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

Eric Senat, M.D.,
(OI File No.: H-14-4-2782-9),

Petitioner,
v.
The Inspector General.
Docket No. C-15-1689
Decision No. CR4320

Date: October 14, 2015

DECISION

Dr. Eric Senat requested a hearing to dispute a 13-year exclusion from participation in
Medicare, Medicaid, and all federal health care programs that the Inspector General for
the Department of Health and Human Services (IG) imposed on him. Dr. Senat conceded
that he is subject to exclusion based on his felony criminal conviction for an offense
related to fraud or other financial misconduct involving the delivery of a health care item
or service, and that various circumstances surrounding his conviction serve as
aggravating factors to lengthen his exclusion beyond the statutorily required five-year
minimum period. However, Dr. Senat asserts that the length of exclusion ought to be
reduced based on his cooperation with law enforcement during his prosecution, prompt
payment of restitution, previous services provided to under privileged patients, and the
sentencing judge’s decision to impose a term of incarceration for a period below the
minimum directed by federal sentencing guidelines. Because Dr. Senat did not prove the
existence of any mitigating factors enumerated in the regulations and the IG proved that
four aggravating factors are present in this case, Dr. Senat’s 13-year exclusion is not
unreasonable. Therefore, I affirm that exclusion.
I. Background and Procedural History

In a January 30, 2015 letter, the IG informed Dr. Senat that he was being excluded from
participation in Medicare, Medicaid, and all federal health care programs for a minimum
period of 13 years pursuant to 42 U.S.C. § 1320a-7(a)(3). The IG advised Dr. Senat that
the exclusion was based on his felony conviction in the United States District Court for
the Southern District of New York (U.S. District Court) of a criminal offense related to
fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial
misconduct either: in connection with the delivery of a health care item or service,
including the performance of management or administrative services relating to the
delivery of such items or services; or with respect to any act or omission in a health care
program (other than Medicare and a state health care program) operated or financed by
any federal, state, or local government agency. The IG imposed an exclusion in excess of
the minimum statutory period of five years because of the following aggravating
circumstances:

1. A federal court ordered Dr. Senat to pay approximately $324,700 in restitution to
multiple private insurance companies;

2. Dr. Senat committed criminal acts from about March 2006 to about January 2013;
3. A federal court sentenced Dr. Senat to 15 months of incarceration; and

4. The Office of Workers’ Compensation Program debarred Dr. Senat from
participation in the Federal Workers Compensation program.

IG Exhibit (Ex. ) 1 at 1-2.

On March 19, 2015, Dr. Senat, through counsel, requested a hearing to dispute the length
of the exclusion. Dr. Senat argued that the 13-year exclusion period is unreasonable
because there are mitigating factors present, which should reduce the exclusion period to

five years. Dr. Senat identified the following three mitigating factors:

1. Dr. Senat’s cooperation with federal authorities resulted in the investigation of
another case;

2. Dr. Senat is one of the few African American Board Certified Orthopedic
Surgeons in his community, and serves many disadvantaged people; and

3. Dr. Senat “had an emotional condition before or during the commission of the
offense that reduced his culpability.”

Request for Hearing at 3.
On April 15, 2015, I held a telephonic prehearing conference in this case, the substance of
which I summarized in my April 17, 2015 Order and Schedule for Filing Briefs and
Documentary Evidence. See 42 C.F.R. § 1005.6. The IG filed his brief together with
nine exhibits (IG Exs. 1-9). Dr. Senat submitted his brief (P. Br.) together with two
exhibits (P. Exs. 1-2). The IG submitted a reply brief (IG Reply).

II. Decision on the Record

Neither party objected to any of the proposed exhibits in this case. Therefore, I admit all
of them into the record.

Dr. Senat requested that I permit him to testify at a hearing in this case. P. Br. at 7-9.
Although the IG objected to this (IG Reply at 3-4), I gave Dr. Senat 21 days “to submit
his complete, written direct testimony as an exhibit in lieu of in-person testimony. See
42 C.F.R. § 1005.16(b).” July 27, 2015 Order. However, Dr. Senat has not submitted his
written direct testimony or any request for additional time to submit that testimony. As a
result, I consider the record closed in this case and issue this decision based on the
written record. See Civil Remedies Division Procedures § 19(d).

III. Issues

The issues in this case are limited to determining if there is a basis for exclusion and, if
so, whether the length of the exclusion imposed by the IG is unreasonable. 42 C.F.R.
§ 1001.2007(a)(1).

IV. Jurisdiction
Ihave jurisdiction to adjudicate this case. 42 U.S.C. § 1320a-7(f)(1); 42 C.F.R. § 1005.2.
V. Findings of Fact, Conclusions of Law, and Analysis’

A. Dr. Senat pled guilty to one count of Health Care Fraud in violation of
18 U.S.C. § 1347, and the U.S. District Court sentenced Dr. Senat to serve 15
months in prison and ordered him to pay $324,726.05 in restitution.

Dr. Senat was a physician licensed to practice medicine in New York State commencing
in 1987. IG Ex. 2 at 1; IG Ex. 9 at 5, 7-8, 10, 14. On February 5, 2014, the United States
Attorney for the Southern District of New York filed an Information with the U.S.
District Court charging Dr. Senat with one count of Health Care Fraud under 18 U.S.C.

§ 1347. IG Ex. 3. On February 5, 2014, Dr. Senat signed a plea agreement and pled

' My findings of fact and conclusions of law are set forth in italics and bold font.
guilty to the charge in the Information, and the U.S. District Court accepted the plea. IG
Ex. 4 at 6, 24-25, and 37. On July 31, 2014, the U.S. District Court sentenced Dr. Senat
to 15 months in prison and, on August 6, 2014, ordered Dr. Senat to pay restitution in the
amount of $324,726.05 to numerous victims, including the United States Department of
Labor, Office of Workers’ Compensation Programs. IG Ex. 6; IG Ex. 7 at 29. On
August 6, 2014, the U.S. District Court also entered its written Judgment in a Criminal
Case. IG Ex. 5.

B. The IG proved each of the required elements under 42 U.S.C. § 1320a-7(a)(3);
therefore, there is a basis to exclude Dr. Senat.

The IG excluded Dr. Senat based on 42 U.S.C. § 1320a-7(a)(3). The essential elements
necessary in this case to support the IG’s exclusion are: (1) Dr. Senat must have been
convicted of a federal felony offense; (2) the felonious conduct must have occurred after
August 21, 1996; and 3) the felony offense must have been based on conduct relating to
fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial
misconduct in connection with the delivery of a health care item or service. 42 C.F.R.

§ 1001.101(c).

Dr. Senat does not dispute that the IG’s exclusion under 42 U.S.C. § 1320a-7(a)(3) is
warranted. P. Br. at 2 (“I do not disagree with the .G.’s argument that I must be
excluded for my conviction for Health Care Fraud.”); see also Request for Hearing at 1
(seeking a hearing only on the issue as to whether the length of exclusion is too long).

In addition to Petitioner’s concession that exclusion is warranted, the record supports the
1G’s determination that a mandatory exclusion under 42 U.S.C. § 1320a-7(a)(3) must be
imposed. Dr. Senat was convicted of a criminal offense and that offense was a felony.
An individual is “convicted” of a criminal offense “when a judgment of conviction has
been entered against the individual . . . by a Federal . . . court”; “when there has been a
finding of guilt against the individual . . . by a Federal . . . court”; or “when a plea of
guilty . . . by the individual . . . has been accepted by a Federal . . . court.” 42 U.S.C.

§ 1320a-7(i). In the present case, the record shows that Dr. Senat has had a judgment of
conviction entered against him (IG Ex. 5), that the U.S. District Court made a finding of
guilt against him (IG Ex. 5 at 1), and that Dr. Senat’s plea of guilt was accepted by the
US. District Court. IG Ex. 4 at 6, 24-25, 37. Further, Dr. Senat was convicted of
violating 18 U.S.C. § 1347, which is a Class D felony because a violation of that statute
has a maximum term of imprisonment of ten years. 18 U.S.C. §§ 1347, 3559(a)(4).

Dr, Senat’s criminal conduct occurred between 2006 and 2013. IG Ex. 3 at 1; IG Ex. 4 at
33; IG Ex. 7 at 27. Therefore, the conduct occurred after August 21, 1996.
Dr. Senat’s offense involved fraud or other financial misconduct, in connection with the
delivery of a health care item or service. The charge to which Dr. Senat pled guilty stated
his conduct as follows:

From at least in or about March 2006 through at least in or
about January 2013, in the Southern District of New York and
elsewhere, ERIC SENAT, the defendant, knowingly and
willfully did execute, and attempt to execute, a scheme and
artifice to defraud a health care benefit program, and to
obtain, by means of false and fraudulent pretenses,
representations, and promises, money and property owned by,
and under the custody and control of, a health care benefit
program, in connection with the delivery of and payment for
health care benefits, items, and services, to wit, SENAT
fraudulently billed health care benefit programs for medical
treatment that he did not perform.

IG Ex. 3 at 1. As stated more specifically in his own words while pleading guilty to the
charge against him:

I certified that I had personally performed medical procedures
when I did not perform those procedures myself. I then
submitted bills for those procedures to healthcare benefit
programs with the intent that the bills be paid. I knew at the
time that I did this -- I knew at the time that I did this that it
was unlawful. This occurred between 2006 and 2013... .
The procedures were performed by my physician’s assistant.

IG Ex. 4 at 32-33.

Therefore, I conclude that Dr. Senat is subject to a mandatory exclusion under 42 U.S.C.
§ 1320a-7(a)(3).

C. The presence of four aggravating factors and the absence of any mitigating
factors justify excluding Dr. Senat for a period of 13 years.

Because I have concluded that a basis exists to exclude Dr. Senat pursuant to 42 U.S.C.
§ 1320a-7(a)(3), Dr. Senat must be excluded for a minimum period of five years.

42 U.S.C. § 1320a-7(c)(3)(B). While the IG must impose the five-year minimum
mandatory term of exclusion, the IG is authorized to lengthen that term if certain
aggravating factors exist. See 42 C.F.R. § 1001.102. Those aggravating factors are
detailed at 42 C.F.R. § 1001.102(b)(1)-(9). The IG added eight years to Dr. Senat’s
exclusion based on the presence of four aggravating factors: 42 C.F.R.
§§ 1001.102(b)(1) (the acts resulting in the conviction caused a financial loss to a
government program of $5,000 or more); (b)(2) (the acts resulting in the conviction were
committed over a period of one year or more); (b)(5) (the sentence imposed by the court
included incarceration); and (b)(9) (an adverse action taken by a federal agency, based on
the same circumstances that serve as the basis for imposing the exclusion).

I must uphold the length of exclusion as long as it is not unreasonable. 42 C.F.R.

§ 1001.2007(a)(1)(ii). This means that: “‘So long as the amount of time chosen by the
[JIG is within a reasonable range, based on demonstrated criteria, the ALJ has no
authority to change it under this rule. We believe that the deference § 1001.2007(a)[]
grants to the []IG is appropriate, given the []IG’s vast experience in implementing
exclusions under these authorities.” 57 Fed. Reg. 3298, 3321 (Jan. 29, 1992).

Dr. Senat does not dispute that the aggravating factors relied on by the IG exist. P. Br.

at 3. Dr. Senat, however, argues that the IG has placed too much weight on these factors
resulting in a length of exclusion that is too long. P. Br. at 3-6. Both parties recognize
that it is the quality of the aggravating (or mitigating) factors that is most important when
considering the length of exclusion, and not the sheer number of aggravating factors that
are present in a given case. As stated in the preamble to the final rule establishing the
exclusion regulations:

We do not intend for the aggravating and mitigating factors to
have specific values; rather, these factors must be evaluated
based on the circumstances of a particular case. For example,
in one case many aggravating factors may exist, but the
subject’s cooperation with the []IG may be so significant that
it is appropriate to give that one mitigating factor more
weight than all of the aggravating. Similarly, many
mitigating factors may exist in a case, but the acts could have
had such a_ significant physical impact on program
beneficiaries that the existence of that one aggravating factor
must be given more weight than all of the mitigating. The
weight accorded to each mitigating and aggravating factor
cannot be established according to a rigid formula, but must
be determined in the context of the particular case at issue.

57 Fed. Reg. at 3314-3315.

As indicated by the analysis below, I conclude that each of the aggravating factors
present in this case is significant. Further, there are no mitigating factors cognizable
under the regulations. Therefore, based on the cumulative significant aggravating factors,
I cannot conclude that the IG’s determination to impose a 13-year exclusion is
unreasonable.
1. Dr. Senat’s criminal acts caused a loss of $324,726.05 to government
programs and other entities.

The IG has sufficiently demonstrated that the acts resulting in Dr. Senat’s conviction
caused a loss to a government program and to other entities of $5,000 or more.

42 C.F.R. § 1001.102(b)(1). The record shows that the U.S. District Court ordered Dr.
Senat to pay $324,726.05 in restitution to the United States Department of Labor’s
workers’ compensation office, to the New York State Insurance Fund, and numerous
private insurance programs. IG Ex. 5 at 5-6; IG Ex. 6. It is well-established that an
amount ordered as restitution constitutes proof of the amount of financial loss. See,
e.g., Juan de Leon, Jr., DAB No. 2533, at 5 (2013).

I consider the size of the financial loss here a significant aggravating factor that compels
a period of exclusion longer than the five-year minimum. Loss is an “exceptional
aggravating factor” when, as here, the loss is “very substantially greater than the statutory
standard.” Jeremy Robinson, DAB No. 1905 (2004); Donald A. Burstein, Ph.D., DAB
No. 1865 (2003). The financial loss in this case, which is approximately 65 times greater
the minimum needed to support an increase to the exclusion period, strongly supports a
lengthy exclusion. See Anderson v. Thompson, 311 F.Supp.2d 1121, 1130 (D. Kan.
2004).

Dr. Senat asserts that I should consider his prompt repayment of full restitution as a
mitigating factor. P. Br. at 4-5. It is true that he paid full restitution before he was even
formally sentenced. P. Br. at 5; IG Ex. 7 at 19. However, I must consider the full
amount of loss when determining the weight I will give to this aggravating factor without
regard to any restitution payments. See 42 C.F.R. § 1001.102(b)(1).

Dr. Senat also asserts that although he billed for physician services when physician
assistants provided those services, patients were always provided with appropriate
medical care and there was never an allegation that the medical services billed for were
not provided. P. Br. at 5, 10. During sentencing, the U.S. District Court dealt with this
issue as follows:

Let me suggest this: To the extent there is a dispute, I am not
sure I need to resolve it for this sentencing because no one is
disputing that Dr. Senat’s conduct was criminal, what he did
by submitting for work that he himself did not do. Similarly
there does not seem to be a dispute about the actual loss
figure, intentional or intended. So the issue is: Is it bad
because it is this species of fraud, or is it bad because it is this
first and second species of fraud? So I understand that.
IG Ex. 7 at 16. I agree with the court that Dr. Senat committed fraud and whether it was
fraud involving providing no services or for overbilling for the services provided, it is
still fraud. Therefore, I do not attach importance to the argument Dr. Senat has made.

2. Dr. Senat committed his criminal acts from March 2006 to January 2013.

The IG has also demonstrated that the acts resulting in the underlying conviction
occurred over a period of one year or more. 42 C.F.R. § 1001.102(b)(2). The U.S.
District Court accepted Dr. Senat’s guilty plea to a Health Care Fraud offense that
commenced at least in March 2006 and ended in January 2013. IG Ex. 3 at 1; IG Ex. 4 at
33; IG Ex. 7 at 27. Therefore, Dr. Senat’s involvement in the scheme was for more than
one year.

The purpose of this aggravating factor “is to distinguish between petitioners whose lapse
in integrity is short-lived from those who evidence a lack of such integrity over a longer
period of time.” Donald A. Burstein, Ph.D., DAB No. 1865, at 8. The fact that Dr. Senat
engaged in illegal conduct for a period of time that is six to seven times longer than the
minimum one year required for aggravation means that this aggravating factor provides
strong support for a lengthy exclusion. See Anderson, 311 F.Supp.2d at 1,130. During
sentencing, the U.S. District Court was concerned by the length of Dr. Senat’s criminal
activity:

This is not a buy-and-bust situation or a fe s
situation. This was conscious involvement in obviously
criminal activity over a period of nearly seven years

from 2006 to 2013.

IG Ex. 7 at 27. I share this concern over Dr. Senat’s prolonged lack of integrity and
believe that this aggravating factor supports the 13-year exclusion in this case.

3. The U.S. District Court sentenced Dr. Senat to a 15-month term of
incarceration.

The IG has also proven that the U.S. District Court sentenced Dr. Senat to incarceration.
42 C.F.R. § 1001.102(b)(5). The U.S. District Court sentenced Dr. Senat to 15 months of
incarceration. IG Ex. 5 at 2; IG Ex. 7 at 29. Dr. Senat argues that it is significant that the
USS. District Court sentenced Dr. Senat to a term of imprisonment that was less than the
minimum under the sentencing guidelines. P. Br. at 6.

It is true that the minimum period of incarceration for Dr. Senat’s offense was 24 months
and the U.S. District Court reduced the term to 15 months. IG Ex. 7 at 27,29. Further, I
believe this is important because the U.S. District Court’s intentional deviation from the

sentencing guidelines evidences the court’s view that Dr. Senat’s conduct, while serious,
was somehow less so than other defendants convicted of the same offense. Cf. Anderson,
311 F.Supp.2d at 1,130 (holding that a sentence determined under the U.S. Sentencing
Guidelines “cannot be interpreted as the sentencing court’s view of [the excluded
individual’s] character or untrustworthiness.”). However, I must consider that despite
this, a prison sentence of as little as nine months is relatively substantial for exclusion
purposes. Jason Hollady, M.D., DAB No. 1855, at 12 (2002). Dr. Senat’s sentence is
longer than that and represents a substantial period of time, which shows the seriousness
of his offense. Accordingly, this aggravating factor provides further support for the IG’s
decision to increase the exclusion beyond the five-year minimum exclusion period to 13
years.

4. The United States Department of Labor excluded Dr. Senat from
participating in the Federal Employees’ Compensation Act program
as a provider of medical services based on his criminal conviction in
the U.S. District Court.

I conclude that an enlargement of the period of Dr. Senat’s exclusion is also not
unreasonable given the presence of the aggravating factor that the United States
Department of Labor excluded him from being a medical provider in its Federal
Employees’ Compensation Act program. The exclusion notice expressly references Dr.
Senat’s conviction in the U.S. District Court as the reason for the exclusion. Further, the
exclusion notice states that the conviction “was based on fraudulent activities relating to
the [Federal Employees’ Compensation Act.]” IG Ex. 8.

There is no doubt that the Labor Department’s exclusion is an adverse action taken by a
federal agency based on the same set of circumstances in the present case and that, as
such, is an aggravating factor in this case. 42 C.F.R. § 1001.102(b)(9). In assessing this
as an aggravating factor, I consider this exclusion significant because it is based on fraud
in a federal program. Dr. Senat cannot be considered trustworthy to participate in federal
health care programs when he was committing fraud in another federal program. See
Morgan v. Sebelius, 694 F.3d 535, 538 (4th Cir. 2012) (The exclusion provision at

42 U.S.C. § 1320a-7(a)(3) “was specifically intended to protect federal programs from
untrustworthy individuals” who had committed fraud.). Accordingly, the presence of this
additional aggravating factor further justifies Dr. Senat’s exclusion for an extended
period of 13 years.

5. Dr. Senat did not prove the existence of any mitigating factors that
would justify a reduction in the length of exclusion imposed by the IG.

If the IG proves that an aggravating factor listed in the regulations exists to warrant an
exclusion of more than five years, then a petitioner may raise mitigating factors listed in
the regulations to seek a reduction in the length of exclusion. 42 C.F.R. § 1001.102(c).
Dr. Senat alleged that two mitigating factors listed in the regulations were present in his
10

case. Dr. Senat asserts that he cooperated with federal authorities and that this resulted in
the investigation of another criminal case. Request for Hearing at 3. Dr. Senat attached a
presentencing report to his hearing request as support for this mitigating factor and
indicated that paragraph 8 of the report proves his cooperation. That paragraph states:

The investigation of ERIC SENAT commenced after a
separate investigation of a postal employee who was charged
with worker’s compensation fraud. According to the case
agent, the Government planned on using SENAT as a witness
in the worker’s compensation fraud case because he treated
the postal employee, who was his patient. The information he
provided to the Government led investigators to inquire about
his billing practices. SENAT’s case is not related to the
postal employee’s workers’ compensation fraud case.

Request for Hearing Supporting Document described in the Departmental Appeals Board
E-Filing system as “Senat PSI” at 5 4 8.

Dr. Senat appears to have refined this argument in his brief by asserting that his
cooperation is evidenced by the cooperation he showed in his own criminal case. P. Br.
at 6-7. It is true that the U.S. District Court noted the following:

I note as well as counsel mentioned to me that restitution was
paid in advance and that this matter was resolved without a
tremendous effort on the part of the government as would
have happened had the government been forced to indict the
case and proceed to trial.

IG Ex. 7 at 28.

Under the regulations, it is a mitigating circumstance if an individual’s cooperation
results in additional cases being investigated. 42 C.F.R. § 101.102(c)(3)(ii). However,
the passage that Dr. Senat points to in the presentencing report indicates that an
investigation of a postal employee was commenced and Dr. Senat’s cooperation may
have led to the investigation of Dr. Senat’s billing practices. Further, Dr. Senat’s further
cooperation led to his conviction. However, I agree with the IG that the regulations
contemplate that mitigation occurs when an excluded individual cooperates with
authorities to obtain the conviction of another person and not oneself. 42 C.F.R.

§§ 1001.102(c)(3)(i) (“Others being convicted . . .”), 1001.102(c)(3)(ii) (“Additional
cases being investigated ...”). Therefore, Dr. Senat did not prove this mitigating factor.
11

Dr. Senat also asserted that he had “an emotional condition before or during the
commission of the offense that reduces his culpability.” Request for Hearing at 3. The
regulation requires that the record of the criminal proceeding demonstrate the emotional
condition that allegedly reduced the excluded individual’s culpability. 42 C.F.R.

§ 1001.102(c)(2).

A review of the record indicates that far from documenting an emotional condition
affecting Dr. Senat, Dr. Senat’s counsel told the U.S. District Court in response to a
question of Dr. Senat’s health: “There are no emotional issues for which he is under a
doctor’s care. They are all physical issues.” IG Ex. 4 at 9. Therefore, Dr. Senat did not
prove this mitigating factor.

In addition, Dr. Senat has provided many letters related to his character and his
professional conduct as a physician in order to support a reduction in the length of
exclusion. P. Br. at 3, 9-10; P. Ex. 1. However, the regulations do not allow me to
consider any other mitigating factors except those listed in the regulations. 42 C.F.R.

§ 1001.102(c). Therefore, I cannot consider Dr. Senat’s general character, as relayed by
other individuals, as a basis to reduce the length of exclusion.

Finally, Dr. Senat asserts that he is entitled to waiver of the exclusion because “he is one
of the few African American Board Certified Orthopedic Surgeons in his community, and
serves a number of needy and disadvantaged members of the community.” Request for
Hearing at 3. Although there is a provision for waiver of exclusion, I do not have the
authority to grant such a waiver. 42 U.S.C. § 1320a-7(c)(3)(B); 42 C.F.R. § 1001.1801.

VI. Conclusion

For the foregoing reasons, the IG has a basis to exclude Dr. Senat from participating in
Medicare, Medicaid, and all federal health care programs. The 13-year length of
exclusion is not unreasonable given the aggravating factors present in this case and the
lack of any mitigating factors. Therefore, I affirm the IG’s determination to exclude Dr.
Senat for 13 years.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Igor Persidsky, M.D./House Calls Medical Corporation
(NPIs: 1437188299; 1598787574),

Petitioners,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-15-2629
Decision No. CR4309

Date: October 13, 2015

DECISION

The Centers for Medicare & Medicaid Services (CMS), through its administrative
contractor, Noridian Healthcare Solutions, Inc., revoked the Medicare billing privileges
of Petitioners, Igor Persidsky, M.D. and his professional corporation, House Calls
Medical Corporation (HCMC), based on the denial of HCMC’s application for
enrollment in California’s Medicaid program and Dr. Persidsky’s termination from the
same. Petitioners requested a hearing to dispute the revocations of their Medicare
enrollments and billing privileges. For the reasons stated below, I affirm CMS’s
revocation of Dr. Persidsky’s Medicare billing privileges and reverse the revocation of
HCMC’s Medicare billing privileges.

I. Background and Procedural History

Dr. Persidsky is a physician licensed to practice medicine in California. CMS Exhibit
(Ex.) 3 at 1. After approximately 12 years as a physician participating in Medicare and
the California Medicaid program, Medi-Cal, Dr. Persidsky decided to enroll HCMC in
the Medicare and Medi-Cal programs. Dr. Persidsky submitted an enrollment application
to CMS on behalf of HCMC, and CMS approved the application. Dr. Persidsky’s
difficulties began when he submitted an application to enroll HCMC in Medi-Cal. The
California Department of Health Care Services (state agency) conducted a site-visit to
HCMC’s billing address and determined that HCMC did not have an appropriate place of
business and that Dr. Persidsky, on behalf of HCMC, had failed to disclose all individuals
with an ownership interest in HCMC. CMS Ex. 3 at 2. Asa result, on September 5,
2013, the state agency denied HCMC’s Medi-Cal enrollment application and deactivated
Dr. Persidsky’s provider number. CMS Ex. | at 1,3. The state agency warned
Petitioners that “[o]nce the appeal period is closed or you have exhausted all appeal rights
under State law . . . should this denial and deactivation be upheld, then [the state agency]
will be required to report the termination of your participation in the Medi-Cal Program

. .. [and] other government healthcare programs in which you participate may also take
action to terminate you.” CMS Ex. | at 4.

Petitioners appealed the state agency’s decision in a September 27, 2013 letter. Dr.
Persidsky stated that he believed he had corrected the identified problems or deficiencies.
CMS Ex. 3 at 24. At some point thereafter, an administrative law judge (ALJ) in the state
agency’s Office of Administrative Hearings and Appeals denied Petitioners’ appeals,
fully exhausting Petitioners’ appeal rights at the state level. CMS Ex. 3 at 4.

In a December 23, 2014 initial determination, CMS revoked Petitioners’ Medicare
enrollments and billing privileges pursuant to 42 C.F.R. § 424.535(a)(12) (termination or
revocation of Medicaid billing privileges by a state Medicaid agency). CMS stated that it
revoked Petitioners’ billing privileges because:

[bly letter dated September an 2013, Igor Persdsky [sic] was
informed that he was terminated from the California
Medicaid program. California Medicaid confirmed that Igor
Persdsky’s appeal rights have been exhausted with respect to
his termination.

CMS Ex. 2 at 1.

Petitioners requested reconsideration on February 17,2015. CMS Ex. 3. Petitioners
explained that Dr. Persidsky submitted the incorrect enrollment form to Medi-Cal and
compounded his mistake by misunderstanding certain principles of corporate ownership,
which began the series of events that led the state agency to deny HCMC’s Medi-Cal
enrollment application and terminate Dr. Persidsky’s Medi-Cal provider number. They
argued that CMS should exercise its discretion and choose not to terminate Petitioners’
Medicare billing privileges. Petitioners maintained that each of the factors the Secretary
of Health and Human Services (Secretary) identified as important in determining whether
a supplier should be removed from the Medicare program weighed against revoking
Petitioners’ privileges. CMS Ex. 3 at 5-9.
CMS issued a March 6, 2015 reconsidered determination upholding the revocations.
CMS Ex. 4. The hearing officer recited the identical factual basis for revocation found in
the initial determination. The sole explanation the hearing officer proffered for the
decision was that “Igor Peridsky [sic] MD had not provided evidence to show full
compliance with the standards for which you were revoked.” CMS Ex. 4 at 1.

Petitioners timely requested a hearing before an ALJ. On June 2, 2015, I issued an
Acknowledgment and Pre-Hearing Order (Order) establishing deadlines for the
submission of prehearing exchanges. In accordance with the Order, CMS filed its
prehearing exchange, which included a brief (CMS Br.) in support of summary judgment
and four exhibits (CMS Exs. 1-4). Petitioners filed a prehearing exchange consisting of a
brief (P. Br.) in opposition to summary judgment. Petitioners did not object to CMS’s
exhibits; therefore, I admit CMS Exs. 1-4 into the record.

II. Decision on the Record

My Order advised the parties that they must submit written direct testimony for each
proposed witness and that an in-person hearing would only be necessary if the opposing
party requested to cross-examine a witness. Order JJ 8-10; Civil Remedies Division
Procedures §§ 16(b), 19(b). Neither party submitted written direct testimony, and there
are no witnesses to cross-examine. Therefore, I issue a decision based on the written
record. Order § 11; Civil Remedies Division Procedures § 19(d).

III. Issue

Whether CMS had a legitimate basis for revoking Petitioners’ Medicare billing privileges
under 42 CFR. § 424.535(a)(12).

IV. Jurisdiction

Ihave jurisdiction to decide this issue. 42 C.F.R. §§ 498.3(b)(17), 498.5(1)(2); see also
42 USC. § 1395cc(j)(8).

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

Dr. Persidsky is a physician and HCMC is an entity that furnishes health care services.
Therefore, both are suppliers for purposes of the Medicare program. See 42 U.S.C.

§ 1395x(d); 42 C.F.R. §§ 400.202 (compare definition of Supplier and Provider),
410.20(b)(1). CMS may revoke the Medicare billing privileges of a supplier for any of

' My findings of fact and conclusions of law are set forth in italics and bold font.
the reasons stated in 42 C.F.R. § 424.535. Relevant to this case, CMS may revoke a
supplier’s Medicare billing privileges if:

(i) Medicaid billing privileges are terminated or revoked by a
State Medicaid Agency.

(ii) Medicare may not terminate unless and until a provider or supplier has
exhausted all applicable appeal rights.

42 CFR. § 424.535(a)(12).

1. On September 5, 2013, the state agency denied HCMC enrollment in
Medi-Cal and deactivated the Medi-Cal provider number for
Dr. Persidsky.

On January 17, 2013, a representative of the state agency conducted an onsite inspection
of HCMC in conjunction with its Medi-Cal enrollment application. In a letter dated
September 5, 2013, the California state agency notified Dr. Persidsky that it was denying
HCMC’s enrollment in Medi-Cal as a result of the onsite inspection and identified two
bases for the denial. First, the state agency stated that HCMC “failed to disclose all
individuals with ownership and control interest . . . [because] you failed to disclose that
[an individual other than Dr. Persidsky] owns 49% of shares in the business.” CMS Ex. 1
at 1. Second, the state agency stated that HCMC “failed to meet established place of
business requirements... .” CMS Ex. | at 2. Therefore, the state agency denied
HCMC’s enrollment in Medi-Cal and imposed a three-year bar on its reapplication. CMS
Ex. | at 3. Further, due to that denial, the state agency deactivated Dr. Persidsky’s Medi-
Cal provider number. CMS Ex. | at 3.

2. CMS had a legitimate basis for revoking Dr. Persidsky’s Medicare
billing privileges under 42 C.F.R. § 424.535(a)(12) because the state
agency deactivated Dr. Persidsky’s Medicaid provider number, the
deactivation has the same effect as a termination of Medicaid billing
privileges, and Dr. Persidsky has no appeal of the deactivation
pending.

Based on the state agency’s deactivation (CMS Ex. | at 3), CMS revoked Dr. Persidsky’s
Medicare billing privileges under 42 C.F.R. § 424.535(a)(12). CMS Exs. 2,4. As
discussed below, I conclude that CMS properly revoked Dr. Persidsky’s Medicare billing
privileges under section 424.535(a)(12).
a. The Department of Health Care Services administers Medi-Cal,
the California Medicaid program.

The state agency deactivated Dr. Persidsky’s Medi-Cal provider number. CMS Ex. 1.
Medi-Cal is California’s Medicaid program. See Jesusa N. Romero, M.D., DAB CR380,
at 1 n.1 (1995). The state agency, the Department of Health Care Services, administers
the Medi-Cal program. See Cal. Welf. & Inst. Code § 14000.03; Marvin Lieblein, Inc. v.
Shewry, 137 Cal.App.4th 700, 707, 40 Cal. Rptr.3d 547, 549 (2006) (“California
participates in Medicaid through the Medi-Cal program, administered by the Department
[of Health Services].”). Medi-Cal benefits are benefits that California provides to
individuals who are eligible for Medicaid under Title XIX of the Act, which established
the Medicaid program. Cal. Welf. & Inst. Code § 14005.60. Petitioner has not disputed
that Medi-Cal is California’s state Medicaid program. CMS Ex. 3 at 2 (“The California
Department of Health Care Services (““DHCS”), [is] the State Agency which administers
the Medi-Cal program . . . .). Therefore, I conclude that the state agency that deactivated
Dr. Persidsky’s Medi-Cal provider number is a state Medicaid agency within the meaning
of 42 CFR. § 424.535(a)(12).

b. For purposes of 42 C.F.R. § 424.535(a)(12), Dr. Persidsky’s
deactivation from the California Medicaid program is a
termination of his Medicaid billing privileges.

The state agency deactivated Dr. Persidsky’s provider number as a result of its denial of
HCMC’s Medi-Cal enrollment application. CMS Ex. 1 at 3. Petitioner has variously
described the action that the state agency took against him as a “termination” of his
Medicaid privileges. P. Br. at 2; CMS Ex. 3 at 4,7,9. Petitioner does not contest that he
was terminated from Medi-Cal. As previously discussed, California regulations define
“deactivate” to mean that “the provider’s number . . . shall no longer be used to bill the
Medi-Cal Program on or after the effective date of the deactivation.” Cal. Code Regs. tit.
22, § 51000.6.1 (2008).

Because I believe that the Secretary meant for the terms “terminated” and “revoked” in
section 424.535(a)(12) to describe an action that a state Medicaid agency may take that
could result in revocation of Medicare billing privileges, I find that CMS was authorized
to revoke Dr. Persidsky’s Medicare billing privileges.

The Secretary added section 424.535(a)(12) as a basis for revocation of Medicare billing
privileges so that it could “work[] in tandem” with the requirement in the Affordable
Care Act (ACA) § 6401 that each state must terminate the Medicaid billing privileges of
a provider who has been terminated from the Medicare program or another state’s
Medicaid program. 76 Fed. Reg. 5,861, 5,946 (Feb. 2, 2011). The reason that the
Secretary thought that coordination between Medicare and state Medicaid programs was
important was because “providers and suppliers whose enrollment has been terminated
by a State Medicaid program may pose an increased risk to the Medicare program.” Id.
Significantly, even though section 424.535(a)(12) as originally proposed and ultimately
promulgated only mentions terminations and revocations of Medicaid billing privileges in
the regulatory text, the preambles to the proposed and finals rules consider terminations,
revocations, and suspensions of billing privileges to be actions that permit CMS to
revoke Medicare billing privileges. Id.; 75 Fed. Reg. 58,203, 58,229, 58,242 (Sept. 23,
2010). The inclusion of suspensions in the list of actions that a state Medicaid agency
can take that could result in revocation of Medicare billing privileges indicates that the
specific name of the action taken is not dispositive under section 424.535(a)(12). Rather,
it is more important to look to the action the state Medicaid agency takes and determine if
it is essentially the same in effect as a termination or revocation. The states may use
various terms in their statutes and regulations to indicate that an individual has been
prohibited from continuing to bill a state’s Medicaid program, so a flexible approach is
required to effectuate the Secretary’s stated purpose: to remove the risk to the Medicare
program that individuals who have been terminated by a state’s Medicaid program may
pose. Based on this approach, I believe that California Medicaid deactivations have
essentially the same effect as a termination of Medicaid billing privileges for purposes of
section 424.535(a)(12) because, under California law, a deactivation is a suspension.

When the state agency notified Dr. Persidsky that it was deactivating his provider
number, it cited Cal. Welf. & Inst. Code § 14043.28(b)(1) as the basis for its action.
Section 14043.28(b)(1) states that when an application is denied as it was here, “all
business addresses of the applicant or provider shall be deactivated and the applicant or
provider shall be removed from enrollment in the Medi-Cal program by operation of
law.” (emphasis added). It was on this basis that the state agency deactivated Dr.
Persidsky’s Medi-Cal provider number and, in so doing, “removed [him] from enrollment
in the Medi-Cal program.” Significantly, California regulations define the term
“suspend” to include:

a deactivation, and means health care services, goods,
supplies, or merchandise provided, directly or indirectly, to a
Medi-Cal beneficiary shall not be reimbursed under the Medi-
Cal program until the provider is reinstated by the
Department.

Cal. Code Regs. tit. 22, § 51000.25.1. Thus, the state agency’s action is a suspension,
which has the same effect as terminating his Medicaid billing privileges.

Further, the state agency characterized its action as “the termination of [Dr. Persidsky’s]
participation in the Medi-Cal Program” and warned Dr. Persidsky that “other government
healthcare programs in which [he] participate[s] may also take action to terminate [him].”
CMS Ex. | at 4.
Therefore, I conclude that Dr. Persidsky’s deactivation from the California Medicaid
program is a termination for purposes of section 424.535(a)(12).

c. Dr. Persidsky does not have an appeal of his Medi-Cal
termination pending.

The September 5, 2013 letter informing Dr. Persidsky that the state agency was
deactivating him from the California Medicaid program stated that he had the right to an
appeal under Cal. Welf. & Inst. Code § 14043.65. The letter provided detailed
information about where to send an appeal and what information to include with an
appeal. CMS Ex. | at 3-4.

Petitioners concede that they appealed the denial and deactivation to an ALJ at the state
agency’s Office of Administrative Hearings and Appeals and that ALJ denied the appeal.
CMS Ex. 3 at 4. Dr. Persidsky does not assert that an appeal is presently pending with
the state agency. P. Br. at 2. Therefore, I conclude that Dr. Persidsky does not have an
appeal of his deactivation pending, and the deactivation may serve as a basis for a
revocation under section 424.535(a)(12).

Based on the evidence of record CMS had a legitimate basis to revoke Dr. Persidsky’s
Medicare billing privileges under 42 C.F.R. § 424.535(a)(12).

3. CMS did not have a legitimate basis to revoke HCMC’s Medicare
billing privileges under 42 C.F.R. § 424.535(a)(12) because the state
agency denied HCMC enrollment in Medi-Cal, rather than terminated
its enrollment.

CMS revoked HCMC’s Medicare billing privileges under 42 C.F.R. § 424.535(a)(12)
because Dr. Persidsky was “terminated from the California Medicaid Program” and
because “California Medicaid confirmed that Igor Persdsky’s [sic] appeal rights have
been exhausted with respect to this termination.” CMS Ex. 2 at 1. That regulation
requires as one of its elements that the supplier’s “Medicaid billing privileges are
terminated or revoked by a State Medicaid Agency.” 42 C.F.R. § 424.535(a)(12)(i).

Neither the initial determination nor the reconsidered determination identified the basis
upon which CMS believed HCMC’s Medicaid billing privileges had been terminated.
Both referred to Dr. Persidsky’s Medicaid termination, rather than HCMC’s termination.
Indeed, neither mentioned HCMC whatsoever in explaining the basis for CMS’s actions.
Both relied on the action the state agency took against Dr. Persidsky. CMS Exs. 2, 4.
Before me, CMS has not offered any explanation for why it believes HCMC’s Medicaid
privileges were terminated. Instead, CMS concedes that the state agency “denied
HCMC’s application to enroll as a provider in the Medi-Cal program... .” CMS Br. at
2. CMS distinguishes the action that the state agency took against HCMC from the
action it took against Dr. Persidsky: “at the same time [the state agency] revoked Dr.
Persidsky’s personal enrollment as a Medi-Cal provider.” CMS Br. at 2.

The state agency did not terminate HCMC’s Medi-Cal enrollment because HCMC had
not yet enrolled in Medi-Cal. The September 5, 2013 notice letter begins by stating that
the state agency “reviewed the Medi-Cal Physician Application/agreement requesting
enrollment ....” CMS Ex. | at 1 (emphasis added). In requesting reconsideration of
CMS’s initial determination, Petitioners explained that “[s]ince the year 2000, Dr.
Persidsky, as an individual has been . . . an approved preferred provider for . . . ‘Medi-
Cal,’” and in January 2012, “decided to enroll his professional medical corporation
[HCMC] in Medicare and Medi-Cal.” CMS Ex. 3 at 2. It was only following the
submission of the HCMC provider enrollment application that the state agency conducted
the onsite inspection that led it to deny HCMC’s enrollment in Medi-Cal. CMS Ex. 3 at
2. All the evidence before me suggests that HCMC was never enrolled in the Medi-Cal
program, and, therefore, could not be terminated from it.

As noted above, the term “terminated” in section 424.535(a)(12) could encompass
differently named actions that states may take that serve to remove an enrolled health
care provider or supplier from participating in a state health care program, whether the
state uses the specific term “terminate” or a similar term, such as suspend. Here,
however, without evidence that HCMC previously was enrolled in Medi-Cal, it cannot
reasonably be said that denial of an enrollment application has essentially the same effect
as termination of a provider’s enrollment.

Whereas the state agency denied HCMC’s enrollment, it “deactivat[ed] [Dr. Persidsky’s]
provider number (1437188299) ....” CMS Ex. 3 at 1. Under California regulations,
“deactivate” means “the provider’s number, including all business addresses used by the
provider to provide health care services, goods, supplies, or merchandise directly or
indirectly to Medi-Cal beneficiaries shall no longer be used to bill the Medi-Cal Program
....” Cal. Code Regs. tit. 22, § 51000.6.1 (2008) (emphasis added). In order for a
provider to “no longer” be permitted to bill Medi-Cal, it must have been permitted to do
so in the first place. HCMC was not permitted to bill Medi-Cal; indeed, seeking
permission for it to bill Medi-Cal was the entire purpose of Dr. Persidsky’s efforts. CMS
Ex. 3 at 2 (“Dr. Persidsky decided to enroll his professional medical corporation [HCMC]
in Medicare and Medi-Cal so that payment remittances would be tied to the [HCMC] tax
identification number rather than his own individual social security number.”).

Because CMS revoked HCMC’s Medicare billing privileges based on a provision that
applies only to terminations and HCMC was not terminated, CMS did not have a
legitimate basis to revoke HCMC’s Medicare billing privileges.
4. Ireject Dr. Persidsky’s various other arguments.

The bulk of the arguments that Dr. Persidsky raises before me constitute challenges to the
state agency’s denial and deactivation decisions and CMS’s exercise of discretion in
making its revocation determination. Dr. Persidsky challenges the factual basis upon
which the state agency denied HCMC’s Medi-Cal enrollment application and deactivated
his Medi-Cal enrollment. He argues that he always had an established place of business
and was at all times the sole owner of HCMC. Further, he asserts that the state agency
never should have terminated him at all, notwithstanding its decision to deny HCMC’s
Medi-Cal enrollment. P. Br. at 2-4. Dr. Persidsky’s arguments amount to collatera
attacks on the state agency’s administrative decisions. His revocation under section
424.535(a)(12) is derivative of the state agency’s action. The terms of that regulation do
not permit me to review the merits of the state agency’s decision. See Ravindra Patel,
M.D., DAB CR2171, at 6 (2010). Though he misidentifies the source, Dr. Persidsky
correctly observes that the Secretary has the discretion to terminate the Medicare billing
privileges of an individual who has been terminated by a state Medicaid program. He
argues that the Secretary’s decision, by way of CMS, to exercise that discretion does not
serve the best interests of his patients or other Medicare beneficiaries. P. Br. at 4-5.
However, I am not authorized to review whether CMS exercised its discretion wisely,
merely whether CMS acted permissibly based on the law and facts in a case. Latantia
Bussell, M.D., DAB No. 2196, at 13 (2008) (“[T]he right to review of CMS’s
determination by an ALJ serves to determine whether CMS had the authority to revoke . .
. not to substitute the ALJ’s discretion about whether to revoke.”). Rather, “[t]he ALJ’s
review of CMS’s revocation . . . is thus limited to whether CMS had established a legal
basis for its actions.” Id.

Finally, Dr. Persidsky argues that the reenrollment bar CMS imposed is unfair for all of
the reasons he previously raised. He asks that I shorten the bar, at a minimum. P. Br at
5. However, I do not have jurisdiction to consider this issue. See Patel, DAB CR2171, at
7n.5; Emmanuel Brown M.D. and Simeon K. Obeng, M.D., DAB CR2145, at 10 (2010).

III. Conclusion

For the reasons explained above, I affirm CMS’s determination to revoke Dr. Persidsky’s
Medicare billing privileges and reverse CMS’s determination to revoke HCMS’s
Medicare billing privileges.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Autumn Care Center
(CCN: 36-5481),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-907
Decision No. CR4304
Date: October 9, 2015
DECISION

In an annual health survey completed January 3, 2014, the Ohio Department of Health
(state agency) determined that Autumn Care Center (Petitioner or facility), was not in
substantial compliance with the requirements of a Medicare-participating long-term care
facility. The state agency cited seven separate deficiencies that resulted in Petitioner’s
overall noncompliance. Based on the state agency’s findings, the Centers for Medicare
& Medicaid Services (CMS) imposed a $3,510 per-instance civil money penalty (CMP)
based only on one of the cited deficiencies, specifically the determination that Petitioner
violated 42 C.F.R. § 483.25(h) because it did not provide adequate supervision to prevent
accidents. Petitioner requested a hearing before an administrative law judge to challenge
the noncompliance determination and enforcement remedy. CMS now moves for
summary judgment, which Petitioner opposes.

For the reasons set forth below, I find that the undisputed material facts of this case show
Petitioner was not in substantial compliance with Medicare participation requirements
because it did not provide adequate supervision to prevent future falls of a resident
assessed to be at high risk for falls. I also find that the per-instance CMP is reasonable.
Therefore, I grant summary judgment in favor of CMS.
I. Background and Procedural History

Petitioner is a long-term care facility in Newark, Ohio, that participates in the Medicare
and Medicaid programs. Following an annual health survey that ended January 3, 2014,
the state agency determined that Petitioner was not in substantial compliance with
Medicare participation requirements for a long-term care facility based on seven separate
deficiencies. See CMS Exhibit (Ex.) 7. The most serious deficiency, which is the only
deficiency for which CMS later imposed an enforcement remedy, was cited as the failure
to comply with 42 C.F.R. § 483.25(h), cited as Tag F-323. CMS Ex. 7 at 10-19. That
participation standard generally requires a facility to ensure that a resident’s environment
remains free from accident hazards and the resident receives adequate supervision and
protective devices to prevent accidents. 42 C.F.R. § 483.25(h). The state agency found
that Petitioner’s noncompliance with section 483.25(h) was at a scope and severity level
of “G,” meaning that there was isolated actual harm that was not immediate jeopardy.
CMS Ex. 7 at 10.

In reaching its conclusion regarding Petitioner’s noncompliance with section 483.25(h),
the state agency found that Petitioner did not provide adequate supervision to three
residents, referred to in the survey documents and this proceeding as “Resident 61,”
“Resident 63,” and “Resident 86.” According to the state agency: Petitioner did not
provide adequate supervision to Resident 61 to prevent her repeated falls despite
assessing her as being at high risk for falls; Petitioner did not provide adequate
supervision to Resident 86 to prevent physical encounters with other residents as well as
the resident’s repeated falls; and Petitioner did not provide adequate supervision to
Resident 63 to prevent her elopement from the facility. CMS Ex. 7 at 10-19.

By letter dated February 7, 2014, CMS accepted the state agency’s findings and imposed
a per-instance CMP of $3,510 for the noncompliance cited under Tag F-323 (42 CFR.

§ 483.25(h)), as well as a mandatory denial of payment for new admissions (DPNA)
effective April 3, 2014, if Petitioner did not achieve substantial compliance by that time.
CMS Ex. 4 at 2. A revisit survey on March 4, 2014, determined that Petitioner had
returned to substantial compliance effective February 10,2014. CMS Ex.5 at 2. Asa
result, in a letter dated April 14,2014, CMS rescinded the mandatory DPNA, leaving the
per-instance CMP for noncompliance with 42 C.F.R. § 483.25(h) as the only enforcement
remedy against Petitioner. CMS Ex. 6 at 1.

Petitioner then requested independent, informal dispute resolution. CMS Ex. 17. The
Michigan Peer Review Organization recommended to the state agency that the survey
findings related to Resident 86 be removed as a basis for noncompliance with 42 C.F.R.
§ 483.25(h) but otherwise recommended that the noncompliance determination be
affirmed. CMS Ex. 23 at 1. The state agency affirmed Petitioner’s noncompliance
without modification. CMS Ex. 22. Petitioner then filed a request for hearing.” CMS
timely filed its prehearing exchange, consisting of a prehearing brief (CMS Br.), witness
and exhibit lists, and 24 proposed exhibits (CMS Exs. 1-24). Petitioner also timely filed
its prehearing exchange, which included its prehearing brief (P. Br.) and nine proposed
exhibits (P. Exs. 1-9). CMS subsequently filed a motion for summary judgment (CMS
Mot. Summ. J.), and Petitioner filed an opposition (P. Opp.). CMS argues in its motion
for summary judgment that the material facts regarding Petitioner’s care of Resident 61
are undisputed and that those undisputed facts establish that Petitioner did not provide the
resident with adequate supervision to prevent her falls. CMS Mot. Summ. J. at 2-4.
Petitioner does not argue that there are facts in dispute regarding Resident 61 but instead
claims that it provided adequate supervision to Resident 61 to the maximum extent
Petitioner was authorized to do so. P. Opp. at 1-4. Petitioner contends that the
noncompliance determination should be reversed and therefore opposes summary
judgment in favor of CMS. P. Opp. at 5.

The parties have not submitted new evidence with the motion for summary judgment and
opposition but instead relied on the proposed exhibits already submitted as part of their
prehearing exchanges. Neither party filed objections to the admission of the proposed
exhibits. In the absence of any objections, I admit CMS Exs. 1-24 and P. Exs. 1-9 into
the record for consideration.

II. Statutory and Regulatory Framework

The Social Security Act (Act) establishes the minimum standards of resident care that a
long-term care facility must meet in order to participate in the Medicare and Medicaid
programs and authorizes the Secretary of Health and Human Services (Secretary) to issue
regulations implementing those statutory requirements. 42 U.S.C. §§ 1395i-3, 1396r.
Specific Medicare participation requirements for long-term care facilities are in 42 C.F.R.
Part 483. A long-term care facility must remain in substantial compliance with program

' The state agency’s letter that notified Petitioner it was affirming the noncompliance
determination after independent review was dated February 6, 2014, which is clearly an
error. See CMS Ex. 22. Petitioner requested review on February 13, 2014. CMS Ex. 17
at 1. The independent review body returned its recommendations to the state agency on
March 6, 2014. CMS Ex. 23.

> Petitioner requested a hearing based on the February 7, 2014 notice letter. Req. for
Hrg. at 1; CMS Ex. 4. Petitioner did not file a hearing request based on the final notice
letter dated April 14,2014. However, the April 14 notice letter did not change the overall
noncompliance determination or CMP that CMS imposed on Petitioner in the February 7
notice letter. Therefore, the request for hearing based on the February 7 notice letter
effectively preserved Petitioner’s challenge to the noncompliance determination and
CMS’s enforcement remedy.
requirements to participate in Medicare. 42 C.F.R. § 483.1(b). “Substantial compliance”
means “‘a level of compliance with the requirements of participation such that any
identified deficiencies pose no greater risk to resident health or safety than the potential
for minimal harm. Id. § 488.301. “Noncompliance” means “any deficiency that causes a
facility not to be in substantial compliance.” Id.

The Act authorizes the Secretary to impose enforcement remedies against a long-term
care facility if it does not comply substantially with federal participation requirements.
42 U.S.C. § 1395i-3(h)(2). The Secretary has delegated to CMS and the states the
authority to impose remedies against a long-term care facility that is not in substantial
compliance with participation requirements. State agencies survey facilities on behalf of
CMS to determine whether the facilities comply with federal participation requirements.
42 CFR. §§ 488.10-.28, 488.300-.335. Standard surveys must occur at least every 15
months, and complaints of abuse or neglect of residents in a long-term care facility may
trigger a survey sooner than a standard survey. See 42 U.S.C. § 1395i-3(g)(1)(C),
(g)(2)(A)(iil). The regulations specify the enforcement remedies that CMS may impose
if a facility is not in substantial compliance with Medicare requirements. 42 C.F.R.

§ 488.406. These remedies include: termination of a facility’s participation in the
Medicare program, closure of the facility, temporary management, denial of certain
Medicare payments, transfer of residents, state monitoring, directed plans of correction,
and various CMPs. Id. § 488.408.

CMS may impose a per-day CMP for the number of days a facility is not in substantial
compliance or a per-instance CMP for each instance of the facility’s noncompliance. Id.
§ 488.430(a). A per-instance CMP, which CMS imposed in this case, may range from
$1,000 to $10,000. Id. § 488.438(a)(2). When establishing the amount of a per-instance
CMP, CMS must consider, among other things, the seriousness of the deficiencies, which
includes whether the deficiencies posed no actual harm with the potential for more than
minimal harm that is not immediate jeopardy, actual harm that is not immediate jeopardy,
or immediate jeopardy to resident health and safety. Id. §§ 488.438(f), 488.404(b).

If CMS imposes an enforcement remedy against a long-term care facility based on a
noncompliance determination, the facility may request a hearing before an administrative
law judge to challenge the noncompliance finding and enforcement remedies. 42 U.S.C.
§§ 1320a-7a(c)(2), 1395cc(h); 42 C.F.R. §§ 488.408(g), 498.3(b)(13).

III. Issues

This case presents the following issues:

1. Whether summary judgment is appropriate;
2. Whether Petitioner was in substantial compliance with the Medicare participation
requirement in 42 C.F.R. § 483.25(h) at the time cited; and

3. If Petitioner was not in substantial compliance, whether the $3,510 per-instance
CMP imposed is reasonable.

The scope and severity determination is not reviewable in this case. An administrative
law judge may review CMS’s scope and severity findings only if a successful challenge
would affect the range of the CMP, or if CMS has made a finding of substandard quality
of care that results in the loss of approval of a facility’s nurse aide training program.

42 CFR. §§ 498.3(b)(14), 498.3(d)(10); Cedar Lake Nursing Home, DAB No. 2344, at
9-10 (2010); Aase Haugen Homes, DAB No. 2013, at 17-19 (2006). For a per-instance
penalty, the regulations provide only one range of possible penalty ($1,000 to $10,000),
so the scope and severity of any noncompliance does not affect the range of the possible
CMP. See 42 C.F.R. § 488.438(a)(2). Further, CMS’s G-level finding here does not
constitute a substandard quality of care finding?

For purposes of summary judgment in this case, my review is limited to Petitioner’s care
of Resident 61. As mentioned above, the state agency cited facts involving the care of
two other residents to support the noncompliance citation, but CMS moved for summary
judgment in this case based only on Petitioner’s care of Resident 61. See CMS Mot.
Summ. J. at 2-4. Therefore, I do not make any conclusions about Petitioner’s care of
other residents that the state agency originally included as part of the factual basis for the
citation under Tag F-323 (42 C.F.R. § 483.25(h)). As explained below, Petitioner’s care
of Resident 61 is sufficient to support the deficiency cited as well as the reasonableness
of the enforcement remedy imposed.

IV. Findings of Fact and Conclusions of Law

1. Summary judgment is appropriate.
Summary judgment is appropriate if there is “no genuine issue as to any material fact,
and the moving party is entitled to judgment as a matter of law.” Mission Hosp. Reg’!

Med. Ctr., DAB No. 2459, at 5 (2012) (citations omitted). The moving party must show
that there is no genuine dispute of material fact requiring an evidentiary hearing and that

> Substandard quality of care means one or more deficiencies related to participation
requirements under 42 C.F.R. § 483.13, resident behavior and facility practices, 42
CFR. § 483.15, quality of life, or 42 C.F.R. § 483.25, quality of care, that constitute
either immediate jeopardy to resident health or safety (level J, K, or L); a pattern of or
widespread actual harm that is not immediate jeopardy (level H or I); or a widespread
potential for more than minimal harm, but less than immediate jeopardy, with no actual
harm (level F). See 42 C.F.R. § 488.301.
it is entitled to judgment as a matter of law. Id. If the moving party meets its initial
burden, the non-moving party must “come forward with ‘specific facts showing that there
is a genuine issue for trial... .”” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475
U.S. 574, 587 (1986). “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.” Senior Rehab. & Skilled Nursing
Ctr., DAB No. 2300, at 3 (2010). A party “must do more than show that there is ‘some
metaphysical doubt as to the material facts . .. . Where the record taken as a whole could
not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue
for trial.” Mission Hosp., DAB No. 2459, at 5 (quoting Matsushita, 475 U.S. at 586).

In examining the evidence to determine the appropriateness of summary judgment, I must
draw all reasonable inferences in the light most favorable to the non-moving party. See
Brightview Care Ctr., DAB No. 2132, at 2,9 (2007); but see Cedar Lake, DAB No.
2344, at 7 (2010); Brightview, DAB No. 2132, at 10 (upholding summary judgment
where inferences and views of non-moving party are not reasonable). However, drawing
factual inferences in the light most favorable to the non-moving party does not require
that I accept the non-moving party’s legal conclusions. Cedar Lake, DAB No. 2344, at 7.

There is no genuine dispute of any material fact in this case. CMS has presented facility-
created and otherwise unchallenged evidence that Petitioner’s staff assessed Resident 61,
an 81-year-old female resident, as needing assistance from two or more persons for
walking between locations in her room as well as for walking in the corridor of the
facility. CMS Ex. 10 at 4. Staff also assessed Resident 61 as being at high risk for falls
in November 2013 and twice in December 2013, each time noting that Resident 61 had
three or more falls in the three months prior to the assessment. CMS Ex. 10 at 5. It is
undisputed that Resident 61 fell three times between July 10,2013 and December 17,
2013, and was found on the ground one additional time on September 23, 2013, although
there is no clear evidence whether she fell in the September 23 incident. CMS Ex. 10

at 14-17, 21. The responses of Petitioner’s staff to these falls are also undisputed. On
July 10, 2013, staff decided to keep Resident 61 in an area where they could monitor her
and updated her care plan to reflect that new requirement. CMS Ex. 10 at 7, 14. On
October 1, 2013, Resident 61’s physician ordered staff to place a pressure alarm around
her bed and bedside chair. CMS Ex. 10 at 11, 15. On December 17, 2013, Petitioner’s
staff requested a medication review. CMS Ex. 10, at 17.

On December 31, 2013, during the annual survey giving rise to this case, the surveyor
observed Resident 61 walking without assistance to the day lounge in the facility. None
of Petitioner’s staff was around Resident 61 to supervise her while she was walking.
CMS Ex. 20 at 5.
Petitioner has not come forward with any evidence that conflicts with CMS’s evidence or
that raises a dispute of any facts relevant to Resident 61. Petitioner also has not come
forward with any testimony from an individual present at the time of the survey, or
otherwise come forward with any documentation, to refute the surveyor’s observations.
Indeed, Petitioner has not disputed the surveyor’s observations at all in its opposition to
summary judgment. Instead, Petitioner argues that it took all of the steps that Resident
61’s family authorized facility staff to take, and in doing so, Petitioner complied
substantially with Medicare participation requirements. See P. Opp. at 1. Whether the
undisputed facts support CMS’s noncompliance determination and enforcement remedy
or not is a legal issue to decide. I find there are no issues of material fact to decide, and I
do not need to weigh any of the evidence. My decision in this case is based on
undisputed evidence, drawing all reasonable inferences in favor of Petitioner.
Accordingly, summary judgment is appropriate.

2. The undisputed evidence establishes Petitioner’s staff did not adequately
supervise Resident 61, contrary to her plan of care and her assessments,
while she walked in the facility.

The quality of care regulation set forth in 42 C.F.R. § 483.25 generally requires that a
facility ensures each resident receives the necessary care and services to attain or
maintain the resident’s highest practicable physical, mental, and psychosocial well-being
in accordance with the resident’s comprehensive assessment and plan of care. The
regulation imposes specific obligations upon a facility related to accident hazards and
accidents. It states in relevant part:

(h) Accidents. The facility must ensure that —

(1) The resident environment remains as free of accident
hazards as is possible; and

(2) Each resident receives adequate supervision and
assistance devices to prevent accidents.

42 C.F R. § 483.25(h). In this case, the state agency and CMS based the noncompliance
determination primarily on subsection 483.25(h)(2). Regarding that subsection, the
Board has explained that a facility must take “all reasonable steps to ensure that a
resident receives supervision and assistance devices that meet his or her assessed needs
and mitigate foreseeable risks of harm from accidents.” Briarwood Nursing Ctr., DAB
No. 2115, at 11 (2007) (citing Woodstock Care Ctr. v. Thompson, 363 F.3d 583, 590

(6th Cir. 2003)). The Board has also determined that accident precautions contained in a
resident’s plan of care represent a facility’s judgment about what measures are necessary
to keep the resident safe, and failure to implement such precautions supports a conclusion
that a facility did not meet its obligation under section 483.25(h)(2) to provide adequate

supervision. See Cedar Lake Nursing Home, DAB No. 2288, at 6-11 (2009), aff’d, Cedar
Lake Nursing Home v. U.S. Dep’t of Health & Human Servs., 619 F.3d 453 (5th Cir.
2010); see also St. Catherine ’s Care Ctr. of Findlay, Inc., DAB No. 1964, at 13 n.9
(2005) (“If a facility concedes that it identified a risk in the resident assessment and that it
either failed to plan for the risk or failed to follow its own plan, summary judgment may
be appropriate.”). An accident “does not, in itself, prove that the supervision or devices
provided must have been inadequate to prevent it.” Josephine Sunset Home, DAB No.
1908, at 13 (2004). However, an accident is “relevant to the extent the surrounding
circumstances shed light on the nature of the supervision being provided and its adequacy
for the resident’s condition.” St. Catherine’s Care Ctr. of Findlay, Inc., DAB No. 1964,
at 12.

Here, Petitioner’s staff was well-aware of Resident 61’s fall risk. Resident 61’s care
plan, in place since August 6, 2012, addressed her risk of falls and set a goal of “no fall
related injuries.” CMS Ex. 10 at 6. There is no dispute, nor can there be, that falls were
a foreseeable risk of harm to Resident 61 and that she needed adequate supervision to
prevent the foreseeable risk of harm from those falls. The plan of care that Petitioner’s
staff developed for Resident 61 recognized as much. CMS Ex. 10 at 6. After an incident
on July 10, 2013, where another resident pushed Resident 61 and caused Resident 61 to
all and sustain an injury to the back of her head, staff updated her care plan to include
eeping Resident 61 in an area “where staff can monitor [her].’* CMS Ex. 10 at 7, 14.

On September 23, 2013, Petitioner’s staff observed Resident 61 sitting on the floor in
another resident’s room. CMS Ex. 10 at 21. The record does not make it clear whether
Resident 61 fell or sat down. Staff happened to find Resident 61 in this position without
nowing how Resident 61 ended up in another resident’s room or documenting the cause
of her being on the ground. Facility staff continued for several days to monitor Resident
61 for any injuries from the September 23 incident, although no injuries were ultimately
ound. CMS Ex. 10 at 21. Petitioner’s staff requested that Resident 61 receive a physical
therapy screen. See CMS Ex. 10 at 7; see also CMS Ex. 10 at 21 (noting that Resident
61’s physician was notified but did not order anything new).

On October 1, 2013, at 1:45 A.M., Resident 61’s roommate reported to facility staff that
Resident 61 was on the floor of their room. CMS Ex. 10 at 15, 22. Staff observed a
laceration on Resident 61’s forehead. CMS Ex. 10 at 22. Resident 61 was unable to tell
staff what happened, but her roommate believed that Resident 61 was trying to transfer

* While it was foreseeable that Resident 61 could fall and suffer injury as a result, see
CMS Ex. 10 at 6, there is nothing in the record that suggests Petitioner’s staff should
have foreseen that another resident would push down Resident 61 and injure her.
Therefore, the July 10 incident alone does not form a basis for noncompliance.
from her rocking chair to a reclining chair without assistance. CMS Ex. 10 at 22.
Following the incident, Resident 61’s physician ordered that facility staff place pressure
alarms around Resident 61’s bed and bedside chair, which staff did. CMS Ex. 10 at 11,
15.

An assessment worksheet dated November 4, 2013, noted that Resident 61 required
supervision when walking in the hallway and for locomotion. CMS Ex. 15 at 3; P. Ex. 6
at 9. Staff reiterated that supervision requirement in a later assessment worksheet dated
December 7, 2013. P. Ex. 6 at 15. Two nursing notes on November 6, 2013, indicate
that Resident 61 ambulated unassisted, but she required at least one other person to assist
with her activities of daily living. CMS Ex. 10 at 23. On November 8, 2013, staff
assessed Resident 61 as requiring assistance from at least two people for, among other
things, transfers, walking in her room, and walking in the corridor. CMS Ex. 10 at 4. On
November 14, 2013, and again on December 14, 2013, staff assessed Resident 61 as
being at high risk for falls. CMS Ex. 10 at 5.

On December 17, 2013, Petitioner’s staff observed Resident 61 on the ground of the
hallway. Staff determined that Resident 61 had “fallen and hit handrail in corridor... .”
CMS Ex. 10 at 17. Resident 61 had bruising above and around her right eye. As a result
of the fall, staff requested a medication review for Resident 61. CMS Ex. 10 at 17. Staff
again assessed Resident 61 as being at high risk for falls. CMS Ex. 10 at 5.

On December 31, 2013, during the state agency’s survey of Petitioner’s facility, the
surveyor observed Resident 61 “ambulate into the day lounge without assistance” and the
surveyor also saw “that no staff members were present in the day lounge to supervise
her.” CMS Ex. 20 at 5. Petitioner does not dispute the surveyor’s observations.

Resident 61’s repeated falls and Petitioner’s staff finding Resident 61 on the ground on at
least three occasions demonstrate that the intended supervision and interventions in
Resident 61’s care plan were not adequately implemented, in violation of the regulatory
requirement. See 42 C.F.R. § 483.25(h)(2). If Petitioner’s staff had been providing the
adequate supervision that Resident 61’s updated care plan required, specifically to keep
her in an area “where staff can monitor” her whereabouts, they would have known what
caused Resident 61 to end up sitting on the ground in another resident’s room on
September 23, 2013, and possibly prevented it by diverting her away from the other
resident’s room. See CMS Ex. 10 at 6. The September 23 incident demonstrates that
staff was not carrying out the type of supervision that Resident 61’s care plan required in
order to mitigate harm from her foreseeable risk of falls. It was certainly foreseeable that
Resident 61 entering another resident’s room could result in harm from a fall or
altercation, or both. See CMS Ex. 10 at 14. Yet it is undisputed that staff did not keep
Resident 61 in an area where they could monitor her as her care plan required and instead
allowed her to enter another resident’s room and end up on the ground in that room for
unknown reasons.

10

Petitioner’s lack of adequate supervision of Resident 61 was not limited to September
23rd. On December 17, 2013, after staff had put in place pressure alarms, assesse:
Resident 61 repeatedly as being at high risk for falls, noted that she needed supervision
when ambulating in the hallway, and required that she be placed in an area where staff
could monitor her, Petitioner’s staff found Resident 61 unattended and unsupervised in
the hallway after falling against a handrail and sustaining a head injury. CMS Ex. 10

at 17. If Petitioner’s staff had actually implemented any of the supervision methods that
it had included in Resident 61’s medical records, then the supervision may have been
adequate to prevent the foreseeable risk of harm to Resident 61 from her falls. See Cedar
Lake Nursing Home, DAB No. 2288, at 6-7 (citations omitted). On December 17, 2013,
the fact that Petitioner’s staff found Resident 61 after she fell in the hallway, completely
unsupervised and without any explanation of the events leading to the fall, sufficiently
demonstrates that Petitioner did not provide Resident 61 with adequate supervision
despite being fully aware that Resident 61 was at high risk of sustaining injury from falls.
On December 31, 2013, the surveyor observed Resident 61 walking and sitting in the
common area without any supervision, which represented yet another occasion where
Petitioner’s staff did not provide Resident 61 with any supervision, let alone adequate
supervision, to prevent the foreseeable risk of harm from falls.

Petitioner argues that it did everything that it could to supervise Resident 61 and that the
next step would have been to restrain the resident. P. Br. at 13; P. Opp. at 6. Petitioner
goes on to assert that Resident 61’s family did not authorize the use of physical restraints,
so there was nothing more Petitioner’s staff could have done to prevent Resident 61’s
falls. P. Opp at 9; see also P. Ex. 6 at 23. Under Petitioner’s theory, it complied with the
regulatory standard because it put in place all of the supervision methods for which it was
permitted. But Petitioner’s argument overlooks two key aspects of this case.

First, Petitioner’s staff was not actually implementing the supervision that Resident 61’s
care plan and assessments called for because staff repeatedly did not have Resident 61 in
an area where they could monitor her nor did they adequately supervise her when she
walked in the hallway. See CMS Ex. 10 at 17,21. The measures Petitioner had intended
to implement were likely reasonable in light of the circumstances, but Petitioner’s staff
was not actually carrying them out and was therefore unable to provide the necessary
adequate supervision to Resident 61. For example, on December 17, 2013, Petitioner’s
staff found Resident 61 on the floor of a hallway after she fell. CMS Ex. 10 at 17. Staff
did not observe her in the hallway or monitor her movement before the fall. Staff did not
witness the fall. Rather, staff found Resident 61, already on the ground and injured and
then assessed and treated her.

Second, staff certainly did not need to restrain Resident 61 to a specific area in order to
monitor her. Petitioner’s assertion that restraints were its only remaining option is
unreasonable and a misunderstanding of the regulatory requirement. Petitioner’s staff did
not need to prevent every future fall of Resident 61 by tying her to a bed or chair in order
11

to comply with the regulation. Instead, staff needed to provide adequate supervision by
taking reasonable steps to mitigate the foreseeable risk of harm. See Briarwood Nursing
Ctr., DAB No. 2115, at 5, 11. In this case, staff should have actually carried out the
supervision required in Resident 61’s care plan and assessment as the facility determined
those measures were reasonable to address Resident 61’s high risk of falls.

I conclude that Petitioner was not in substantial compliance with the Medicare
participation requirement in 42 C.F.R. § 483.25(h) because its staff did not carry out the
steps in Resident 61’s care plan and assessments, which recognized Resident 61’s high
risk for falls, and therefore did not provide the resident with adequate supervision to
prevent the foreseeable risk of harm from falls.

3. The $3,510 per-instance CMP is reasonable.

Based on Petitioner’s noncompliance, CMS imposed a $3,510 per-instance CMP against
Petitioner. CMS Ex. 4 at 1. The factors listed in 42 C.F.R. § 488.438(f) guide whether
the CMP imposed here is reasonable. Those factors include: (1) the facility’s history of
noncompliance; (2) the facility’s financial condition; (3) factors specified in 42 C.F.R.

§ 488.404; and (4) the facility’s degree of culpability, including neglect, indifference, or
disregard for resident care, comfort or safety. Among the factors specified in section
488.404 are the scope and severity of noncompliance, the relationship of one deficiency
to another deficiency resulting in noncompliance, and the facility’s history o
noncompliance generally as well as with reference to the cited deficiencies. 42 C.F.R.

§ 488.404(b)-(c). In addition, the “absence of culpability is not a mitigating circumstance
in reducing the amount of the penalty.” 42 C.F.R. § 488.438(f)(4). Unless a facility
shows that a particular regulatory factor does not support the CMP amount, the ALJ must
sustain it. Coquina Ctr., DAB No. 1860 at 32 (2002).

The $3,510 per-instance CMP imposed in this case is in the low-to-middle range of
available CMPs, which may range from $1,000 to $10,000 per instance. See 42 CFR.
§ 488.408. Petitioner was previously cited for noncompliance with the requirement in
42 CFR. § 483.25(h), cited as Tag F-323, once before in a May 2010 survey. See CMS
Ex. 18 at 1. Petitioner has not alleged or offered evidence that its financial condition
affects its ability to pay the CMP. CMS offered financial information that Petitioner
submitted to CMS for 2012, which shows that it has adequate funding to pay the
relatively low CMP imposed in this case. CMS Ex. 19 at 41.

This case involves more than one instance where the Petitioner did not meet Medicare
participation standards with respect to Resident 61, and its staff is ultimately culpable for
the noncompliance. Once Petitioner’s staff knew of Resident 61’s high risk of falls, it
was required to plan for and carry out reasonable steps to supervise and prevent
foreseeable harm from falls. On repeated occasions, staff did not monitor Resident 61’s
whereabouts and only discovered that Resident 61 had fallen when they happened to find
12

her injured on the floor, often requiring emergency medical services to treat her injuries.
Staff documented reasonable measures to supervise Resident 61 in her care plan and
medical records, but they did not implement all of those steps and allowed Resident 61 to
walk down hallways unsupervised and at a greater risk for harm than if she was being
adequately supervised in accordance with Petitioner’s own directives. I find Petitioner’s
staff was ultimately responsible for the breakdown in providing Resident 61 with the
adequate supervision that her care plan and assessments required. In light of these
circumstances, I find that the $3,510 per-instance CMP imposed here is well-supported
by the record before me.

V. Conclusion

I conclude that the undisputed facts show Petitioner was not in substantial compliance
with Medicare participation requirements, and the CMP CMS imposed is reasonable.
CMS, therefore, is entitled to summary judgment affirming the noncompliance
determination and enforcement remedy of a $3,510 CMP.

/s/
Joseph Grow
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
(FDA No. FDA-2014-H-1516)

Complainant,
v.

Kimberly R. Wart
d/b/a Midland Rails Liquor,

Respondent.
Docket No. C-15-23
Decision No. CR4301

Date: October 8, 2015

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) initiated a $5,000 civil money penalty (CMP)
action against Respondent for unlawfully selling cigarettes to minors and failing to
verify, by means of photo identification containing a date of birth, that the purchasers
were 18 years of age or older, on three separate occasions, in violation of 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. During the hearing process, Respondent has failed to
comply with three separate judicial directions, (1) to file its pre-hearing exchange, (2) to
appear at a scheduled pre-hearing telephone conference, and (3) to show cause for failing
to appear at the scheduled pre-hearing conference. | therefore strike Respondent’s
answer and issue this decision of default judgment.

I. Procedural History

Respondent timely answered CTP’s complaint proposing the CMP and requested a
hearing. I issued an Acknowledgement and Prehearing Order (APHO) that set deadlines
for parties’ submissions, including the December 22, 2014 deadline to request that the
opposing party provide copies of documents relevant to this case. Additionally the
APHO stated that a party receiving such a request must provide the requested documents
no later than 30 days after the request.

CTP served Respondent with its request for documents on December 22, 2014. On
January 27, 2015, CTP filed a motion to compel discovery indicating that Respondent did
not respond to its request within the time limit. See 21 C.F.R. § 17.23(a). CTP also
moved to stay all deadlines citing Respondent’s production of documents as necessary to
complete its informal brief and supporting exhibits. On January 28, 2015, I extended all
deadlines and provided Respondent until February 9, 2015, to reply to CTP’s motion to
compel discovery to show that it either did comply with CTP’s December 22, 2014,
Request for Production of Documents or to explain its failure to comply with the request.

On February 19, 2015, I issued an Order granting CTP’s Motion to Compel Discovery
because Respondent failed to file any response to CTP’s Motion to Compel Discovery or
to my January 28, 2015, Order. I stated that Respondent shall comply with CTP’s
Request for Production of Documents by March 23, 2015.

On March 3, 2015, I issued an Order further extending the deadlines in the January 28,
2015 Order for a period of 30 days. Then, the Order granting CTP’s Motion to Compel
Discovery was returned in the mail. Therefore, on April 6, 2015, I reissued two prior
Orders, one granting CTP’s Motion to Compel Discovery and the other extending the
parties’ exchange deadlines. I then learned of a second address for the Respondent, and
as it had become evident that there were mail delivery issues, on May 12, 2015, I reissued
the Order granting CTP’s Motion to Compel and the Order extending the parties’
exchange deadlines.

On June 16, 2015, CTP filed a Joint Motion to Extend Deadlines. Specifically, the
Motion requested that the pre-hearing exchange deadlines in the May 12, 2015 Order be
extended an additional 30 days. In a June 18, 2015, Order I extended the pre-hearing
exchange deadlines as requested. Pursuant to that Order, CTP’s pre-hearing exchange to
Respondent was due July 27, 2015, and Respondent’s pre-hearing exchange to CTP was
due August 17, 2015.

On July 27, 2015, CTP filed its pre-hearing exchange. To date Respondent has not filed
a pre-hearing exchange.

On September 8, 2015, I issued an Order Scheduling a Pre-Hearing Conference for
September 21, 2015 at 1:00 pm Eastern Time. That Order provided a toll free telephone
number for the parties to call to appear at the telephone pre-hearing conference. At the
scheduled time, Deeona Gaskin, the attorney representing CTP, appeared at the pre-
hearing conference. Respondent did not appear for the scheduled pre-hearing telephone
conference. At that time, Ms. Gaskin moved for a default judgment as Respondent had
not appeared and had not submitted a pre-hearing exchange.

On September 22, 2015, I issued an Order informing Respondent that he had until
October 2, 2015 to show cause for his failure to appear at the scheduled pre-hearing
conference. In that Order I stated that “[f]ailure to do so may result in sanctions,
including the issuance of an Initial Decision and Default Judgment finding Respondent
liable for the violations listed in the Complaint and imposing a civil money penalty.”

To date Respondent has not submitted any explanation for his failure to appear at the pre-
hearing conference. On October 2, 2015, my office received an email from CTP stating,
in pertinent part, that:

Mr. Kimberly Wart (Respondent) recently called Deeona Gaskin and left a
message. I called Mr. Wart today .... I explained to Mr. Wart that he had
missed the Pre-Hearing Conference, and that he should contact you
immediately for details on what to do next. Mr. Wart said he could not
make long distance calls because there is a block on his phone. I told him I
would inform you of his limitations, and pass on his request that your office
callhim....”

Il. Striking Respondent’s Answer

Respondent failed to file its pre-hearing exchange, failed to appear at the scheduled pre-
hearing conference and did not respond to my Order to show cause for his failure to
appear. The record shows that Respondent did contact CTP, but he has not shown cause
for his failure to appear at the scheduled pre-hearing conference. While Respondent
informed CTP that he was unable to make long distance calls, the telephone number that
was provided to appear at the pre-hearing conference was a toll free telephone number.
Additionally, despite Respondent’s statement that he could not make long distance calls,
he was able to call and leave a message for Deeona Gaskin at CTP. Further, Respondent
could have submitted a written explanation before the pre-hearing conference stating his
concerns about his ability to appear. But, he did not. Additionally, he could have
responded to my Order to show cause following the pre-hearing conference. But, again,
he did not. There is no indication that Respondent has made any attempt to contact the
Departmental Appeals Board.

I therefore strike Respondent’s Answer, issue this default decision, and assume the facts
alleged in CTP’s complaint to be true. See 21 C.F.R. §§ 17.35(c)(3), 17.11(a). The
harshness of the sanctions I impose upon either party must relate to the nature and
severity of the misconduct or failure to comply, and I find the failure to comply here
egregious. See 21 C.F.R. § 17.35(b). Respondent failed to file its pre-hearing exchange.
Further, there is no indication Respondent made any effort to appear at the scheduled
telephone pre-hearing conference, and has not responded to my Order to show cause for
failing to appear at the pre-hearing conference. Respondent did not comply with my
orders on three occasions nor did he provide any adequate justification for not doing so.

Ill. Default Decision

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 orders. 21 C.F.R.
§ 17.11. Specifically:

e CTP previously issued a warning letter to Respondent Midland Rails Liquor on
August 18, 2011, citing violations’ of 21 C.F.R. pt. 1140 on July 18, 2011, at
Respondent’s business establishment, 10550 Ute Pass Avenue, Green Mountain
Falls, Colorado 80819;

¢ On October 1, 2013, CTP initiated a previous civil money penalty action, CRD
Docket Number C-13-1333, FDA Docket Number FDA-2013-H-1138, against
Respondent Midland Rails Liquor for three violations of 21 C.F.R. pt. 1140 within
a 24-month period. CTP alleged those violations to have occurred on July 18,
2011, and March 27, 2013;

e The previous action concluded when Kim Wart, Respondent’s authorized
representative, settled the claims on Respondent’s behalf. Mr. Wart signed an
Acknowledgment Form, dated November 4, 2013, in which he “‘admitt[ed] that the
violations . . . occurred, waiv[ed] his ability to contest the violations in the future,
and stat[ed] that he understood that the violations may be counted in determining
the total number of violations for purposes of future enforcement actions.”

' In the complaint, CTP describes the action or actions that took place at Respondent
Midland Rails Liquor’s business establishment on July 18, 2011, as both “a violation”
and as “violations.” Complaint J 10. In a previous administrative complaint dated
September 18, 2013, and attached to the present complaint, however, CTP described two
discrete violations at Respondent Midland Rails Liquor’s business establishment on July
18, 2011: a violation of 21 C.F.R. § 1140.14(a), and a violation of 21 C.F.R.

§ 1140.14(b)(1). Therefore, I will infer that CTP’s description in the present complaint
of “a violation” occurring on July 18, 2011, was a typographical error.
The Administrative Law Judge closed the case on February 27, 2014;

e During a subsequent inspection of Respondent’s business establishment, 10550
Ute Pass Avenue, Green Mountain Falls, Colorado 80819, on April 2, 2014, at
approximately 2:16 p.m., FDA-commissioned inspectors documented
Respondent’s staff selling a package of Marlboro cigarettes to a person younger
than 18 years of age. The inspectors also documented that staff failed to verify, by
means of photographic identification containing a date of birth, that the purchaser
was 18 years of age or older.

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

21 U.S.C. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b). The
Secretary of the U.S. Department of Health and Human Services issued the regulations at
21 C.F.R. pt. 1140 under section 906(d) of the Act. 21 U.S.C. § 387a-1; see 21 U.S.C.

§ 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). Under 21 C.F.R.

§ 1140.14(a), no retailer may sell cigarettes to any person younger than 18 years of age.
Under 21 C.F.R. § 1140.14(b)(1), retailers must verify, by means of photographic
identification containing a purchaser’s date of birth, that no tobacco purchasers are
younger than 18 years of age.

I conclude, therefore, that a $5,000 civil money penalty is permissible under 21 C.F.R.
§ 17.2. This order becomes final and binding upon both parties after 30 days of the date
of its issuance. 21 C.F.R. § 17.11(b).

/s/
Catherine Ravinski
Administrative Law Judge


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

(OI File No. H-15-40057-9),
Petitioner,

v.

The Inspector General.

Docket No. C-15-3112
Decision No. CR4273

Date: October 2, 2015

DECISION

I sustain the determination of the Inspector General (I.G.) to exclude Petitioner, Annacilia
Tira, from participating in Medicare and other federally funded health care programs,
including State Medicaid programs, until she regains her license to provide health care as
a certified nursing assistant in the State of Florida.

I. Background

The I.G. excluded Petitioner under the authority of section 1128(b)(4) of the Social
Security Act (Act). Petitioner requested a hearing. The I.G. filed a brief and three
exhibits, identified as I.G. Ex. 1 — I.G. Ex. 3, in support of the exclusion determination.
Petitioner filed a brief in opposition. I receive the I.G.’s exhibits into the record.
II. Issue, Findings of Fact and Conclusions of Law
A. Issue

The issue is whether the I.G. may exclude Petitioner pursuant to section 1128(b)(4) of the
Act.

B. Findings of Fact and Conclusions of Law
In relevant part section 1128(b)(4) permits the I.G. to exclude anyone:

whose license to provide health care has been revoked or suspended by any

State licensing authority . . . for reasons bearing on that individual’s or
entity’s professional competence, professional performance, or financial
integrity.

Act § 1128(b)(4)(A).

The relevant facts of this case are as follows. Petitioner was licensed to work as a
certified nursing assistant in the State of Florida. On November 6, 2014, the State of
Florida Board of Nursing issued a final order revoking Petitioner’s professional license.
1G. Ex. 3. In its order, the Board of Nursing noted that an administrative complaint had
been filed against Petitioner and that she had failed to appear to challenge that order or to
otherwise contest it. Id. at 1. The administrative complaint that was the predicate to the
order charged that Petitioner had improperly influenced a patient to either co-sign or sign
contracts to purchase automobiles for Petitioner and her daughter. I.G. Ex. 2 at 2-3. The
value of the two automobiles was cited as being close to $39,000. Id. at 3.

The evidence offered by the I.G. plainly establishes grounds to exclude Petitioner
pursuant to section 1128(b)(4)(A). The evidence proves that a disciplinary proceeding
was brought against Petitioner, that the subject of the proceeding related to Petitioner’s
financial integrity (her use of undue influence in her capacity as a certified nursing
assistant to influence a patient to co-sign or sign contracts for the purchase of
automobiles priced at nearly $39,000 for the benefit of Petitioner and her daughter), and
that the proceeding had an adverse result consisting of the revocation of Petitioner’s
professional license.

Petitioner now argues that she did not unduly influence her patient to co-sign or sign
contracts for the purchase of automobiles. She argues, in effect, that she is innocent of
the charges that are the basis for the Board of Nursing’s decision to revoke her license
and that her patient never actually paid for the cars in question. This is a substantive
defense to the Board of Nursing’s decision and it is irrelevant. The I.G.’s authority to
exclude Petitioner derives from the Board of Nursing’s decision and not from the
underlying conduct that is the basis of that

lecision. If Petitioner disagrees with the

Board of Nursing’s findings she may challenge them in the appropriate forum. However,

the merit of those findings is not at issue be:

ore me. See 42 C-F.R. § 1001.2007(d). In

order for the I.G. to remove her exclusion, Petitioner must either challenge the Board of
Nursing’s findings or otherwise regain her license from the Board of Nursing.

The minimum length of exclusion that may

e imposed pursuant to section 1128(b)(4) of

the Act is for a period that is equal to the underlying license revocation or suspension
period. 42 C.F.R. § 1001.501(b)(1). The I.G. opted to exclude Petitioner for the
minimum period — coterminous with Petitioner’s loss of her license in Florida — and

therefore, the reasonableness of the length o:
consider.

the exclusion is not an issue that I may

/s/
Steve T. Kessel
Administrative Law Judge