Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Subgenius Entertainment LLC
d/b/a Goat Head Saloon,

Respondent.

Docket No. C-13-745
FDA Docket No. FDA-2013-H-0532

Decision No. CR2860

Date: July 18, 2013

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an administrative complaint
(Complaint) against Respondent, Subgenius Entertainment LLC d/b/a Goat Head
Saloon, that alleges facts and legal authority sufficient to justify imposing a $500
civil money penalty. Respondent did not timely answer the Complaint, nor did
Respondent request an extension of time within which to file an answer.
Therefore, I enter a default judgment against Respondent and assess a civil money
penalty of $500.

CTP began this case by filing a copy of the Complaint with the Food and Drug
Administration’s (FDA) Division of Dockets Management and serving the
Complaint on Respondent. The Complaint alleges that Respondent unlawfully
sold individual cigarettes, sold a tobacco product to a minor, and failed to verify
that the purchaser of the tobacco product was of sufficient age, thereby violating
the Federal Food, Drug, and Cosmetic Act (Act), codified at 21 U.S.C. §§ 301-
399d, and its implementing regulations found at 21 C.F.R. Part 1140. CTP seeks a
civil monetary penalty of $500 for these violations.

On May 31, 2013, CTP served the Complaint on Respondent by United States
Postal Service Certified Mail, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the
Complaint and accompanying cover letter, CTP explained that, within 30 days,
Respondent should pay the penalty, file an answer, or request an extension of time
within which to file an answer. CTP warned Respondent that, if it failed to take
one of these actions within 30 days, an Administrative Law Judge could issue an
initial decision ordering Respondent to pay the full amount of the proposed
penalty, pursuant to 21 C.F.R. § 17.11.

Respondent has not filed an answer within the time provided by regulation or
timely requested an extension. Pursuant to 21 C.F.R. § 17.11(a), 1am required to
“assume the facts alleged in the complaint to be true[] and, if such facts establish
liability under [the Act],” issue a default judgment and impose a civil monetary
penalty. Accordingly, I must determine whether the allegations in the Complaint
establish violations of the Act.

Specifically, CTP alleges that:

e Respondent owns Goat Head Saloon, an establishment that sells tobacco
products and is located at 1423 South Country Club Drive, Suite 12, Mesa,
Arizona 85210. Complaint § 3.

e On May 10, 2012, an FDA-commissioned inspector observed that
Respondent sold individual cigarettes. Complaint § 10.

e ‘“[O]n August 23, 2012, CTP issued a Warning Letter to Goat Head
Saloon.” The letter informed Respondent of the violation the FDA-
commissioned inspector had observed on May 10, 2012, and explained that
FDA could initiate a civil money penalty or other regulatory action if
Respondent failed to correct the violation. Moreover, CTP explained that
the Warning Letter was not intended to provide an exhaustive list of
violations and that Goat Head Saloon was responsible for complying with
the law. Complaint § 10.

e Respondent received the Warning Letter on August 27, 2012. United
Parcel Service delivered the letter to “MARKEE.” CTP received no
response. Complaint § 11.

e During a following inspection, FDA-commissioned inspectors documented
two additional violations. “Specifically, a person younger than 18 years of
age was able to purchase a package of Marlboro cigarettes on December 14,
2012, at approximately 12:56 PM[.]” And, “the minor’s identification was
not verified before the [December 14, 2012,] sale... .” Complaint § 1.

Taking these facts as true, I must find, pursuant to 21 C.F.R. § 17.11(a), that
Respondent is liable under the Act. The Act prohibits misbranding of a tobacco
product. 21 U.S.C. § 331(k). A tobacco product is misbranded if sold or
distributed in violation of regulations issued under section 906(d) of the Act,
codified at 21 U.S.C. § 387f(d). 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R § 1140.1(b).
Those regulations prohibit retailers from opening a cigarette or smokeless tobacco
package “‘to sell or distribute individual cigarettes ....” 21 C.F.R. § 1140.14(d).
They also prohibit the sale of “cigarettes or smokeless tobacco to any person
younger than 18 years of age[.]” 21 C.F.R. § 1140.14(a). Finally, those
regulations require a retailer to “verify by means of photographic identification
containing the bearer’s date of birth that no person purchasing the [tobacco]
product is younger than 18 years of age[.]” 21 C.F.R. § 1140.14(b)(1).

Here, Respondent violated 21 C.F.R. § 1140.14(a), (b)(1), and (d). First, on May
10, 2012, Respondent unlawfully sold individual cigarettes in violation of 21
C.F.R. § 1140.14(d). Then, on December 14, 2012, Respondent unlawfully sold a
tobacco product to a minor without verifying that the purchaser was not younger
than 18 years of age, in violation of 21 C.F.R. § 1140.14(a) and (b)(1). Therefore,
Respondent’s actions and omission on two separation occasions at the same retail
outlet constitute violations of law for which a civil money penalty is merited.

The regulations require me to impose a civil money penalty in the amount that is
either the maximum provided for by law or the amount sought in the Complaint,
whichever is smaller. 21 C.F.R. § 17.11(a). Respondent has committed its third
violation within a 24-month period, the maximum penalty for which is $500. 21
C.F.R. § 17.2. And, CTP has requested a civil money penalty in that amount.
Therefore, I impose a civil money penalty in the amount of $500.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Tasneem Khan
d/b/a Honey Bee Farms,

Respondent.

Docket No. C-13-801
FDA Docket No. FDA-2013-H-0614

Decision No. CR2859

Date: July 17, 2013

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint
(Complaint) against Respondent, Tasneem Khan d/b/a Honey Bee Farms, that
alleges facts and legal authority sufficient to justify the imposition of a civil
money penalty of $500. Respondent did not timely answer the Complaint, nor did
Respondent request an extension of time within which to file an Answer.
Therefore, I enter a default judgment against Respondent and assess a civil money
penalty of $500.

CTP began this case by serving the Complaint on Respondent and filing a copy of
the Complaint with the Food and Drug Administration’s (FDA) Division of
Dockets Management. The Complaint alleges that Respondent impermissibly sold
tobacco products to a minor or minors and failed to verify that a purchaser or
purchasers of cigarettes or smokeless tobacco were 18 years of age or older,
thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C.
§ 301 et seq., and its implementing regulations, Cigarettes and Smokeless
Tobacco, 21 C.F.R. Part 1140 (2012). CTP seeks a civil money penalty of $500.

On May 24, 2013, CTP served the Complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and
accompanying cover letter, CTP explained that within 30 days, Respondent should
pay the proposed penalty, file an answer, or request an extension of time within
which to file an answer. CTP warned Respondent that if it failed to take one of
these actions within 30 days, an Administrative Law Judge could, pursuant to

21 C.F.R. § 17.11, issue an initial decision ordering Respondent to pay the full
amount of the proposed penalty.

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

Specifically, CTP alleges the following facts in its Complaint:

e Respondent owns Honey Bee Farms, an establishment that sells tobacco
products and is located at 265 Broad Street, New London, Connecticut
06320. Complaint § 2.

e On July 17, 2012, at approximately 1:33 PM, an FDA-commissioned
inspector observed two violations of 21 C.F.R. Part 1140 at Honey Bee
Farms/Sonoco. The inspector observed a violation of 21 C.F.R.

§ 1140.14(a), a regulation prohibiting the sale of cigarettes or smokeless
tobacco to a person younger than 18 years of age. The inspector also
observed a violation of 21 C.F.R. § 1140.14(b)(1), a regulation requiring
retailers to verify, by means of photo identification containing the
purchaser’s date of birth, that no purchaser of cigarettes or smokeless
tobacco is younger than 18 years of age. Complaint 7 9.

e CTP issued a Notice of Compliance Check Inspection to Honey Bee
Farms/Sonoco on July 27, 2012, “stating that an inspection had been
conducted on July 17, 2012, and that during this inspection a minor was
able to enter the establishment and purchase a regulated tobacco product at
approximately 1:33 PM.” The Notice indicated that the named violation

was not necessarily the only violation observed during the inspection.
Complaint § 9.

¢ On September 27, 2012, CTP issued a Warning Letter to Respondent
regarding the inspector’s observations from July 17, 2012. The letter
explained that the observations constituted violations of regulations found
at 21 C.F.R. § 1140.14(a) and 1140.14(b)(1), and that the named violations
were not necessarily intended to be an exhaustive list of all violations at the
establishment. The Warning Letter went on to state that if Respondent
failed to correct the violation, a civil money penalty or other regulatory
action by the FDA could occur and that Respondent is responsible for
complying with the law. Complaint § 9.

e FDA received no response to the Warning Letter from Respondent, though
United Parcel Service records demonstrate that an individual named
“SHAKIR” received the Warning Letter on September 28, 2012.
Complaint § 10.

e¢ On December 31, 2012, at approximately 12:09 PM, FDA-commissioned
inspectors observed additional violations of 21 C.F.R. Part 1140 at Honey
Bee Farms. The inspectors observed a violation of 21 C.F.R. § 1140.14(a)
when “a person younger than 18 years of age was able to purchase a
package of Marlboro Gold Pack cigarettes.” The inspectors observed a
violation of 21 C.F.R. § 1140.14(b)(1) when “the minor's identification was
not verified before the [above referenced] sale... .” Complaint § 1.

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

§ 1140.1(b). The Secretary issued the regulations at 21 C.F.R. Part 1140 under
section 906(d) of the Act. 21 U.S.C. § 387(a); 21 U.S.C. § 387f(d)(1); 75 Fed.
Reg. 13,229 (Mar. 10, 2010). The regulations prohibit the sale of cigarettes or
smokeless tobacco to any person younger than 18 years of age. 21 C.F.R.

§ 1140.14(a). The regulations also require retailers to verify, by means of photo
identification containing the purchaser’s date of birth, that no purchaser of
cigarettes or smokeless tobacco is younger than 18 years of age. 21 C.F.R.

§ 1140.14(b)(1).

Taking the above alleged facts as true, Respondent had four violations of
regulations contained in 21 C.F.R. Part 1140 within a six-month period.
Specifically, Respondent had two violations on July 17, 2012, and two violations
on December 31, 2012. Respondent’s actions violated the prohibition against

selling cigarettes or smokeless tobacco to persons younger than 18 years of age.
21 C.F.R. § 1140.14(a). Respondent’s actions also violated the requirement that
retailers verify, by means of photo identification containing a purchaser’s date of
birth, that no purchaser of cigarettes or smokeless tobacco is younger than

18 years of age. 21 C.F.R. § 1140.14(b)(1). Therefore, Respondent’s actions
constitute violations of law for which a civil money penalty is merited.

The regulations require me to impose a civil money penalty in the amount that is
either the maximum provided for by law or the amount sought in the Complaint,
whichever is smaller. 21 C.F.R. § 17.11(a)(1)-(2). The regulations currently
allow a maximum penalty of $2,000 for a fourth violation within a six-month
period. 21 C.F.R. § 17.2. CTP, however, has requested a fine in the amount of
$500. Therefore, I find that a civil money penalty of $500 is warranted and so

order one imposed.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Maribel Padilla
d/b/a Cecilia’s Convenience Store / 99 Cent Store,

Respondent.

Docket No. C-13-451
FDA Docket No. FDA-2013-H-0207

Decision No. CR2858

Date: July 17, 2013

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an administrative complaint
(Complaint) against Respondent, Maribel Padilla d/b/a Cecilia’s Convenience
Store / 99 Cent Store, alleging facts and legal authority sufficient to justify
imposing a civil money penalty of $250. Respondent did not timely answer the
Complaint, nor did Respondent request an extension of time within which to file
an answer. Therefore, I enter a default judgment against Respondent and order
that Respondent pay a civil money penalty in the amount of $250.

CTP began this case by serving the Complaint on Respondent and filing a copy of
the Complaint with the Food and Drug Administration’s (FDA) Division of
Dockets Management. The Complaint alleges that Respondent’s staff unlawfully
sold regulated tobacco products to a minor or minors on two separate occasions,
thereby violating the Federal Food, Drug, and Cosmetic Act (Act) and its

implementing regulations found at 21 C.F.R. Part 1140. CTP seeks a civil money
penalty of $250.

On June 3, 2013, CTP served the Complaint on Respondent by personal delivery,
pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and accompanying
cover letter, CTP explained that, within 30 days, Respondent should pay the
penalty, file an answer, or request an extension of time within which to file an
answer. CTP warned Respondent that, if it failed to take one of these actions
within 30 days, an Administrative Law Judge could, pursuant to 21 C.F.R. §
17.11, issue an initial decision by default ordering Respondent to pay the full
amount of the proposed penalty. Respondent did not take any of the required
actions within the time provided by regulation.

I am required to issue an initial decision and default judgment if the Complaint is
sufficient to justify a penalty, and the Respondent fails to answer timely or to
request an extension. 21 C.F.R. § 17.11(a). For that reason, I must decide
whether a default judgment is appropriate here, and I conclude that it is merited
based on the allegations of the Complaint and Respondent’s failure to answer
them.

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

e Respondent owns Cecilia’s Convenience Store / 99 Cent Store, an
establishment that sells tobacco products and is located at 9354 West Van
Buren Street, Tolleson, Arizona 85353.

e On January 4, 2012, an FDA-commissioned inspector observed a violation
of 21 C.F.R. § 1140.14(a) when Respondent’s staff sold cigarettes or
smokeless tobacco to a person younger than 18 years of age.

e On February 23, 2012, CTP issued a Warning Letter to Respondent
detailing the inspector’s observations from January 4, 2012. In addition to
describing the violation, the letter advised Respondent that the FDA may
initiate a civil money penalty action or take other regulatory action against
Respondent if Respondent failed to correct the violation. The letter also
stated that it was Respondent’s responsibility to comply with the law.

¢ On February 29, 2012, Maribel Padilla, the owner of 99 Cent Store,
responded by telephone to CTP’s Warning Letter on behalf of Respondent.
Ms. Padilla stated that she would discuss the tobacco sales laws with her
employee and change the store’s tobacco sales policy to include “requesting

ID of persons under age 27 and refusing to sell tobacco products to
minors.”

e¢ On November 16, 2012, FDA-commissioned inspectors documented an
additional violation during another inspection of Respondent’s
establishment. At approximately 10:01 AM MT, Respondent’s staff sold a
package of “Marlboro” cigarettes to a person younger than 18 years of age.

These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is
misbranded if sold or distributed in violation of regulations issued under section
906(d) of the Act. 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R § 1140.1(b). Under 21
C.F.R. § 1140.14(a), no retailer may sell cigarettes or smokeless tobacco to any
person younger than 18 years of age.

Here, Respondent’s staff sold cigarettes or smokeless tobacco to a minor or minors
on two separate occasions, January 4, 2012, and November 16, 2012.
Respondent’s actions on two occasions at the same retail outlet constitute
violations of law for which a civil money penalty is merited. Accordingly, I find
that a civil money penalty of $250 is permissible under 21 C.F.R. § 17.2 and order
one imposed.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.
Marina Sweet Shop, Inc.,

Respondent.

Docket No. C-13-842

FDA Docket No. FDA-2013-H-0650
Decision No. CR2857

Date: July 17, 2013

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an administrative comp!

laint (Complaint)

against Respondent, Marina Sweet Shop, Inc., that alleges facts and legal authority
sufficient to justify imposing a $2,000 civil money penalty. Respondent did not timely
answer the Complaint, nor did Respondent request an extension of time within which to

file an answer. Therefore, I enter a default judgment against Respon
civil money penalty of $2,000.

CTP began this case by filing a copy of the Complaint with the Food

lent and assess a

and Drug

Administration’s (FDA) Division of Dockets Management and serving the Complaint on

Respondent. The Complaint alleges that, on two separate occasions,
unlawfully sold a tobacco product to a minor and failed to verify that

Respondent
the purchaser of the

tobacco product was of sufficient age, and on one of those occasions also unlawfully sold

an individual cigarette, thereby violating the Federal Food, Drug, and

Cosmetic Act

(Act), codified at 21 U.S.C. §§ 301-399d, and its implementing regulations found at 21

C.F.R. Part 1140. CTP seeks a civil monetary penalty of $2,000 for t

ese violations.
On June 5, 2013, CTP served the Complaint on Respondent by United Parcel Service,
pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and accompanying cover letter,
CTP explained that, within 30 days, Respondent should pay the penalty, file an answer,
or request an extension of time within which to file an answer. CTP warned Respondent
that, if it failed to take one of these actions within 30 days, an Administrative Law Judge
could issue an initial decision by default ordering Respondent to pay the full amount of
the proposed penalty, pursuant to 21 C.F.R. § 17.11.

Respondent has not filed an answer within the time provided by regulation or timely
requested an extension. Pursuant to 21 C.F.R. § 17.11(a), 1am required to “assume the
facts alleged in the complaint to be true[] and, if such facts establish liability under [the
Act],” issue an initial decision by default and impose a civil monetary penalty.
Accordingly, I must determine whether the allegations in the Complaint establish
violations of the Act.

Specifically, CTP alleges that:

e Respondent owns Marina Sweet Shop, an establishment that sells tobacco
products and is located at 202 Washington Place, Passaic, New Jersey 07055.
Complaint 3.

¢ On December 1, 2012, an FDA-commissioned inspector observed two violations
at Marina Sweet Shop. First, “a person younger than 18 years of age was able to
purchase a package of Newport Box cigarettes . . . at approximately 3:05 PM
ET[.]” The inspector also noted that “the minor’s identification was not verified
before the [December 1, 2012,] sale... .” Complaint § 10.

e ‘“[O]n December 5, 2012, CTP issued a Notice of Compliance Check Inspection”
informing Respondent that, on December 1, 2012, an inspector had visited and
observed a minor enter the establishment and purchase a tobacco product at
approximately 3:03 PM. The Notice warned “that other potential violations of
federal tobacco law may have been observed,” and, if violations had occurred,
FDA could notify Respondent further. Complaint § 10.

¢ “[OJn January 3, 2013, CTP issued a Warning Letter to Marina’s""!Sweet Shop.”
The letter informed Respondent of the violations the FDA-commissioned
inspector had observed on December 1, 2012, and explained that FDA could
initiate a civil money penalty or other regulatory action if Respondent failed to

' The caption of the Complaint names Respondent as Marina Sweet Shop. Evidently, the
references to “Marina’s Sweet Shop” are typographical errors in the body of the
Complaint, and I can infer that they refer to Respondent Marina Sweet Shop.
correct the violations. Moreover, CTP explained that the Warning Letter was not
intended to provide an exhaustive list of violations and that Marina’s Sweet Shop
was responsible for complying with the law. Complaint § 10.

e Respondent responded in writing to the Warning Letter on January 28, 2013.
Respondent explained “that the establishment had trained its employees on the
tules and regulations regarding the sale of tobacco products, including what types
of identification are acceptable for age-verification purposes.” Respondent also
assured “that the establishment’s employees would be checking identification of
tobacco purchasers under the age of 27.” Complaint § 11.

¢ On March 27, 2013, CTP acknowledged that it had received Respondent’s
response. CTP also reminded Respondent that it had a continuing duty to comply
with the law. Complaint § 11.

e During a following inspection, FDA-commissioned inspectors documented three
additional violations. First, in violation of 21 C.F.R. § 1140.14(a), “a person
younger than 18 years of age was able to purchase an individual cigarette on April
13, 2013, at approximately 12:57 PM[.]” Second, in violation of 21 C.F.R.

§ 1140.14(b)(1), “the minor’s identification was not verified before the [April 13,
2013,] sale... .” Finally, the inspectors cited Respondent for “[s]elling individual
cigarettes,” during the two-part inspection conducted on April 13 and April 23,
2013, in violation of 21 C.F.R. § 1140.14(d). Complaint § 1.

Taking these facts as true, I must find, pursuant to 21 C.F.R. § 17.11(a), that Respondent
is liable under the Act. The Act prohibits misbranding of a tobacco product. 21 U.S.C. §
331(k). A tobacco product is misbranded if sold or distributed in violation of regulations
issued under section 906(d) of the Act, codified at 21 U.S.C. § 387f(d). 21 U.S.C. §
387c(a)(7)(B); 21 C.F.R § 1140.1(b). Those regulations prohibit the sale of “cigarettes or
smokeless tobacco to any person younger than 18 years of age[.]” 21 C.F.R. §
1140.14(a). Those regulations also require a retailer to “verify by means of photographic
identification containing the bearer’s date of birth that no person purchasing the [tobacco]
product is younger than 18 years of age[.]” 21 C.F.R. § 1140.14(b)(1). Finally, the
regulations prohibit retailers from opening a cigarette or smokeless tobacco package “‘to
sell or distribute individual cigarettes ....” 21 C.F.R. § 1140.14(d).

Here, Respondent violated 21 C.F.R. § 1140.14(a) and (b)(1) on two separate occasions.
First, on December 1, 2012, Respondent unlawfully sold a tobacco product to a minor
without verifying that the purchaser was not younger than 18 years of age, in violation of
21 C.F.R. § 1140.14(a) and (b)(1). Then, on April 13, 2013, Respondent again sold a
tobacco product to a minor without verifying that the minor was of sufficient age. And,
during that two-part inspection, Respondent sold an individual cigarette. Therefore,
Respondent’s actions and omissions on two separation occasions at the same retail outlet
constitute violations of law for which a civil money penalty is merited.

The regulations require me to impose a civil money penalty in the amount that is either
the maximum provided for by law or the amount sought in the Complaint, whichever is
smaller. 21 C.F.R. § 17.11(a). Respondent has committed its fifth violation within a 36-
month period, the maximum penalty for which is $5,000. 21 C.F.R. § 17.2. CTP,
however, has requested a civil money penalty in the amount of $2,000, which is the
maximum penalty for the fourth violation committed within a 24-month period.
Therefore, I impose a civil money penalty in the amount of $2,000.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant,
v.
County 17 Club, Inc.,
Respondent.

Docket No. C-13-760
FDA Docket No. FDA-2013-H-0563

Decision No. CR2855

Date: July 16, 2013

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) initiated the above-captioned matter when it
filed an Administrative Complaint for Civil Money Penalties (Complaint) with the
Departmental Appeals Board, Civil Remedies Division (CRD) and the Food and Drug
Administration’s (FDA) Division of Dockets Management. CTP seeks to impose civil
money penalties under the Federal Food, Drug, and Cosmetic Act (Act) and the Act’s
implementing regulations.

The Complaint alleges the following facts. Respondent owns an establishment in Detroit
Lakes, Minnesota, that sells tobacco products. Complaint § 3. CTP conducted two
inspections of the establishment. Complaint J 9. During an August 1, 2012 inspection,
an FDA-commissioned inspector observed that Respondent:

[Sold] tobacco products to a minor, in violation of 21 C.F.R. § 1140.14(a); and
fail[ed] to verify the age of a person purchasing tobacco products by means of
photographic identification containing the bearer’s date of birth, as required by
21 C.F.R. § 1140.14(b)(1).

Complaint § 10.

On October 18, 2012, CTP issued a warning letter to Respondent specifying the
violations that the inspector observed. The letter warned Respondent that if it failed to
correct the violations, civil money penalties could be imposed on it and that it was
Respondent’s responsibility to ensure compliance with the law. Complaint J 10. The
FDA did not receive a response to the warning letter. Complaint § 11.

During a subsequent inspection, an FDA-commissioned inspector documented that
“a person younger than 18 years of age was able to purchase a package of Marlboro
cigarettes on December 27, 2012, at approximately 12:43 PM.” Complaint { 1.

In compliance with 21 C.F.R. §§ 17.5 and 17.7, CTP served Respondent with the
Complaint on May 16, 2013, via United Parcel Service. CTP charged Respondent with
violating 21 C.F.R. § 1140.14(a) (sale of tobacco products to a minor) and 21 C.F.R.

§ 1140.14(b)(1) (failure to verify the age of a person purchasing tobacco products by
means of photographic identification containing the bearer’s date of birth).

Complaint § 1, 10. CTP asked the CRD to impose a $250 civil money penalty based
on two alleged violations of the regulations in a 12-month period. Complaint § 13.

The Complaint provided detailed instructions related to filing an answer and requesting
an extension of time to file an answer. Complaint J 14-18, 20-22. The Complaint stated
that failure to file an answer could result in the imposition of a civil money penalty
against Respondent. Complaint § 19. Respondent neither filed an answer nor requested
an extension of time within the 30-day time period prescribed in 21 C.F.R. § 17.9.

If a respondent does not file an answer within 30 days of a properly served complaint, the
regulations provide that:

the presiding officer shall assume the facts alleged in the complaint to be
true, and, if such facts establish liability under the relevant statute, the
presiding officer shall issue an initial decision within 30 days of the time
the answer was due, imposing:
(1) The maximum amount of penalties provided for by law for the
violations alleged; or
3
(2) The amount asked for in the complaint, whichever amount is smaller.

21 C.F.R. § 17.11(a). Further, a failure to file a timely answer means that “the
respondent waives any right to a hearing and to contest the amount of the penalties and
assessments” imposed in the initial decision. 21 C.F.R. § 17.11(b).

Accepting the facts alleged in the Complaint as true, I find that those facts establish
Respondent’s liability under the Act. See 21 U.S.C. §§ 333(f)(9), 387c(a)(7)(B), 387£(d);
21 C.F.R. §§ 1140.1(b), 1140.14. Lalso find that CTP’s request to impose a $250 civil
money penalty is permissible. See 21 C.F.R. § 17.2.

Therefore, Respondent is directed to pay a civil money penalty in the amount of $250.00.
This initial decision becomes final and binding upon both parties 30 days after the date of
its issuance. 21 C.F.R. § 17.11(b).

It is so ordered.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Sandra Scarce,
(O.L. File No. 12-4-2364-9)

Petitioner,
v.
The Inspector General.
Docket No. C-13-704
ALJ Ruling No. 2013-15
Date: July 15, 2013
DISMISSAL
Until the state board revoked her license, Petitioner, Sandra Scarce, was a nurse
practicing in Arizona. Pursuant to section 1128(b)(4) of the Social Security Act (Act),
the Inspector General (I.G.) has excluded her from participating in Medicare, Medicaid,

and all federal health care programs. Petitioner appeals, challenging the “breadth” of the
exclusion.

The I.G. has moved to dismiss, arguing that Petitioner fails to raise an issue that may
properly be addressed in a hearing. I agree and, for the reasons discussed below, grant
the I.G.’s Motion to Dismiss.

Discussion

Ina letter dated February 28, 2013, the I.G. advised Petitioner Scarce that she was
excluded from participating in Medicare, Medicaid, and all federal health care programs
because the Arizona State Board of Nursing revoked her nursing license for reasons
bearing on her professional competence, professional performance, or financial integrity.
The letter explained that section 1128(b)(4) of the Act authorizes the exclusion. LG. Ex.
lat 1.
Petitioner concedes that the Arizona nursing board revoked her license for reasons
bearing on her professional competence, professional performance, or financial integrity,
and that she is therefore subject to exclusion under section 1128(b)(4). She complains
about the “breadth” of the exclusion and asks for an exemption so that she can perform
other, non-nursing work from which she would be precluded if unable to participate in
federal healthcare programs. P. Response; Order at 2 (May 20, 2013).'

Section 1128(b)(4) of the Act authorizes the Secretary of Health and Human Services to
exclude from program participation any individual whose license to provide health care
“has been revoked or suspended by any State licensing authority” for reasons bearing on
the individual’s “professional competence, professional performance, or financial
integrity.” See also 42 C.F.R. § 1001.501. The period of exclusion “shall not be less
than the period during which [her] . . . license . . . is revoked. . . .” Act § 1128(c)(3)(E);
42 CFR. § 1001.501(b)(1).

An excluded individual may challenge the basis for the exclusion and the length of the
exclusion. 42 C.F.R. § 1001.2007(a)(1). I am required to dismiss a request for hearing
where that request fails to raise any issue that may properly be addressed in a hearing. 42
C.F.R. § 1005.2(e)(4). Because Petitioner’s hearing request does not raise an issue that I
am empowered to resolve, I grant the I.G.’s motion and dismiss Petitioner’s appeal.

Regulations governing these procedures afford no further appeal rights. 42 C.F.R.

§ 1005.20; 42 C.F.R. § 1005.21(a), (d); Departmental Appeals Board, Guidelines -- In
Cases to which Procedures in 42 C.F.R. Part 1005 Apply; see also 57 Fed. Reg. 3,298,
3,327 (Jan. 29, 1992) (stating that administrative appeals of administrative law judge
decisions have been limited by regulation). There is no administrative appeal from a
dismissal of a hearing request. 55 Fed. Reg. 12,205, 12,213 (Apr. 2, 1990) (“If [a] party
fails to file a timely request for a hearing, or thereafter withdraws or abandons his or her
request for a hearing, the [administrative law judge] is required to dismiss the hearing
request. In such a case, the CMP or exclusion would become final with no further appeal
permitted.”) (emphasis added); see also 57 Fed. Reg. 3,298, 3,325 (Jan. 29, 1992)
(adding as a ground for dismissal in 42 C.F.R. § 1005.2(e) a party’s failure to raise any
issue that may properly be addressed in a hearing).

/s/
Carolyn Cozad Hughes
Administrative Law Judge

' The I.G. filed a motion to dismiss (I.G. Motion) with one exhibit (I.G. Ex. 1). In
addition to her appeal, undated but submitted on April 26, 2013, Petitioner responded to
the I.G.’s motion (P. Response).


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Kelly Gene Svedberg,
(O.I. File No. 4-08-40374-9)

Petitioner,
v.
The Inspector General.

Docket No. C-13-507

ALJ Ruling No. 2013-14
Date: July 12, 2013
DISMISSAL

Petitioner, Kelly Gene Svedberg, was a physician’s assistant, licensed to practice in
North Carolina. He pled guilty in federal district court to one count of conspiracy to
commit health care fraud. Pursuant to section 1128(a)(1) of the Social Security Act
(Act), the Inspector General (1.G.) has excluded him from participating in Medicare,
Medicaid, and all federal health care programs for a period of five years. Petitioner
appeals, challenging the length of the exclusion.

The I.G. has moved to dismiss, arguing that Petitioner fails to raise an issue that may be
properly addressed in a hearing. I agree and, for the reasons discussed below, grant the
1.G.’s Motion to Dismiss.

Discussion

Ina letter dated January 31, 2013, the I.G. advised Petitioner Svedberg that he was
excluded from participation in Medicare, Medicaid, and all federal health care programs
because he had been convicted of a criminal offense related to the delivery of an item or
service under Medicare or a state health care program. The letter explained that section
1128(a)(1) of the Act authorizes the exclusion. I.G. Ex. | at 1.
Petitioner concedes that he was convicted and is subject to exclusion under section
1128(a)(1), but argues that mitigating factors justify reducing the period of his exclusion.
P. Brief at 1-2; Order and Schedule for Filing Briefs and Documentary Evidence at 2
(April 5, 2013); see OIG Appeal for Hearing (March 7, 2013); I.G. Ex. 2 at 1; I.G. Ex. 4.

Section 1128(a)(1) of the Act mandates that the Secretary of Health and Human Services
exclude from program participation any individual who has been convicted under federal
or state law of a criminal offense related to the delivery of an item or service under the
Medicare or a state health care program. See also 42 C.F.R. § 1001.101(a). The
exclusion must be for a minimum period of five years. Act § 1128(c)(3)(B); 42 C.F.R.

§ 1001.102(a). Mitigating factors may be considered as bases for reducing the period of
exclusion only if the exclusion period is longer than five years. 42 C.F.R. § 1001.102(c).

An excluded individual may challenge the basis for the exclusion and the length of the
exclusion. 42 C.F.R. § 1001.2007(a)(1). However, where, as here, the I.G. imposes an
exclusion of five years, the length of the exclusion is not reviewable. 42 C.F.R.
§ 1001.2007(a)(2). Iam required to dismiss a request for hearing where that request fails
to raise any issue that may properly be addressed in a hearing. 42 C.F.R. § 1005.2(e)(4).
Because Petitioner’s hearing request does not raise an issue that I am empowered to
resolve, I grant the I.G.’s motion and dismiss Petitioner’s appeal.

Regulations governing these procedures afford no further appeal rights. 42 C.F.R.
§ 1005.20; 42 C.F.R. § 1005.21(a), (d); Departmental Appeals Board, Guidelines -- In
Cases to which Procedures in 42 C.F.R. Part 1005 Apply; see also 57 Fed. Reg. 3,298,
3,327 (Jan. 29, 1992) (stating that administrative appeals of administrative law judge
decisions have been limited by regulation). There is no administrative appeal from a
dismissal of a hearing request. 55 Fed. Reg. 12,205, 12,213 (Apr. 2 1990) (“If [a] party
fails to file a timely request for a hearing, or thereafter withdraws or abandons his or her
request for a hearing, the [administrative law judge] is required to dismiss the hearing
request. In such a case, the CMP or exclusion would become final with no further appeal
permitted) (emphasis added); see also 57 Fed. Reg. 3,298, 3,325 (Jan. 29, 1992) (adding
as a ground for dismissal in 42 C.F.R. § 1005.2(e) a party’s failure to raise any issue that
may properly be addressed in a hearing).

/s/
Carolyn Cozad Hughes
Administrative Law Judge

' The LG. filed a motion to dismiss and supporting brief (I.G. Brief), along with four
exhibits (I.G. Exs. 1-4). In addition to his March 7, 2013 appeal, Petitioner filed a brief
(P. Brief) and assorted “supporting documents/exhibits.”


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Planned Parenthood Choice of Abilene, Texas,
(CLIA No. 45D2019250),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-12-1229
Decision No. CR2854

Date: July 12, 2013

DECISION

Until recently, Petitioner, Planned Parenthood Choice of Abilene, Texas (Petitioner or
lab), was a Texas clinical laboratory, certified under the Clinical Laboratory
Improvement Amendments of 1988 (CLIA), 42 U.S.C. § 263a et seq. The parties agree
that, before submitting its first-quarter 2011 proficiency testing (PT) report, the lab
employee charged with performing the tests called a second lab and compared results.
Based on this and other findings, the Centers for Medicare and Medicaid Services (CMS)
revoked the lab’s CLIA certificate and canceled its approval to receive Medicare
payments.

Petitioner now appeals, challenging the sanctions imposed. CMS has moved for
summary judgment. Petitioner opposes, but “does not dispute the underlying conduct
alleged in the statement of deficiencies.” Instead, Petitioner argues that CMS “is not
entitled to judgment as a matter of law on its imposition of sanctions.” P. Br. at 1-2.

For the reasons set forth below, I grant CMS’s motion and sustain the penalties imposed.
I. Background

In order to ensure the accuracy and reliability of laboratory tests, and thus the health and
safety of those tested, CLIA creates a federal certification process for laboratories that
perform clinical diagnostic tests on human specimens. Public Law No. 100-58,
amending section 353 of the Public Health Service Act, codified at 42 U.S.C. § 263a et
seq.; see H.R. Rep. No. 100-899, at 8, reprinted in 1988 U.S.C.C.A.N. 3828, 3829. To
be certified, a laboratory must meet the conditions of certification set out in the statute
and regulations. 42 U.S.C. § 263a(f)(1)(E); 42 C.F.R. Part 493. A condition represents a
major division of laboratory services or required environmental protections; each
condition is broken down into more detailed standards that laboratories must meet to be
compliant with the overall condition. White Lake Family Medicine, P.C., DAB No. 1951
at 2-3 (2004); RNA Labs., DAB No. 1820 at 3 (2002).

The statute gives the Secretary of Health and Human Services broad enforcement
authority, which the Secretary has delegated to CMS. CMS or its designee conducts
periodic inspections to determine a laboratory’s compliance with CLIA requirements. 42
C.F.R. § 493.1777. CMS may suspend, limit, or revoke the CLIA certificate of a
laboratory that is out of compliance with one or more CLIA conditions and may also
impose alternative sanctions (directed plan of correction, state monitoring, civil money
penalty). 42 C.F.R. § 493.1806; White Lake Family Medicine, P.C., DAB No. 1951 at 5.
Noncompliance with even one standard, if sufficiently serious, may justify a condition-
level deficiency. RNA Labs., DAB No. 1820 at 3; Edison Medical Labs., Inc., DAB No.
1713 at 2-3 (1999).

Here, following a certification survey completed October 6, 2011, CMS determined that
Petitioner did not meet two conditions of participation: 42 C.F.R. § 493.801, which
governs the enrollment and testing of samples; and 42 C.F.R. § 493.1403, which sets
forth requirements for the lab director for labs performing moderate complexity testing.
CMS Exs. 1, 2. Based on these findings, CMS revoked Petitioner’s CLIA certificate and
cancelled the laboratory’s approval to receive Medicare payments for its services. CMS
Ex. | at 2.

Petitioner timely appealed. CMS has filed a motion for summary judgment, which
Petitioner opposes. With its motion and brief (CMS Br.), CMS submits eight exhibits
(CMS Exs. 1-8). With its response brief (P. Br.), Petitioner submits three exhibits (P.
Exs. 1-3). CMS also filed a reply (CMS Reply).

IL. Issues

I consider whether summary judgment is appropriate.
On the merits, the issues before me are whether Petitioner violated CLIA and its
implementing regulations, and, if so, whether CMS properly revoked Petitioner’s CLIA
certificate and cancelled its approval to receive Medicare payments.

III. Discussion

A, CMS is entitled to summary judgment because the undisputed facts establish
that: 1) the lab did not test PT samples in the same manner as patient
specimens; 2) prior to submitting its PT testing results, a lab employee
compared her test results with those of a second laboratory; and 3) for two
testing events, the lab director did not attest that the PT samples were
integrated into the regular patient workload. The lab thus violated the
statute (42 U.S.C. § 263a(i)(4)) and was not in substantial compliance with
two conditions of certification: 42 C.F.R. § 493.801 and 42 C.F.R.

§ 493.1403.

Summary Judgment. Summary judgment is appropriate where a case presents no
disputed issues of material fact and where the only questions presented involve either
questions of law or the application of the law to the undisputed facts. Livingston Care
Center, DAB No. 1871 at 6 (2003), aff'd, Livingston Care Ctr. v. Dep’t of Health &
Human Servs., 388 F.3d 168 (6th Cir. 2004). Where, as here, the parties agree on all
material facts, I need not convene an oral hearing. Sol Teitelbaum, M.D., DAB No. 1849
at 10 (2002), citing Glenburn Home, DAB No. 1806 at 17 (2002) (“[I]n reviewing a case
where an ALJ failed to either obtain a written waiver or hold an oral hearing, we may
nonetheless uphold the decision if the affected party either had conceded all of the
material facts or proffered testimonial evidence only on facts which, even if proved,
clearly would not make any substantive difference in the result.”).

Regulatory requirements. A laboratory that holds a CLIA certificate may perform
moderate and high complexity tests but must participate in a PT program, as outlined in
42 C.F.R. Part 493, Subpart H. Part 493 mandates that each laboratory enroll in an
approved PT program that meets the specific criteria set out at Subpart I of Part 493. 42
C.F.R. § 493.801. A laboratory performing “nonwaived” testing (which includes the
moderate complexity tests that Petitioner performed) “must successfully participate” in
an approved PT program for each “specialty, subspecialty, and analyte or test in which
[it] is certified under CLIA.” 42 C.F.R. § 493.803(a).

' My findings of fact and conclusions of law are set forth, in bold and italics, as captions
in the discussion sections of this decision.

> To be waived, an examination or procedure must present “an insignificant risk of an
erroneous result,” and the Food and Drug Administration must approve the waiver. 42
C.F.R. § 493.2; 42 U.S.C. § 263a(d)(3).
A laboratory must treat and analyze PT samples in the same manner as patient samples.
42 CFR. § 493.801(b); 42 C.F.R. § 493.61(b)(1); 42 U.S.C. § 263a(d)(1)(E). The PT
samples must be integrated with the laboratory’s regular patient workload, and the tests
must be performed by the same personnel who routinely do the testing, using the
laboratory’s routine testing method. 42 C.F.R. § 493.801(b)(1). The integration of PT
samples must be attested to by the laboratory director and the individual who performs
the testing. PT samples must be tested the same number of times as routine patient
samples. 42 C.F.R. § 493.801(b)(2). Records documenting each step taken in the testing
of PT samples are required. 42 C.F.R. § 493.801(b)(5).

A laboratory may not engage in inter-laboratory communications pertaining to PT results
until after the due date by which the laboratory must report its results to the PT program.
42 C.F.R. § 493.801(b)(3). It must not refer PT samples or portions of PT samples to
another laboratory for any analysis that it is certified to perform in its own laboratory. 42
U.S.C. § 263a(i); 42 C.F.R. § 493.801(b)(4). Until recently, the statute mandated that
CMS revoke for at least one year the license of a laboratory that intentionally referred a
PT sample to another laboratory for analysis. 42 U.S.C. § 263a(i)(4); 42 C.F.R.

§ 493.1840(b); accord, Wade Pediatrics v. Dep’t. of Health and Human Servs., 567 F.3d
1202, 1204 (10" Cir. 2009); Lackawanna Medical Group Lab., DAB No. 1870 (2003).>

A laboratory must also have a qualified director (see 42 C.F.R. § 493.1405) who provides
overall management and direction in accordance with 42 C.F.R. § 493.1407. 42 C.F.R.

§ 493.1403. Among the director’s specific responsibilities, he/she must ensure that the
laboratory is enrolled in an approved PT program, that the PT samples are tested as
required, and that PT results are reviewed in order to identify problems. 42 C.F.R.

§ 493.1407.

Application of law to undisputed facts. The parties here agree on all material facts.
Petitioner operated a clinical laboratory that, until September 2011, tested blood for the
Rh factor.* Such testing is considered moderate complexity. P. Ex. | at 2 (Holeva Decl.
43). To meet its proficiency testing obligations, the lab enrolled in a testing program
offered by the American Proficiency Institute (API). API sponsored periodic testing
“events,” which involved sending test samples to the lab. The lab was to integrate the

* This mandatory provision was in effect at the time CMS imposed sanctions in this case.
Since then, Congress has amended CLIA. The statute now authorizes — but does not
compel — CMS to revoke a referring laboratory’s license. Pub. L. 112-202 (2012); see
discussion, infra.

* The Rh (Rhesus) factor is a protein found in blood, and the test checks blood for its
presence. The test is important for pregnant women, because serious problems can occur
if a woman with Rh-negative blood is pregnant with a fetus that has Rh-positive blood.
samples into its normal testing routine, perform the tests, and send the results back to
API. For the first testing event of 2011, API sent testing samples to the lab. A lab
employee tested the samples, but, to verify her results, she then engaged in impermissible
communications with another laboratory that was taking the same test. A February 3,
2011 entry in the lab’s testing records documents this improper communication:

Called Nanci about unsure results. Nanci said to call [San
Angelo] location and compare results. After speaking with
Heather Keeling, all of our results are the same. Submitted
the results online.

CMS Ex. 3 at 3. The lab electronically submitted the test results to API at 4:08 p.m. on
February 3, 2011. CMS Ex. 3 at 4.

Interviewed by a surveyor on October 5, 2011, the responsible employee (identified as
“Testing Person 1”) admitted that she contacted the San Angelo laboratory to compare
results before she submitted her test report to API, although she also said that the labs
independently arrived at the same results. CMS Ex. 2 at 4. The surveyor later spoke to
personnel at the San Angelo lab, who confirmed that conversations occur between the
two labs as to proficiency testing results, but that San Angelo personnel were “under the
impression that the results were not discussed until after the results were submitted.”
CMS Ex. 2 at 4.°

Petitioner admits these facts. It explains that an employee was testing proficiency
samples for the first time since her training, one year earlier. She obtained a result that
she was unsure about and “was concerned that she had run the test incorrectly.” Not
aware of the statutory and regulatory restrictions, she called another lab to compare
results and ensure that she had not made a mistake. According to Petitioner, the call to

* CMS also points to an obvious and unexplained change on the lab’s answer sheet. The
answer for sample Rh04 has been changed from positive to negative. CMS Ex. 3 at 3.
CMS finds it “notable” and suspicious that the San Angelo lab also reported a negative
result for Rh04, implying that Testing Person 1 may have changed her answer to conform
with San Angelo’s answer. CMS Br. at 10, citing CMS Ex. 3 at 3; CMS Ex. 4 at 6.
Petitioner insists that the employee had already completed the test when she made her
call to San Angelo, and denies that she changed any answers as a result of the
unauthorized communication. CMS Ex. 5 at 3. For purposes of summary judgment, I
accept Petitioner’s representation, but I do not consider this a material fact.
verify the result “was an innocent error done by someone unaware of the prohibition
regarding calling other sites.” In any event, by the time of the survey, the lab no longer
tested blood for the Rh factor. CMS Ex. 5 at 3; P. Br. at 5-6.

The parties also agree that, for the first and second testing events of 2011, the lab director
did not sign required statements attesting that the PT samples were tested in the same
manner as patient specimens. Her signature is not on the attestation statement submitted
February 3, 2011, nor the statement submitted May 31, 2011. All lab director signature
lines are left blank on these documents. CMS Ex. 3 at 4, 5, 7, 9. During the survey, the
lab’s clinic manager confirmed that the lab director had not signed the attestations. CMS
Ex. 2 at 2. Again, Petitioner does not challenge these facts.

Thus, the lab violated both sections 493.80land 493.1403. In comparing the test results,
Testing Person 1 did not follow the lab’s routine testing methods, violating section
493.801(b)(1); the lab director did not attest that these samples or samples from a
subsequent testing event were integrated into the lab’s regular patient workload, violating
section 493.801(b)(2). Most egregious, Testing Person | engaged in inter-laboratory
communications pertaining to the test results for the first testing event, violating section
493.801(b)(3). Further, the lab director did not provide necessary management and
direction; she did not ensure that samples were tested as required by sections 493.1403
and 493.1407.

B. CMS properly determined that the lab was not in compliance with two
conditions of certification, and the seriousness of the deficiencies justify the
sanctions imposed.

Petitioner admits that the lab “‘failed to ensure that a testing employee fully understood
the process of PT and that its laboratory director completed the required review and
paperwork for two events.” P. Br. at 8. Petitioner even agrees that the violations “were
not insignificant” and that they warranted corrective action. P. Br. at 8. Petitioner
argues, however, that the violations were not serious enough to put conditions out and
that the sanctions imposed are unjustifiably harsh.

According to Petitioner, nobody intended to violate CLIA regulations; rather, the testing
employee was confused about PT procedures and the clinic manager was confused about
the chain of command. P. Br. at 9. That Testing Employee 1 acted out of ignorance
rather than malice does not alter the fact that she intentionally and willfully compared test
results with those from another lab. Indeed, the Departmental Appeals Board has
consistently rejected this line of defense where, as here, laboratory staff acted knowingly
and voluntarily, without realizing that they violated CLIA requirements. Victor Valley
Cmty. Hospital/Clinical Lab., DAB No. 2340 at 7 (2010); Wade Pediatrics, DAB No.
2153 (2008), aff'd Wade Pediatrics v. Dep’t of Health and Human Servs., 567 F.3d 1202
(10 Cir. 2009); Lackawanna Medical Group Lab., DAB No. 1870.

Moreover, Testing Employee | does not bear all responsibility for the improper
consultation. Plainly, she was inadequately trained.° And where was the lab director in
all of this? The individual who runs the test is not the only lab employee responsible for
maintaining the integrity of the PT process. By regulation, the lab director must also
attest to the “routine integration of the samples into the patient workload using the
laboratory’s routine methods.” 42 C.F.R. § 493.801(b)(1). The lab director was thus at
least equally responsible for protecting the integrity of the PT samples and the test, which
she did not do. Further, the evidence establishes that she did not attest to the integrity of
the process for at least two testing events, conducted four months apart. CMS Ex. 3 at 4,
5,7, 9.

Similarly, that the lab did not ultimately change its answers following the improper
communication does not excuse its conduct or make its actions less serious. Victor
Valley Cmty. Hospital/Clinical Lab., DAB No. 2340 at 11-13, Wade Pediatrics, DAB
No. 2153 at 21.

As noted above, at the time of these events, CMS was required to revoke a laboratory’s
license if it intentionally referred a PT sample to another laboratory. For other types of
deficiencies, CMS had (and still has) broad discretion to determine an appropriate
sanction. 42 C.F.R. § 493.1800(a)(2)(iii); Victor Valley Cmty. Hospital/Clinical Lab.,
DAB No. 2340 at 4; see 42 C.F.R. § 493.1804(d)(2) (directing CMS to consider, among
other factors, the “nature, incidence, severity, and duration” of the noncompliance).
CMS acted well within its discretion when it revoked the lab’s CLIA certificate and
canceled its approval to receive Medicare payments. In terms of the threat posed to the
integrity of the PT process, the lab’s collusion is comparable to sending its samples to
another lab. Its actions fit within the analogy described by the Tenth Circuit in Wade:

Wade is like the student who protests that he did not cheat on
his exam because he did not hand in someone else’s work but
merely checked his answers against those of another student.
But peering over the shoulder of another student in the middle
of an exam to check one’s answers is as much cheating as
handing in someone else’s work.

° The record shows that, unsure of her testing results, she consulted “Nanci,” who gave
her very bad advice. CMS Ex. 3 at 3. The record does not identify “Nanci’s”
relationship to the lab, nor does it explain why she gave such advice. Nor has the lab
explained why Testing Employee | did not consult the lab director, who would have been
the logical choice in a properly-supervised lab.
Wade Pediatrics, 567 F.3d at 1204-5; Victor Valley Cmty. Hospital/Clinical Lab., DAB
No. 2340 at 13. Here, the lab literally “checked [its] answers” against those of another.
See also Stanley Boykansky, M.D., DAB No. 1756 at 13 (2000) (where multiple labs
reached identical results, the Board upheld the ALJ’s finding unlawful communication
that justified revoking a participating lab’s CLIA certificate).

Petitioner complains that, in determining the sanction, CMS failed to consider all of the
regulatory factors listed in 42 C.F.R. § 493.1804(d). That section lists factors that CMS
may consider in determining the sanction. However, the regulation is explicit: CMS
considers “one or more” of the listed factors, and CMS is not limited to the factors listed
in the regulation. Thus, CMS could reasonably determine that the nature of the
deficiencies and their relationship to each other justified the sanction, without regard to
the other listed factors.

Finally, Petitioner argues that, because of a December 2012 amendment to CLIA, CMS
may “no longer impose a sanction of suspension and revocation by simply citing to the
mandatory revocation provision. ...” P. Br. at 17. That legislation, referred to as the
TEST Act, changed “shall” to “may” in section 263a(i)(4) of the statute, so that that
section now reads:

Any laboratory that the Secretary determines intentionally
refers its proficiency testing samples to another laboratory for
analysis may have its certificate revoked for a least one year
and shall be subject to appropriate fines and penalties as
provided for in subsection (h) of this section.

(emphasis added) Pub. L. No. 112-202. Petitioner’s argument fails for three reasons: 1)
the survey took place more than two years prior to the statutory change and the sanctions
were imposed about a year-and-a-half before the change; the amendment is not to be
applied retroactively; 2) CLIA’s mandatory provision did not apply in this case, which
involves collusion, but not referral; and 3) the statutory change increases CMS’s
discretion, but does not preclude it from revoking a lab’s CLIA certificate if it finds that
the deficiencies cited warrant that sanction.
IV. Conclusion

Accepting as true all of Petitioner’s factual assertions, I find that Petitioner violated two
CLIA conditions: 42 C.F.R. §§ 493.801 and 493.1403. I therefore grant CMS’s motion
for summary judgment, and uphold the revocation of Petitioner’s CLIA certificate.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.
Grand Tobacco & Grocery Inc.,
Respondent.

Docket No. C-13-770
FDA Docket No. FDA-2013-H-0567

Decision No. CR2853

Date: July 12, 2013

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint
(Complaint) against Respondent, Grand Tobacco & Grocery Inc., that alleges facts
and legal authority sufficient to justify the imposition of a civil money penalty of
$500. Respondent did not timely answer the Complaint, nor did Respondent
request an extension of time within which to file an Answer. Therefore, I enter a
default judgment against Respondent and assess a civil money penalty of $500.

CTP began this case by serving the Complaint on Respondent and filing a copy of
the Complaint with the Food and Drug Administration’s (FDA) Division of
Dockets Management. The Complaint alleges that Respondent impermissibly sold
tobacco products to a minor or minors and failed to verify, by means of photo
identification containing a purchaser’s date of birth, that a purchaser or purchasers
of cigarettes or smokeless tobacco were 18 years of age or older, thereby violating
the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and its
implementing regulations, Cigarettes and Smokeless Tobacco, 21 C.F.R. Part 1140
(2012). CTP seeks a civil money penalty of $500.

On May 17, 2013, CTP served the Complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and
accompanying cover letter, CTP explained that within 30 days, Respondent should
pay the proposed penalty, file an answer, or request an extension of time within
which to file an answer. CTP warned Respondent that, if it failed to take one of
these actions within 30 days, an Administrative Law Judge could, pursuant to 21
C.F.R. § 17.11, issue an initial decision ordering Respondent to pay the full
amount of the proposed penalty.

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

Specifically, CTP alleges the following facts in its Complaint:

e Respondent owns Grand Tobacco & Grocery, an establishment that sells
tobacco products and is located at 311 Grand Avenue, New Haven,
Connecticut 06513. Complaint § 3.

e At approximately 10:45 AM on July 3, 2012, an FDA-commissioned
inspector observed two violations of 21 C.F.R. Part 1140 at Respondent’s
establishment. The inspector observed a violation of 21 C.F.R.

§ 1140.14(a), a regulation prohibiting the sale of cigarettes or smokeless
tobacco to a person younger than 18 years of age. The inspector also
observed a violation of 21 C.F.R. § 1140.14(b)(1), a regulation requiring
retailers to verify, by means of photo identification containing a purchaser’s
date of birth, that no purchaser of cigarettes are smokeless tobacco is
younger than 18 years of age. Complaint § 10.

¢ On September 13, 2012, CTP issued a Warning Letter to Respondent
regarding the inspector’s observations from July 3, 2012. The letter
explained that the observations constituted violations of regulations found
at 21 C.F.R. § 1140.14(a) and 1140.14(b)(1), and that the named violations
were not necessarily intended to be an exhaustive list of all violations at the
establishment. The Warning Letter went on to state that if Respondent
failed to correct the violations, a civil money penalty or other regulatory
action by the FDA could occur and that Respondent is responsible for
complying with the law. Complaint ¥ 10.

e FDA received no response to the Warning Letter from Respondent, though
United Parcel Service records demonstrate that an individual named
“CRUZ” received the Warning Letter on September 17, 2012.

Complaint § 11.

e At approximately 11:22 AM on December 28, 2012, FDA-commissioned
inspectors documented additional violations at Respondent’s establishment.
The inspectors documented a violation of 21 C.F.R. § 1140.14(a) when
“a person younger than 18 years of age was able to purchase a package of
Newport Box 100s cigarettes ....” The inspectors documented a violation
of 21 C.F.R. § 1140.14(b)(1) when “the minor's identification was not
verified before the sale... .” Complaint 1.

e CTP issued a Notice of Compliance Check Inspection to Grand Tobacco &
Grocery Inc. on January 2, 2013, notifying Respondent that a minor
purchased a regulated tobacco product on December 28, 2012, at
approximately 11:22 AM, during an inspection. The Notice stated that the
violation described was not necessarily the only violation reported and that
CTP could send further notification to Respondent. Complaint § 2.

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

§ 1140.1(b). The Secretary issued the regulations at 21 C.F.R. Part 1140 under
section 906(d) of the Act. 21 U.S.C. § 387(a); 21 U.S.C. § 387f(d)(1); 75 Fed.
Reg. 13,229 (Mar. 10, 2010). The regulations prohibit the sale of cigarettes or
smokeless tobacco to any person younger than 18 years of age. 21 C.F.R.

§ 1140.14(a). The regulations also require retailers to verify, by means of photo
identification containing the purchaser’s date of birth, that no purchasers of
cigarettes or smokeless tobacco are younger than 18 years of age. 21 C.F.R.

§ 1140.14(b)(1).

Taking the above alleged facts as true, Respondent had four violations of
regulations contained in 21 C.F.R. Part 1140 within a six-month period.
Specifically, Respondent had two violations on July 3, 2012, and two violations on
December 28, 2012. Respondent’s actions on two separate occasions violated the
prohibition against selling cigarettes or smokeless tobacco to persons younger than
18 years of age. 21 C.F.R. § 1140.14(a). Respondent’s actions on two separate
occasions also violated the requirement that retailers verify, by means of photo

identification containing a purchaser’s date of birth, that no purchaser of cigarettes
or smokeless tobacco is younger than 18 years of age. 21 C.F.R. § 1140.14(b)(1).
Therefore, Respondent’s actions constitute violations of law for which a civil
money penalty is merited.

The regulations require me to impose a civil money penalty in the amount that is
either the maximum provided for by law or the amount sought in the Complaint,
whichever is smaller. 21 C.F.R. § 17.11(a)(1)-(2). The regulations currently
allow a maximum penalty of $2,000 for a fourth violation within a six-month
period. 21 C.F.R. § 17.2. CTP, however, has requested a fine in the amount of
$500. Therefore, I find that a civil money penalty of $500 is warranted and so
order one imposed.

/s/
Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Michael T. Parra, M.D.,
(OI File No.: H-11-4-3105-9),
Petitioner,

v.

The Inspector General.
Docket No. C-13-442
Decision No. CR2852

Date: July 12, 2013

DECISION

This matter is before me on the Inspector General’s (1.G.’s) Motion for Summary
Disposition affirming the I.G.’s determination to exclude Petitioner Michael T. Parra,
M.D., from participation in Medicare, Medicaid, and all other federal health care
programs until he regains his license to practice medicine as a physician in the State of
Colorado. The I.G.’s Motion and determination are based on sections 1128(b)(4)(A) and
1128(b)(4)(B) of the Social Security Act (Act), 42 U.S.C. §§ 1320a-7(b)(4)(A) and (B).

The undisputed material facts of this case show that the I.G. is authorized to impose the
exclusion against Petitioner, and that the length of that period of exclusion is not
unreasonable. Accordingly, I grant the I.G.’s Motion for Summary Disposition.

I. Procedural Background

Petitioner Michael T. Parra, M.D., was first licensed to practice medicine as a physician
in the State of Colorado in August 1988. In 2010, the Colorado Medical Board (CMB)
was engaged in a review of Petitioner’s professional activity, and on December 16, 2010
notified him that it “had reasonable grounds to believe that the public health, safety, or
welfare imperatively required emergency action” and that it had voted to suspend
Petitioner’s license summarily. Petitioner and the CMB subsequently agreed that in lieu
of the summary suspension of his license, Petitioner would cease practicing medicine
pending CMB’s further investigation and evaluation of his practice; this agreement was
formalized in an Interim Cessation of Practice Agreement signed by Petitioner and his
attorney on December 21, 2010. I.G. Ex. 2.

In mid-February 2011 the CMB learned that Petitioner had “performed acts requiring a
license” while the Interim Cessation of Practice Agreement was in effect, and had
“falsified or repeatedly made incorrect essential entries on patient records.” In its
February 18, 2011 Order of Suspension Pursuant to § 24-4-104(4), C.R.S., the CMB
found that “Petitioner has deliberately and willfully violated the Colorado Medical
Practice Act and/or that the public health, safety, or welfare imperatively requires
emergency action.” The CMB acted on its finding by suspending Petitioner’s license to
practice medicine effective February 24, 2011. LG. Ex. 3, at 1-2.

The Order of Suspension was subject to administrative appeal. I.G. Ex. 3, at 4-10. While
at appeal was pending and while the summary suspension of Petitioner’s license was
till in effect, Petitioner and the CMB agreed to resolve all proceedings against Petitioner
na Stipulation and Final Agency Order signed by Petitioner on January 10, 2012 and
ffective immediately on the CMB’s execution of it on January 13, 2012. 1.G. Ex. 4. By
e language employed in that document, Petitioner’s “license to practice medicine in the
tate of Colorado issued by the Board is deemed relinquished.” By another provision of
at document, Petitioner agreed “not to apply for reactivation of his license,
reinstatement of his license, or to apply for a new license issued by the Board at any time
in the future.” I.G. Ex. 4, at 3.

ao

fo}

ang

On January 31, 2013 the I.G. sent a notice-of-exclusion letter to Petitioner, relying on the
terms of section 1128(b)(4) of the Act, 42 U.S.C. § 1320a-7(b)(4). LG. Ex. 1. Acting
through counsel Petitioner sought review of the I.G.’s determination in a request for
hearing in a letter dated February 6, 2013.

I convened a prehearing conference by telephone on March 20, 2013, pursuant to 42
C.F.R. § 1005.6, in order to discuss procedures and a schedule for addressing the issues
presented by this case. The details of that conference and the schedule established appear
my Amended Order of March 21, 2013. The record in this case closed for purposes of 42
C.F.R. § 1005.20(c) on June 28, 2013.

The evidentiary record on which I decide the issues before me contains 15 exhibits. The
1.G. proffered four exhibits marked I.G. Exhibits 1 through 4 (LG. Exs. 1-4). Petitioner
proffered 11 exhibits marked Petitioner’s Exhibits 1 though 5 and 7 through 12 (P. Exs.
1-5, 7-12). Petitioner’s proffer did not include an exhibit marked P. Ex. 6. The I.G.
objected to the relevance of P. Exs. 1, 2, 4, and 7 through 12; although those objections
are sound and those proffered exhibits are in fact irrelevant to the issues before me, I
discuss some of them briefly below. Accordingly, I have admitted all proffered exhibits.
I have admitted no pleadings or evidentiary proffers filed after June 28, 2013.

IL. Issues

The legal issues before me are limited to those set out at 42 C.F.R. § 1001.2007(a)(1). In
the context of this record, they are:

a. Whether the LG. has a basis for excluding Petitioner from participating in
Medicare, Medicaid, and all other federal health care programs pursuant to
sections 1128(b)(4)(A) and (B) of the Act; and

b. Whether the length of the proposed period of exclusion is unreasonable.

I decide these issues in favor of the I.G.’s position. Section 1128(b)(4)(A) of the Act
supports Petitioner’s exclusion from all federal health care programs, for his license to
practice medicine as a physician was suspended by the CMB, the State licensing
authority, for reasons bearing on his professional competence and professional
performance, and he may not renew that license. Section 1128(b)(4)(B) of the Act
supports Petitioner’s exclusion as well, for his license to practice medicine as a physician
was surrendered to the CMB while a formal disciplinary proceeding was pending
concerning the same issues. The length of this proposed period of exclusion is
reasonable as a matter of law.

III. Controlling Statutes and Regulations

Section 1128(b)(4)(A) of the Act, 42 U.S.C. § 1320a-7(b)(4)(A), authorizes the exclusion
from participation in Medicare, Medicaid, and all other federal health care programs of
any individual or entity “whose license to provide health care has been revoked or
suspended by any State licensing authority, or who otherwise lost such a license or the
right to apply for or renew such a license, for reasons bearing on the individual’s or
entity’s professional competence, professional performance, or financial integrity.”

Section 1128(b)(4)(B) of the Act, 42 U.S.C. § 1320a-7(b)(4)(B), authorizes the exclusion
from participation in Medicare, Medicaid, and all other federal health care programs of
any individual or entity “who surrendered [a license to provide health care] while a
formal disciplinary proceeding was pending before [a State licensing authority] and the
proceeding concerned the individual’s or entity’s professional competence, professional
performance, or financial integrity.”
The terms of sections 1128(b)(4)(A) and (B) are restated in similar regulatory language at
42 C.F.R. §§ 1001.501(a)(1) and (2).

The terms of 42 C.F.R. § 1001.2007(d) provide that in exclusion appeals to this forum:

When the exclusion is based on the existence of a criminal conviction

or a civil judgment imposing liability by (a) Federal, State or local court,

a determination by another Government agency, or any other prior
determination where the facts were adjudicated and a final decision was made,
the basis for the underlying conviction, civil judgment, or determination is

not reviewable and the individual or entity may not collaterally attack it

either on substantive or procedural grounds in this appeal.

An exclusion based on section 1128(b)(4) of the Act is discretionary. If the I.G. exercises
his discretion to proceed with the sanction, then the mandatory minimum period of
exclusion to be imposed under section 1128(b)(4) of the Act “shall not be less than the
period during which the individual’s or entity’s license to provide health care is revoked,
suspended, or surrendered... .” Act § 1128(c)(3)(E), 42 U.S.C. § 1320a-7(c)(3)(E).
Regulatory language at 42 C.F.R. § 1001.501(b)(1) affirms the statutory provision.

Although an exclusion based on section 1128(b)(4) of the Act is discretionary, the LG.’s
decision to exercise his discretion and proceed with the sanction is not subject to review.
Donna Rogers, DAB No. 2381 (2011); Keith Michael Everman, D.C., DAB No. 1880
(2003); Sheldon Stein, M.D., DAB No. 1301 (1992); 42 C.F.R. § 1005.4(c)(5).

The CMB is Colorado’s licensing authority for the practice of medicine by physicians.
COLO. REV. STAT. §§ 12-36-103,104 and 24-4-104.

IV. Findings and Conclusions
I find and conclude as follows:

1. Petitioner was first licensed to practice medicine as a physician in the State of
Colorado in 1988. I.G. Exs. 2, 3.

2. On December 16, 2010 the CMB notified Petitioner of some results of its
formal investigation into Petitioner’s professional conduct. 1.G. Exs. 2, 3.

3. The CMB proceeding against Petitioner was begun for reasons bearing on, and
concerned, Petitioner’s professional competence and professional performance.
LG. Exs. 2, 3, 4.
4. The CMB proceeding against Petitioner resulted in the summary suspension of
his license to practice medicine effective February 24, 2011. I.G. Ex. 3.

5. While the CMB proceeding against him was pending and the summary
suspension of his license was in effect, Petitioner and his attorney signed a
Stipulation and Final Agency Order on January 10, 2012, by which he
relinquished his license to practice medicine as a physician in Colorado and
agreed that he would not seek reactivation or reinstatement of his license, or
apply for a new license, from the CMB. The Stipulation and Final Agency
Order became effective January 13, 2012. I.G. Ex. 4.

6. At all times between December 16, 2010 and January 13, 2012, the CMB
proceedings against Petitioner were for reasons bearing on, and concerned,
Petitioner’s professional competence and professional performance. LG.
Exs. 2, 3, 4.

7. Because the CMB suspended Petitioner’s license to practice medicine effective
February 24, 2011, and Petitioner later lost the right to apply for or renew such
a license, a basis exists for the I.G.’s exercise of authority to exclude Petitioner
from participation in Medicare, Medicaid, and all other federal health care
programs. Act § 1128(b)(4)(A).

8. Because Petitioner relinquished his license to practice medicine effective
January 13, 2012, a basis exists for the I.G.’s exercise of authority to exclude
Petitioner from participation in Medicare, Medicaid, and all other federal
health care programs. Act § 1128(b)(4)(B).

9. The LG.’s exclusion of Petitioner until such time as he regains his license to
practice medicine as a physician in the State of Colorado is not unreasonable.
Act § 1128(c)(3)(E); 42 C.F.R. § 1001.501(b)(1).

10. There are no disputed issues of material fact and summary disposition is
appropriate in this matter. Marvin L. Gibbs, Jr., M.D., DAB No. 2279 (2009);
Michael J. Rosen, M.D., DAB No. 2096 (2007); Thelma Walley, DAB No.
1367 (1992); 42 C.F.R. § 1005.4(b)(12).

V. Discussion

The exclusion of an individual based on section 1128(b)(4) of the Act, 42 U.S.C.

§ 1320a-7(b)(4) is a derivative action, based on an action previously taken by a court,
licensing board, or other agency. In this case the I.G. relies on the actions of the CMB to
support two theories that would authorize Petitioner’s exclusion: the first theory invokes
section 1128(b)(4)(A), and the second rests on section 1128(b)(4)(B). As I shall explain
below, the I.G. has demonstrated the essential elements of both theories.

There are two essential elements necessary to support an exclusion based on section
1128(b)(4)(A). First, the I.G. must prove that the license of the individual to be excluded
to provide health care, or the right to apply for or renew such a license, has been lost,
revoked or suspended by a state licensing authority. Second, the I.G. must prove that the
license was revoked or suspended for reasons bearing on the individual’s professional
competence, professional performance, or financial integrity. Leonard R. Friedman,
M.D., DAB No. 1281 (1991); Thomas I. DeVol, Ph.D., DAB CR1652 (2007); Sherry J.
Cross, DAB CR1575 (2007); Michele R. Rodney, DAB CR1332 (2005); Edmund B.
Eisnaugle, D.O., DAB CR1010 (2003); Marcos U. Ramos, M.D., DAB CR788 (2001);
Allison Purtell, M.D., DAB CR781 (2001).

Three essential elements must be proven in order to support an exclusion based on
section 1128(b)(4)(B). First, the I.G. must prove that the individual to be excluded has
surrendered her or his license to provide health care to a State licensing authority.
Second, the I.G. must prove that the license was surrendered while a formal disciplinary
proceeding against the individual was pending before the State authority. Third, the LG.
must prove that the pending proceeding concerned the individual’s professional
competence, professional performance, or financial integrity. Jane Espejo Norton, M.D.,
DAB CRI1627 (2007); James Latimer, M.D., DAB CR1578 (2007); Julia Maria Nash,
DAB CR1277 (2005); Maureen Felker, DAB CR1110 (2003); April Ann May, P.A.,
DAB CR1089 (2003); Djuana Matthews Beruk, D.D.S., DAB CR950 (2002).

The L.G. has made the first showing required by each statutory provision. This record
shows that Petitioner was first licensed to practice medicine as a physician in Colorado in
1988. I. G. Exs. 2, 3. The first element required to be shown by section 1128(b)(4)(A) is
established by uncontroverted evidence that Petitioner’s license was summarily
suspended by the CMB on February 24, 2011, and is further established by unchallenged
evidence that Petitioner abandoned any right to apply for or renew that license on January
13, 2012. I. G. Exs. 3, 4. The first element required to sustain an exclusion based on
section 1128(b)(4)(B) is demonstrated by uncontradicted evidence that Petitioner
relinquished his license on January 13, 2012.

The I.G. has made the second showing required by an action brought pursuant to section
1128(b)(4)(B) as well. The CMB proceeding began not later than December 2010. I.G.
Ex. 2. In March 2011, CMB referred the results of its investigative proceeding to the
Attorney General of the State of Colorado. Petitioner and his attorney determined to
relinquish his license as a means of settling all matters charged in that investigative
proceeding, and by agreement with CMB, the relinquishment of Petitioner’s license
became final with the entry of the CMB’s Stipulation and Final Agency Order on January
13, 2012. I.G. Exs. 3, 4. That sequence of events demonstrates that Petitioner

surrendered his license while the CMB proceeding was pending against him, and thus
proves the second essential element required in an 1128(b)(4)(B) exclusion.

The nexus between the CMB proceeding and Petitioner’s professional performance and
professional competence — the second essential element of the I.G.’s 1128(b)(4)(A)
theory and the third of his 1128(b)(4)(B) theory — has been contested, but the I.G. has
proven it, and Petitioner’s effort to suggest otherwise approaches an intentional distortion
of the record before me and the CMB. As I shall point out presently, that effort to deny
the nexus is remarkable in many ways, but particularly because it is impeached by
Petitioner’s own words to the CMB.

The record of the CMB proceeding between December 2010 and February 2011 shows
that the CMB found the public health, welfare, or safety sufficiently threatened to
“imperatively require” the cessation of Petitioner’s medical practice. I.G. Ex. 2.
Although the December 21, 2010 cessation agreement does not specify the individual
bases for the CMB’s action, the February 18, 2011 Order of Suspension goes into some
detail: it specifies that Petitioner flouted the cessation agreement, persisted in his active
practice of medicine, and “falsified or repeatedly made incorrect essential entries on
patient records.” I.G. Ex. 3, at 2. That Order asserts the CMB’s belief that Petitioner was
in willfull and deliberate violation of the Colorado Medical Practice Act, and reasserts the
charge that Petitioner’s conduct jeopardized the public health, safety, or welfare.

But the final resolution of the CMB proceeding leaves no room for speculation about the
exact relationship between that proceeding and Petitioner’s professional performance and
competence. The Stipulation and Final Agency Order of January 13, 2012 identified by
their initials eight of Petitioner’s individual patients whom the CMB alleged were
mistreated by Petitioner — over a period “from approximately 2003 to 2010” — when he
“did not appropriately use medications, did not confirm medical diagnoses before
initiating treatment, and did not fully document patient visits or medical justification for
his treatment approaches.” The CMB alleged that Petitioner “attempted to create medical
notes for patients that were not contemporaneously made with patient care.” I.G. Ex. 4,
at 2. Perhaps most significantly, Petitioner acknowledged that if proven, the allegations
would constitute unprofessional conduct as defined by law. I.G. Ex. 4, at 2-3.

To this record Petitioner responds that “his license was relinquished as a business
decision, entered specifically without any findings of fact against him, and in
contemplation of his inactive licenses and continued practicing in two other states.” P.
Ans. Br. at 2. He insists that relinquishing his license was “a relatively simply business
decision,” (P. Ans. Br. at 8), and elaborates that “Parra simply desired, due to the costs of
litigation and the disappoint [sic] with the Colorado board’s unreasonableness, to transfer
his practice to another state. It was a business decision, not an admission of guilt.” P.
Ans. Br. at 9. Whether a business decision or something else entirely, it is very clear that
Petitioner was eager to place himself beyond the jurisdiction of the CMB as quickly as he
could by taking “‘a business decision, due to the costs of discovery . . . in contemplation
of his continued practice and licenses [in] two other states . . . to simply cut his ties with
the medical community in Colorado with stipulation by both parties that there was not
any wrongdoing ....” P. Resp. Br. at 1-2.

This argument may be an effort to divert attention from a crucial concession Petitioner
made early in the CMB proceeding. The nexus between that proceeding and Petitioner’s
professional competence and performance — which is, of course, the real matter to be
proven — is confirmed in letters Petitioner himself wrote to the CMB during that
proceeding. He first wrote on March 15, 2010: that letter appears in this record as P. Ex.
9. In it, Petitioner acknowledged CMB’s investigation into his keeping of patient
records, and attempted to justify his practices “regarding the issues that have been raised
in the Board complaints” by blaming computer programs, office equipment, and his own
employees. He wrote to the CMB again on May 10, 2010. P. Ex. 5. In this letter of 10
pages he mounted an extended apologia for his treatment of eight patients he identified
by name. Those eight names correspond exactly with the initials of patients CMB
alleged it could prove had been mistreated by Petitioner. P. Ex. 5; 1.G. Ex. 4, at 2. The
CMB investigative file number Petitioner noted in the second line of P. Ex. 5 (2009-
001822-B) was one of several noted and settled in the Stipulation and Final Agency
Order. I. G. Ex. 4, at 1. Those letters are before me proffered by Petitioner, and they
serve as well as anything else in this record to tie the CMB investigation into Dr. Michael
T. Parra’s professional performance and competence to the fact that Dr. Michael T. Parra
no longer has — and will never regain — a license to practice medicine as a physician in
the State of Colorado.

Quite apart from the gratuitous fling at the CMB, whose Interim Cessation of Practice
Agreement Petitioner deliberately defied, Petitioner’s present argument depends on its
studied distortion of a central point in any 1128(b)(4) exclusion: that no admission or
finding of “guilt” need be shown as long as the proceeding was “for reasons bearing on”
or “concerned” a licensee’s professional competence, professional performance, or
financial integrity. Chang Goo Yoon, DAB CR1852 (2008). It is perfectly true that no
final findings of misconduct were entered by the CMB in the Stipulation and Final
Agency Order, but it is also perfectly true that their absence is immaterial to this
discussion. The material point is simply this: the entire process that was well-advanced
in December 2010, that led to the Order of Suspension in 2011, and that culminated in
that January 2012 Stipulation and Final Agency Order was an inquiry into Dr. Michael T.
Parra’s professional competence and performance. The rule on this point as articulated
by the Departmental Appeals Board (Board) is clear:

This Board has previously held that a state licensing authority is not
required to make findings with respect to an individual’s professional
competence, professional performance, or financial integrity, or to use
those words, in order for the I.G. to exclude an individual. Brian Bacardi,
D.P.M., DAB No. 1724 (2000); Olufemi Okonuren, M.D., DAB No. 1319
(1992). The wording of the provision merely requires that the reasons for
the revocation have “bearing on” these concerns. A contrary interpretation
would subject federal programs and patients to risks simply because of the
state licensing authority’s choice of words.

Tracey Gates, R.N., DAB No. 1768 (2001). See Narinder Saini, M.D., DAB No. 1371
(1992).

When Petitioner and his attorney signed the Stipulation and Final Agency Order they
were aware beyond misunderstanding that the CMB felt itself able and prepared to prove
Petitioner’s serious specific lapses in those professional standards, and that those
allegations supported the CMB’s authority to “order conditions upon [Petitioner’s]
practice that it deems appropriate.” I.G. Ex. 4, at 3, paragraphs 8-10. The nexus between
the CMB proceeding and Petitioner’s professional performance and professional
competence, the second essential element of the I.G.’s 1128(b)(4)(A) theory and the third
of his theory based on 1128(b)(4)(B), has been proven.

With the proof of that nexus accomplished, t
essential to both theories, and Petitioner’s ex:
and (B) of the Act is authorized.

In resisting the I.G.’s action, Petitioner has d
practiced medicine between 2003 and 2010.

e I.G. has proven all of the elements
clusion pursuant to sections 1128(b)(4)(A)

lenied any misconduct whatsoever while he
His description of events colors him as the

victim of malicious and unfounded accusations motivated by the animus of his former

employees and colleagues, accusations that

e claims the CMB parlayed into an

“unreasonable and baseless” investigation. P. Ans. Br. at 2-5. Petitioner offered a

similar narrative in a document singular for i
exhibit is a letter dated March 12, 2012 and

University’s School of Medicine. The LG.

ad
properly objected to the admission of P. Ex.

its fervid self-justification. P. Ex. 8. That

essed to the Dean of Creighton

8, but although it is irrelevant because it constitutes an attack on the allegations that led to
the loss of his license, I have admitted it because it illustrates Petitioner’s continued

refusal to acknowledge — or even to describ:
the CMB’s Interim Cessation of Practice Ag:

Order. That context was a CMB investigation
unprofessional conduct and sought to bar him

e frankly — the context, goal, and effect of
reement and Stipulation and Final Agency
by which CMB accused Petitioner of
rom the practice of medicine in Colorado.

That goal was the protection of the Colora
effect was to close the investigation with a q
forbearance in reaching and announcing final

OP

ublic’s “health, safety, and welfare.” That
uid pro quo: in return for the CMB’s
findings and conclusions, Petitioner agreed

to be forever barred from the practice of medicine in Colorado.'

' Any suggestion that this quid pro quo does
“surrendered” cannot survive the careful anal

not mean that Petitioner’s license was
lysis and forceful rejection of a very similar
10

Petitioner’s Exs. 1, 2, 4 and 7 are similarly irrelevant and just as unhelpful. Each in its
way is an effort to argue that the CMB proceeding was somehow invalid, unsound,
meaningless, or unfair. Each in its own way attempts to debate issues that are not valid
defenses to the I.G.’s proposed exclusion action.

That P. Ex. 1 may show that Petitioner was able to renew his Nebraska medical license in
June 2012 does not alter the finality of the CMB proceeding, and certainly does not mean
that a valid Nebraska license can, for purposes of section 1128(b)(4), substitute for the
one Petitioner lost permanently in Colorado. The reasonableness of an individual’s de
facto permanent exclusion based on the de jure permanent loss of the individual’s license
has been explicitly considered and approved:

It is clear from the Act that, once the exclusion remedy is properly
imposed . . . license reinstatement by the revoking authority is the
only statutorily recognized way to lift the exclusion.

John C. Cheek, M.D., DAB No. 1738 (2000); see Judy Pederson Rogers and William
Ernest Rogers, DAB No. 2009, n.5 (2006); Kenneth M. Behr, DAB No. 1997, n.7 (2005);
Jane Espejo Norton, M.D., DAB CR1627; Armando G. Sanchez, M.D., DAB CR1309
(2005); Michael D. Cerny, D.O., DAB CR1026 (2003); Lori E. Miller, DAB DR961
(2002).

P. Exs. 2 and 3 argue Petitioner’s innocence of professional misconduct, but they are
meaningless now, for P. Ex. 2 is a letter written in September 2011 and is obviously
intended as part of Petitioner’s defense in the CMB proceeding, while P. Ex. 3 is simply
the ipse dixit statement of Petitioner’s attorney before the CMB as to his view of that
proceeding. That CMB proceeding is no longer subject to challenge or collateral attack,
and its results speak for themselves without the need for expatiation by Petitioner’s
former advocate. Nor does P. Ex. 4 add to this discussion, for it is a letter written in
March 2011, probably as part of Petitioner’s defense in the CMB proceeding, describing
the nature and function of Petitioner’s electronic office record-keeping system.
Petitioner’s undated curriculum vitae, P. Ex. 7, is lengthy, and it would be longer still if it
mentioned the history of Petitioner’s Colorado license after 2010 through its suspension
in 2011 and its relinquishment in 2012. It would be far more candid if it used some term
other than “inactive” to describe the current status of that Colorado license. P. Ex. 7, at

notion in Djuana Matthews Beruk, D.D.S., DAB CR950 (2002), in which Administrative
Law Judge José A. Anglada described the application of section 1128(b)(4)(B) to almost-
identical facts as “inescapable.”
11

42 The arguments suggested by these irrelevant exhibits are made too late to aid
Petitioner’s cause here. I will not consider them, for such collateral attacks on the
soundness or fairness of the CMB proceeding are explicitly barred in appeals based on
section 1128(b)(4). Donna Rogers, DAB No. 2381, at 4-5; Marvin L. Gibbs, Jr, M.D.,
DAB No. 2279; Roy Cosby Stark, DAB No. 1746 (2000); George Iturralde, M.D., DAB
No. 1374 (1992); Leonard R. Friedman, M.D., DAB No. 1281; 42 C.F.R.

§ 1001.2007(d).

Petitioner’s protestations that he did not understand this consequence of his license
relinquishment, or that he was not adequately informed about it, are no defenses to the
exclusion. Erica L. Pedersen, DAB CR1700 (2007); Stella Remedies Lively, DAB
CR1369 (2005); Steven Caplan, R.Ph., DAB CR1112 (2003); aff’d sub nom. Steven
Caplan v. Thompson, CIV No. 04-00251 (D. Haw. Dec. 17, 2004). And Petitioner’s
constitutional challenges are beyond the scope of this appeal and this forum in general: I
simply cannot consider them. Rogers, DAB No. 2381; Kenneth M. Behr, DAB No. 1997;
Keith Michael Everman, D.C., DAB No. 1880; Susan Malady, R.N., DAB No. 1816
(2002). However, it may be worth noting that it is a firmly-established principle that no
health care practitioner, including this Petitioner, has a constitutionally-protected interest
in continued participation in the Medicare program. Kahn v. I.G. 484 F. Supp. 423
(S.D.N.Y. 1994); Hillman Rehabilitation Center, DAB No. 1611 (1997); Norton, DAB
CR1627; Edmund D. Eisnaugle, D.O., DAB CR1010; Martin Markoff, D.O., DAB
CR538 (1998).

Because the I.G. has established a basis for the exclusion of Petitioner pursuant to
sections 1128(b)(4)(A) and (B) of the Act, his exclusion until such time as he regains his
license to practice medicine as a physician in the State of Colorado is required by section
1128(c)(3)(E) of the Act, 42 U.S.C. § 1320a7(c)(3)(E) and 42 C.F.R. § 1001.501(b)(1).
That period is reasonable as a matter of law, based as it is on that statute and regulation.
Petitioner’s complaint that the period is “grossly disproportionate” and “unreasonable” is

>It may be possible to infer the approximate date of P. Ex. 7. At page 4 of that exhibit,
there is a reference to activity in August 2011. That is the most recent date in the
document. The document does not reflect the apparent renewal of Petitioner’s Nebraska
license in June 2012. Thus, the curriculum vitae can be assumed to have been prepared
after August 2011 and before June 2012. Remarkably, it describes his Colorado license
as “inactive” at that time, a plainly untruthful reflection of the CMB’s action of February
2011, and of January 2012 as well, if prepared after that latter date. On the other hand,
the curriculum vitae does show — without explanation — that Petitioner’s association
with at least three Denver-area hospitals ended in December 2010, the month in which
the CMB ordered him to cease performing “any act requiring a license by the Board.” P.
Ex. 7, at 4-6; LG. Ex. 2, at 1-3.
12

simply wrong: in fact, the period of exclusion is the precise result desired by Congress in
1987, when it enacted section 1128(b)(4) as part of the Medicare and Medicaid Patient
and Program Protection Act of 1987, Pub. L. No. 100-93. His demand that I alter the
period and effect of his exclusion is explicitly beyond my authority to address. 42 C.F.R.
§§ 1005.4(c)(5) and (6). And it may be well to summarize here what I have written
above: because Petitioner has agreed never to seek a license to practice medicine as a
physician in Colorado, his exclusion from the protected programs is, for all practical
purposes, permanent. The effects of this exclusion on Dr. Parra’s future are concededly
stark, but they are not recognized defenses or mitigating factors in this appeal, and they
are amply justified by the facts and the law of this case. Jeremy Robinson, DAB No.
1905 (2004); Donald A. Burstein, Ph.D., DAB No. 1865 (2003).

Summary disposition is authorized by the terms of 42 C.F.R. § 1005.4(b)(12). Resolution
of a case by summary disposition is particularly fitting when settled law can be applied to
undisputed material facts. Gibbs, DAB No. 2279; Michael J. Rosen, M.D., DAB No.
2096. This Decision issues accordingly, for the material facts in this case are undisputed,
unambiguous, and support summary disposition as a matter of settled law.

VI. Conclusion

For the reasons set forth above, the I.G.’s Motion for Summary Disposition should be,
and it is, GRANTED. The I.G.’s exclusion of Petitioner Michael T. Parra, M.D., from
participation in Medicare, Medicaid, and all other federal health care programs pursuant
to the terms of sections 1128(b)(4)(A) and 1128(b)(4)(B) of the Act, 42 U.S.C. § 1320a-
7(b)(4)(A) and (B), until such time as he regains his license to practice medicine as a
physician in the State of Colorado is SUSTAINED.

/s/
Richard J. Smith
Administrative Law Judge