Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Karen R. Morgan,
Petitioner,
v.
The Inspector General.
Docket No. C-14-1038
Decision No. CR3331

Date: August 14, 2014

DECISION

I sustain the determination of the Inspector General (1.G.) to exclude Petitioner, Karen R.
Morgan, from participating in Medicare, State Medicaid programs, and all other federally
funded health care programs for a minimum period of five years. Petitioner was
convicted of a criminal offense within the meaning of section 1128(a)(2) of the Social
Security Act (Act), and this section mandates her exclusion.

I. Background and Ruling on Petitioner’s Objection to Admission of Exhibits

Petitioner requested a hearing to challenge the I.G.’s exclusion determination. I ordered
the parties to file briefs and proposed exhibits. The LG. filed a brief and four proposed
exhibits that he identifies as LG. Ex. 1 —1.G. Ex. 4. The LG. also filed a reply brief.
Petitioner filed a brief. Neither party requested that I convene an in-person hearing.

Petitioner objects to my receiving I.G. Ex. 3 and I.G. Ex. 4 into evidence. I.G. Ex. 3 is an
Amended Criminal Information that was filed against Petitioner in the Superior Court of
Washington for King County. I.G. Ex. 4 is a “Certification for Determination of
Probable Cause” authored and signed by a detective with the King County Sheriff's
Office. Petitioner objects to my receiving these exhibits on two grounds: that they
contain hearsay; and that they are prejudicial. I overrule these objections and receive
these exhibits, along with .G. Exs. | and 2, into evidence.

The fact that a document contains hearsay is no ground for me to exclude it. I do not hear
this case pursuant to the Federal Rules of Evidence and there is no automatic hearsay
exclusion rule.

Petitioner’s more serious objection goes to the contents of the exhibits — particularly of
1.G. Ex. 4 — and the purpose for which the I.G. seeks to offer them into evidence.
Petitioner was convicted, after a jury trial, of “Criminal Mistreatment in the Third
Degree,” which is a crime under Washington State Law. I.G. Ex. 2. That conviction, on
its face, doesn’t say much of significance about the elements of Petitioner’s crime.
However, the two exhibits, especially I.G. Ex. 4, contain a detailed description of the
allegations that were made against Petitioner.

1.G. Ex. 4 is an accusation in which the specifics of Petitioner’s alleged criminal conduct
are laid out. Petitioner asserts that it is now of no value because, although she was
charged with “Criminal Mistreatment in the Second Degree,” she was actually convicted
of a different offense, “Criminal Mistreatment in the Third Degree.” Petitioner asserts
that the statutory definition of this crime is broad enough to subsume crimes against
family members and other individuals and, therefore, the law is so vague that there is no
way that one can infer the elements of a section 1128(a)(2) conviction from the face of
the law.

That may be so, but I.G. Ex. 4 plainly explains what were the elements of Petitioner’s
crime. The exhibit describes how Petitioner, a registered nurse, was hired by another
individual to serve as a nurse delegator in an adult family home. LG. Ex. 4 at 1.
Petitioner’s job was to examine the residents of the home at least every 90 days and, if
appropriate, to train and delegate specific nursing care tasks to qualified and
appropriately trained nursing assistants. /d. Among the residents under Petitioner’s care
at the home was an 89-year-old, demented and dependent woman. During her stay at the
home this resident developed several severe and life-threatening pressure sores. I.G. Ex.
4 alleges that Petitioner’s neglect of her duties was a contributing factor in the resident’s
development of pressure sores and her decline. It charges that Petitioner failed to provide
adequate guidance to the employees at the home and that Petitioner failed to examine the
resident, to recognize the seriousness of her sores, to report the presence of the sores, and
to comprehend the need for advanced medical treatment.

These allegations clearly comprise the essential elements of “Criminal Mistreatment in
the Third Degree” under Washington State law. The statute describes the crime as
follows:
(1) A person is guilty of the crime of criminal mistreatment in
the third degree if the person is the parent of a child, is a
person entrusted with the physical custody of a child or
other dependent person, is a person who has assumed the
responsibility to provide to a dependent person the basic
necessities of life, or is a person employed to provide to
the child or dependent person the basic necessities of life,
and either:

(a) With criminal negligence, creates an imminent and
substantial risk of substantial bodily harm to a child
or dependent person by withholding any of the
basic necessities of life; or

(b) With criminal negligence, causes substantial bodily
harm to a child or dependent person by withholding
any of the basic necessities of life... .

RCW 9A.42.035. The elements of the crime of which Petitioner was convicted are that:
Petitioner, as a nurse, was a person employed to provide to a dependent, elderly resident
the basic necessities of life; and committed criminal negligence as is described in either
subparagraphs (a) or (b) of the statute. 1.G. Ex. 4 is thus highly relevant to explaining the
elements of Petitioner’s conviction and is admissible for that reason. Additionally, the
exhibit is relevant because it explains that Petitioner’s criminal negligence was related to
Petitioner’s providing health care items or services to a dependent resident, an essential
element of crimes covered by section 1128(a)(2) of the Act, as I shall discuss below.

The exhibits are not prejudicial to Petitioner. The allegations laid out in I.G. Ex. 3 and 4
were presented to a jury and Petitioner was convicted after a trial. I1.G. Ex. 2. She was
given an opportunity to challenge those allegations and to present evidence refuting them.
Therefore, I can discern nothing unfair about allowing the exhibits into evidence in this
case as a way of explaining the elements of Petitioner’s crime.

Traditionally, the Departmental Appeals Board and administrative law judges have
allowed extrinsic evidence to be admitted that explains the elements of the crime of
which a party stands convicted. Narendra M. Patel, M.D., DAB No. 1736 (2000);
Dewayne Franzen, DAB No. 1165 (1990). My ruling here is consistent with the holdings
of these cases.

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

The issue is whether Petitioner was convicted of a crime within the meaning of section
1128(a)(2) of the Act.

B. Findings of Fact and Conclusions of Law

Section 1128(a)(2) mandates the exclusion of any individual who is convicted of a
federal or State criminal offense relating to neglect or abuse of patients in connection
with the delivery of a health care item or service. All of the elements of an 1128(a)(2)
crime are present here. First, and as Petitioner admits, she was convicted of a crime.
Second, she was convicted of neglect. Criminal negligence is an essential element of any
crime that falls within the meaning of the Washington State statute of which Petitioner
was convicted. There is no distinction in the law between “criminal negligence” and
“neglect.” Both terms describe a criminal failure to perform duties that were assigned to
the convicted individual. Third, Petitioner’s crime involved neglect of a patient.
Petitioner was assigned the responsibility of examining and providing and/or supervising
nursing care to a resident of an adult family home and her crime consisted of criminal
negligence in providing care to this resident. Finally, Petitioner committed her crime in
connection with the delivery of health care items or services. Petitioner was charged with
supervising delivery of health care services to the resident in question, including
preventing the development of, identifying, assessing, and treating, her pressure sores.
Petitioner was convicted of criminally failing to carry out these duties.

Petitioner’s arguments boil down to her assertion that it is unclear what misconduct she
was actually convicted of and arguing from this alleged lack of clarity that it cannot be
inferred that she was convicted of a section 1128(a)(2) crime. This assertion is
unpersuasive. The elements of Petitioner’s crime are laid out explicitly in IG. Ex. 4.

The .G. excluded Petitioner for a minimum of five years. That is the minimum
mandatory exclusion period for exclusions imposed pursuant to section 1128(a)(2). Act,
section 1128(c)(3)(B). Consequently, there is no issue in this case concerning the
reasonableness of the length of Petitioner’s exclusion.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Suzanne Pindell
and
Terra S. Shepherd,

Petitioners,
v.
The Inspector General.
Docket Nos. C-14-859 and C-14-905
Decision Nos. CR3329 and CR3330
Date: August 12, 2014
DECISION
Petitioner, Suzanne Pindell, is excluded from participating in Medicare, Medicaid, and all
federal health care programs pursuant to section 1128(a)(1) of the Social Security Act
(Act) (42 U.S.C. § 1320a-7(a)(1)), effective February 20, 2014. There is a proper basis
for Petitioner Pindell’s exclusion based upon her conviction of a criminal offense related
to the delivery of an item or service under Medicare or a state health care program.

Petitioner Pindell’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)).!

' Pursuant to 42 C.F.R. § 1001.3001, Petitioners may apply for reinstatement only after
the period of exclusion expires. Reinstatement is not automatic upon completion of the
period of exclusion.
Petitioner, Terra S. Shepherd, is excluded from participating in Medicare, Medicaid, and
all federal health care programs pursuant to section 1128(a)(1) of the Act (42 U.S.C. §
1320a-7(a)(1)), effective February 20, 2014. There is a proper basis for Petitioner
Shepherd’s exclusion based upon her conviction of a criminal offense related to the
delivery of an item or service under Medicare or a state health care program. Petitioner
Shepherd’s exclusion for the minimum period of five years is mandatory pursuant to
section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)).

I. Background

The Inspector General (I.G.) of the U.S. Department of Health and Human Services
notified Petitioners by letters dated January 31, 2014, that they were being excluded from
participation in Medicare, Medicaid, and all other federal health care programs for a
minimum period of five years under section 1128(a)(1) of the Act (42 U.S.C. § 1320a-
7(a)(1)). The I.G. advised Petitioners that they were being excluded based on their
convictions in the Second Judicial District Court of the State of Nevada, Washoe County,
of criminal offenses related to the delivery of an item or service under Medicare or a state
ealth care program. I.G. Exhibits (Exs.) 1, 2.

Petitioners timely requested hearings on April 1, 2014. On April 25, 2014, I convened a
prehearing telephone conference, the substance of which is memorialized in my
Prehearing Order dated April 28, 2014. Petitioners orally requested during the prehearing
conference that I consolidate the cases for hearing and decision; the I.G. did not object;
and the cases were consolidated.” On May 27, 2014, the L.G. filed a motion for summary
judgment, a brief in support of summary judgment (I.G. Br.), and I.G. Exs. | through 10.
Petitioners filed a brief in opposition (P. Br.) on June 25, 2014, and Petitioners’ Exhibits
(P. Exs.) 1 through 11. The I.G. filed a reply brief (I.G. Reply) on July 9, 2014. The
parties have not objected to my consideration of the offered exhibits and I.G. Exs. 1
through 10 and P. Exs. | through 11 are admitted as evidence.

> A separate docket has been maintained for each case in the Departmental Appeals
Board Electronic Filing System with duplicate filings in each, in case it became necessary
to sever the cases.
IL. Discussion
A. Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) establishes Petitioners’ 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)(1) of the Act, the Secretary must exclude from participation
in any federal health care program any individual convicted under federal or state law of
a criminal offense related to the delivery of an item or service under Medicare or a state
health care program. The Secretary has promulgated regulations implementing these
provisions of the Act. 42 C.F.R. § 1001.101(a).°

Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section
1128(a) of the Act will be for a period of not less than five years. 42 C.F.R.

§ 1001.102(a). Pursuant to 42 C.F.R. § 1001.102(b), the period of exclusion may be
extended based on the presence of specified aggravating factors. 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 is a preponderance of the evidence, and there may be no collateral
attack of the conviction that provides the basis of the exclusion. 42 C.F.R.

§ 1001.2007(c), (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 the I.G. has a basis for excluding an individual or entity from

participating in Medicare, Medicaid, and all other federal health care programs;
and

> References are to the 2013 revision of the Code of Federal Regulations (C.F.R.), unless
otherwise indicated.
Whether the length of the proposed exclusion is unreasonable.

42 C.F.R. § 1001.2007(a)(1). If the 1.G. imposes the minimum period of exclusion
authorized for a mandatory exclusion under section 1128(a)(1) of the Act, there is no
issue of whether or not the period of exclusion is unreasonable. 42 C.F.R.

§ 1001.2007(a)(2).

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

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

1. Petitioners’ requests for hearing were timely and I have
jurisdiction.

2. Summary judgment is appropriate.

Petitioners’ requests for hearing were timely filed and preserved Petitioners’ rights to
review of justiciable issues. I have jurisdiction pursuant to section 1128(f) of the Act and
42 CFR. 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. Pro. 56(c);
Garden City Med. Clinic, DAB No. 1763 (2001); Everett Rehab. & Med. Ctr., DAB No.
1628 at 3 (1997) (holding in-person hearing is required where the 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).

Summary judgment is appropriate in this case. There are no genuine issues of material
fact in dispute in this case. The issues raised by Petitioners are issues of law that must be
resolved against Petitioners.

3. Petitioners’ exclusions are required by section 1128(a)(1) of the Act.

The LG. cites section 1128(a)(1) of the Act as the basis for Petitioners’ mandatory
exclusions. The statute provides:

(a) MANDATORY EXCLUSION. - The Secretary shall
exclude the following individuals and entities from
participation in any Federal health care program (as defined
in section 1128B(f)):

(1) Conviction of program-related crimes. — Any
individual or entity that has been convicted of a criminal
offense related to the delivery of an item or service under
title XVIII or under any State health care program.

Act § 1128(a)(1). Section 1128(a)(1) of the Act requires that the Secretary exclude from
participation in Medicare, Medicaid, and all federal health care programs, any individual
or entity: (1) convicted of a criminal offense; (2) where the offense is related to the
delivery of an item or service; and (3) the delivery of the item or service was under
Medicare or a state health care program. The definition of a “State health care program”
includes state Medicaid plans. Act § 1128(h) (42 U.S.C. § 1320a-7(h)); 42 C.F.R.

§ 1001.2.

Petitioners Pindell and Shepherd, who are mother and daughter, were part owners of
HealTherapy of Nevada, Inc. (HTN). HTN provided “equine-facilitated psychotherapy
and experiential learning programs,” including horseback riding and all aspects of
horsemanship to “traumatized and disabled” youth and their families. P. Exs. 1, 2; P. Br.
at 2. It is not disputed that HTN had an agreement with Nevada Medicaid to provide
mental health services to Medicaid recipients and that HTN did submit claims to Nevada
Medicaid for services rendered. It is not disputed that Petitioner Pindell was the
President and Petitioner Shepard was the General Manager of HTN. P. Exs. 1, 7-8, 10.

On June 12, 2013, the Grand Jury of Washoe County, State of Nevada, returned an
indictment against each of the Petitioners alleging: one count of submission of false
Medicaid claims; one count of theft by misrepresentation; one count of intentional failure
to maintain adequate records under Medicaid; and one count of obtaining and using the
personal identifying information of another for unlawful purposes. I.G. Exs. 9, 10. On
August 6, 2013, the Nevada Attorney General filed an “Information Supplementing
Indictment” (supplemental information) against each Petitioner alleging one count of
submission of false Medicaid claims. I.G. Exs. 7, 8.

On August 7, 2013, each Petitioner agreed to enter a plea of nolo contendere (no contest)
to the one count of submission of false Medicaid claims, a misdemeanor, as alleged in the
supplemental information. Petitioners agreed to plead no contest based on the terms of
the plea agreement, which included: Petitioners agreed to pay court costs; Petitioners
agreed to pay restitution of $30,000 to Nevada Medicaid for which they agreed that they
were jointly and severally liable; and, when restitution was paid in full, the prosecutor
would recommend no incarceration and no fine, and that the charges from the grand jury
would be dismissed and the case closed. The plea agreements stated that Petitioners
understood that by pleading no contest they admitted that the prosecutor could prove
facts necessary to establish the offenses to which Petitioners were pleading no contest.
The plea agreement also specifically stated that Petitioners understood that as a
consequence of their no contest pleas, they may be excluded from participating in
Medicare, Medicaid and other government health care programs or facilities.

LG. Exs. 3, 4.

Petitioners’ no contest pleas were accepted and judgments entered against them on
August 7, 2013. The judgments state that Petitioners were guilty of the crime of
submission of false Medicaid claims, a violation of Nev. Rev. Stat. § 422.540(1)(a) and
(2)(b), a misdemeanor. Petitioners were sentenced to pay, jointly and severally,
restitution of $30,000. The court dismissed Counts | through 4 of the grand jury
indictment. I.G. Exs. 5, 6.

An individual is considered “convicted of a criminal offense” when a judgment of
conviction has been entered by a federal, state, or local court or a plea of guilty or no
contest has been accepted. Act § 1128(i) (42 U.S.C. § 1320a-7(i)). Thus, the court’s
judgments against Petitioners constitute a conviction and Petitioners were convicted of a
criminal offense within the meaning of the Act. I also conclude that the criminal offense
of which each Petitioner was convicted was related to the delivery of an item or service
under a state health care program, in this case, Medicaid. Petitioners were each convicted
of the offense of submission of false Medicaid claims to Nevada Medicaid. The charge
to which they pleaded no contest clearly shows a nexus between their offenses and the
delivery of a health care item or service under Medicare, Medicaid or another
governmental health care program. Accordingly, I conclude that all elements of section
1128(a)(1) of the Act are met; there is a basis for Petitioners’ exclusions; and their
exclusions are mandated by the Act.

Petitioners argue that the I.G. may not rely upon Petitioners’ no contest pleas because
evidence of a no contest plea is not admissible as evidence in a criminal or civil
proceeding pursuant to Nev. Rev. Stat. § 48.125 (2007). P. Br. at 6-7. Petitioners’
argument is without merit in this forum. Petitioners’ exclusions are not based upon their
no contest pleas, but rather, upon the judgments of conviction that were entered against
Petitioners when their pleas were accepted. The relevant evidence is the judgments
against Petitioners admitted as I.G. Exs. 5 and 6. Whether their pleas were no contest,
guilty, or not guilty, has no impact the application of section 1128(a)(1) of the Act and
the nature of the plea is of no real relevance. Further, Petitioners have failed to point to
any authority to support an argument that the Nevada rules of evidence have any
application to a federal administrative proceeding. In fact, the Nevada rules of evidence
specifically provide that they govern proceedings in the Nevada courts and before
Nevada magistrates. Nev. Rev. Stat. § 47.020.1 (2013). Furthermore, even the Federal
Rules of Evidence are not binding upon the ALJ. 42 C.F.R. § 1005.17.

Petitioners also argue that the I.G. failed to consider the entirety of the circumstances
associated with the no contest pleas. This argument is also without merit. The I.G. is
required to consider whether or not the elements of section 1128(a)(1) of the Act are
satisfied. If the elements are met, Congress mandates that the Secretary exclude the
person or entity convicted. Congress granted the Secretary, the I.G., and me no authority
to consider any other factors or to decide not to exclude when the elements of section
1128(a)(1) of the Act are met.*

Petitioners argue that their exclusion for five years violates the prohibition of the Eighth
Amendment of the U.S. Constitution against excessive fines and cruel and unusual
punishment. P. Br. 7-10. I am bound to follow the federal statutes and regulations, and
ave no authority to declare them unconstitutional. Susan Malady, R.N., DAB No. 1816
(2002); 42 C.F.R. § 1005.4(c)(1). Although I must interpret and apply federal statutes
and regulations consistent with Constitutional principles, there is no issue of
interpretation for me in this case. I have no authority to address Petitioners’ attack on the
Act and the regulations on constitutional grounds. Petitioners have preserved the issue
for appeal to the federal courts. I note, however, that their arguments have been rejected
by the courts before. Exclusions imposed by the I.G. are civil sanctions, remedial in
nature and not punitive and criminal. Because exclusions are remedial sanctions, they do
not violate either the double jeopardy clause or the prohibition against cruel and unusual
punishment. Manocchio v. Kusserow, 961 F.2d 1539 (11th Cir. 1992); Greene v.
Sullivan, 731 F.Supp. 838 (E.D. Tenn. 1990); W. Scott Harkonen, MD, DAB No. 2485 at
22 (2012); Joann Fletcher Cash, DAB No. 1725 (2000); Douglas Schram, R.Ph., DAB

* There is limited authority for the Secretary to waive some mandatory exclusions based
on very specific facts not present in this case. Act § 1128(c)(3)(B).
No. 1372 (1992); and Janet Wallace, L.P.N., DAB No. 1126 (1992).° Arguments that the
exclusion provisions are anything but remedial have consistently been found to be
without merit. Manocchio, 961 F.2d 1539; Greene, 731 F.Supp. 838.

4. The minimum period of exclusion under section 1128(a) is five
years. Act § 1128(c)(3)(B).

5. Petitioners’ exclusions for five years are not unreasonable as a
matter of law.

I have concluded that there is a basis to exclude Petitioners pursuant to section 1128(a)(1)
of the Act. Therefore, the I.G. must exclude Petitioners for a minimum period of five
years pursuant to section 1128(c)(3)(B) of the Act. The I.G. has no discretion to impose
a lesser period and I may not reduce the period of exclusion below five years.

Petitioners submitted several letters expressing support for Petitioners and attesting to
the quality and effectiveness of their services. P. Ex. 4. I read the letters with interest,
but I am unable to reduce the period of exclusion below five years, which is the minimum
period authorized. Act § 1128(c)(3)(B); 42 C.F.R. § 1001.102(a).

HI. Conclusion
For the foregoing reasons, Petitioners are excluded from participating in Medicare,

Medicaid, and all federal health care programs for the statutory five-year minimum
period, effective February 20, 2014.

/s/
Keith W. Sickendick
Administrative Law Judge

> The exclusion remedy serves twin congressional purposes: the protection of federal
funds and program beneficiaries from untrustworthy individuals and the deterrence of
health care fraud. S. Rep. No. 100-109, at 1-2 (1987), reprinted in 1987 U.S.C.C.A.N.
682, 686 (“clear and strong deterrent”); Joann Fletcher Cash, DAB No. 1725 at 18
(discussing trustworthiness and deterrence).


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.
The Smoke House LLC,
Respondent.

Docket No. C-14-1276
FDA Docket No. FDA-2014-H-0774

Decision No. CR3326

Date: August 12, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint)
against Respondent, The Smoke House LLC, 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 a
minor, failed to verify that a cigarette purchaser was 18 years of age or older, and
impermissibly utilized a self-service display of smokeless tobacco, 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 June 19, 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), 1am 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 The Smoke House, an establishment that sells tobacco products
and is located at 6301 Rainier Avenue South, Suite 1, Seattle, Washington 98118.
Complaint § 2.

e During an inspection of Respondent’s establishment on February 24, 2013, at
approximately 1:35 PM PT, an FDA-commissioned inspector observed that “a
person younger than 18 years of age was able to purchase a package of Newport
Box cigarettes . . . [.]” The inspector also observed that “the minor’s identification
was not verified before the sale....” Complaint 49.

¢ On March 14, 2013, CTP issued a Warning Letter to Respondent regarding the
inspector’s observations from February 24, 2013. The letter explained that the
observations constituted violations of regulations found at 21 C.F.R. § 1140.14(a)
and (b)(1), and that the named violations were not necessarily intended to be an
exhaustive list of all violations at the establishment. The Warning Letter went on
to state that if Respondent failed to correct the violations, regulatory action by the
FDA or a civil money penalty action could occur and that Respondent is
responsible for complying with the law. Complaint § 9.

e Saif Shmed, Respondent’s owner, responded to the Warning Letter in an April 3,
2013 letter. “Mr. Shmed stated that Respondent took disciplinary action against
the employee who sold the tobacco product to the minor, that all employees will
request identification from every tobacco purchaser, and that Mr. Shmed will
explain to every new employee the importance of verifying identification of
tobacco purchasers.” Complaint § 10.

e During a subsequent inspection of Respondent’s establishment on January 8, 2014,
FDA-commissioned inspectors documented the presence of “two displays
containing various brands of smokeless tobacco that were directly accessible to
customers” in the establishment. Further, Respondent’s owner “stated that minors
are allowed in the establishment.” 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. § 387¢(a)(7)(B); 21 C.F.R § 1140.1(b). The
Secretary issued the regulations at 21 C.F.R. pt. 1140 under section 906(d) of the Act. 21
U.S.C. § 387(a); 21 U.S.C. § 387f(d)(1); 75 Fed. Reg. 13,229 (Mar. 10, 2010). The
regulations prohibit the sale of cigarettes to any person younger than 18 years of age. 21
C.F.R. § 1140.14(a). The regulations also require retailers to verify, by means of photo
identification containing a purchaser’s date of birth, that no cigarette purchasers are
younger than 18 years of age. 21 C.F.R. § 1140.14(b)(1). Finally, the regulations
prohibit the use of self-service displays of smokeless tobacco, 21 C.F.R. § 1140.16(c),
except in facilities in which no minors are present or permitted to enter at any time, 21
CFR. § 1140.16(c)(2)(ii).

Taking the above alleged facts as true, Respondent violated the prohibition against selling
cigarettes to persons younger than 18 years of age, 21 C.F.R. § 1140.14(a), on February
24, 2013. On the same date, Respondent also violated the requirement that retailers
verify, by means of photo identification containing a purchaser’s date of birth, that no
cigarette purchasers are younger than 18 years of age. 21 C.F.R. § 1140.14(b)(1). On
January 8, 2014, Respondent violated the prohibition on using self-service displays as a
means of selling smokeless tobacco, 21 C.F.R. § 1140.16(c), because Respondent
permitted minors to enter its establishment. Therefore, Respondent’s actions constitute
violations of law that merit a civil money penalty.

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

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

St. John of God Retirement and Care Center
(CCN: 055253),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-865
ALJ Ruling No. 2014-40

Date: August 13, 2014

ORDER OF DISMISSAL

The Centers for Medicare & Medicaid Services (CMS) determined that Petitioner, St.
John of God Retirement and Care Center, was not in substantial compliance with
Medicare participation requirements. CMS decided that it would impose remedies
against Petitioner if Petitioner did not reach substantial compliance with participation
requirements within certain specified time-frames. Petitioner timely achieved substantial
compliance with Medicare participation requirements and no remedy went into effect.
Subsequently, Petitioner filed a request for hearing (RFH) before an administrative law
judge. Because the remedies imposed by CMS never went into effect, Petitioner does not
have a right to a hearing. Therefore, I dismiss Respondent’s RFH.

I. Procedural History and Background

Petitioner is a skilled nursing facility (SNF) located in Los Angeles, California, that
participates in the Medicare program. In a January 28, 2014 letter, the California
Department of Public Health, County of Los Angeles (State Agency), as authorized by
CMS, informed Petitioner that it recommended CMS to impose remedies against
Petitioner because it was not in substantial compliance with federal requirements.
2

Specifically, the State Agency stated that it conducted an abbreviated survey of Petitioner
on January 24, 2014, and found that Petitioner had a single deficiency at the “D” scope
and severity level (no actual harm with the potential for more than minimal harm that is
not immediate jeopardy). CMS Ex. 2, at 1; see CMS Ex. 1.

The letter informed Petitioner of the specific remedies that the State Agency
recommended that CMS impose if Petitioner did not achieve substantial compliance by
certain dates: a civil money penalty (CMP) if Petitioner did not achieve substantial
compliance by February 6, 2014;' denial of payment for new admissions (DPNA) would
be imposed effective April 24, 2014, unless Petitioner demonstrated substantial
compliance prior to that date; and termination of Petitioner’s Medicare provider
agreement if Petitioner did not achieve substantial compliance by July 24, 2014. CMS
Ex. 2, at 2-3. The State Agency offered Petitioner the opportunity to submit a plan of
correction within 10 days of receiving the statement of deficiencies (also referred to as
the “CMS-2567”) and notified Petitioner of its right to request a hearing before an
administrative law judge within 60 days of receiving the January 24, 2014 letter. CMS
Ex. 2, at 2-3. Petitioner appears to have provided a plan of correction by February 6,
2014. CMS Ex. 1, at 1; see also RFH at 1.

On March 27, 2014, Petitioner filed a RFH in which Petitioner challenged the deficiency
findings. Petitioner complained that the State Agency posted information about the
January 2014 survey results that were not accurate and that one of the investigators
committed misconduct. Petitioner later submitted copies of letters dated April 8 and 9,
2014, sent by its attorney to an individual in charge of the Health Facilities Inspection
Division.

On May 21, 2014, CMS filed a motion to dismiss the RFH (CMS Motion). CMS
asserted that Petitioner was found in substantial compliance on February 6, 2014, based
on its Plan of Correction, and CMS did not impose any remedies on Petitioner. CMS
Motion at 2, 4. CMS argued that dismissal was appropriate because Petitioner did not
have a right to a hearing where no remedies had been imposed. 42 C.F.R. § 498.70(b).

' Tt is unclear from the January 28, 2014 letter whether CMS meant to impose a CMP on
Petitioner or the reference to a CMP was a typographical error. However, this has no
impact on my discussion because CMS ultimately determined that no remedies, including
a CMP, would be imposed against Petitioner.
3

On June 18, 2014, I issued an order staying the prehearing exchange schedule in this case
to consider the CMS Motion. I noted in the order that I had not yet received a response
from Petitioner. Petitioner had 20 days from the date of receipt of the CMS Motion to
file a response. April 8, 2014 Acknowledgment and Initial Pre-hearing Order, at 7 § 17;
see 42 C.F.R. § 498.17; Civil Remedies Division Procedures 415. To date, I have not
received a response from Petitioner.

II. Issue

Whether Petitioner has a right to a hearing before an administrative law judge where
CMS has imposed no enforcement remedies against Petitioner.

III. Discussion

CMS has imposed no enforcement remedies in this case, therefore,
Petitioner has no right to hearing before an administrative law judge.

An SNF has a right to a hearing before an administrative law judge when CMS has
“made an adverse ‘initial determination’ of a kind specified in 42 C.F.R. § 498.3(b).”
Columbus Park Nursing & Rehab. Ctr., DAB No. 2316, at 6 (2010); see also 42 C.F.R.
§ 498.3(a)(1). When CMS makes a finding that a SNF is noncompliant and CMS
imposes a remedy under 42 C.F.R. § 488.406, the SNF has received an initial
determination that is subject to further review. 42 C.F.R. § 498.3(b)(13); see also

42 CFR. §§ 488.330(e)(3), 488.408(g)(1), 498.3(a)(3)(ii). Consistent with this, a SNF
“has no right to an [administrative law judge] hearing to contest survey deficiency
findings where CMS has not imposed any of the remedies specified in section 488.406
based on those findings, or where CMS imposed, but subsequently rescinded, any such
remedies.” Columbus Park, DAB No. 2316, at 7. Remedies specified at 42 C.F.R.

§ 488.406 include termination of a provider agreement, a DPNA, CMPs, and directed in-
service training.

In the present matter, the State Agency advised Petitioner that it recommended that CMS
impose a CMP, DPNA, and termination of Petitioner’s provider agreement if Petitioner
did not achieve substantial compliance with program participation requirements within
certain specified time-frames. However, because Petitioner returned to substantial
compliance on February 6, 2014, CMS never imposed any enforcement remedy based on
the January 24, 2014 survey. CMS Motion at 2, 4. Therefore, Petitioner does not have
any hearing rights based on the remedies originally recommended. See, e.g., Golden
Living Ctr.-Grand Island Lakeview, DAB No. 2364 (2011) (holding that it is the
imposition of a remedy, not the citation of a deficiency, that triggers a facility’s right to a
hearing under 42 C.F.R. Part 498).
IV. Conclusion

I may dismiss an RFH if Petitioner does not have a right to a hearing. 42 C.F.R.
§ 498.70(b). Because Petitioner does not have a right to a hearing, CMS’s motion to
dismiss is GRANTED and Petitioner’s RFH is DISMISSED.

Within 60 days of receiving this Order, either party may request that I vacate this Order.
42 CFR. § 498.72.

It is so ordered.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Borger I Enterprises, LLC, d/b/a
Caprock Nursing & Rehabilitation,
(CCN: 67-6341),

Petitioner,

-v.-

Centers for Medicare & Medicaid Services.
Docket No. C-14-1291
ALJ Ruling No. 2014-38

Date: August 13, 2014

ORDER OF DISMISSAL

I dismiss the hearing request of Petitioner, Borger I Enterprises, LLC, d/b/a
Caprock Nursing & Rehabilitation, because it was untimely and Petitioner did not
establish that there was good cause to extend the filing deadline.

I. Background and Procedural History

Petitioner is a skilled nursing facility doing business in the State of Texas.’ On April 8,
2013, Novitas Solutions, Inc. (Novitas), a contractor acting on behalf of the Centers for
Medicare & Medicaid Services (CMS), received an application from Petitioner to enroll
in the Medicare program. On November 6, 2013, CMS notified Petitioner that it met the
requirements for participation in the Medicare program and that the effective date of its
enrollment was May 29, 2013. Petitioner, believing that the effective date should have
been April 16, 2013, requested reconsideration on December 5, 2013. On December 10,

' Skilled nursing facilities are considered providers for the purposes of the Medicare
program. 42 C.F.R. § 400.202 (definition of Provider).
2013, CMS issued an unfavorable reconsidered determination upholding the May 29,
2013 effective date.

In a letter dated May 12, 2014, Petitioner requested a hearing before an administrative
law judge (ALJ) to challenge the reconsidered determination. Petitioner sent its request
to the CMS Dallas Regional Office, Division of Survey and Certification, who then
forwarded the request to the Civil Remedies Division (CRD) of the Departmental
Appeals Board. Petitioner’s hearing request included six exhibits marked as Exhibits 1,
2A, 2B, and 3-5. CRD received the hearing request on June 9, 2014. The CRD Director
administratively assigned this case to me for hearing and decision.

An initial review of the hearing request revealed that Petitioner submitted it after the 60-
day filing deadline required by 42 C.F.R. § 498.40(a)(2). Because Petitioner did not
provide an explanation as to the apparent delay in filing the hearing request, my June 13,
2014 Acknowledgment and Order to Show Cause directed Petitioner to provide good
cause why I should not dismiss the hearing request as untimely. Petitioner filed its
response on June 18, 2014, which included its brief (P. Resp. Br.) and a copy of its
previously submitted exhibits marked as Exhibits 1, 2A, 2B, and 3-5.

I have considered all of Petitioner’s submissions in reaching my conclusion. While the
regulations do not permit an aggrieved provider to file new documentary evidence at this
level of review, a provider or supplier may do so upon a showing of good cause.

42 C.F.R. § 498.56(e)(1). The new documents Petitioner submitted directly relate to its
argument about whether good cause exists to extend the deadline for filing its hearing
request. That issue was not and could not have been before the hearing officer at the
reconsideration level of review. Therefore, I will consider the documents Petitioner
submitted for the first time at this level of review for the limited purpose of whether good
cause exists to extend the deadline for filing Petitioner’s hearing request.

IL. Issues

The general issue presently before me is whether I should dismiss Petitioner’s hearing
request. The specific issues that I must decide are whether Petitioner’s hearing request
was untimely and, if so, whether Petitioner had good cause for filing the request late.

III. Analysis

A provider dissatisfied with a reconsidered determination “is entitled to a hearing before
an ALJ.” 42 C.F.R. § 498.5(/))(2); see also 42 U.S.C. § 1395cc(j)(8). However, in order
for a provider to exercise the right to a hearing, a provider must file its request for hearing
no later than 60 days from the date that it receives a reconsidered determination from
CMS. 42 C.F.R. § 498.40(a)(2). Receipt of the notice of a reconsidered determination is
presumed to be five days after the date of notice unless shown otherwise. Jd.; 42 C.F.R.
§ 498.22(b)(3). A provider may request that an ALJ extend the date to file a hearing
request; however, the provider must show good cause in order for the ALJ to grant such a
request. Jd. § 498.40(c). Ifa hearing request is untimely and there is no good cause to
extend the filing date, then an ALJ may dismiss the hearing request. Jd. § 498.70(c).

A. Petitioner filed an untimely hearing request.

The reconsidered determination is dated December 10, 2013. Under the regulations, I
presume that Petitioner received the determination on December 16, 2013.” Petitioner
had 60 days, until February 14, 2014, in which to file a hearing request. See 42 C.F.R.
§ 498.40(a)(2). On May 12, 2014, Petitioner filed a document I interpret to be a request
for a hearing. However, Petitioner filed that document 87 days after the filing deadline.

In response to the Acknowledgment and Order to Show Cause, Petitioner claims that
once it became aware of the May 29, 2013 effective date it contacted its congressman’s
office and also began exchanges with CMS officials. Petitioner claims further that it has
a “plethora of emails” showing its “dispute of the incorrectly issued effective date.” P.
Resp. Br. at 1. The gravaman of Petitioner’s argument is that its correspondence with
CMS and Novitas, which presumably occurred during the 60-day window for filing a
earing request, should be found to qualify as a hearing request. Although Petitioner did
not submit any emails with its response brief, a copy of email correspondences between
Petitioner, CMS, and Novitas were submitted by Petitioner with its May 12, 2014 hearing
request and cover communications during the period of March 17, 2014 through May 22,
2014. Petitioner did not mark the emails as an exhibit. The first email, dated March 17,
is from Petitioner to CMS and was sent 31 days after the February 14 regulatory deadline
for Petitioner to file its request for hearing. Moreover, none of the eight emails Petitioner
submitted in this proceeding show that Petitioner requested a hearing. At no point in the
email correspondences does Petitioner express an interest in having a hearing to
challenge its assigned effective date determination. For example, on April 9, 2014,
Petitioner sent an email to Novitas stating that the effective date determination was an
“issue that we have been struggling with for quite some time . . .” and asking “could you
advise on where we would need to go to reach a resolution on this? We are spinning in
circles and don’t know what to do.”

The April 9 email and the other seven emails from Petitioner appear to be attempts by
Petitioner to convince CMS to change the May 29 effective date, but they show no intent
by Petitioner to file a hearing request. Moreover, in addition to not expressing any intent
to file a hearing request, the emails do not meet the content requirements for hearing
requests at 42 C.F.R. § 498.40(b)(1) and (2).

> Five calendar days following the reconsidered determination fell on a Sunday.
Accordingly, I presume that Petitioner received the determination on the following day.
Civil Remedies Division Procedures § 6.
A request for hearing must:

(1) Identify the specific issues, and the findings of fact and conclusions of
law with which the affected party disagrees; and

(2) Specify the basis for contending that the findings and conclusions are
incorrect.

Id. § 498.40(b)(1),(2) .

Aside from the fact that the emails were outside the 60-day regulatory window for
Petitioner to file its hearing request, I find no basis to construe the emails between
Petitioner, CMS, and Novitas as an attempt to request a hearing. Rather, the emails show
that Petitioner was attempting to resolve the matter informally with CMS and Novitas.
Consequently, I find that Petitioner did not file a timely request for hearing.

B. Petitioner did not establish good cause for failing to file its hearing request
timely.

If a provider establishes that there was good cause to extend the filing date for a hearing
request, then an ALJ can accept an otherwise untimely hearing request. 42 C.F.R.

§ 498.40(c). The regulations do not define what constitutes “good cause” to extend the
filing deadline for a hearing request and the Departmental Appeals Board “has never
attempted to provide an authoritative or complete definition of the term ‘good cause’ in
section 498.40(c)(2).” Brookside Rehab. & Care Ctr., DAB No. 2094, at 7 n.7 (2007)
(citing Glen Rose Med. Ctr. Nursing Home, DAB No. 1852, at 7 n.5 (2002)).> Rather, a
review of the relevant circumstances of each case is critical to determine whether there is
“good cause” to extend the filing deadline. See NBM Healthcare, Inc., DAB No. 2477, at
3 (2012) (“[T]he facts of this case do not show good cause under any reasonable
definition of that term.”); see also Quality Total Care, LLC d/b/a The Crossings, DAB
No. 2242, at 4-5 n.4 (2009) (same).

In response to the Acknowledgement and Order to Show Cause, Petitioner states that it
made a “mistake” by not filing its hearing request sooner. P. Resp. Br. at 1. Petitioner
explains that it “simply misunderstood the letter’s request and believed that [it was] in
fact appealing the decision by working directly with CMS.” Jd. Petitioner claims that if

> Departmental Appeals Board decisions cited in this decision are accessible on the
Department of Health and Human Services’ website at:
http://www.hhs.gov/dab/decisions/index.html.
its request is dismissed it will face a “substantial forfeiture,” involving the loss of
$250,000. Jd. at 1; Hearing Request.

Despite Petitioner’s claim that it “misunderstood the letter’s request” (P. Resp. Br. at 1), a
review of the December 10, 2013 reconsidered determination shows that it clearly stated
that Petitioner had 60 days from receipt of the determination to request a hearing.

If you disagree with our determination, you may request a
hearing before an administrative law judge of the Department
of Health and Human Services, Departmental Appeals Board.
Procedures governing this process are set out in 42 CFR
498.40, et seq. A written request for hearing must be filed no
later than 60 days from the date of receipt of this letter.

Additionally, the December 10 reconsidered determination provided the specific address
where Petitioner was to mail its hearing request to and also noted:

A request for hearing should identi[f]y the specific issues, and
findings of fact and conclusions of law with which you
disagree. It should also specify the basis for contending that
the findings and conclusions are incorrect. Borger I
Enterprises, LLC d/b/a Caprock Nursing and Rehabilitation
may be represented at a hearing by counsel at your own
expense.

Moreover, the reconsidered determination also provided Petitioner with the name, phone
number, and email address of a contact person Petitioner could call for any questions.

The reconsidered determination explicitly advised Petitioner of its right to request a
hearing from that determination. Petitioner does not explain why it disregarded this clear
notice of its further appeal rights.

I conclude that Petitioner’s proffered reason for failing to file a timely hearing request
does not constitute good cause to extend the filing deadline. See Kids Med (Delta
Medical Branch), DAB No. 2471 (2012) (holding that negligence by a facility’s staff or
representative is never good cause for failing to file a timely hearing request even if the
petitioner was not represented by an attorney at the time). Moreover, dismissal of a
hearing request is appropriate where the reconsidered determination clearly explained the
filing requirements and deadlines to the petitioner. See Vanguard Vascular & Vein,
PLLC, Trent E. Proffitt, M.D., and Franklin S. Yau, M.D., DAB No. 2523 (2013)
(upholding dismissal when the reconsidered determination correctly explained in
“unambiguous and conspicuous language” that the petitioners had 60 days from their
receipt of the reconsidered determination to request a hearing before an ALJ); Waterfront
Terrace, Inc., DAB No. 2320, at 6, 8 (2010) (holding that no good cause existed to justify
extending the filing deadline where the notice letter reasonably informed the Petitioner of
its appeal rights). Because Petitioner has made no showing of good cause for filing its
hearing request almost three months after the expiration of the 60-day deadline for doing
so, I do not have the authority to extend the filing deadline for the hearing request.

IV. Conclusion

Petitioner filed an untimely request for hearing and did not show that there was good
cause for extending the filing deadline. Therefore, I dismiss Petitioner’s hearing request.

/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-0815)
Complainant
v.

Santiago Sosa d/b/a Sosa Food Market,
Respondent.

Docket No. C-14-1326
Decision No. CR3325

Date: August 8, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an
administrative complaint on Respondent, Santiago Sosa d/b/a Sosa Food Market,
at 4062 L Street, Philadelphia, Pennsylvania 19124, and by filing a copy of the
complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The complaint alleges that Sosa Food Market unlawfully sold
cigarettes to minors and failed to verify, by means of photo identification
containing a date of birth, that cigarette purchasers were18 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 Sosa Food Market.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on June 25, 2014, CTP served the
complaint on Respondent Sosa Food Market by United Parcel Service. In the
complaint and accompanying cover letter, CTP explained that, within 30 days,
Respondent should pay the penalty, file an answer, or request an extension of time
in which to file an answer.
CTP warned Respondent that, if it failed to take one of these actions within 30
days, the Administrative Law Judge could, pursuant to 21 C.F.R. § 17.11, issue an
initial decision ordering it to pay the full amount of the proposed penalty.

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

e At Respondent’s business establishment, 4062 L Street, Philadelphia,
Pennsylvania 19124, on August 10, 2013, at approximately 7:05 PM, an
FDA-commissioned inspector observed Respondent’s staff sell a package
of Newport Menthol Gold Box 100s cigarettes to a person younger than 18
years of age. The inspector also noted that Respondent’s staff failed to
verify, by means of photo identification containing the bearer’s date of
birth, that the cigarette purchaser was 18 years of age or older;

e Ina warning letter issued on September 26, 2013, CTP informed
Respondent of the inspector’s observations from August 10, 2013, 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, the
FDA could impose a civil money penalty or take other regulatory action;

e At Respondent’s business establishment, 4062 L Street, Philadelphia,
Pennsylvania 19124, on January 11, 2014, at approximately 2:10 PM,
FDA-commissioned inspectors documented Respondent’s staff selling a
package of Newport Box 100s cigarettes to a person younger than 18 years
of age. The inspectors also noted that Respondent’s staff failed to verify,
by means of photo identification containing the bearer’s date of birth, that
the cigarette purchaser was 18 years of age or older.

These facts establish Respondent’s liability under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is
misbranded if sold or distributed in violation of regulations issued under section
906(d) of the Act. 21 U.S.C. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R.
§ 1140.1(b). The Secretary issued the regulations at 21 C.F.R. pt. 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 or smokeless tobacco to any person younger than 18 years of age.
Under 21 C.F.R. § 1140.14(b)(1), retailers must verify, by means of photo
identification containing the bearer’s date of birth, that no cigarette or smokeless
tobacco purchaser is younger than 18 years of age.

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

For these reasons, I enter default judgment in the amount of $500 against
Respondent Santiago Sosa d/b/a Sosa Food Market. Pursuant to 21 C.F.R.

§ 17.11(b), this order becomes final and binding upon both parties after 30 days of
the date of its issuance.

/s/
Catherine Ravinski
Administrative Law Judge


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

(FDA No. FDA-2014-H-0763)
Complainant
v.
MKA Fuel Inc. d/b/a Citgo,

Respondent.

Docket No. C-14-1270

Decision No. CR3323

Date: August 8, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an admin:
complaint on Respondent, MKA Fuel Inc. d/b/a Citgo, at 2801 South Schaefer

istrative
Highway,

Detroit, Michigan 48217, and by filing a copy of the complaint with the Food and Drug
Administration’s (FDA) Division of Dockets Management. The complaint alleges that
Citgo unlawfully sold cigarettes to minors and, on two occasions, failed to verify the age

of a tobacco purchaser by means of photographic identification containing the

bearer’s

date of birth, 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. CT.
impose a $500 civil money penalty against Respondent Citgo.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on June 12, 2014, CTP served t

complaint on Respondent Citgo by United Parcel Service. In the complaint and

accompanying cover letter, CTP explained that, within 30 days, Respondent sh

P seeks to

ie

ould 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
ordering it to pay the full amount of the proposed penalty.

decision
Respondent Citgo 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, 1
assume that the facts alleged in the complaint (but not its conclusory statements) are true.
Specifically:

e At Respondent’s business establishment, 2801 South Schaefer Highway, Detroit,
Michigan 48217, on March 9, 2013, at approximately 9:35 AM, an FDA-
commissioned inspector observed Respondent’s staff sell a package of Newport
Box cigarettes to a person younger than 18 years of age. The inspectors also noted
that Respondent’s staff failed to verify, by means of photo identification
containing the bearer’s date of birth, that the cigarette purchaser was 18 years of
age or older;

e Ina warning letter issued on June 27, 2013, CTP informed Respondent of the
inspector’s observations from March 9, 2013, 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 violation, the FDA could impose a civil money
penalty or take other regulatory action;

e At Respondent’s business establishment, 2801 South Schaefer Highway, Detroit,
Michigan 48217, on November 23, 2013, at approximately 3:34 PM, FDA-
commissioned inspectors documented Respondent’s staff selling a package of
Newport Box 100s cigarettes to a person younger than 18 years of age. The
inspectors also noted that Respondent’s staff failed to verify, by means of photo
identification containing the bearer’s date of birth, that the cigarette purchaser was
18 years of age or older

These facts establish Respondent’s liability under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is misbranded
if sold or distributed in violation of regulations issued under section 906(d) of the Act.

21 US.C. § 387£(d); see 21 U.S.C. § 387¢(a)(7)(B); 21 C.F.R. § 1140.1(b). The
Secretary issued the regulations at 21 C.F.R. pt. 1140 under section 906(d) of the Act. 21
U.S.C. § 387(a); see 21 U.S.C. § 387£(d)(1); 75 Fed. Reg. 13,229 (Mar. 10, 2010). Under
21 C.F.R. § 1140.14(a), no retailer may sell cigarettes or smokeless tobacco to any person
younger than 18 years of age. Under 21 C.F.R. § 1140.14(b)(1), retailers must verify, by
means of photo identification containing the bearer’s date of birth, that no cigarette or
smokeless tobacco purchaser is younger than 18 years of age.

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

For these reasons, I enter default judgment in the amount of $500 against Respondent
MKA Fuel Inc. d/b/a Citgo. 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

Juan M. Rios, M.D.,
(OI File No. 7-12-40220-9),

Petitioner,
v.
The Inspector General.
Docket No. C-14-741
Decision No. CR3322

Date: August 8, 2014

DECISION

I sustain the determination of the Inspector General (1.G.) to exclude Petitioner, Juan M.
Rios, M.D., from participating in Medicare, State Medicaid programs, and all other
federally funded health care programs for a minimum period of 15 years. I base my
decision on proof that Petitioner was convicted of a felony offense within the meaning of
section 1128(a)(3) of the Social Security Act (Act) and on evidence relating to certain
aggravating factors proven by the I.G. There is no evidence in this case relating to any
potential mitigating factors.

I. Background

Petitioner, a physician, requested a hearing to challenge the determination that I recite in
this decision’s opening paragraph and the case was assigned to me. The LG. filed a brief
and five proposed exhibits, identified as I.G. Ex. 1 — .G. Ex. 5. Petitioner filed a brief
and no proposed exhibits. The I.G. offered a reply brief and a sixth exhibit, I.G. Ex. 6, as
rebuttal to arguments that Petitioner made in his brief. I receive the I.G.’s exhibits,
including I.G. Ex. 6, into evidence.
The L.G. did not request an in-person hearing. However, Petitioner requested one and
offered his own testimony. Petitioner contends that his testimony is necessary in order to
show how court-ordered restitution was calculated in the case that led to Petitioner’s
conviction. I do not find that Petitioner has offered a sufficient basis to introduce his
testimony into the record and I deny his request.

First, in a pre-hearing order that I issued on March 24, 2014, I specifically directed each
party to reduce any and all proposed testimony to writing. Petitioner did not comply with
that order nor did he explain why he failed to do so. Second, Petitioner has not
established that he is qualified to interpret the order of the court that sentenced him. The
order of restitution is part of the judgment of conviction that was entered against
Petitioner by the United States District Court for the Southern District of Illinois. I.G.
Ex. 1. Petitioner is neither an official of that court nor is he vested with authority by the
court to explain or interpret the court’s records. Any testimony he would offer
attempting to do so would be irrelevant by virtue of Petitioner’s lack of qualification.
Finally, even if Petitioner were qualified to testify concerning the restitution order, I
would find his testimony to be irrelevant. The restitution that Petitioner was ordered to
pay relates to an aggravating factor that addresses the financial impact of Petitioner’s
crimes. But restitution is not, in and of itself, at issue here. The issue, rather, is what
financial impact Petitioner’s crimes had and that is spelled out both in the indictment to
which Petitioner pled guilty and to the plea agreement that Petitioner signed and in which
e admitted his guilt.

IL. Issues, Findings of Fact and Conclusions of Law

A. Issues
The issues here are: whether Petitioner was convicted of a criminal offense within the
meaning of section 1128(a)(3) of the Act; and whether the 15-year exclusion imposed
against him by the I.G. is reasonable.

B. Findings of Fact and Conclusions of Law
Section 1128(a)(3) of the Act mandates the exclusion of any individual who is convicted

of a felony, committed after August 21, 1996, that relates to fraud, theft, embezzlement,
breach of fiduciary responsibility or other financial misconduct, in connection with the

' In his brief the I.G. asserted incorrectly that he had imposed a 13-year exclusion.
Subsequently, the I.G. advised me that he had erred and that he was seeking to affirm the
15-year exclusion that he had imposed originally against Petitioner. I afforded Petitioner
the opportunity to object and Petitioner did so. I find no reason to limit the exclusion in
this case due to the I.G.’s error. Therefore, I evaluate the reasonableness of a 15-year
exclusion based on the factors that I discuss below.
delivery of a health care item or service. Stated simply this section is intended to
mandate the I.G. to exclude anyone who is convicted of health care-related financial
felonies directed against programs other than the Medicare and State Medicaid programs.
Crimes directed against those programs are covered by another section of the Act, section
1128(a)(1).

The evidence in this case proves unequivocally that Petitioner was convicted of a felony
as is described at section 1128(a)(3).” Petitioner pled guilty to Counts 1, 2, 3, 4 and 6 of
a Superseding Indictment that had been issued against him. I.G. Ex. | at 1. Count | of
the Indictment explicitly charged Petitioner with the federal felony offense of health care
fraud. 1.G. Ex. 4 at 1-4. In pleading guilty Petitioner admitted to the following facts:

e He devised a scheme to defraud health care benefit programs of between $400,000
and $1 million.

e In furtherance of his scheme, Petitioner ordered a series of 10 days of physical
therapy sessions for all of his patients who were covered by a health insurance
carrier knowing that many of his patients would not receive all of the services that
were being billed.

e Petitioner was not always present when physical therapy services were being
provided and, furthermore, many of these services were provided by unqualified
individuals. However, Petitioner billed for the services as if a qualified individual
had provided them.

e Petitioner directed the creation of false medical bills, approved submission of false
medical bills to insurance carriers, and requested payment for services that he
knew that neither he nor any member of his staff had provided.

e Petitioner provided false physical therapy progress notes to insurance carriers in
order to further his scheme.

1G. Ex. 3 at 1 — 2. Petitioner also admitted, as an essential element of his crime, that his
fraudulent scheme was in connection with the delivery or payment for health care
benefits, items or services. I.G. Ex. 2 at 5.

These admitted facts establish all of the elements of an 1128(a)(3) crime. They establish
that Petitioner was convicted of a felony, that the felony involved fraud perpetrated

> Petitioner was charged with, and pled guilty to perpetrating a scheme that began in
1995 and that continued through 1999. Obviously, some of the crimes that Petitioner
committed transpired before August 21, 1996. But, others occurred after that date.
against health care insurers, and that the crime was committed in connection with the
delivery of health care items or services.

Petitioner acknowledges that he was convicted of a felony but asserts that the I.G. failed
to prove that the facts show that he committed any crime in connection with the delivery
of a health care item or service. Petitioner asserts that his actions were: “peripheral, non-
specific[,] and never supported by any factual basis.” Petitioner’s brief at 2.> Amplifying
on that assertion, Petitioner argues that the I.G. has not offered evidence establishing the
nature of his crimes and that, absent such evidence, there can be no basis for finding that
ie committed any crimes in connection with the delivery of health care items or services.

I disagree, emphatically. The facts that Petitioner admitted to are ample basis for
concluding that he committed crimes of a financial nature that were in connection with
ealth care items or services.

Now, Petitioner seems to be arguing that he was not really guilty of these crimes, or that
¢ pleaded guilty for the purposes of obtaining closure, but in the absence of any
evidence proving his actual guilt. Evidently, he would litigate before me the basis for his
conviction. That is impermissible. 42 C.F.R. § 1001.2007(d). The authority to exclude
pursuant to section 1128(a)(3) derives from Petitioner’s conviction. The issue of his guilt
was settled when Petitioner pled guilty. The elements of Petitioner’s crime were
established by the indictment to which he pled guilty and by Petitioner’s plea agreement
in which he explicitly admitted all of the elements of his crimes and the details of many
of them.

The minimum exclusion period that must be imposed against an individual who is
convicted of a crime within the meaning of section 1128(a)(3) is five years. Act, section
1128(c)(3)(B). Here, the I.G. imposed an exclusion of at least 15 years and Petitioner has
challenged the length of that exclusion. I therefore must decide whether an exclusion of
greater than five years — at least 15 years in this case — is reasonable.

The purpose of any exclusion imposed by the LG. is remedial. The intent is to assure that
federally funded programs and the beneficiaries and recipients of program funds are
protected from individuals who have established by their conduct that they are
untrustworthy. The issue that I must decide in any case where the length of exclusion is
at issue is: how long an exclusion is reasonably necessary, given the facts of the case, to
protect the programs and their beneficiaries and recipients?

> Petitioner did not consecutively number the pages in his entire Informal Brief.
Citations are to the page number in the written brief, which Petitioner named his “Reply
Brief.”
The Secretary of the United States Department of Health and Human Services has
published regulations governing the length of exclusions imposed for more than the
minimum five-year period. These regulations function as rules of evidence that
determine what evidence is relevant to the issue of trustworthiness. For exclusions
imposed pursuant to section 1128(a)(3) of the Act, the relevant regulation is found at 42
C.F.R. § 1001.102. Subsection (b) of this regulation enumerates various aggravating
factors, which if present, may be used to lengthen an exclusion beyond the five-year
minimum period. Subsection (c) enumerates various mitigating factors, which if present,
may be used to offset aggravating evidence and, possibly, to reduce an exclusion down to
as few as five years.

The 1.G. offered evidence that establishes the following aggravating factors:

e Petitioner’s crimes resulted in a loss to a government program or other entities of
at least $5,000. 42 C.F.R. § 1001.102(b)(1). In support, the LG. relies on
evidence that Petitioner was ordered to pay restitution of more than $300,000.

1.G. Ex. 1 at 5. That is certainly the case, but even more significant, Petitioner
admitted to devising a scheme to defraud health insurers of between $400,000 and
$1 million. IG. Ex. 3 at 1-2.

Petitioner attempts now to minimize the impact of his crimes by asserting that the
restitution figures were, in effect, fictitious numbers that were imposed on him by
the sentencing court and that these numbers may have “double counted” the
financial impact of some of his crimes. Petitioner’s brief at 4. However, it is
unnecessary for me to look at the fine print of the restitution order given
Petitioner’s admission of the financial impact of his crimes.

e Petitioner committed the acts that resulted in his conviction, or similar acts, over a
period of one year or longer. 42 C.F.R. § 1001.102(b)(2). In fact, Petitioner
admitted to perpetrating his scheme beginning in 1995 and through 1999, a period
of more than four years. I.G. Ex. 3 at 1—2.4

e Petitioner was incarcerated as a result of his conviction. 42 C.F.R.
§ 1001.102(b)(5). Petitioner was sentenced to a term of 30 months’ imprisonment

* The fact that Petitioner may have engaged in criminal activity prior to August 21, 1996
is no bar to my considering those crimes as aggravating evidence. There is a de facto
“statute of limitations” in the Act barring exclusion for crimes that were committed prior
to August 21, 1996. But, that bar does not relate to the issue of trustworthiness. It has
long been settled that evidence that relates to trustworthiness may be considered even if
that evidence does not relate, strictly speaking, to the acts that are the statutory basis for
exclusion.
for his criminal scheme to defraud health insurers and other entities. 1.G. Ex. | at
2.

Additionally, the LG. asserts that there is evidence that establishes the presence of a
fourth aggravating factor. According to the LG., Petitioner was the subject of an adverse
action (revocation of his State medical license and controlled substance license) that was
based on the same facts that underlie his criminal conviction. That, according to the I.G.,
establishes the presence of the aggravating factor identified at 42 C.F.R.

§ 1001.102(b)(9).

Petitioner concedes that his State licenses to practice medicine and prescribe controlled
substances were revoked and does not deny that these revocations are the consequence of
an adverse action. But, he contends that there is no proof that the revocations are based
on the same facts as are the basis for his criminal conviction. Petitioner’s brief at 5.

The LG. rebutted that assertion with I.G. Ex. 6. That exhibit is a Complaint filed against
Petitioner in the Illinois Department of Professional Regulation that charges him with the
identical crimes to which he pled guilty. Subsequently, the Department of Professional
Regulation adopted an order revoking Petitioner’s physician’s license and license to
prescribe controlled substances. I.G. Ex. 5. It is evident that the order revoking these
licenses is premised on the complaint and on the facts underlying Petitioner’s
conviction.>

I find that the evidence that relates to the aggravating factors established by the LG. is
ample basis for finding the 15-year minimum exclusion to be reasonable. Petitioner is a
highly untrustworthy individual. He devised and perfected a scheme to defraud health
insurers. He perpetrated that scheme over a period of at least four years. He stole, or
sought to steal, between $400,000 and $1 million. That is evidence of concerted, willful,
and calculated criminal activity by Petitioner and it justifies as entirely reasonable the
1.G.’s exclusion determination.

Petitioner makes several arguments concerning his exclusion that I find to be either
irrelevant or without merit. He reiterates that he is not really guilty of the crimes that he
admitted previously and to which he pled guilty. He asserts that he hasn’t treated
Medicare beneficiaries for years and thus presents no danger to the program. He argues
that his relatively advanced age (67) should be considered as a factor that works to his
benefit. He contends that his skill and the quality of care that he provides have never
been an issue. He asserts that he is an excellent doctor and that the community should

> T note that Petitioner’s loss of his physician’s license due to an adverse finding would
be an independent ground to exclude him — possibly indefinitely — even if the license
revocation is based on facts entirely separate from those which underlie his criminal
conviction. Act, section 1128(b)(4).

not be deprived of his skills and the services he provides. He argues that the effect of his
exclusion will be to prevent him from earning the money he must pay as restitution.
Petitioner’s brief at 5 — 7.

None of these assertions relate to any of the regulatory mitigating factors and they are,
therefore, irrelevant. See 42 C.F.R. § 1001.102(c). Moreover, and as I have stated, at
least some of them are belied by the evidence. I am hard put to attach any credibility to
Petitioner’s professions of innocence given his previous admission of guilt.

/s/
Steve T. Kessel
Administrative Law Judge


Department of Healt!

h and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Reme

dies Division

Center for Tobacco Products,

Complainant

Gary S
d/b/a Tw

Vv.

chramer
in Liquors,

Respondent.

Docket No.
FDA Docket No.

. C-14-1290
FDA-2014-H-0783

Decision No. CR3321

Date: August 7, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP)

filed an Administrative Complaint

(Complaint) against Respondent, Gary Schramer d/b/a Twin Liquors, alleging

facts and legal authority sufficient to just
$250. Respondent did not timely answer
request an extension of time within whic
default judgment against Respondent an
penalty in the amount of $250.

ify imposing a civil money penalty of
the Complaint, nor did Respondent

to file an answer. Therefore, I enter a
order that Respondent pay a civil money

CTP began this case by serving a Complaint on Respondent and filing a copy of

the Complaint with the Food and Drug A

dministration’s (FDA) Division of

Dockets Management. The Complaint al

leges that Respondent’s staff unlawfully

sold cigarettes to minors and failed to verify that a cigarette purchaser was of

sufficient age, thereby violating the Feder:

al 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 $250.
On June 18, 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, 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 Twin Liquors, an establishment that sells tobacco
products and is located at 975 North Farnsworth Avenue, Aurora, Illinois
60505. Complaint § 3.

e During an inspection of the establishment conducted on July 26, 2013, an
FDA-commissioned inspector observed that “a person younger than 18
years of age was able to purchase a package of Newport Box cigarettes...
at approximately 1:43 PM [.]” The inspector also observed that “the
minor’s identification was not verified before the sale. ...” Complaint
q 10.

e¢ On September 5, 2013, CTP issued a Warning Letter to Twin Liquors
explaining that the inspector’s July 26, 2013 observations constituted
violations of regulations found at 21 C.F.R. § 1140.14(a) and (b)(1). In
addition to describing the violations, 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 violations. The letter
also stated that it was Respondent’s responsibility to comply with the law.
Complaint § 10.

e The FDA did not receive a response to the Warning Letter, but delivery
records show that an individual named “Gary” received it on September 6,
2013. Complaint § 11.
¢ On December 28, 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 Pall Mall
Menthol cigarettes . . . at approximately 12:31 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 a 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, Respondent violated 21 C.F.R. § 1140.14(a) on July 26, 2013, and
December 28, 2013, when its staff sold cigarettes to minors. Respondent also
violated 21 C.F.R. § 1140.14(b)(1) during the July 26, 2013 transaction, when its
staff did not verify, by checking the minor’s photographic identification, that a
cigarette purchaser was 18 years of age or older. Therefore, Respondent’s actions
and omissions 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