Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Paramjit Fagoora, M.D.

(PTAN: CA162183),

Petitioner,

v.

Centers for Medicare & Medicaid Services.
Docket No. C-16-248
Decision No. CR4617

Date: May 25, 2016

DECISION

Petitioner’s Medicare billing privileges were deactivated as a result of its failure to
respond to a revalidation request, and its billing privileges were subsequently reactivated
effective June 30, 2015, the date it submitted an internet-based enrollment application to
reactivate its billing privileges. Petitioner has appealed the determination that the
effective date of its revalidation is June 30, 2015. For the reasons discussed below, I
conclude that the effective date of Petitioner’s reactivated billing privileges remains June
30, 2015.

I. Background

Petitioner, Paramjit S. Fagoora, M.D., Inc., also known as Clear Vision Medical Center,
is a medical practice that is owned by Paramjit Fagoora, M.D. Centers for Medicare &
Medicaid Services Exhibit (CMS Ex.) 3 at 2, 4.

On February 24, 2014, Noridian Healthcare Solutions (Noridian), a Medicare
Administrative Contractor, sent Petitioner a request for Medicare enrollment revalidation.
CMS Ex. 1. The correspondence was mailed to an address on Barstow Avenue in Fresno,
California. CMS Ex. | at 1. After Noridian did not receive a response to its revalidation
request, it sent a notice on August 27, 2014, informing Petitioner that it had deactivated
Petitioner’s Provider Transaction Access Number (PTAN) and billing privileges because
Petitioner had failed to respond to the February 24, 2014 revalidation request. CMS Ex.
2 at 1. The letter instructed that Petitioner could reactivate its billing privileges by using
the internet-based Provider Enrollment Chain and Ownership System (PECOS) to review
the information on file, upload any supporting documentation, and electronically sign and
submit the revalidation application, or alternatively, it could complete and submit a paper
enrollment application. CMS Ex. 2 at 1. More than ten months later, on June 29, 2015,
Petitioner submitted a new enrollment application through PECOS that it electronically
signed on June 30, 2015, at which time it listed an updated office location and mailing
address on Fresno Street in Fresno, California. CMS Ex. 3 at 2. Petitioner stated that the
effective date of its office relocation was January 1,2014. CMS Ex. 3 at 3. On August
28, 2015, Noridian informed Petitioner that it had approved Petitioner’s Medicare
enrollment application, effective June 30, 2015. CMS Ex. 4 at 1-2. At that time,
Noridian assigned Petitioner a new PTAN. CMS Ex. 4 at 1.

In a letter dated October 7, 2015, implying that he did not receive the February 2014
revalidation request, Petitioner’s owner explained that he was unaware that Petitioner’s
billing privileges had been deactivated and requested that the effective date of the
reactivation of billing privileges be the date of deactivation. CMS Ex. 5 at 1. Petitioner
explained that “I remember that a couple of efforts [were] done on paper to register our
change of address but I guess my office did not follow through what were missing on the
applications we sent out.” CMS Ex. 5. Petitioner further stated that “[w]e will assure
you that this will not happen again if we need any changes in the future.” CMS Ex. 5.
Petitioner did not offer documentation showing that it had notified CMS or its contractor
of its new address on Fresno Street.

Noridian construed Petitioner’s correspondence as a request for reconsideration, and in a
reconsidered determination dated October 22, 2015, explained the following:

Revocation, Denial, or Effective date reason: 42 [C.F.R. §] 424.520(d)
Carriers and Part A and Part B Medicare Administrative
Contractors (A/B MACs) will establish the effective date of
Medicare billing privileges (see 42 CFR 424.520(d)) for
physicians, non-physician practitioners, and physician or non-
physician practitioner organizations. Physicians, non-physician
practitioners and physician and non-physician practitioner
organizations will no longer be allowed to establish retrospective
Medicare effective billing dates.
Carriers and A/B MACs will establish an effective date of
Medicare billing privileges for . . . physician and non-physician
practitioner organizations (e.g., clinics/group practices).

The effective date of Medicare billing privileges for the
individuals and organizations identified above is the later of the
ate of filing or the date they first began providing services at a
new practice location. Note: The date of filing for Internet-
based Provided Enrollment, Chain and Ownership System
(PECOS) applications for these individuals and organizations is
the date that the contractor received an electronic version of the
enrollment application and a signed certification statement that
were both processed to completion.

CMS Ex. 6 at 1 (emphasis in original). Noridian further explained:

The provider was deactivated due to no response to revalidation on
September 4, 2014.' The provider has 120 days from the date of
deactivation to revalidate and maintain the issued PTAN[s] and effective
dates. The application for the provider was received June 30, 2015. This is
past the 120 days allowed and was processed as a reactivation and given the
effective date of June 30, 2015.

According to the [M]PIM 15.27.1.2 the effective date of a reactivation shall
be the date the contractor received the application that is processed.

DECISION: [Paramjit] Fagoora MD had not provided evidence to
definitely support an earlier effective date. Therefore, Noridian Healthcare
Solutions is not granting you access to the Medicare Trust Fund (by way or
issuance) of [a new] effective date.

CMS Ex. 6 at 2 (emphasis in original).

Petitioner filed a request for hearing on December 17, 2015, that was received at the Civil
Remedies Division on January 6, 2016. CMS filed a pre-hearing brief and motion for
summary disposition (CMS Br.), along with six exhibits (CMS Exs. | to 6). Petitioner
filed a response (P. Br.). In the absence of any objections, I admit CMS Exs. | to 6 and
the parties’ briefs into the record.

' CMS acknowledged in its brief that the September 4, 2014 date of deactivation is
incorrect. CMS Br. at 4. As previously discussed, the date of the letter informing
Petitioner of the deactivation of its billing privileges is August 27, 2014. CMS Ex. 2 at 1.
Neither party has offered the testimony of any witnesses, and therefore, a hearing for the
purpose of cross-examination of witnesses is not necessary. See Acknowledgment and
Prehearing Order §§ 8,9, and 10. I consider the record in this case to be closed, and the
matter is ready for a decision on the merits.”

II. Issue

Whether CMS had a legitimate basis for establishing June 30, 2015, as the effective date
of Petitioner’s reactivated billing privileges.

III. Jurisdiction
I have jurisdiction to decide this case. 42 C.F.R. §§ 498.3(b)(15), 498.5(1)(2)
IV. Findings of Fact, Conclusions of Law, and Analysis*

1. Noridian received Petitioner’s electronically signed and internet-based
enrollment application seeking reactivation of billing privileges on
June 30, 2015.

2. Noridian correctly determined that the reactivation of Petitioner’s
billing privileges was effective June 30, 2015.

Petitioner is considered a “supplier” for purposes of the Social Security Act (Act) and the
regulations. See 42 U.S.C. §§ 1395x(d), 1395x(u); see also 42 C.F.R. § 498.2. A
“supplier” furnishes services under Medicare and the term applies to physicians or other
practitioners that are not included within the definition of the phrase “provider of
services.” 42 U.S.C. § 1395x(d). A supplier must enroll in the Medicare program to
receive payment for covered Medicare items or services. 42 C.F.R. § 424.505. The
regulations at 42 C.F.R. Part 424, subpart P, establish the requirements for a supplier to
enroll in the Medicare program. 42 C.F.R. §§ 424.510 - 424.516; see also Act

§ 1866(j)(1)(A) (authorizing the Secretary of the U.S. Department of Health and Human
Services to establish regulations addressing the enrollment of providers and suppliers in the
Medicare program). A supplier that seeks billing privileges under Medicare must
“submit enrollment information on the applicable enrollment application.” 42 C.F.R.

> CMS has argued that summary disposition is appropriate. It is unnecessary in this
instance to address the issue of summary disposition, as neither party has requested an in-
person hearing.

> My findings of fact and conclusions of law are set forth in italics and bold font.
§ 424.510(a). “Once the provider or supplier successfully completes the enrollment
process ...CMS enrolls the provider or supplier into the Medicare program.” 42 C.F.R.
§ 424.510(a), (d).

To maintain Medicare billing privileges, a supplier such as Petitioner must revalidate its
enrollment information at least every 5 years. 42 C.F.R. § 424.515. CMS reserves the
right to perform off-cycle revalidations in addition to the regular 5—year revalidations, and
as in this case, may request that a provider or supplier recertify the accuracy of the
enrollment information when warranted to assess and confirm the validity of the
enrollment information maintained by CMS. 42 C.F.R. § 424.515. Off-cycle
revalidations may be triggered as a result of random checks, information indicating local
health care fraud problems, national initiatives, complaints, or other reasons that cause
CMS to question the compliance of the provider or supplier with Medicare enrollment
requirements. 42 C.F.R.§ 424.515(d). When CMS notifies a supplier that it is time to
revalidate, the supplier must provide the requested information and documentation
within 60 calendar days of CMS’s notification. 42 C.F.R. § 424.515(a)(2).

CMS is authorized to deactivate an enrolled supplier’s Medicare billing privileges if the
enrollee fails to comply with revalidation requirements within 90 days of CMS’s notice
to revalidate. 42 C.F.R. § 424.540(a)(3). If CMS deactivates a supplier’s Medicare
billing privileges “[n]o payment may be made for otherwise Medicare covered items or
services furnished to a Medicare beneficiary.” 42 C.F.R. § 424.555(b). The regulation
authorizing deactivation explains that “[d]eactivation of Medicare billing privileges is
considered an action to protect the provider or supplier from misuse of its billing number
and to protect the Medicare Trust Funds from unnecessary overpayments.” 42 C.F.R.

§ 424.540(c).

The reactivation of an enrolled provider or supplier’s billing privileges is governed by 42
C.F.R. § 424.540(b), and the process for reactivation is contingent on the reason for
deactivation. If CMS deactivates a provider or supplier’s billing privileges due to an
untimely response to a revalidation request, such as in this case, the enrolled provider or
supplier may apply for CMS to reactivate its Medicare billing privileges by completing
the appropriate enrollment application or recertifying its enrollment information, if
deemed appropriate.* 42 CFR. § 424.540(a)(3), (b)(1). In this case, Petitioner was

* The Secretary recently proposed rulemaking amending 42 C.F.R. § 424.540(b)(1) and
(2). 81 Fed. Reg. 10719, 10738-10739 (March 1, 2016). The proposed revisions state
that a deactivated provider or supplier “must recertify that its enrollment information
currently on file with Medicare is correct and furnish any missing information as
appropriate,” and that “CMS may for any reason require a deactivated provider or
supplier to submit a complete Form CMS-855 application as a prerequisite for
reactivating its billing privileges.” 81 Fed. Reg. at 10752. In the proposed rulemaking,
the Secretary explained, in part, that the Department was clarifying that a provider or
informed, at the time of its deactivation, that it could use PECOS to review the
information on file, upload any supporting documentation, and electronically sign and
submit its revalidation application, or alternatively, it could submit a hard copy Form
CMS-855 application. CMS Ex. 2 at 1-2.

Noridian deactivated Petitioner’s billing privileges more than six months after it
requested that Petitioner revalidate its enrollment information. CMS Exs. 1, 2.
Approximately 16 months after Noridian initially requested that Petitioner complete the
revalidation process through PECOS or by submitting a hard copy application (CMS Ex.
1), Petitioner submitted an application for revalidation through PECOS on June 29, 2015,
and electronically signed its application on June 30, 2015. CMS Ex. 3. Noridian
accepted Petitioner’s application, reactivated its billing privileges, and assigned a new
PTAN. CMS Ex. 4 at 1. Noridian granted Petitioner billing privileges effective from
June 30, 2015, the date it received Petitioner’s signed enrollment application. CMS Ex. 4
at 1-2.

The pertinent regulation with respect to the effective date of reactivation, as cited by
Noridian in its reconsidered decision, is 42 C.F.R. § 424.520(d)(1). CMS Ex. 6 at 1;
Arkady B. Stern, M.D., DAB No. 2329 at 4 (2010). Section 424.520(d)(1) states that “the
effective date for billing privileges . . . is the later of the date of filing of a Medicare
enrollment application that was subsequently approved by a Medicare contractor or the
date an enrolled physician or nonphysician first began furnishing services at a new
practice location.” The corresponding CMS policy, which has been in effect since March
18, 2015, is consistent with section 424.520(d)(1) and instructs that the effective date of
the reactivation “shall be the date the contractor received the application or [reactivation
certification package] that was processed to completion.” Medicare Program Integrity
Manual (MPIM), ch. 15 § 15.27.1.2 (rev. 561, issued December 12, 2015, and effective
March 18, 2015). The Departmental Appeals Board has explained that the “date of
filing” is the date that the Medicare contractor receives a signed provider or supplier
enrollment application that the Medicare contractor is able to process to approval. Tri-
Valley Family Medicine, Inc., DAB No. 2358 (2010); but see 79 Fed. Reg. 72500, 72521
(December 5, 2014) (statement in the Federal Register that the “date of filing’ of a CMS-
855 application” is “the date on which the provider or supplier submitted its CMS-855
application via mail or Internet-based PECOS”). Accordingly, based on the date of
filing, Noridian reactivated Petitioner’s billing privileges effective June 30, 2015.

Petitioner is seeking an effective date of billing privileges dating back to its deactivation
in August 2014, but does not identify any authority supporting this retroactive effective
date for the reactivation of billing privileges. While Petitioner’s failure to respond to the

supplier “may use recertification—regardless of the deactivation reasons—as a means of
reactivation.” 81 Fed. Reg. at 10739.
revalidation request for a period of 16 months unfortunately resulted in a 10-month lapse
in its billing privileges, only a few years ago such a failure to respond to a revalidation
request could have resulted in a revocation of billing privileges and an enrollment bar for
a minimum of one year.” 42 C.F.R. § 424.535(b), (c) (2010) (stating that “[w]hen a
provider’s or supplier’s billing privilege is revoked, any provider agreement in effect at
the time of revocation is terminated effective with the date of revocation” and “[a]fter a. .
. Supplier . . . has had their billing privileges revoked, they are barred from participating
in the Medicare program from the effective date of the revocation until the end of the re-
enrollment bar,” which is a minimum of one year and no more than three years.) The
Secretary’s former authority to revoke billing privileges and establish a re-enrollment bar
was implemented through a final rule published on June 27, 2008, and the regulatory
amendment had a stated purpose “to prevent providers and suppliers from being able to
immediately re-enroll in Medicare after their billing privileges were revoked.” 76 Fed.
Reg. 65909, 65912 (October 24, 2011), citing 73 Fed. Reg. 36448. When the Secretary
later determined, in subsequent rulemaking, that this basis for revocation and a re-
enrollment bar should be eliminated through removing the pertinent language in 42
CFR. § 424.535(c), the Secretary’s final rule explained:

In our October 24, 2011, proposed rule, we proposed to revise

§ 424.535(c) to eliminate the re-enrollment bar in instances where
providers and suppliers have had their billing privileges revoked under

§ 424.535(a) solely for failing to respond timely to a CMS revalidation
request or other request for information. As we explained in the proposed
tule, we believe that this change is appropriate because the re-enrollment
bar in such circumstances often results in unnecessarily harsh consequences
for the provider or supplier and causes beneficiary access issues in some
cases .. . Moreover, there is another, less restrictive regulatory remedy
available for addressing a failure to respond timely to a revalidation
request. This remedy was identified in proposed § 424.540(a)(3).

> Tt is not unnoticed that the evidence before me indicates that Petitioner did not report its
new office location until June 30, 2015, which is approximately 18 months after its
January 1, 2014 office relocation. While not addressed by Noridian or CMS, I recognize
that such delayed notification of Petitioner’s relocation, if supported by the evidence, was
well in excess of the notification requirements set forth in 42 C.F.R. § 424.516(d), and
could have resulted in revocation of billing privileges based on a failure to comply with
enrollment requirements. See 42 C.F.R. § 424.535(a)(9). A failure to meet this
enrollment requirement could have resulted in revocation of billing privileges and, at a
minimum, a one-year re-enrollment bar, whereas the total duration of Petitioner’s
deactivated billing privileges was for approximately 10 months. 42 C.F.R. § 424.535(c).
Thus, it is fortuitous for Petitioner that Noridian deactivated its billing privileges rather
than revoking its Medicare supplier agreement and establishing a re-enrollment bar.
76 Fed. Reg. at 65912 (emphasis added). The final rule further stated:

We do not believe that the finalization of our proposed revision to

§ 424.535(c) will impact our ability to prevent or combat fraudulent activity
in our programs. Providers and suppliers that fail to respond once or
repeatedly to a revalidation or other informational request will still be
subject to adverse consequences, including—as explained below—the
deactivation of their Medicare billing privileges.

76 Fed. Reg. at 65912 (emphasis added). Finally, in amending section 424.540(a)(3), as
referenced above, the final rule stated:

We proposed to add a new § 424.540(a)(3) that would allow us to
deactivate, rather than revoke, the Medicare billing privileges of a provider
or supplier that fails to furnish complete and accurate information and all
supporting documentation within 90 calendar days of receiving notification
to submit an enrollment application and supporting documentation, or
resubmit and certify to the accuracy of its enrollment information. While
the deactivated provider or supplier would still need to submit a complete
enrollment application to reactivate its billing privileges, it would not be
subject to other, ancillary consequences that a revocation entails; for
instance, a prior revocation must be reported in section 3 of the Form CMS-
855] application, whereas a prior deactivation need not.

76 Fed. Reg. at 65913 (emphasis added). Thus, while the rulemaking explained that the
regulatory amendment was intended to mitigate the “unnecessarily harsh consequences”
of revocation and a mandatory enrollment bar for a supplier’s failure to respond to a
revalidation request, the final rule recognized that there was a “less restrictive regulatory
remedy available for addressing a failure to respond timely to a revalidation request” and
that a supplier “will still be subject to adverse consequences” that included “the
deactivation of their Medicare billing privileges.” The final rule implemented section
424 .540(a)(3), which specified that deactivation of billing privileges, rather than
revocation, was appropriate, and stated that deactivation “does not have any effect on a
provider or supplier’s participation agreement or any conditions of participation.” ° 42
CFR. § 424.540(a)(3), (c).

° A physician or supplier participation agreement can be made through a Form CMS-
460. When a physician or supplier enters into such an agreement, it “enters into an
agreement with the Medicare program to accept assignment of the Medicare Part B
payment for all services for which the participant is eligible to accept assignment under
the Medicare law and regulations.” Form CMS-460. A supplier such as Petitioner is not
subject to conditions of participation. See 42 C.F.R. Parts 482 and 485.
While section 424.540(a)(3) indicates that the deactivation does not have any effect on
the supplier’s participation agreement or conditions of participation, deactivation
nonetheless may cause “adverse consequences,” most significantly, the loss of billing
privileges. The effective date of reactivation of billing privileges is governed by 42
CFR. § 424.520, “Effective date of Medicare billing privileges,” which states, in
pertinent part, that the effective date for billing privileges, as applicable to this case, is
“(t]he date of filing of a Medicare enrollment application that was subsequently approved
by a Medicare contractor.” 42 C.F.R. § 424.520(d)(1). The October 22, 2015
reconsidered determination explicitly relied on 42 C.F.R. § 424.520(d) in determining
that the effective date of Petitioner’s reactivated billing privileges was correctly
letermined to be June 30, 2015. CMS Ex. 6 at 1. The reconsidered determination
additionally relied on section 15.27.1.2 of the MPIM, which contains the aforementioned
policy guidance that is consistent with section 424.520(d) and indicates that the effective
late of a reactivation is the date the enrollment application was submitted. But see Viora
Home Health, Inc., DAB No. 2690 at 8 (2016) (“the MPIM provision . . . is sub-
regulatory guidance, and as the introduction to chapter 15 of MPIM . . . suggests, chapter
5 provisions are primarily intended as guidance or instructions for CMS fee-for-service
contractors”). I conclude that the MPIM is consistent with section 424.520(d), and
further, I conclude that Noridian correctly relied on both section 424.520(d) and the
policy in determining the June 30, 2015 effective date for the reactivation of Petitioner’s
billing privileges.

Petitioner has argued that it did not receive any mail correspondence from CMS
regarding its revalidation and contended that the correspondence was mailed to an
address that was not its current office location. P. Br. In its October 7, 2015 construed
request for reconsideration, Petitioner explained that “a couple of efforts [were] done on
paper to register our change of address but I guess my office did not follow through.”
CMS Ex. 5 at 1. Petitioner later stated, in its brief, that a billing company “was the
contact person and was doing all the application completion for change of address etc. for
[the] office.” P. Br. While Petitioner explained that it did not receive any mail
correspondence regarding the revalidation request, it did not claim to have notified CMS
of its new address, nor did it submit any evidence documenting such notification.
Petitioner has not contended that it actually notified CMS or its contractor of its new
address, and in fact, Petitioner appears to have conceded that it did not properly notify
CMS or its contractor of its new office location. See CMS Ex. 5 at 1 (stating “[w]e will
assure you this will not happen again if we need any changes in the future”) and P. Br.
(requesting “equitable relief” or “mer[cy] plea”). Since Petitioner has not shown, or even
alleged, that it notified CMS or Noridian of its new address, Noridian correctly sent
correspondence to Petitioner’s former office location on Barstow Avenue; Petitioner’s
failure to timely respond to the revalidation request is not due to any fault of CMS or
Noridian, but rather, its own failure to provide notice of its new address.

10

To the extent that Petitioner requests “equitable relief or mer[cy] plea for [its] office to be
able to bill for the services provided to Part B medicare claims for the period . . . as it has
caused a big financial strain [on its] office,” I am unable to grant equitable relief. See US
Ultrasound, DAB No. 2302 at 8 (2010) (“[nJeither the ALJ nor the Board is authorized to
provide equitable relief by reimbursing or enrolling a supplier who does not meet
statutory or regulatory requirements”). Therefore, the effective date of June 30, 2015
must stand.

V. Conclusion

I uphold the June 30, 2015 effective date of Petitioner’s Medicare enrollment
reactivation.

/s/
Leslie C. Rogall
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Dana Marks, M.D.,
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-16-163
Decision No. CR4616

Date: May 23, 2016

DECISION

The Centers for Medicare & Medicaid Services (CMS), through an administrative
contractor, revoked the Medicare enrollment and billing privileges of Dana Marks, M.D.
(Dr. Marks or Petitioner), because Dr. Marks failed to timely report to CMS the
suspension of his license to practice medicine in Nevada from September 2014 to
December 2014. Dr. Marks requested a hearing to dispute the revocation, arguing that he
only received a temporary suspension of his Nevada license and that the regulations do
not require him to report a suspension that is not a final adverse action. Because the
regulations require physicians to report any adverse legal action, and not just final
adverse actions, to CMS within 30 days and Petitioner did not report the suspension of
his medical license to CMS within that time frame, I affirm CMS’s revocation of Dr.
Marks’ Medicare enrollment and billing privileges.

I. Background and Procedural History

Dr. Marks is a physician licensed to practice medicine in Nevada. On September 19,
2014, the Nevada State Board of Medical Examiners (Medical Examiners Board)
summarily suspended Petitioner’s medical license based on a concern that Petitioner was
placing the public at risk for harm. The Medical Examiners Board set a hearing for
October 15, 2014, to determine whether the summary suspension would remain in effect.
Petitioner Exhibit (P. Ex.) 1.

On December 8, 2014, the Medical Examiners Board approved a settlement agreement
involving Dr. Marks. Dr. Marks agreed to complete treatment and monitoring for
substance abuse. Petitioner’s summary suspension was also lifted. P. Ex. 3 at 15, 32-33.

In June 2015, Dr. Marks submitted an enrollment application in order to revalidate his
enrollment in the Medicare program. CMS Ex. | at 1; P. Ex. 3. Dr. Marks disclosed on
the enrollment application that he had been subject to a final adverse action, i.e., the
summary suspension, and provided detailed information about the suspension. P. Ex. 3 at
15, 32-33. In an August 3, 2015 initial determination, a CMS administrative contractor
approved Dr. Marks’ revalidation. P. Ex. 4.

However, in an August 13, 2015 initial determination, the CMS administrative contractor
revoked Dr. Marks’ Medicare enrollment and billing privileges, effective September 12,
2015, for the following reason:

42 CFR §424.535(a)(9) — Failure to Report Changes

Your Nevada medical license was suspended from September
19, 2014 through December 5, 2014. This action was not
reported within the required time frame.

CMS Ex. 2 at 1 (emphasis in original). CMS’s administrative contractor barred
Dr. Marks from re-enrolling in the Medicare program for one year. CMS Ex. 2 at 2.

The CMS administrative contractor mailed the initial determination to an incorrect
address. Dr. Marks eventually learned of the revocation and requested additional time to
file a reconsideration request. CMS Ex. | at 2. The CMS administrative contractor
acknowledged that it mailed the initial determination to an incorrect address, accepted Dr.
Marks’ request for additional time as his reconsideration request, and proceeded to
render, on November 25, 2015, an unfavorable reconsidered determination. CMS Ex. 3.

Petitioner timely requested a hearing, asserting that the CMS contractor failed to consider
any evidence from Petitioner because it issued its reconsidered determination based on
Petitioner’s request for an extension of time to file a reconsideration request. 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 motion for summary judgment and brief, and
three exhibits (CMS Exs. 1-3). Petitioner filed a brief (P. Br.) in opposition to summary
judgment and four exhibits (P. Exs. 1-4).
II. Decision on the Record

I admit all of the parties’ proposed exhibits into the record because neither party objected
to any of them. See Order § 7; Civil Remedies Division Procedures § 14(e). In regard to
Petitioner’s exhibits, I conclude that Petitioner had good cause to submit his exhibits to
me. See 42 C.F.R. § 498.56(e). This is because the letter that CMS interpreted as
Petitioner’s reconsideration request did not have documents enclosed with it. In such a
circumstance, the CMS administrative contractor was obligated to contact Petitioner and
determine if Petitioner had any evidence to submit. 42 C.F.R. § 405.803(d). The CMS
administrative contractor failed to do this.

Neither party submitted written direct testimony for any witnesses. Therefore, there are
no witnesses to be cross-examined and I issue this decision based on the written record.
Order §§ 8-11; Civil Remedies Division Procedures §§ 16(b), 19(b), (d). Consequently, I
deny CMS’s motion for summary judgment.

Ill. Issue

Whether CMS had a legitimate basis to revoke Dr. Marks’ Medicare enrollment and
billing privileges.

IV. Jurisdiction

Ihave jurisdiction to hear and decide this case. See 42 C.F.R. §§ 498.3(b)(17),
498.5(1)(2); see also 42 U.S.C. § 1395cc(j)(8).

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

Petitioner is a physician and, therefore, a supplier for purposes of the Medicare program.
See 42 U.S.C. § 1395x(d); 42 C.F.R. §§ 400.202 (definition of Supplier), 410.20(b)(1).
CMS may revoke a supplier’s Medicare billing privileges for any of the reasons stated in
42 CFR. § 424.535. When CMS revokes a supplier’s Medicare billing privileges, CMS
establishes a re-enrollment bar that lasts from one to three years. 42 C.F.R. § 424.535(c).
Generally, a revocation becomes effective 30 days after CMS mails the initial
determination revoking Medicare billing privileges. 42 C.F.R. § 424.535(g).

1. The Nevada Medical Examiners Board summarily suspended Dr. Marks’
medical license on September 19, 2014, and lifted the summary suspension in
December 2014, and Dr. Marks did not inform CMS of the summary suspension
until June 2015.

' My findings of fact and conclusions of law are set forth in italics and bold font.
On September 19, 2014, the Medical Examiners Board issued an Order of Summary
Suspension against Dr. Marks. The Medical Examiners Board based the summary
suspension on preliminary findings, which included: Dr. Marks failed to appear for work
at a hospital on August 30, 2014; the hospital contacted the police and the police went to
Dr. Marks’ residence; the police forcibly entered Dr. Marks’ residence and found him
asleep; Dr. Marks then went to the hospital to commence his work shift; staff at the
hospital suspected that Dr. Marks was under the influence of alcohol or drugs; and, the
hospital tested Dr. Marks and determined that Dr. Marks had a blood alcohol level three
times the legal limit. The Medical Examiners Board concluded that the public’s health,
safety, and welfare were at imminent risk and that summary suspension of Dr. Marks’
medical license was necessary to remove that risk. The Medical Examiners Board set a
hearing for October 15, 2014, to consider whether the summary suspension ought to
remain in effect. P. Ex. 1.

In December 2014, the Medical Examiners Board approved a settlement agreement with
Dr. Marks. The summary suspension was lifted and Dr. Marks was ordered to engage in
treatment for substance abuse. P. Ex. 3 at 32-33.

In an enrollment application filed with a CMS administrative contractor in June 2015, Dr.
Marks, for the first time, informed CMS of the summary suspension imposed on him
from September to December 2014. P. Ex. 3 at 15.

2. CMS had a legitimate basis under 42 C.F.R. § 424.535(a)(9) to revoke Dr.
Marks’ Medicare enrollment and billing privileges because the Nevada Medical
Examiners Board took an adverse legal action against Dr. Marks when it
summarily suspended his medical license, and Dr. Marks did not report that
adverse legal action to CMS within 30 days.

The regulations require that physicians report, within 30 days, “[a]ny adverse legal
action” to their Medicare contractor. 42 C.F.R. § 424.516(d)(1)(ii). Failure to timely
report is a basis to revoke a physician’s Medicare enrollment and billing privileges.
42 CFR. § 424.535(a)(9).

CMS asserts that there is no dispute that the Medical Examiners Board summarily
suspended Dr. Marks’ medical license on September 19, 2014, or that Dr. Marks first
informed CMS of the suspension in June 2015, long after the 30-day reporting period
ended. Petitioner argues that the regulations required Dr. Marks to report only a “final
adverse action,” as defined in 42 C.F.R. § 424.502, and that he was not obligated to
report the summary suspension of his medical license because, under Nevada law, a
summary suspension is not a final administrative action. P. Br. at 3-4.

It is true that 42 C.F.R. § 424.502 defines the term “final adverse action” and that the
regulations do not define the phrase “any adverse legal action” from 42 C.F.R.
§ 424.516(d)(1)(ii). However, there is no reason for me to conclude that these terms
mean the same thing. To the contrary, the phrase in section 424.516(d)(1)(ii) is broader
than the term “final adverse action,” because it can encompass all adverse legal actions,
not just final adverse actions. See Akram A. Ismail, DAB No. 2429, at 10-11 (2011)
(concluding that the plain language of the phrase “any adverse legal action” in 42 C.F.R.
§ 424.516(d)(1)(ii) requires the reporting of a license suspension, even if under appeal.).

In the present case, the Medical Examiners Board’s summary suspension order provided
for the following: Petitioner’s Nevada medical license was suspended until further order;
Petitioner had to undergo a drug and alcohol evaluation at his own expense; and
Petitioner had to execute a release so that the Medical Examiners Board would receive a
copy of the results of the drug and alcohol evaluation. P. Ex. 1 at 2-3. This summary
suspension order not only deprived Petitioner from engaging in his profession, but
required him to incur the expense of a medical evaluation, and curtailed his right to
privacy regarding that evaluation. Such an order is obviously an adverse legal action as
contemplated by the regulations.

Petitioner also asserts that he made an effort to properly inform all governmental entities
of the summary suspension order and that he truthfully informed CMS of it when he filed
the application to revalidate his enrollment. Petitioner states he made no effort to conceal
the suspension from CMS. CMS Ex. | at 2-3. However, as stated in another case,
“Petitioner’s pleas of ignorance [to the reporting requirement] are no defense. The
regulation places the burden upon the Medicare participant to report ‘[a]ny adverse legal
action.” 42 C.F.R. § 424.516(d)(1)(ii). There are no exceptions to the requirement to
report.” Phyllis Barson, M.D., DAB CR2510, at 7 (2012). If there were exceptions, it
would undermine the purpose of 42 C.F.R. § 424.516(d), which is “to provide CMS with
information about adverse legal actions that CMS has determined are relevant to
evaluating whether a supplier should continue to participate in Medicare.” Gulf South
Med. & Surgical Inst. & Kenner Dermatology Clinic, Inc., DAB No. 2400, at 8 (2011).

Petitioner also states that the CMS administrative contractor, having fully evaluated
Petitioner’s revalidation enrollment application, including the information about his
summary suspension, approved Petitioner’s revalidation before the CMS administrative
contractor revoked Petitioner’s billing privileges. P. Br. at 4-5. Petitioner appears to
argue that the CMS administrative contractor already exercised it discretion as to whether
to take action against Petitioner during the revalidation process and choose not to do so.

Although the CMS administrative contractor’s actions in approving Petitioner’s
revalidation application and then shortly thereafter revoking him appear inconsistent, the
failure to report requirement in 42 C.F.R. § 424.535(a)(9) is not a basis to deny
enrollment under 42 C.F.R. § 424.530. Therefore, the CMS administrative contractor
may not have had any basis to deny the revalidation enrollment application and had to
take action against Petitioner under the revocation regulations. In any event, the CMS
administrative contractor’s decision to approve Petitioner’s revalidation enrollment
application does not preclude the CMS administrative contractor from later revoking
Petitioner based on conduct occurring prior to revalidation.

VI. Conclusion

1 affirm CMS’s determination to revoke Petitioner’s Medicare enrollment and billing
privileges.

Is/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

J. Peaceful, L.C.
d/b/a Town Market,

Respondent.

Docket No. C-15-2711
FDA Docket No. FDA-2015-H-1881

Decision No. CR4614

Date: May 24, 2016

INITIAL DECISION

I sustain the determination of the Center for Tobacco Products (CTP) of the
United States Food and Drug Administration (FDA) to impose a civil money
penalty of $250 against Respondent, J. Peaceful, L.C. d/b/a Town Market.

I. Background

Respondent requested a hearing in order to challenge CTP’s determination to
impose a $250 civil money penalty against it. I held a hearing by telephone on
February 18,2016. At the hearing I received exhibits into evidence from CTP that
are identified as CTP Ex. 1-CTP Ex. 16. I heard the cross-examination testimony
of James Naso, an inspector working on behalf of CTP. Respondent offered no
exhibits.

CTP filed a brief in support of its position. Respondent filed a pre-hearing brief
and a post-hearing brief.
II. Issues, Findings of Fact and Conclusions of Law
A. Issues

The issues are whether Respondent violated regulations governing the sale of
tobacco products to minors and whether a civil money penalty of $250 is
reasonable.

B. Findings of Fact and Conclusions of Law

CTP determined to impose a civil money penalty against Respondent pursuant to
the authority conferred by the Federal Food, Drug, and Cosmetic Act (Act) and
implementing regulations at Part 21 of the Code of Federal Regulations (C.F.R.).
The Act prohibits the misbranding of tobacco products while they are held for sale
after shipment in interstate commerce. 21 U.S.C. § 331(k). FDA and its agency,
CTP, may seek civil money penalties from any person who violates the Act’s
requirements as they relate to the sale of tobacco products. 21 U.S.C. § 331(f)(9).
The sale of tobacco products to an individual who is under the age of 18 and the
failure to verify the photographic identification of an individual who is not over
the age of 26 are violations of implementing regulations. 21 C.F.R. §§ 1140.14(a),
(b)C).

There is no dispute that Respondent sells tobacco products to members of the
public. What is in dispute in this case is whether Respondent sold tobacco
products to a minor in violation of applicable regulations.

An agent, James Naso, working on behalf of CTP, inspected Respondent’s
establishment on September 24, 2014 and January 29, 2015. On both occasions
Mr. Naso was accompanied by a minor who worked under his supervision. CTP
Ex. 1 at 2. On each of these occasions, Mr. Naso verified that the minor did not
have cigarettes in her possession prior to entering Respondent’s establishment. Id.
at 3,4. On September 24 Mr. Naso entered the establishment and personally
observed the minor purchase a package of cigarettes from an employee. He
observed also that the employee did not check the minor’s identification. Id. at 3.

On January 29, 2015, Mr. Naso waited outside while the minor entered the store.
She subsequently exited the store and advised him that she had purchased a
package of cigarettes from an employee. The minor provided Mr. Naso with a
package of Marlboro Gold Pack cigarettes, which Mr. Naso labeled and
photographed. CTP Ex. | at 4; CTP Ex. 13.
I find this evidence to be more than sufficient to prove that Respondent sold
tobacco products (cigarettes) unlawfully to a minor on two occasions, September
24, 2014 and January 29, 2015, and that on one occasion (September 24)
Respondent unlawfully failed to check a minor’s identification before selling
tobacco products to that individual. I find Mr. Naso’s observations of the
September 24 transaction to be reliable. I am also persuaded by the fact that the
minor exited the store on January 29, 2015 with a package of Marlboro Gold Pack
Cigarettes to be persuasive evidence that she purchased them in the store, given
that Mr. Naso verified that the minor did not have tobacco products in her
possession prior to entering the store.

Respondent offered no evidence on its behalf but it challenged the credibility of
Mr. Naso’s testimony and the other evidence offered by CTP. I do not find that
Respondent successfully rebutted the evidence that CTP offered.

Respondent argues, first, that any testimony offered by the minor — and the
accounts that she gave to Mr. Naso of her experiences inside Respondent’s
establishment are hearsay and unreliable. I agree with Respondent that the
minor’s statements are hearsay and not necessarily reliable. But, in this case, CTP
produced independent proof of Respondent’s violations in the form of Mr. Naso’s
observations of the September 24 transaction and the package of Marlboro Gold
Pack Cigarettes that the minor obtained on January 29. Indeed, CTP’s case does
not depend on anything that the minor said, but rather, on Mr. Naso’s
observations, which are not hearsay, and on the physical evidence obtained on
January 29, 2015.

Respondent also argues that CTP rested its entire case on the credibility of the
minor purchaser. That is incorrect. As I have discussed, the minor’s credibility is
not at issue here because CTP relies on evidence that is independent of anything
that the minor said to Mr. Naso.

Respondent argues also that the minor’s failure to obtain receipts for her purchases
on September 24, 2014 and January 29, 2015 undercut CTP’s case. Certainly,
receipts would be dispositive proof that transactions occurred on the two dates.
But, Mr. Naso’s observations and the physical evidence that was obtained on
January 29, 2015 are, in and of themselves, adequate to prove CTP’s case. The
absence of receipts doesn’t derogate from that evidence. Moreover, Mr. Naso
explained that it was policy not to request a receipt if one isn’t offered. Tr. at 17.

Respondent has not argued that it is incapable of paying a civil money penalty of
$250. The penalty amount is authorized by regulations. 21 C.F.R. § 17.2. Lagree
with CTP’s characterization of the penalty amount as “nominal.” Informal Brief
of Complainant at 10. Tobacco products are highly addictive and extremely
harmful. Respondent’s repeated sale of tobacco products to a minor, in violation
of law, creates the risk of serious harm.

/s/
Steven T. Kessel
Administrative Law Judge


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

Grace Udoka Edoho-Ukwa
(OI File No. 6-03-40680-9),

Petitioner,
v.

The Inspector General,
U.S. Department of Health and Human Services.

Docket No. C-16-302
Decision No. CR4612
Date: May 20, 2016
DECISION

The request for hearing of Petitioner, Grace Udoka Edoho-Ukwa, is dismissed pursuant
to 42 C.F.R. § 1005.2(e)(1)! because it was untimely filed, and 42 C.F.R. § 1005.2(e)(4)
for failure to raise any issue that may be properly addressed in a hearing.

I. Background

The Inspector General for the United States Department of Health and Human Services
(L.G.) notified Petitioner by letter dated May 31, 2005, that she was being excluded from
participation in Medicare, Medicaid, and all federal health care programs for the
minimum statutory period of 20 years. The I.G. cited section 1128(b)(15) of the Social
Security Act (the Act) (42 U.S.C. § 1320a-7(b)(15)) as the basis for Petitioner’s
exclusion. The I.G. cited as the factual basis for Petitioner’s exclusion her association
with Grace International Medical Supplies, Inc. and Grace Medical Services and the fact

' References are to the 2004 revision of the Code of Federal Regulations (C.F.R.), which
was in effect at the time of the agency action, unless otherwise stated.
that those entities were excluded by the I.G. from participation in Medicare and all
federal health care programs pursuant to section 1128(a) or (b) of the Act. The I.G.
further specified that Petitioner’s exclusion is for the same period as the excluded entities
with which she was associated. I.G. Exhibit (Ex.) 1.

Petitioner filed a request for hearing (RFH) by mail that was postmarked on February 3,
2016. The case was assigned to me for hearing and decision on February 12, 2016. On
February 20, 2016, the I.G. filed a motion to dismiss the request for hearing with I.G.
Exs. | and 2. A prehearing conference was convened on February 29, 2016. The
substance of the prehearing conference is memorialized in my Prehearing Conference
Order and Schedule for Filing Briefs and Documentary Evidence dated March 1, 2016
(Prehearing Order). During the prehearing conference, Petitioner declined to waive an
oral hearing; I directed Petitioner to respond to the motion to dismiss not later than March
23, 2016; and I advised the parties that I would rule on the motion to dismiss prior to
further case development. Prehearing Order § 5. On March 2, 2016, Petitioner filed a
document titled “Request for Continuation of Waiver Hearing.” No further filings have
been received from Petitioner and the motion to dismiss is considered ripe for ruling.
Petitioner did not object to my consideration of I.G. Exs. | and 2 and they are admitted as
evidence.

II. Discussion
A. Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) establishes Petitioner’s rights to a
hearing by an administrative law judge (ALJ) and judicial review of the final action of
the Secretary of the United States Department of Health and Human Services (Secretary).
The Secretary has provided by regulation that an excluded individual has the right to
request a hearing before an ALJ. 42 C.F.R. §§ 1001.2007(a)(1), 1005.2(a). The
regulations require that a request for hearing be in writing and be filed not more than 60
days from the date of receipt of the notice of exclusion. 42 C.F.R. §§ 1001.2007(b),
1005.2(c). The notice of exclusion is presumed to be received five days after the date on
the notice, unless there is a reasonable showing to the contrary. 42 C.F.R. § 1005.2(c). I
am required to dismiss a request for hearing that is not filed timely. 42 C.F.R.

§ 1005.2(e)(1). The regulations grant me no discretion to waive a late filing or to extend
the time for filing.

Pursuant to 42 C.F.R. § 1001.2007(a)(1), an individual excluded by the I.G. may request
review by an ALJ on the issues of whether: (1) there is a basis for exclusion; and (2) the
period of exclusion is unreasonable. However, when the I.G. imposes the minimum
period of exclusion authorized by Congress, the regulation provides that there is no issue
of the reasonableness of the period of exclusion. 42 C.F.R. § 1001.2007(a)(2). Pursuant
to 42 C.F.R. § 1005.2(e)(4), I must dismiss a request for hearing that does not raise an
issue that may be properly addressed in a hearing. I am bound to comply with the
regulations. 42 C.F.R. § 1005.4(c)(1).

B. Issue

Whether Petitioner’s request for hearing must be dismissed because it was
not timely filed and/or fails to raise an issue that may be properly addressed
in a hearing?

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

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

1. Petitioner’s request for hearing was not timely filed.

2. Petitioner’s request for hearing raises no issue that may be properly
addressed in a hearing.

3. Petitioner’s request for hearing must be dismissed pursuant to
42 C.F.R.§ 1005.2(e)(1) and (4).

There is no dispute that the I.G. mailed Petitioner a letter dated May 31, 2005, notifying
her of her exclusion from Medicare, Medicaid, and all federal health care programs. I.G.
Ex. 1. Pursuant to 42 C.F.R. § 1005.2(c), there is a rebuttable presumption that the May
31, 2005 notice was received by Petitioner on Monday, June 6, 2005, as June 5, 2005 was
Sunday and it is presumed there was no mail delivery on that day. Petitioner has not
presented evidence to show or argued that she received the notice of exclusion after June
6, 2005. Pursuant to 42 C.F.R. §§ 1001.2007(b) and 1005.2(c), Petitioner had 60 days to
file her request for hearing. The 60th day after her presumed receipt of the notice fell on
Friday, August 5, 2005, and that was the deadline for Petitioner to file her request for
hearing. 42 C.F.R. § 1005.12(a).

There is no dispute that Petitioner’s request for hearing dated February 2, 2016, was
postmarked February 3, 2016 (I.G. Ex. 2), and that date is treated as the date of filing.
August 5, 2005 was the deadline for Petitioner to file her request for hearing. Therefore,
Petitioner’s request for hearing was filed more than ten years late. Because Petitioner’s
request for hearing was late, the I.G. has moved that this case be dismissed.

The regulations grant me no discretion to extend the time for filing a request for hearing
or to excuse the late filing of a request for hearing. I am required to dismiss a hearing
request that is not timely filed. 42 C.F.R. § 1005.2(e)(1). Petitioner’s only possible
defense to the motion to dismiss is a showing that she received the May 31, 2005 notice
of exclusion no more than 60 days prior February 3, 2016. Petitioner has failed to make
the required showing. Accordingly, I have no discretion but must dismiss Petitioner’s
request for hearing pursuant to 42 C.F.R. § 1005.2(e)(1).

Petitioner’s letter postmarked February 3, 2016, was treated as a request for hearing
because it was sent to the Departmental Appeals Board, Civil Remedies Division.
However, Petitioner’s request was for a waiver of her exclusion. Petitioner’s March 2,
2016 document titled, “Request for Continuation of Waiver Hearing” also requested a
waiver of her exclusion. Pursuant to 42 C.F.R. § 1001.2007(a)(1), my authority is limited
to reviewing whether the I.G. has a basis to exclude an individual and whether the period
of exclusion is unreasonable. I have no authority to grant a waiver of an exclusion. Only
the Secretary and the I.G. have the authority to grant a waiver, and then only in limited
circumstances that do not appear to be applicable in this case. Act § 1128(c)(3)(B) and
(d)(3)(B); 42 C.F.R. § 1001.1801. Because I have no authority to grant Petitioner a
waiver, she has failed to raise an issue that may be properly addressed in a hearing before
me. Accordingly, I conclude that dismissal is also required by 42 C.F.R. § 1005.2(e)(4).

III. Conclusion

For the foregoing reasons, Petitioner’s request for hearing is dismissed.

Is/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Perry Tan Nguyen,
(O.I. File No. L-10-40659-9),

Petitioner,
v.
The Inspector General.

Docket No. C-16-177

Decision No. CR4611

Date: May 19, 2016

DECISION

The Inspector General (IG) of the United States Department of Health and Human
Services notified Perry Tan Nguyen (Petitioner), that he was being excluded from
participation in Medicare, Medicaid, and all other federal health care programs for a
minimum period of five years under 42 U.S.C. § 1320a-7(a)(4). Petitioner requested a
hearing before an administrative law judge (ALJ) to dispute the exclusion. For the
reasons stated below, I conclude that the IG has a basis for excluding Petitioner from
program participation and that the five-year exclusion is mandated by law.

I. Background

By letter dated October 30, 2015, the IG notified Petitioner that he was being excluded
from Medicare, Medicaid, and all other federal health care programs for a period of five
years, pursuant to 42 U.S.C. § 1320a-7(a)(4). The IG advised Petitioner that the
exclusion was based on his felony conviction “in the United States District Court, Central
District of California, of a criminal offense related to the unlawful manufacture,
distribution, prescription, or dispensing of a controlled substance as defined under
Federal or State law.” IG Exhibit (Ex.) 1.
On December 16, 2015, Petitioner timely filed a request for hearing and this case was
assigned to me for hearing and decision. On December 22, 2015, Petitioner filed an
amended request for hearing. On January 20, 2016, I convened a prehearing conference
by telephone, the substance of which is summarized in my Order and Schedule for Filing
Briefs and Documentary Evidence (Order), dated January 22, 2016.

Pursuant to the Order, the IG submitted a brief (IG Br.) together with four exhibits IG
Exs. 1-4). In his brief, the IG moved for summary judgment. In response to the IG’s
brief, Petitioner submitted on March 17, 2016, a letter brief (P. Letter Br.) and eight
unmarked exhibits (Departmental Appeals Board Electronic Filing System (DAB E-File)
Items # 11, 11a-11f, and 12). On March 29, 2016, Petitioner filed a supplemental letter
brief (P. Supp. Letter Br.). The IG submitted a reply brief.

Neither party objected to any of the proposed exhibits. Petitioner did not oppose the IG’s
motion for summary judgment in either his letter brief or supplemental letter brief.

II. Issues
The issues in this case are:
1. Whether summary judgment is appropriate;

2. Whether the IG has a basis to exclude Petitioner under 42 U.S.C.
§ 1320a-7(a)(4) for five years. See 42 C.F.R. § 1001.2007(a)(1)-(2).

III. Jurisdiction

Ihave jurisdiction to adjudicate this case. 42 U.S.C. § 1320a-7(f)(1); 42 C.F.R.
§§ 1001.2007, 1005.2.

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

The IG is excluding Petitioner based on 42 U.S.C. § 1320a-7(a)(4), which requires the
IG to exclude “[a]ny individual or entity that has been convicted for an offense which
occurred after August 21, 1996, under Federal or State law, of a criminal offense
consisting of a felony relating to the unlawful manufacture, distribution, prescription,
or dispensing of a controlled substance.” Further, the regulations implementing this
statute state that this exclusion provision applies to, among others, health care
practitioners. 42 C.F.R. § 1001.101(d)(1).

Therefore, the five essential elements necessary to support the IG’s exclusion are: (1) the
individual to be excluded must have been convicted of a criminal offense; (2) the
criminal offense must have been a felony; (3) the felony conviction must have been for
conduct relating to the unlawful manufacture, distribution, prescription, or dispensing of
a controlled substance; (4) the felonious conduct must have occurred after August 21,
1996; and (5) the individual to be excluded is or was a health care practitioner. 42 U.S.C.
§ 1320a-7(a)(4); 42 C.F.R. § 1001.101(d)(1).

A. Summary judgment is appropriate.

The IG moved for summary judgment asserting that there is no issue of material fact that
is in dispute. IG Br. at 11. Petitioner does not dispute that he was convicted of a felony,
but argues that his conviction was not related to the unlawful manufacture, distribution,
prescription, or dispensing of a controlled substance. P. Letter Br.; P. Supp. Letter Br.

At the request of a party, an ALJ may decide an exclusion case by summary judgment
“where there is no disputed issue of material fact.” 42 C.F.R. § 1005.4(b)(12). “Matters
presented to the ALJ for summary judgment will follow Rule 56 of the Federal Rules of
Civil Procedure and federal case law . .. .” Civil Remedies Division Procedures § 19(a).
As stated by the United States Supreme Court:

Rule 56(c) of the Federal Rules of Civil Procedure provides
that summary judgment ‘shall be rendered forthwith if the
pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law.’
By its very terms, this standard provides that the mere
existence of some alleged factual dispute between the parties
will not defeat an otherwise properly supported motion for
summary judgment; the requirement is that there be no
genuine issue of material fact.”

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (emphasis in original).

Based on my review of the record, the parties do not dispute the following facts.
Petitioner is a registered pharmacist licensed in California. IG Ex. 2 at 7-8; P. Letter Br.
at 2; DAB E-File Item # 11f. On May 8, 2014, a grand jury convened in the United
States District Court, Central District of California (District Court), returned a Second
Superseding Indictment against Petitioner and other individuals. The grand jury charged
Petitioner with one count of conspiracy to distribute a controlled substance, in violation
of 21 U.S.C. § 846 (Count One); one count of conspiracy to commit health care fraud, in
violation of 18 U.S.C. §§ 1349, 2 (Count Three); and five counts of structuring financial
transactions, in violation of 31 U.S.C. §§ 5324(a)(3), (d)(2) and 18 U.S.C. § 2 (Counts
Ten through Fourteen). IG Ex. 2 at 13-17, 28, 38-40, 42. On October 16, 2014, during
the trial, the District Court dismissed Counts One and Three relating to Petitioner. IG Ex.
4; DAB E-File # 11; P. Letter Br. at 1. However, a jury found Petitioner guilty of Counts

Ten through Fourteen. IG Ex. 3; P. Letter Br. at 1. On May 18, 2015, the District Court
entered a Judgment and Probation/Commitment Order against Petitioner for “Structuring
Financial Transactions; Aiding and Abetting and Causing an Act To Be Done,” as
charged in Counts Ten through Fourteen of the Second Superseding Indictment, in
violation of 31 U.S.C. §§ 5324(a)(3), (d)(2) and 18 U.S.C. § 2. The District Court
sentenced Petitioner to incarceration of six months on each of the counts, to be served
concurrently, followed by a three-year term of supervised release and twelve months in a
home detention program; a $500 assessment; and a $15,000 fine. IG Ex. 3 at 1-2; DAB
E-File # Ila.

I conclude that there are no genuine issues of material fact in dispute in this case. This
case presents a narrow issue: whether Petitioner was convicted of a felony that requires
mandatory exclusion for not less than five years under 42 U.S.C. § 1320a-7(a)(4). See
42 C.F.R. § 1001.2007(a)(1)-(2). As discussed below, the challenges that Petitioner has
raised concerning the exclusion all must be resolved against him as a matter of law.
Accordingly, I grant the IG’s motion for summary judgment.

B. Petitioner was convicted of a criminal offense for purposes of 42 U.S.C.
§ 1320a-7(a)(4).

For exclusion purposes, the Act defines “convicted” as including those circumstances:
“when a judgment of conviction has been entered against the individual . . . by a Federal,
State, or local court, regardless of whether there is an appeal pending or whether the
judgment of conviction or other record relating to criminal conduct has been expunged”
or “when there has been a finding of guilt against the individual . . . by a Federal, State,
or local court.” 42 U.S.C. § 1320a-7(i)(1), (2); see also 42 C.F.R. § 1001.2. Petitioner
was found guilty after a jury trial, and the District Court issued a judgment and sentence.
IG Ex. 3; DAB E-File # 1la. Petitioner admits that he was convicted of a criminal
offense. Amended Hearing Request at 1; P. Letter Br. at 1; P. Supp. Letter Br.
Therefore, I conclude that Petitioner was convicted of a criminal offense for purposes of
42 U.S.C. § 1320a-7(a)(4).

C. Petitioner was convicted of a felony.

Petitioner was convicted of violating 31 U.S.C. §§ 5324(a)(3), (d)(2) and 18 U.S.C. § 2.
Although 31 U.S.C. § 5324, which is titled “Structuring Transactions To Evade
Reporting Requirement Prohibited,” does not specifically state that it is a felony, it does
provide that the maximum term of imprisonment for violating that section is not more
than 5 years. 31 U.S.C. § 5324(d)(1). Any offense that is not specifically classified by a
letter grade in the section defining it is classified as a Class E felony if the maximum
term of imprisonment authorized is more than 12 months and less than 5 years.

18 U.S.C. § 3559(a)(5). Further, Petitioner admits that he was convicted of a felony.
Amended Hearing Request at |. Therefore, I conclude that Petitioner was convicted of a
felony offense.

D. Petitioner’s criminal offense is related to the unlawful distribution,
prescription, or dispensing of a controlled substance.

Although Petitioner concedes the material facts in this case, Petitioner argues that while
he was convicted of a felony, he was not convicted of a crime that involves the unlawful
distribution, prescription, or dispensing of a controlled substance. Petitioner points to the
District Court’s dismissal of the counts which related to conspiracy to distribute a
controlled substance (Count One) and conspiracy to commit health care fraud (Count
Three). Amended Hearing Request at 3; P. Letter Br. at 1; P. Supp. Letter Br. Petitioner
asserts that he was found guilty of five counts of “Structuring Financial Transactions,”
which only involved the “breaking up [of his] cash deposits” into “multiple deposits on a
given day.” P. Letter Br. at 1. Petitioner argues further that there is no evidence or
allegation that he tried to hide the deposits or avoid paying taxes. P. Letter Br. at 1.

I reject Petitioner’s argument. Petitioner was involved in a conspiracy to illegally
distribute OxyContin, and his attempt to characterize his criminal acts as being solely of a
financial nature ignores the specific facts recited in the Second Superseding Indictment
and incorporated into the counts to which he was convicted. When considering all of the
facts alleged in Counts Ten through Fourteen, the counts under which Petitioner was
convicted, it is clear that his criminal conduct was related to the unlawful distribution,
prescription, or dispensing of a controlled substance. For purposes of reaching this
conclusion, it is significant that the terms “related to” and “relating to” in 42 U.S.C.

§ 1320a-7 simply mean that there must be a nexus or common sense connection.
Friedman v. Sebelius, 686 F.3d 813, 820 (D.C. Cir. 2012) (describing the phrase “relating
to” as “deliberately expansive words,” “the ordinary meaning of [which] is a broad one,”
and one that is not subject to “crabbed and formalistic interpretation”’) (internal quotes
omitted); Quayum v. U.S. Dep’t of Health and Human Servs. , 34 F.Supp.2d 141, 143
(E.D.N.Y. 1998).

In the Second Superseding Indictment, the grand jury charged Petitioner with one count
of conspiracy to distribute a controlled substance (Count One); one count of conspiracy
to commit health care fraud (Count Three); and five counts of structuring financial
transactions (Counts Ten — Fourteen). Count One, which begins at paragraph 54 of the
indictment, states that it “repeats and re-alleges paragraphs 1 through 53 of the Second
Superseding Indictment, as though fully set forth herein.” IG Ex. 2 at 13. Count Three,
which begins at paragraph 62, states that it “repeats and re-alleges paragraphs 1 through
53, 56, and 60; Overt Act Nos. 28, 29 and 33, as set forth in paragraph 57 of this Second
Superseding Indictment, as though fully set forth herein.” IG Ex. 2 at 38. Counts Ten
through Fourteen begin at paragraph 68, and the grand jury states that it “repeats and re-
alleges paragraph | through 53,56, and Overt Act Nos. 98 through 106 of
paragraph 57 of this Second Superseding Indictment, as though fully set forth
herein.” IG Ex. 2 at 42 (emphasis added). The District Court dismissed Counts One and
Three, and, in doing so, dismissed the paragraphs associated with those counts.
However, with respect to Counts Ten through Fourteen, all the paragraphs that were
repeated and re-alleged under Counts Ten through Fourteen remained incorporated by
reference into those counts.

Petitioner’s argument, that I should look at the actual crime he committed, i.e., aiding and
abetting in the structuring or assisting in the structuring of bank transactions as part of a
pattern of illegal activity (IG Ex. 2 at 42) in a vacuum, would preclude me from
determining whether his criminal conduct is related to the unlawful distribution,
prescription or dispensing of controlled substances. I must reject Petitioner’s argument
because I am permitted to look beyond the specific statutory language of a criminal
offense to determine the surrounding circumstances of the offense. See Berton Siegel,
D.O., DAB No. 1467 (1994).

As stated above, a jury found Petitioner guilty of Counts Ten through Fourteen. When
the District Court entered judgment against Petitioner, it explicitly stated that Petitioner
was convicted “as charged in Counts Ten, Eleven, Twelve, Thirteen, and Fourteen of the
Second Superseding Indictment.” IG Ex. 3 at 1. These counts incorporated by reference
facts alleged throughout much of the Second Superseding Indictment to that point.
Although Petitioner was only found guilty of the criminal offenses specified under
Counts Ten through Fourteen, this does not mean that the allegations set forth in
“paragraph[s] | through 53, 56, and Overt Act Nos. 98 through 106 of paragraph 57,”
which paragraphs were re-alleged and incorporated by reference into Counts Ten through
Fourteen, are meaningless or inapplicable to determining the circumstances surrounding
Petitioner’s crime. To the contrary, those facts are directly relevant. Even if the facts
specifically associated with Counts One and Three cannot be considered due to the
dismissal of those counts, the facts alleged prior to Count One, i.e., paragraphs | through
53, are sufficient to show the required nexus since they were not dismissed.

Paragraphs | through 13 of the Second Superseding Indictment describe the scheme, of
which Petitioner was a part, as involving a purported medical clinic that generated
fraudulent prescriptions for OxyContin, which was subsequently diverted and sold on the
streets. IG Ex. 2 at 1-4. Paragraph 12 of the Second Superseding Indictment describes
Petitioner’s role in the scheme:

Defendants [another individual] and [Petitioner], together
with co-conspirator [another individual], structured the
deposits of cash generated from the sale of OxyContin
prescribed by the Clinic and its doctors into their bank
accounts by depositing the cash in amounts of $10,000 or less
to evade bank reporting requirements for transactions over
$10,000.

IG Ex. 2 at 4. Paragraph 29 of the indictment directly pertains to Petitioner:

[Petitioner] was a pharmacist, licensed in California to
lawfully dispense prescribed Schedule II narcotic drugs.
[Petitioner] owned and operated St. Paul’s Pharmacy . . .
located in Huntington Park, California, from which
[Petitioner] filled and caused to be filled prescriptions from
the Clinic, starting in or about December 2008. [Petitioner]
controlled bank accounts at Bank of America, a domestic
financial institution, . . . , into which [Petitioner] deposited
proceeds from the sale of OxyContin.

IG Ex. 2 at 7-8. As already stated above, the allegations in the Second Superseding
Indictment alleged before Counts One and Three, and incorporated by reference in
Counts Ten through Fourteen, indicate that Petitioner and his pharmacy participated in a
scheme that included the illegal sale of OxyContin, and Petitioner’s financial transactions
furthered this criminal activity.

If we also consider all of the incorporated facts from Counts One and Three of the
Second Superseding Indictment, the nexus of Petitioner’s crime to the distribution,
prescribing, or dispensing of controlled substances is even clearer. Subparagraphs j. and
q. of Paragraph 56 also explain Petitioner’s involvement in the scheme:

Defendants .. . [Petitioner and other co-conspirators], would
dispense or cause to be dispensed the OxyContin to [one of
the defendants], [other co-conspirators] . . . , who would in
turn give the OxyContin to the Runners.

RKK

To dispose of cash proceeds generated from the proceeds of
OxyContin without drawing scrutiny, . . . [other defendants
and Petitioner], would structure deposits of cash proceeds
from the sale of OxyContin by regularly depositing the cash
proceeds in amounts of $10,000 or less to evade bank
reporting requirements.

IG Ex. 2 at 15,17.

Further, the Overt Acts Nos. 98 through 104, set out under Paragraph 57 of the
indictment, explicitly state that Petitioner “dispensed or caused to be dispensed”
OxyContin pills to co-conspirators and a recruited patient in November 2008, March
2009, April 2009, June 2009, July 2009, and August 2009. Overt Act No. 105 under
Paragraph 57 states that, on or about January 28, 2009, Petitioner “made or caused” two
separate cash deposits in the amounts of $10,000 and $10,000 into two accounts at Bank
of America. Overt Act No. 106 under Paragraph 57 states that, on or about August 19,
2009, Petitioner “made or caused” two separate cash deposits in the amounts of $9,000
and $10,000 into an account at Bank of America. IG Ex. 2 at 28.

Finally, under Counts Ten through Fourteen, the counts for which Petitioner was
convicted, the indictment charges that Petitioner:

aided and abetted by others . . . knowingly, and for the
purpose of evading the reporting requirements of Section
5313(a) of Title 31, United States Code, and the regulations
promulgated thereunder, structured, assisted in structuring,
and caused to be structured, the following transactions with
Bank of America, . . . as part of a pattern of illegal activity
involving more than $100,000 in a 12-month period, and
while violating another law of the United States.

IG Ex. 2 at 42. Following this text is the recitation of the specific charges under Counts
Ten, Eleven, Twelve, Thirteen, and Fourteen, stating the date of activity and the
transaction associated with that date. I note that the charges in Counts Ten and Fourteen
are identical to Overt Acts Nos. 105 and 106, described above. Count Ten charges that
Petitioner, on January 28, 2009, made cash deposits in the amounts of $10,000 and
$10,000 into two accounts at Bank of America, and Count Fourteen charges that, on
August 19, 2009, Petitioner made cash deposits in the amounts of $9,000 and $10,000
into an account at Bank of America. IG Ex. 2 at 42.

It is thus clear from the Second Superseding Indictment’s language that Petitioner’s
criminal acts, as charged in Counts Ten through Fourteen, involved more than simply
engaging in illegal financial transactions. As discussed above, the paragraphs of the
Second Superseding Indictment that were re-alleged and incorporated within Counts Ten
through Fourteen establish that Petitioner had an active role in a scheme to illegally
distribute OxyContin. The underlying facts supporting Petitioner’s conviction show that
Petitioner dispensed OxyContin pills to other co-conspirators or a recruited patient and
also structured cash deposits from the sale of OxyContin to evade bank reporting
requirements. The requisite connection to controlled substances is thus established, and I
conclude that Petitioner was convicted of a felony that is related to, i.e., has a nexus to,
the unlawful distribution, prescription, or dispensing of a controlled substance under

42 U.S.C. § 1320a-7(a)(4).
E. The underlying conduct of Petitioner’s felony conviction occurred after
August 21, 1996.

To be excluded pursuant to 42 U.S.C. § 1320a-7(a)(4), Petitioner’s felony offense “must
have occurred after August 21, 1996.” The record shows that the criminal acts which
formed the basis of Petitioner’s conviction occurred between January and August 2009.
IG Ex. 2 at 42. Petitioner does not dispute this fact and admits that he was “convicted of
a felony occurring after August 21, 1996.” Amended Hearing Request at 1.

F. Petitioner, as a licensed pharmacist, is a health care practitioner subject to
exclusion under 42 U.S.C. § 1320a-7(a)(4).

The regulations implementing 42 U.S.C. § 1320a-7(a)(4) state that an exclusion under
that section applies to, among others, “a health care practitioner.” 42 C.F.R.

§ 1001.101(d)(1). Petitioner admits that he is licensed as a Registered Pharmacist in
California. P. Letter Br. at 2; DAB E-File Item # 11f. Therefore, he is a health care
practitioner who is subject to exclusion under 42 U.S.C. § 1320a-7(a)(4).

G. Petitioner’s additional arguments are unavailing.

In explaining his position, Petitioner states that the pain management clinic through
which the distribution operation was conducted held itself out as legitimate to
pharmacists such as himself. Petitioner claims that he conducted “due diligence” in
checking the background of the physicians at the clinic and making sure that patients
picked up their prescriptions with valid identification. P. Letter Br. at 1. To the extent
that Petitioner attempts to minimize the illegality of his actions, I consider his statements
to constitute an impermissible collateral attack on his conviction. Under the regulations,
Petitioner is explicitly prohibited from re-litigating his criminal offense before me, and I
cannot review the efficacy of Petitioner’s conviction. 42 C.F.R. § 1001.2007(d); see also
Travers v. Shalala, 20 F.3d 993, 998 (9th Cir. 1994); Anderson v. Thompson, 311 F.
Supp. 2d 1121, 1128 (D. Kan. 2004).

H. Petitioner must be excluded for the statutory minimum of five years under
42 USC. § 1320a-7(c)(3)(B).

I conclude that Petitioner’s conviction meets the five elements of a mandatory exclusion
under 42 U.S.C. § 1320a-7(a)(4) as well as the requirement in 42 C.F.R.

§ 1001.101(d)(1). Therefore, the IG was authorized to impose a mandatory exclusion.
Because I have concluded that a basis exists to exclude Petitioner pursuant to 42 U.S.C.
§ 1320a-7(a)(4), Petitioner must be excluded for a minimum period of five years.

42 US.C. § 1320a-7(c)(3)(B); 42 C.F.R. §§ 1001.102(a), 1001.2007(a)(2).
10

V. Conclusion

l affirm the IG’s determination to exclude Petitioner from participating in Medicare,
Medicaid, and all other federal health care programs for the statutory five-year minimum
period pursuant to 42 U.S.C. §§ 1320a-7(a)(4), (c)(3)(B).

Is/
Scott Anderson
Administrative Law Judge