part of Petitioner’s job duties. RFH at 2-3; P. Br. at 8-9.

b. Analysis

The elements necessary for an exclusion pursuant to section 1128(a)(3) of the Act are
derived from the language of that section. The I.G. is required to exclude an individual
or entity pursuant to section 1128(a)(3) of the Act when the following elements are
satisfied:

1. The individual or entity was convicted for an offense
under federal or state law;

2. The offense occurred after August 21, 1996 (the date of
enactment of the Health Insurance Portability and
Accountability Act of 1996);
3. The offense was committed in connection with the
delivery of a health care item or service or with respect to any
act or omission in a health care program (other than those
specifically described in section 1128(a)(1) of the Act, i.e.
Medicare and Medicaid) operated by or financed in whole or
in part by any federal, state, or local government agency;

4. The criminal offense was a felony; and

5. The offense was related to fraud, theft, embezzlement,
breach of fiduciary responsibility, or other financial
misconduct.

All the elements are satisfied in this case. Petitioner does not dispute that he was
convicted of offenses under state law within the meaning of section 1128(i) of the Act
when his guilty pleas were accepted. Petitioner does not dispute that the offenses of
which he was convicted were committed after August 21, 1996. Petitioner does not
dispute that he was convicted of felony offenses. Petitioner does not dispute that he was
convicted of offenses that involved theft. The only element that Petitioner disputes is
whether or not his offenses were connected with the delivery of a health care item or
service or were based on an act or omission in a health care program, other than Medicare
or Medicaid, financed in whole or in part by any government agency. P. Br. at 1-2, 4. I
conclude that the undisputed facts establish the required connection, rational link, or
nexus between Petitioner’s criminal offenses and the delivery of a health care item or
service, in a health care program other than Medicare or Medicaid.

My decision is guided by the decision of the Departmental Appeals Board (the Board) in
W. Scott Harkonen, M.D., DAB No. 2485 (2012), aff'd, Harkonen v. Sebelius No. C13-
0071 PJH, 2013 WL 5734918 (N.D. Cal. Oct. 22, 2013). In Harkonen an appellate panel
of the Board discussed in detail the element of section 1128(a)(3) of the Act, which
requires that the offense of which one is convicted have been committed in connection
with the delivery of a health care item or service. The Board discusses that in prior cases
it has interpreted the language “in connection with” to require a common sense
connection or nexus, also characterized as a “rational link,” between the criminal offense
and the delivery of a health care item or service. Harkonen at 7. The Board notes that in
Erik D. DeSimone, R.Ph., DAB No. 1932 (2004) it found the required nexus in a case
where a pharmacist, in the guise of performing his professional duties, took controlled
substances for his own use. Harkonen at 7. In Kenneth M. Behr, DAB No. 1997 (2005)
the Board found the nexus where a pharmacist who had access to drugs due to his
position attempted to embezzle those drugs, rejecting the argument that the underlying
criminal offense must involve actual delivery of a health care item or service. Harkonen
at 8. In Ellen L. Morand, DAB No. 2436 (2012), the Board concluded that the
Petitioner’s theft from the evening deposit of the pharmacy that employed her had the
requisite nexus considering that the evening deposit included revenue from the sale of
health care items and that the Petitioner diverted those funds to her use. The Board
summarized its prior holdings to be that “frauds or thefts that are linked in a rational way
to the delivery of a health care item or service do fall within the ambit” of section
1128(a)(3). Harkonen at 8. The Board further notes that its interpretation is consistent
with the interpretation of similar language found in section 1128(a)(1). The Board points
out that its interpretations of the language of 1128(a) “effectuate the twin purposes of
section 1128(a): 1) to protect federal health care programs and their beneficiaries from
individuals who have been shown to be untrustworthy; and 2) to deter health care fraud.
Id. at 9 (citations omitted). In Harkonen the Board states that section 1128(a)(3) does not
require proof of an actual impact or effect upon the delivery of a health care item or
service, rather the ALJ must consider all the evidence of circumstances underlying the
criminal offense, including evidence extrinsic to the criminal proceedings if reliable and
credible, to find the rational link between the criminal offense and the delivery of a health
care item or service. Jd. at 10.

In this case the undisputed facts, indeed facts admitted by Petitioner, related to the
circumstances of Petitioner’s criminal offenses establish the rational link between
Petitioner’s criminal offenses and the delivery of a health care item or service — the
required nexus. The facts admitted by Petitioner that establish the nexus between
Petitioner’s offenses of theft from his employer and the delivery of a health care item or
service are:

1. Petitioner was a licensed pharmacist. RFH at 1; P. Br. at 2, 6.

2. At the time of his offenses in June 2012, Petitioner was employed as a traveling
pharmacist for Kmart. LG. Exs. 2; P. Br. at 2, 6.

3. Petitioner took money from the Kmart pharmacy cash register. P. Br. at 2, 6.

4. Petitioner admits that he committed his offenses using the cash register in the
store pharmacy by not ringing the full amount the customers paid him for their
medications and other items purchased at the store pharmacy, resulting in more
cash in the cash register at the end of the day than actually recorded by the
register, and Petitioner took the cash overage for himself. RFH at 2; P. Response
at 11; P. Br. at 8, 11-12; 1G. Ex. 2, at 1-2.

5. Petitioner concedes that it is likely that some of the transactions from which he
skimmed money involved sales of medication and other pharmacy items. P. Br. at
10-12.

The foregoing facts not only establish the rational link between Petitioner’s criminal
offenses and the delivery of a health care item or service, they also show that Petitioner
used his position as a licensed pharmacist and participant in Medicare and Medicaid to
perpetrate his crimes. Thus, it is consistent with the purposes of section 1128(a)(3) to
apply that section to exclude Petitioner to protect federal health care programs and their
beneficiaries from Petitioner, who is shown to be untrustworthy based on the abuse of his
position to commit theft from his employer.

Petitioner asserts that his crimes did not cause direct harm to any health care program
(RFH at 2-3, 5; P. Br. at 8); his crimes did not involve the submission of any false or
fraudulent claims (RFH at 2, 5; P. Response at 11; P. Br. at 5, 8); he did not steal any
medications (RFH at 2-3; P. Br. at 8); customers received the merchandise they paid for
and were not deprived of any benefit (RFH at 3; P. Br. at 8); and the thefts occurred after
items or services were delivered (RFH at 4; P. Br. at 8-9). Even if I accepted these
assertions as true for purposes of summary judgment, these facts do not rebut or negate
the nexus between Petitioner’s crimes and the delivery of a health care item or service,
which is established by the admitted facts set forth above.

Petitioner argues that the criminal charges did not allege that his crimes were: in
connection with the delivery of a health care item or service; related to the sale of
pharmacy items or services; in connection with Petitioner’s employment as a pharmacist;
related to drug violations under state law; or related to fraudulent transactions related to
the sale of prescription medication (P. Response at 2-3, 6-7; P. Br. at 5). He argues that
sale of a pharmacy item is not a duty of a pharmacist under Florida law; that his criminal
conduct did not involve dispensing or delivery of a controlled substance under state or
federal law; and that the sales transactions during which he skimmed money could have
been handled by any Kmart employee, including one who was not a pharmacist. P.
Response at 4-7; P. Br. at 9-10, 12; P. Exs. J, K, O. Petitioner’s arguments are without
merit in this case. The determination of whether the required nexus exists is not
dependent upon the language of the charging document based on which Petitioner was
convicted. The existence of the nexus is also not dependent upon how a pharmacist’s
duties are defined or described under state laws. The nexus is also not dependent upon
whether only a pharmacist could have handled the sales transaction or whether non-
pharmacy sales may have been processed on the cash register that Petitioner used to
perpetrate his crime. The ALJ must consider all the evidence of circumstances
underlying the criminal offense, including evidence extrinsic to the criminal proceedings
if reliable and credible, to find the rational link between the criminal offense and the
delivery of a health care item or service. Harkonen, DAB No. 2485 at 10. While
Petitioner’s arguments point-out the absence of some evidence that might help establish
the required nexus or that may be construed to show the absence of a nexus, the other
evidence of record, specifically the admissions of Petitioner, is more than sufficient to
show the required nexus in this case.

Petitioner argues that his case is not unlike the case of Hong Lu, a.k.a. Hong Lu Henry,
a.k.a. Lu Hong, DAB No. CR1483 (2006) in which the ALJ concluded that the I.G. failed
to establish a basis for exclusion pursuant to section 1128(a)(3) of the Act. P. Response
at 7-10; P. Br. at 13-14; P. Ex. P. In that case, the petitioner was convicted of money
laundering; she worked as the receptionist and bookkeeper for her husband’s medical
practice; and the money laundering related to alleged bank deposits and transactions that
she made with funds from her husband’s medical practice. The ALJ in Hong was
unwilling to find the nexus between the offense of money laundering and the delivery of
a health care item or service because he had insufficient evidence of the actual source of
the laundered funds, i.e. whether the funds derived from the husband’s medical practice
or not; the reasons for laundering the funds; or any impact of the laundering activity on a
health care program. The ALJ commented that he had insufficient evidence from which
to draw inferences and that he was unwilling to simply guess. Petitioner’s case is
distinguishable from the Hong case because Petitioner was the licensed professional who
participated in Medicare and Medicaid and had access to the funds due to his license and
participation. Petitioner concedes that he took funds from the pharmacy cash register and
some of those funds were payments for pharmacy items and services, some of which
were connected to governmental health care plans or programs.

I conclude that the elements of section 1128(a)(3) of the Act are satisfied including the
required connection, rational link, or nexus between Petitioner’s criminal offenses and
the delivery of a health care item or service, in a health care program other than Medicare
or Medicaid. Accordingly, I conclude that there is a basis for Petitioner’s exclusion
pursuant to section 1128(a)(3) of the Act.

4. The I.G. had no discretion to exclude Petitioner under the
permissive exclusion provisions of section 1128(b) of the Act rather
than the mandatory exclusion provisions of section 1128(a) of the Act.

Petitioner argues that if any exclusion is imposed it should be pursuant to the permissive
exclusion provisions found at section 1128(b) of the Act, which requires a three-year
exclusion for a conviction relating to theft. Act § 1128(b)(1)(B); (42 U.S.C. § 1320-
7(b)(1)(B)). RFH at 5, 8. Petitioner argues that if he is subject to permissive exclusion
under section 1128(b) of the Act, there are sufficient mitigating factors to warrant
reducing the period of exclusion to only six months effective May 31, 2013. RFH at 8.
Petitioner alleges mitigating factors in his various pleadings, including that his theft
occurred when he was under extreme financial stress and was out of character; he pled
guilty; adjudication of guilt was withheld; he was placed on probation; he promptly
complied with all terms of probation including restitution; and his probation was
terminated early. He states that he continued to work as a pharmacist after his arrest,
while on probation, and until his exclusion became effective on June 20, 2013; completed
additional continuing education; promptly notified the state licensing authorities; and the
period of exclusion exceeds the period of probation imposed for the criminal offenses.
Petitioner asserts that a practical effect of his exclusion is that he will be unable to apply
for a license in Florida until after May 31, 2018, and the exclusion has a disproportionate

effect upon Petitioner as a pharmacist. RFH at 2-3, 6-8; P. Response at 2; P. Br. at 7. His
former employers have provided letters indicating their support for Petitioner. P. Exs. C,
D, E. Petitioner has also presented evidence that the records of his arrest were
subsequently sealed. P. Ex. Q.

Petitioner’s argument for permissive exclusion is without merit. The LG. has no
discretion to impose a permissive exclusion where an individual’s conviction satisfies the
elements of section 1128(a)(3) of the Act. The “courts have repeatedly held that the I.G.
is .. . required to impose a mandatory exclusion even if an individual’s conduct also falls
within the scope of a permissive exclusion provision.” Gregory J. Salko, M.D., DAB No.
2437, at 4 (2012), citing Timothy Wayne Hensley, DAB No. 2044, at 16 (2006) (and cases
cited therein); Craig Richard Wilder, DAB No. 2416, at 7 (2011); Lorna Fay Gardner,
DAB No. 1733, at 6 (2000).

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

Petitioner does not dispute that if his exclusion is mandatory, the five-year exclusion
period imposed is the minimum period specified by Congress. RFH at 6; P. Br. at 3-4,
15; Act § 1128(c)(3)(B); 42 C.F.R. § 1001.102(a). I have concluded that there is a basis
for Petitioner’s exclusion pursuant to section 1128(a)(3) of the Act, and the five-year
exclusion is not unreasonable as a matter of law.

Exclusion is effective 20 days from the date of the I.G.’s written notice of exclusion to
the affected individual or entity. 42 C.F.R. § 1001.2002(b). The Secretary’s regulations
do not give me discretion to change the effective date of Petitioner’s exclusion and I may
not refuse to follow the Secretary’s regulations. 42 C.F.R. § 1005.4(c)(1); Thomas
Edward Musial, R.Ph., DAB No. 1991 (2005). Consequently, the effective date of
Petitioner’s exclusion is June 20, 2013, twenty days after the I.G.’s May 31, 2013 notice
of exclusion.

II. Conclusion

For all of the foregoing reasons, Petitioner is excluded from participation in Medicare,
Medicaid, and all federal health care programs for the minimum statutory period of five
years, effective June 20, 2013.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

JLYC LLC
d/b/a SeaTac Deli Market,

Respondent.

Docket No. C-13-998
FDA Docket No. FDA-2013-H-0826

Decision No. CR3133
Date: February 27, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint
(Complaint) against Respondent, JUYC LLC d/b/a SeaTac Deli Market, alleging
facts and legal authority sufficient to justify imposing a civil money penalty of
$500.

CTP initiated this case by serving a Complaint on Respondent and filing a copy of
the Complaint with the Food and Drug Administration’s (FDA) Division of
Dockets Management. The Complaint alleges that Respondent unlawfully sold
cigarettes to a minor, failed to verify that a cigarette purchaser was of sufficient
age and utilized a self-service display of regulated tobacco products in a non-
exempt facility, thereby violating the Federal Food, Drug, and Cosmetic Act (Act)
and its implementing regulations, found at 21 C.F.R. Part 1140. CTP seeks a civil
money penalty of $500.
On July 12, 2013, CTP served the Complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and
accompanying cover letter, CTP explained that within 30 days Respondent should
pay the penalty, file an answer, or request an extension of time within which to file
an answer. CTP warned Respondent that if it failed to take one of these actions
within 30 days an Administrative Law Judge could, pursuant to 21 C.F.R.

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

Respondent timely answered the Complaint and requested a hearing. On August
23, 2013, I issued an Acknowledgment and Prehearing Order (Pre-hearing Order)
that set deadlines for the parties’ submissions and scheduled a mandatory
settlement conference to be held on September 25, 2013, at 3:00 PM ET. On
September 25, 2013, the parties participated in the settlement conference but were
unable to reach a settlement agreement during the conference. On October 2,
2013, by my direction, the staff attorney assisting me in this matter sent a letter to
the parties that reminded the parties that they must comply with the deadlines and
provisions set out in the Pre-hearing Order. On November 6, 2013, my staff
attorney sent another letter to the parties that restated the deadlines for the parties’
submissions and contained the informal briefs that I issued on that same date.

On December 6, 2013, CTP’s counsel filed a motion to compel discovery,
pursuant to 21 C.F.R. § 17.23, along with a copy of Complainant’s request for the
production of documents (Request). In her motion, counsel stated that CTP served
the Request on Respondent on November 1, 2013, and that Respondent had until
December 2, 2013, to comply with the Request. See 21 C.F.R § 17.23(a). On
December 11, 2013, by my direction, my staff attorney sent a letter to the parties
that gave Respondent until January 3, 2014, to file its reply to CTP’s motion to
compel discovery or comply with the Request. Respondent neither complied with
the Request by the deadline nor filed a reply to CTP’s motion to compel
discovery.

On January 23, 2014, I directed my staff attorney to send another letter to inform
the parties that any party may move for sanctions when the opposing party fails to
comply with a procedure governing the proceeding; engages in misconduct that
interferes with the speedy, orderly, or fair conduct of the hearing; or fails to
comply with a discovery provision. 21 C.F.R. § 17.35 (a) and (c). On February 3,
2014, CTP’s counsel moved for sanctions against Respondent for its failure to
either file a reply to CTP’s motion to compel discovery or comply with the
Request.
On February 5, 2014, Respondent e-mailed my staff attorney a letter addressed to
me. After ensuring that Complainant received a copy via email, the staff attorney
forwarded the letter to me. In the letter, Respondent objected to the charges made
against it and made some arguments that might address the merits of the case, but
it did not explain why it failed to comply with the Request. On February 6, 2014,
I issued an Order to the parties that gave Respondent until February 14, 2014, to
comply with the Request or I would impose sanctions against Respondent and
enter a default judgment against it. To date, Respondent has neither complied
with the Request nor explained why it has failed to do so. Therefore, pursuant to
21 C.F.R. § 17.35(c)(3), I sanction Respondent by striking its Answer.

Striking Respondent’s Answer leaves the Complaint unanswered. Therefore, I am
required to issue an initial decision by default if the Complaint is sufficient to
justify a penalty. 21 C.F.R. § 17.11(a). 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
and conclude that default judgment is merited based on the allegations of the
Complaint and the sanctions imposed on Respondent for failure to comply with
my Order. 21 C.F.R. § 17.11(a). Specifically, CTP’s Complaint alleges that:

Respondent owns SeaTac Deli Market, an establishment that sells tobacco
products and is located at 18050 Des Moines Memorial Drive, Sea Tac,
Washington 98148. Complaint § 3.

On May 22, 2012, during an inspection of Respondent’s establishment, an
FDA-commissioned inspector observed that Respondent “u[tilized] a self-
service display in a non-exempt facility... .” Complaint § 10.

On September 13, 2012, CTP issued a Warning Letter to SeaTac Deli
Market explaining that the inspector’s May 22, 2012 observation
constituted a violation of a regulation found at 21 C.F.R. § 1140.16(c). In
addition to describing the violation, the letter advised Respondent that the
FDA may initiate a civil money penalty action or take other regulatory
action against Respondent if it failed to correct the violation. The letter
also stated that it was Respondent’s responsibility to comply with the law.
Complaint § 10.

On December 20, 2012, Sukki Kim, Respondent’s management, responded
in writing to the Warning Letter on Respondent’s behalf. “Mr. Kim stated
that the tobacco products were relocated so that all transactions would now
be face-to-face.” Complaint § 11.
e On January 6, 2013, during a subsequent inspection of Respondent’s
establishment, FDA-commissioned inspectors documented that “a person
younger than 18 years of age was able to purchase a package of Newport
Box cigarettes on January 6, 2013, at approximately 1:46 PM PT[ ] and
[that] .. . the minor’s identification was not verified before the sale. . .”
Complaint § 1.

These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is
misbranded if sold or distributed in violation of regulations issued under section
906(d) of the Act. 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R § 1140.1(b). Under 21
C.F.R. § 1140.14(c), a retailer may sell regulated tobacco products only in a direct,
face-to-face exchange between the retailer and the consumer. A self-service
display is an example of a method of sale that is prohibited under the regulations.
However, self-service displays containing tobacco products are permitted in
facilities where the retailer ensures that no person younger than 18 years of age is
present, or permitted to enter, at any time. 21 C.F.R. § 1140.16(c)(2)(ii). Under
21 C.F.R. § 1140.14(a), retailers may not sell cigarettes to any person younger
than 18 years of age. Under 21 C.F.R. § 1140.14(b)(1), a retailer must verify, by
means of photo identification containing the bearer’s date of birth, that no
cigarette purchasers are younger than 18 years of age.

Here, on May 22, 2012, Respondent violated 21 C.F.R. § 1140.16(c) by utilizing a
self-service display to sell regulated tobacco products in a facility that permitted
persons younger than 18 years of age to enter. On January 6, 2013, Respondent
violated 21 C.F.R. § 1140.14(a) when its staff sold cigarettes to a minor. On that
same date, Respondent also violated 21 C.F.R. § 1140.14(b)(1) when
Respondent’s staff failed to verify, by checking the minor’s photo identification,
that a cigarette purchaser was 18 years of age or older. Respondent’s actions on
multiple occasions at the same retail outlet constitute violations of law that merit a
civil money penalty. Accordingly, I find that a civil money penalty of $500 is
permissible under 21 C.F.R. § 17.2. Therefore, Respondent is directed to pay a
civil money penalty in the amount of $500.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
William J. Casto, D.O.,
(OI File No. 3-10-40007-9)
Petitioner,

v.

The Inspector General.
Docket No. C-14-68
Decision No. CR3132
Date: February 28, 2014

DECISION

I sustain the determination of the Inspector General (1.G.) to exclude Petitioner,
William J. Casto, D.O., from participating in Medicare, Medicaid, and all other
federally funded health care programs for a minimum period of five years.

I. Background

Petitioner is a physician. The I.G. excluded Petitioner from participating in
Medicare, Medicaid, and all other federally funded health care programs for a
period of at least five years based on the I.G.’s determination that Petitioner was
convicted of a felony within the meaning of section 1128(a)(4) of the Social
Security Act (Act). This section mandates the exclusion of anyone who is
convicted of a felony related to the unlawful manufacture, distribution,
prescription, or dispensing of a controlled substance. The minimum period of
exclusion that the I.G. must impose pursuant to section 1 128(a)(4) is at least five
years. Act § 1128(c)(3)(B).

Petitioner requested a hearing and the case was assigned to me. I ordered the
parties to file briefs and their proposed exhibits including the written direct
testimony of any proposed witnesses. The LG. filed a brief and three exhibits that
are identified as I.G. Ex. 1 —1.G. Ex. 3. Petitioner filed a brief and three exhibits
that are identified as P. Ex. A, P. Ex. B, and P. Ex. C. I receive all of the exhibits
into the record.

Petitioner also requested that I convene an in-person hearing so that I could hear
the testimony of Petitioner and a witness whose affidavit is in the record as P. Ex.
C. Ideny that request. Petitioner has offered no facts through the affidavits he
submitted that are material to the outcome of this case.

II. Issue, Findings of Fact and Conclusions of Law
A. Issue

The issue in this case is whether the I.G. is required to exclude Petitioner for a
minimum period of five years.

B. Findings of Fact and Conclusions of Law

The essential facts of this case are undisputed. On December 18, 2011, Petitioner
pled guilty to a single felony offense in the United States District Court of the
Western District of Virginia. I.G. Ex. 3 at 1, 6. The court subsequently accepted
that plea. I.G. Ex. 2 at 1. Petitioner pled guilty to violating 21 U.S.C. § 846,
which makes it a felony to conspire to acquire or obtain controlled substances by
misrepresentation, fraud, forgery, deception and subterfuge. Petitioner’s
conviction was based on numerous acts in which Petitioner wrote prescriptions for
controlled substances (Hydrocodone, Oxycodone, and Alprazolam) on behalf of
individuals who were not his patients. Jd. at 9-13.

Petitioner’s conviction was for an offense related to the unlawful dispensing of
controlled substances and it fell squarely within the reach of section 1128(a)(4) of
the Act. Exclusion is mandatory in this case. Furthermore, there is no issue as to
the reasonableness of the exclusion because the I.G. opted to exclude Petitioner for
five years, the minimum period mandated by law. Act § 1128(c)(3)(B).

Petitioner makes arguments that are essentially equitable. He argues that his
practice is located in an area that is underserved by physicians and he contends
that his services are needed in order to provide care to the residents of his
community. He argues also that he wrote his unlawful prescriptions to help out an
individual who he thought was a friend, suggesting that his desire to lend a helping
hand to a friend compromised his judgment. He avers that none of his unlawful
activity affected a federally funded health care program.
I have no authority to consider Petitioner’s equitable arguments. The I.G. imposed
the minimum exclusion required by law and under no circumstance may I reduce
that exclusion period.

Petitioner argues also that the exclusion should be made retroactive to August 10,
2010, the date when Petitioner contends that he stopped treating Medicare
beneficiaries and State Medicaid recipients. I am not authorized to change the
start date of an exclusion. The applicable regulations establish that the exclusion
will be effective 20 days from the date of the I.G.’s written notice to the affected
individual and I am bound by all applicable regulations. 42 C.F.R.

§ 1001.2002(b).

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2014-H-1603)

Complainant
v.

Hasan Oil Corp.
d/b/a BP,

Respondent.
Docket No. C-14-392
Decision No. CR3127

Date: February 25, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an
administrative complaint on Respondent, Hasan Oil Corp. d/b/a BP, at 20 Main
Street, Asbury Park, NJ 07712, and by filing a copy of the complaint with the
Food and Drug Administration's (FDA) Division of Dockets Management. The
complaint alleges that BP impermissibly sold cigarettes to minors and failed to
verify the purchasers’ ages by means of photo identification containing a date of
birth, violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301
et seq., and its implementing regulations, 21 C.F.R. Part 1140. CTP seeks to
impose a $500 civil money penalty against Respondent BP.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on January 7, 2014, CTP served the
complaint on Respondent BP by United Parcel Service. In the complaint and
accompanying cover letter, CTP explained that, within 30 days, Respondent
should pay the penalty, file an answer, or request an extension of time in which to
file an answer. CTP warned Respondent that, if it failed to take one of these
actions within 30 days, the Administrative Law Judge could, pursuant to 21 C.F.R.
§ 17.11, issue an initial decision ordering it to pay the full amount of the proposed
penalty.

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

e At approximately 1:27 PM ET on February 16, 2013, at Respondent’s
business establishment, 20 Main Street, Asbury Park, NJ 07712, an FDA-
commissioned inspector observed Respondent’s staff sell a package of
Marlboro cigarettes to a person younger than 18 years of age.
Respondent’s staff also failed to verify the purchaser’s age by means of
photo identification containing a date of birth.

e Ina warning letter dated March 7, 2013, CTP informed Respondent of the
inspector’s February 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 if Respondent failed to correct its violations, a civil money penalty or
other regulatory action could occur;

e At approximately 2:33 PM on July 2, 2013, at Respondent’s business
establishment, 20 Main Street, Asbury Park, NJ 07712, an FDA-
commissioned inspector documented Respondent’s staff selling a package
of Marlboro cigarettes to a person younger than 18 years of age. The
inspector also documented that Respondent’s staff failed to verify the
purchaser’s age by means of photo identification containing a date of birth.

These facts establish Respondent BP’s liability under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is
misbranded if sold or distributed in violation of regulations issued under section
906(d) of the Act. 21 U.S.C. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R.
§ 1140.1(b). The Secretary issued the regulations at 21 C.F.R. Part 1140 under
section 906(d) of the Act. 21 U.S.C. § 387(a); see 21 U.S.C. § 387f(d)(1); 75 Fed.
Reg. 13,229 (Mar. 10, 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), a retailer must verify, by means of photo identification containing
the bearer’s date of birth, that no cigarette purchaser is younger than 18 years of
age.

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

For these reasons, I enter default judgment in the amount of $500 against
Respondent BP. 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/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Advanced Care Medical Center, Inc.
Petitioner,

v.
Centers for Medicare & Medicaid Services.
Docket No. C-13-1383
Decision No. CR3124

Date: February 20, 2014

DECISION

The Centers for Medicare & Medicaid Services (CMS) revoked Petitioner’s Medicare
enrollment. Petitioner, Advanced Care Medical Center, Inc., appeals. As discussed
below, the uncontroverted facts compel revocation of Petitioner’s enrollment because it
allowed an individual to improperly use its billing number. Therefore, I affirm the
decision to revoke Petitioner’s billing privileges.

I. Background

The following facts are not disputed. Advanced Care Medical Center, Inc. enrolled in the
Medicare program as a clinic/group practice. CMS Ex. 5, at 3. Apparently, an
investigation by the Office of the Inspector General for the U.S. Department of Health
and Human Services revealed that Petitioner entered into a contract with a doctor,
allowing him to bill for services under Petitioner’s billing number in exchange for a set
reimbursement, and the doctor submitted bills under Petitioner’s billing number. CMS
Exhibits (Exs.) 1 and 2. However, the doctor did not reassign his benefits to Petitioner.
CMS Ex. 5, at 5.

On June 28, 2013, Wisconsin Physicians Service (WPS), the Medicare contractor,
notified Petitioner that it was revoking its billing privileges pursuant to 42 C.F.R.
§ 424.535(a)(7) for a period of two years, effective July 28, 2013, for misuse of its billing
number.

On July 11, 2013, Petitioner submitted, by separate letters, a corrective action plan (CAP)
and an identically worded request for reconsideration before a Medicare Hearing Officer.
CMS Exs. 2 and 3. In the requests, Petitioner’s owner did not deny the existence of the
improper arrangement but stated --

lam sorry that a mistake was occurred on my behalf this time but I assure you that
it is not going to happen again. I would like to give you a detail about this
incident. I provided the same detail to special agent . . . . 1 am in business since
2000. If you look at my record it is clean. There are no wrong doings. [The doctor]
met me on May 22, 2013 and told me that he is going to put doctors under my
company and expand the operation of my company. In the mean time he also
mentioned that he has some billing which he would like to do under my company
by using the modifier Q5 and Q6. I checked the AMA book and found out that we
can do the billing. I did not go in detail to find out about Q5 and Q6 modifiers till I
met special agent . .. who showed me the detail of Q5 and Q6 usage. By looking
at the detail description, I agree with you that I made a mistake. This is my first
mistake in my thirteen years of business and I assure you that it is not going to
happen again. Secondly, as soon as I came to know I cancelled the contract and
did not do any more billing.

CMS Exs. 2 and 3.

On August 5, 2013, WPS notified Petitioner that it was rejecting its CAP. CMS Ex. 6.
On August 14, 2013, WPS hearing officer issued an unfavorable reconsideration decision
and upheld the revocation of Petitioner’s Medicare enrollment. CMS Ex. 7.

By submission filed September 16, 2013, Petitioner requested a hearing of the
reconsideration determination with the Civil Remedies Division of the Departmental

' This subsection states: “(a) Reasons for revocation. CMS may revoke a currently

enrolled provider or supplier’s Medicare billing privileges and any corresponding
provider agreement or supplier agreement for the following reasons: .. . (7) Misuse of
billing number. The provider or supplier knowingly sells to or allows another individual
or entity to use its billing number. This does not include those providers or suppliers who
enter into a valid reassignment or benefits as specified in § 424.80 or a change of
ownership as outline in § 489.18 of this chapter.”
Appeals Board.” With its hearing request, Petitioner attached a copy of the August 14,
2013 reconsideration decision. This case was assigned to me for decision.

On November 8, 2013, CMS filed its prehearing exchange and brief supporting its
motion for summary judgment together with seven exhibits, CMS Exs. 1-7. On
December 12, 2013, we received Petitioner’s one page response together with copies of
its bank statements for May, June, July, August, September and October 2013.

II. Applicable Law

Medicare payments for services rendered to Medicare-eligible beneficiaries may only be
made to eligible providers of services and suppliers.’ The Social Security Act (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 provider or supplier is prohibited from selling its Medicare billing number or allowing
another individual or entity to use its Medicare billing number. 42 C.F.R. § 424.550(a).
CMS may revoke a currently enrolled provider or supplier’s Medicare billing privileges
for misuse of its billing number if the “provider or supplier knowingly sells to or allows
another individual or entity to use its billing number.” 42 C.F.R. § 424.535(a)(7).

Suppliers who have had their billing privileges revoked “are barred from participating in
the Medicare program from the effective date of the revocation until the end of the re-
enrollment bar,” which is “a minimum of 1 year but not greater than 3 years depending
on the severity of the basis for revocation.” 42 C.F.R. § 424.535(c).

II. Issue

The issue is whether CMS had a legitimate basis to revoke Petitioner’s Medicare billing
privileges.

> The rejection of a CAP is not an appealable initial determination. Pepper Hill Nursing
& Rehab. Ctr, DAB No. 2395, at 9 (2011); 42 C.F.R. § 498.3(b).

> A “suppler” furnishes services under Medicare, and the term supplier applies to
physicians and 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)).
IV. Findings of Fact and Conclusions of Law
A. This case is appropriate for summary judgment.

CMS filed a Motion for Summary Judgment. The applicable standard for summary
judgment is as follows:

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

Senior Rehab. & Skilled Nursing Ctr., DAB No. 2300, at 3 (2010) (citations omitted).
The role of an ALJ in deciding a summary judgment motion differs from the ALJ’s role
in resolving a case after a hearing. The ALJ should not assess credibility or evaluate the
weight of conflicting evidence. Holy Cross Vill. at Notre Dame, DAB No. 2291, at 4-5
(2009). Here, Petitioner does not dispute that it allowed the doctor to bill under its
Medicare billing number. Moreover, Petitioner does not dispute that it did so without an
active Medicare reassignment of benefits from the doctor to Petitioner.

B. CMS had a legitimate basis to revoke Petitioner’s Medicare
enrollment and billing privileges.

The sole issue before me is whether CMS had a legitimate basis for revoking Petitioner’s
Medicare enrollment and billing privileges. The applicable law is abundantly clear, CMS
may revoke a currently enrolled supplier’s Medicare billing privileges if it knowingly
allows another individual or entity to use its billing number. 42 C.F.R. § 424.535(a)(7).
Petitioner admits that it allowed the doctor to bill under its billing number and that no
exception to the regulatory prohibition applied. Therefore, CMS had a legitimate basis to
revoke Petitioner’s billing privileges.

C. Iam unauthorized to grant Petitioner’s requests for equitable relief:

Petitioner makes various arguments for equitable relief even though it admits that it
allowed the doctor to use its Medicare billing number in violation of the enrollment
requirement. Petitioner requests leniency and claims: it made an innocent mistake which
will never happen again, it immediately cancelled the contract with the doctor and did not
do anymore billing, and its bank statements from May through October 2013 show it did
not receive funds from Medicare. However, I am without authority to order CMS to
provide an exemption to Petitioner under the circumstances because Petitioner’s equitable
arguments give me no grounds to restore Petitioner’s billing privileges. See US
Ultrasound, DAB No. 2302, at 8 (2010) (“[nJeither the ALJ nor the Board is authorized
to provide equitable relief by reimbursing or enrolling a supplier who does not meet
statutory or regulatory requirements.”). Moreover, I have no authority to declare statutes
or regulations invalid or ultra vires. 1866/CPayday.com, L.L.C., DAB No. 2289, at 14
(2009) (“[a]n ALJ is bound by applicable laws and regulations and may not invalidate
either a law or regulation on any ground.”).

V. Conclusion

I find Petitioner was not in compliance with Medicare enrollment requirements when it
allowed a doctor to improperly use its Medicare billing number. I therefore grant CMS’s
motion for summary judgment and sustain the revocation of Petitioner’s Medicare billing
privileges, effective July 28, 2013. Accordingly, Petitioner is barred from re-enrolling
for two years from the effective date of its revocation.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Ambria Ptacek, PA-C,
(NPI: 1629240874),
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-13-1288
Decision No. CR3122

Date: February 18, 2014

DECISION

Petitioner, Ambria Ptacek, PA-C, is a certified physician’s assistant who applied for
enrollment in the Medicare program. The Centers for Medicare & Medicaid Services
granted her application, effective January 28, 2013 (with a billing date of December 29,
2012). Petitioner now challenges that effective date. CMS has moved for summary
judgment, which Petitioner has not opposed.!

For the reasons set forth below, I grant CMS’s motion.’ I find that CMS appropriately
granted Petitioner’s enrollment effective January 28, 2013.

' Moreover, because there are no witnesses to cross-examine, an in-person hearing would
serve no purpose. I could therefore close the record and decide the case. See
Acknowledgment and Pre-hearing Order at 6 (ff 10, 11).

> CMS has submitted nine exhibits (CMS Exs. 1-9), and Petitioner has submitted eight
exhibits (P. Exs. 1-8).
Discussion

CMS properly determined the effective date for
Petitioner’s Medicare enrollment, because the evidence
establishes that she submitted her subsequently-approved
enrollment application on January 28, 2013, and her
effective date can be no earlier than the date she filed
that enrollment application.>

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

When CMS determines that a physician or nonphysician practitioner meets the applicable
enrollment requirements, it grants her Medicare billing privileges, which means that she
can submit claims and receive payments from Medicare for covered services provided to
program beneficiaries. For physicians and nonphysician practitioners, the effective date
for billing privileges “‘is the /ater of the date of filing” a subsequently approved
enrollment application or “the date an enrolled physician or nonphysician practitioner
first began furnishing services at a new practice location.” 42 C.F.R. § 424.520(d)
(emphasis added).

If a physician or nonphysician practitioner meets all program requirements, CMS allows
her to bill retrospectively for up to “30 days prior to their effective date if circumstances
precluded enrollment in advance of providing services to Medicare beneficiaries.” 42
C.F.R. § 424.521(a)(1).

Here, Petitioner Ptacek is a certified physician’s assistant, who agreed to cover the
practice of another physician’s assistant while he was on medical leave. Her colleague
was employed by Orthopeadic Triage of Fairbanks, and provided services under that
practice’s supplier number. Although Petitioner was also enrolled in the Medicare
program, she participated under a different practice’s supplier number.

> make this one finding of fact/conclusion of law.
Petitioner Ptacek began providing services to Medicare beneficiaries at Orthopeadic
Triage on November 12, 2012. But the Medicare contractor, Noridian Administrative
Services, denied reimbursement for the services she provided there, apparently because
she was not enrolled under Orthopeadic Triage’s supplier number.

On January 28, 2013, she submitted a new enrollment application (form CMS 8551) to
the Medicare contractor. CMS Ex. 1. Although the contractor subsequently asked her to
make some corrections, and to provide some additional information, it ultimately
approved the application with the January 28, 2013 effective date. This allowed her to
bill retrospectively to December 29, 2012.4 CMS Ex. 5; P. Ex. 3.

Thus, pursuant to 42 C.F.R. § 424.520(d), Petitioner’s effective date of enrollment is
January 28, 2013, the date she filed her application.

Petitioner argues that she is entitled to reimbursement, because she was already enrolled
in the Medicare program, and she provided services to Medicare beneficiaries. Although
enrolled, she was not enrolled for that practice location, and suppliers are obligated to
submit to the contractor updates and changes in their enrollment information, including
changes in practice location. 42 C.F.R. § 424.516(d)(1)(iii). CMS requires that this
information be provided by submitting to the contractor the appropriate enrollment
application. 42 C.F.R. § 424.502; CMS Ex. 5 at 2.

I recognize that the Medicare program allows a substitute physician (referred to as a
“locum tenens” physician) to bill Medicare under the regular physician’s National
Provider Identifier, if certain conditions are met. P. Ex. 1. It seems that Orthopeadic
Triage billed Medicare, claiming reimbursement under this program for the services
Petitioner provided. But, for reasons neither party has fully explained, the contractor
denied reimbursement under the “locum tenens” program. CMS Exs. 6, 7. I have no
authority to review the contractor’s denials of reimbursement, which are generally
reviewable in a different forum. My authority is defined by federal regulations: 42
C.F.R. Part 498. Administrative actions that are not initial determinations are not subject
to appeal. 42 C.F.R. § 498.3(a); Florida Health Sciences Ctr., Inc., d/b/a/ Tampa
General Hospital, DAB No. 2263 at 4 (2009). The regulations specify which actions are
“initial determinations” and set forth examples of actions that are not. Claims for
reimbursement are not initial determinations that are reviewable here.

* Both the contractor and Petitioner have referred to December 29 as the “effective date.”
CMS Ex. 4. As CMS points out, December 29 is the effective billing date, but January
28 is the effective date of Petitioner’s enrollment. See CMS Br. at 3 n.2; 42 C.F.R.

§ 424.521 (a).
Conclusion

Because Petitioner’s approved enrollment application was filed on January 28, 2013, the
contractor properly granted her Medicare enrollment effective that date.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Yokaira Torres
d/b/a Peralta Grocery,

Respondent.

Docket No. C-14-369
FDA Docket No. FDA-2013-H-1581

Decision No. CR3121
Date: February 20, 2014
INITIAL DECISION AND DEFAULT JUDGMENT

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

CTP began this case by serving a Complaint on Respondent and filing a copy of
the Complaint with the Food and Drug Administration’s (FDA) Division of
Dockets Management. The Complaint alleges that Respondent’s staff unlawfully
sold cigarettes to minors, thereby violating the Federal Food, Drug, and Cosmetic
Act (Act) and its implementing regulations, found at 21 C.F.R. Part 1140. CTP
seeks a civil money penalty of $250.
On December 31, 2013, CTP served the Complaint on Respondent by United
Parcel Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and
accompanying cover letter, CTP explained that within 30 days Respondent should
pay the penalty, file an answer, or request an extension of time within which to file
an answer. CTP warned Respondent that if it failed to take one of these actions
within 30 days an Administrative Law Judge could, pursuant to 21 C.F.R.

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

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

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

e Respondent owns Peralta Grocery, an establishment that sells tobacco
products and is located at 2029 East Tioga Street, Philadelphia,
Pennsylvania 19134. Complaint 3.

¢ On September 5, 2012, an FDA-commissioned inspector observed that “a
person younger than 18 years of age was able to purchase a package of
Marlboro cigarettes ... at approximately 2:53 PM.” Complaint § 10.

e¢ On November 1, 2012, CTP issued a Warning Letter to Peralta Grocery
explaining that the inspector’s September 5, 2012 observation constituted a
violation of a regulation found at 21 C.F.R. § 1140.14(a). In addition to
describing the violation, the letter advised Respondent that the FDA may
initiate a civil money penalty action or take other regulatory action against
Respondent if it failed to correct the violation. The letter also stated that it
was Respondent’s responsibility to comply with the law. Complaint § 10.

¢ On November 4, 2012, Respondent’s site manager responded in writing to
the Warning Letter on Respondent’s behalf. “Respondent stated that the
establishment will ensure future compliance with laws and regulations
related to tobacco sales.” Complaint § 11.

e On May 1, 2013, during another inspection of Respondent’s establishment,
FDA-commissioned inspectors documented that “a person younger than 18
years of age was able to purchase a package of Newport Box 100s
cigarettes . . . at approximately 3:00 PM.” Complaint § 1.

These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is
misbranded if sold or distributed in violation of regulations issued under section
906(d) of the Act. 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R § 1140.1(b). Under

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

Here, Respondent violated 21 C.F.R. § 1140.14(a) on September 5, 2012, and May
1, 2013, when its staff sold cigarettes to minors. Respondent’s actions on two
separate occasions at the same retail outlet constitute violations of law that warrant
a civil money penalty. Accordingly, I find that a civil money penalty of $250 is
permissible under 21 C.F.R. § 17.2.

/s/
Steven T. Kessel
Administrative Law Judge