Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
West Texas LTC Partners, Inc.,

d/b/a Cedar Manor,

(CCN: 67-6068),

Petitioner,

v.

Centers for Medicare & Medicaid Services.
Docket No. C-14-1085
Decision No. CR3526

Date: December 22, 2014

DECISION

I grant summary judgment in favor of the Centers for Medicare & Medicaid Services
(CMS), sustaining its determination to impose the following remedies against Petitioner,
West Texas LTC Partners, Inc., d/b/a Cedar Manor, a skilled nursing facility in the State
of Texas:

¢ Civil money penalties of $6050 per day for each day of a period that began on
December 18, 2013 and that extended through December 20, 2013; and

¢ Civil money penalties of $350 per day for each day of a period that began on
December 21, 2013, and that extended through January 31, 2014.

also sustain CMS’s determination to impose a denial of payment for new Medicare
admissions against Petitioner during a period that began on January 24, 2014, and that ran
through January 31, 2014.
I. Background

Petitioner requested a hearing to challenge CMS’s remedy determinations. CMS moved
for summary judgment and Petitioner opposed the motion. CMS offered exhibits that are
identified as CMS Ex. 1 - CMS Ex. 17. Petitioner offered exhibits that are identified as
P. Ex. 1 — P. Ex. 14. I receive these exhibits into the record for purposes of this decision.

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

The issues are whether, based on undisputed material facts: Petitioner failed to comply
substantially with Medicare participation requirements; CMS’s determinations of
immediate jeopardy noncompliance are clearly erroneous; and, CMS’s remedy
determinations are reasonable.

B. Findings of Fact and Conclusions of Law

CMS bases its noncompliance allegations and its remedy determinations on the results of
two compliance surveys of Petitioner’s facility, completed December 20, 2013
(December survey) and January 28, 2014 (January survey). CMS asserts that, at the
December survey, Petitioner manifested deficiencies, all of which were so egregious as to
put residents of Petitioner’s facility at immediate jeopardy. Allegedly, Petitioner’s
immediate jeopardy level noncompliance included failures to comply with:

e 42C.F.R. § 483.13(c), in that Petitioner’s staff neglected to care appropriately for
two residents who are identified as Residents #s 1 and 4. CMS alleges
additionally that Petitioner failed to comply with this section by not implementing
internal policies that were written to protect residents from neglect.

e 42 CFR. § 483.25(h)(1) and (2) by failing adequately to supervise Residents #s 1
and 4 and to protect these residents against accident hazards.

e 42CFR. § 483.75 by failing to administer its facility effectively and efficiently.
Specifically, CMS asserts that Petitioner’s alleged failures to comply with the
requirements of 42 C.F.R. §§ 483.13(c) and 483.25(h)(1) and (2) are a basis for
concluding additionally that Petitioner failed to comply with the requirements of
42 CFR. § 483.75.

Summary judgment may be granted only where undisputed material facts are a basis for a
party to prevail. I must deny summary judgment where there is a dispute as to material
facts that could lead to an inference on a dispositive issue that is favorable to the party
against which the motion is filed.
Here, the undisputed facts plainly establish that Petitioner contravened the requirements
of 42 CFR. §§ 483.13(c), 483.25(h)(1) and (2) and, by extension, 483.75. Moreover,
these facts establish that CMS’s determination of immediate jeopardy level
noncompliance is not clearly erroneous. Consequently, summary judgment is appropriate
in CMS’s favor as to the deficiency findings made at the December survey.

The undisputed facts concerning Petitioner’s care of Resident # | are as follows. The
resident is a paraplegic individual who is totally dependent on his caregivers for such
essential functions as bed mobility, transfers, and personal hygiene. CMS Ex. 6 at 56, 58.
His disability is such that he must wear a catheter. CMS Ex. 6

at 8. He spent his days while at Petitioner’s facility in an electric wheelchair. CMS Ex. 6
at 4, 10. Petitioner’s staff employed a device known as a Hoyer Lift to transfer the
resident in and out of his wheelchair. CMS Ex. 6 at 10. I take notice that a Hoyer Lift is
a device that transfers an individual by use of a hammock-like sling. The straps of the
sling are attached to the lift and the lift is then used to raise the individual from his or her
bed or wheelchair for purposes of transfer. Petitioner’s staff opted to leave the sling and
straps attached to Resident # 1’s wheelchair, evidently in order to make it easier for the
staff to transfer the resident when necessary. CMS Ex. 16 at 2.

Petitioner’s staff assessed Resident # 1 and concluded that he was at risk for falling
forward from his wheelchair and injuring himself due to his paraplegia. CMS Ex. 6 at
10. The staff concluded that the resident played with the Hoyer sling straps that were
attached to his wheelchair and also unhooked the tubing of his catheter. Id. To address
these problems, Petitioner’s staff prepared a care plan for Resident # 1 that enjoined the
staff to assure that the resident’s Hoyer lift straps and catheter tubing were tucked in so
that they did not dangle and, potentially, become entangled in the mechanism of the
resident’s wheelchair. Id.

Petitioner’s care plan for the resident notwithstanding, the Hoyer lift straps on Resident #
1’s wheelchair were often left dangling, near the chair’s wheels. CMS Ex. 16 at 2. The
resident’s father alerted Petitioner’s staff on numerous occasions to the dangers posed by
dangling Hoyer lift straps. CMS Ex. 16 at 2. Petitioner’s staff was generally not
responsive to complaints uttered by the resident’s father and stepmother about dangling
lift straps. CMS Ex. 16 at 2-3.

Petitioner contradicted none of these facts. Petitioner asserts that the lift straps that were
attached to the resident’s wheelchair were not inherently dangerous. Petitioner’s
Response to CMS’s Motion for Summary Judgment (Response) at 4. It asserts that, to
the extent that the straps were a hazard, they became so only because of the resident’s
constant playing with them. Response at 4-5.
I assume Petitioner’s assertions about the Hoyer Lift straps to be true for purposes of this
decision. But, these assertions do not gainsay the fact that the straps frequently dangled
so that they could become entangled with the wheels of the resident’s electric wheelchair.
Nor do they rebut the facts showing that the resident’s parents brought this hazard to the
attention of Petitioner’s staff without avail. So, whether or not the resident’s playing with
them caused the straps to dangle, they were an evident and obvious safety hazard that
Petitioner’s staff was aware of, but that Petitioner did not address.

The undisputed facts establish that on December 2, 2013, Resident # 1 was leaving
Petitioner’s dining room in his electric wheelchair when the Hoyer Lift straps became
entangled in the wheelchair’s wheels. CMS Ex. 6 at 36, 38. As a consequence, the
resident fell out of his wheelchair and sustained fractures to both of his femurs. CMS Ex.
6 at 37, 44, 72.

The following are undisputed facts relevant to Resident # 4’s care by Petitioner and its
staff. As of December 2013, the resident was an elderly woman suffering from dementia
and a variety of other disabling conditions that left her confined to a wheelchair. CMS
Ex. 4 at 1, 9. During the December survey a surveyor observed Petitioner’s staff putting
the resident, who was in a high-backed wheelchair, into a Hoyer sling and lifting her.
CMS Ex. 16 at 3,5. The sling was left on the resident’s wheelchair after the transfer (I
infer that the resident sat on the sling). The surveyor observed the resident propelling her
wheelchair down a corridor with the straps dangling at the level of the chair’s wheels.
CMS Ex. 16 at 3. Approximately two hours later the surveyor saw the resident again and
noted that the straps were still dangling at wheel level. CMS Ex. 16 at 5. The surveyor
discussed the transfer of Resident # 4 with the nursing assistant who performed it and the
nursing assistant told the surveyor that she had not received training on using the Hoyer
Lift. CMS Ex. 16 at 5.

Petitioner does not dispute any of these facts. It asserts that Resident # 4 never sustained
a fall and, based on that, it contends that its care of the resident is essentially irrelevant to
the issue of its compliance with Medicare participation requirements. I accept as true
Petitioner’s assertion that the resident never fell. That does not rebut any of the facts
offered by CMS for reasons that I explain below.

The undisputed material facts plainly establish that Petitioner contravened the
requirements of 42 C.F.R. § 483.13(c). They show, first, that Petitioner neglected the
needs of Residents #s 1 and 4. The term “neglect” is defined by implementing
regulations to mean “failure to provide goods and services necessary to avoid physical
harm, mental anguish, or mental illness.” 42 C.F.R. § 488.301. Petitioner’s staff
recognized that Resident # 1 was at risk for serious injury if Hoyer Lift straps became
entangled in his wheelchair. The staff should have known that Resident # 4 presented
similar issues. And, yet, the staff allowed both residents to roam Petitioner’s premises
with dangling Hoyer Lift straps, putting these residents in danger. In the case of Resident

# 1, the staff not only knew that the resident was at risk, but the staff was warned
repeatedly by the resident’s father and stepmother that he was in danger. And, yet,
despite this knowledge and the warnings received, the staff did not abate the risk. That is
neglect under any definition of the term.

Petitioner asserts that what happened to Resident # 1 was beyond its staff’s ability to
control. It contends that the staff was instructed to assure that the Hoyer Lift straps were
tied behind the resident’s wheelchair in order to prevent them from dangling. It argues
that it was the resident, and not Petitioner’s staff, who caused the straps to dangle, and
this hazard, it asserts, was simply unavoidable.

But, Petitioner has not offered a single fact to show that its staff dealt meaningfully with
the hazard caused by the resident untying and playing with the Hoyer Lift straps. There
were obvious measures that Petitioner’s staff might have taken to protect the resident,
ranging from keeping the resident under observation and retying the straps whenever the
staff saw them untied, to simply removing the sling and straps from the resident’s
wheelchair. But, Petitioner offered not even a suggestion that it attempted to implement
any of these measures. The facts of this case show only that there was a hazard caused
by dangling straps, that Petitioner’s staff was made aware of that hazard, repeatedly, and
that it did nothing meaningful to ameliorate it.

Petitioner argues that whatever the staff did or failed to do in the case of Resident # 4 is
irrelevant because the resident did not sustain an accident. I find this “no harm, no foul”
argument to be without merit. It is unnecessary that a resident sustain an injury in order
to be neglected within the meaning of 42 C.F.R.

§ 483.13(c). The regulation governs the services that must be provided to a resident.
Failure to provide those services is neglect whether or not a resident is injured as a
consequence of the failure to provide them. Moreover, Resident # 1 was injured and, in
this case, the undisputed facts strongly support the conclusion that his injuries were the
proximate consequence of Petitioner’s neglect.

Petitioner violated 42 C.F.R. § 483.13(c) in another respect by failing to implement its
anti-neglect policy in providing care to Residents #s 1 and 4. Petitioner’s policy
explicitly tracks the language of 42 C.F.R. § 488.301 in defining neglect. CMS Ex. 14 at
16. Its anti-neglect policy goes further to state that negligent care includes the failure to
“properly care for a resident in the manner conducive to professional care standards.”
CMS Ex. 14 at 16. Additionally, Petitioner has policies that command its staff to identify
those residents who are at risk for accidents or falls and to implement procedures to
reduce or prevent accidents. CMS Ex. 14 at 24.

The undisputed material facts show clearly that Petitioner and its staff failed to
implement these policies in providing care to Residents #s 1 and 4. As I have discussed
above, the staff identified obvious and serious hazards, but then did nothing of
significance to protect the residents against those hazards.

Petitioner argues that, as a matter of law, it cannot be held to have violated the
requirement that it develop and implement policies to prevent neglect. Response at 5-6.
It premises this argument on its assertion that it did not neglect either Resident # 1 or
Resident # 4. I reject that argument because it is plain — from the undisputed facts — that
the needs of both of these residents were neglected. As I have discussed, these residents
were at risk of serious injury, Petitioner knew or should have known about the hazards
that these residents were being exposed to, and yet, Petitioner did not protect them.

The undisputed facts also establish that Petitioner failed to comply with the requirements
of 42 C.F.R. § 483.25(h)(1) and (2). Both Residents #s 1 and 4 were exposed to palpable
hazards. Staff knew that these residents could be injured seriously if Hoyer Lift straps
became entangled in their wheelchairs. Staff knew also that these residents were
traveling around Petitioner’s facility with dangling straps that could become entangled in
their wheelchairs’ wheels. In the case of Resident # 1, the Resident’s father and
stepmother told the staff repeatedly about the problem. And, yet, Petitioner and its staff
allowed the problem to persist until Resident # 1 was grievously injured. Perhaps worse,
even after the injury sustained by Resident # 1, Petitioner’s staff continued to allow
another resident, Resident # 4, a demented and helpless individual, to propel herself
around the facility with dangling Hoyer Lift straps.

Petitioner argues that Resident # 4 never had an “accident” and that, therefore, her care is
no basis to find Petitioner liable. Response at 6. That is the same “no harm, no foul”
argument that I rejected above and I reject it again, here, for the same reasons.
Compliance with the requirements of 42 C.F.R. § 483.25(h)(1) and (2) is not outcome-
dependent. A facility does not earn a pass for its failure to protect residents against
accident hazards or its failure to provide adequate supervision if, fortuitously, no accident
occurs in spite of the facility’s failure. The failure to protect Resident # 4 is evident in
this case. The resident — and Petitioner — were fortunate that no accident occurred. But
that favorable outcome does not relieve Petitioner from liability.

As for Resident # 1, Petitioner asserts that its staff was trained frequently and routinely to
identify and protect residents against accident risks. It characterizes the accident that
Resident # 1 experienced as a one-off event, something from which no generalization can
be made. Response at 6-7. I disagree.

I will accept for purposes of this decision that Petitioner’s staff was trained — even
frequently and routinely — to identify and protect residents against accident risks. That
training was obviously ineffective because it failed to protect Residents #s | and 4 against
risks that any competent staff member should have been alerted to. The staff assessed
Resident #1 as being at risk for injury from dangling Hoyer Lift sling straps and yet staff
allowed the resident to roam Petitioner’s facility in a motorized wheelchair with the
straps dangling. That happened, despite repeated requests from the resident’s family that
he be better protected. Training, even frequent and routine training, is no defense here if
it is ineffective. Moreover, it is evident that not all of Petitioner’s staff received
appropriate training. CMS offered facts that Petitioner did not rebut establishing that the
nursing assistant who provided care to Resident # 4 and who transferred that resident by
means of a Hoyer Lift had not been trained in safety procedures concerning use of the
lift.

Finally, the undisputed facts establish that Petitioner’s noncompliance with 42 C.F.R. §§
483.13(c) and 483.25(h)(1) and (2) are a basis for finding noncompliance with 42 C.F.R.
§ 483.75. At bottom, the ineffective implementation of Petitioner’s policies and the
absence of meaningful protection of Residents #s | and 4 is a failure of management. It
is management’s responsibility in a facility to assure that policies are implemented and
that regulatory requirements are complied with. The failure here is evident.

Petitioner argues that it had an aggressive staff training and supervision program in place.
But, even if that is so, that does nothing to refute the facts that show that Petitioner’s
implementation of its policies in the cases of Residents #s 1 and 4 was woefully
inadequate.

Petitioner offered no facts to rebut CMS’s determination that the deficiencies identified at
the December survey put residents of Petitioner’s facility at immediate jeopardy.
“Immediate jeopardy” is defined to mean noncompliance that is so egregious as to cause,
or to be likely to cause, serious injury, harm, impairment, or death to a resident or
residents of a facility. 42 C.F.R. § 488.301.

The undisputed material facts establish not only that Petitioner’s noncompliance created a
likelihood of serious injury or worse to residents but that it caused actual grievous injury
to Resident # 1.

Petitioner offered nothing specific to rebut the facts that I have discussed. Rather, it says
only that there are issues of material fact in dispute, citing to some of its exhibits without
explaining why these exhibits create a genuine fact dispute. Response at 10. That is
inadequate to create a genuine fact dispute. The facts offered by CMS, which Petitioner
did not rebut, clearly establish the existence of immediate jeopardy level noncompliance.

CMS raises issues of additional noncompliance by Petitioner addressing alleged
noncompliance that was identified at the January survey of Petitioner’s facility. CMS
alleges that the additional noncompliance included failures by Petitioner to comply with:

e 42C FR. § 483.25(c), which requires: that a facility ensure that a resident entering
a facility without pressure sores not develop them unless their development is
medically unavoidable; and that a resident having pressure sores receives the
necessary treatment and services to promote healing, prevent infection, and to
prevent new sores from developing.

e 42CFR. § 483.65, which requires that a facility establish and maintain an
infection control program that is designed to provide a safe, sanitary and
comfortable environment in order to prevent the development and transmission of
disease and infection.

e 42C FR. § 483.75(f), which requires that nursing assistants be able to
demonstrate competency in skills and techniques necessary to care for those
residents’ needs that are identified through resident assessments and described in
residents’ care plans.

Undisputed facts establish Petitioner’s noncompliance with these three regulatory
requirements albeit at a level of noncompliance that was less egregious than immediate
jeopardy. All of these facts relate to care that Petitioner’s staff gave to a resident who is
identified as Resident #7. As of the January survey, Resident

#7 was 91 years old and she suffered from multiple illnesses. CMS Ex. 11 at 77. In
August 2013, Petitioner’s staff assessed this resident as being at a high risk for
developing pressure sores. Id. at 51. Petitioner developed a care plan for the resident
that required the staff to turn and reposition the resident every two hours and to clean the
resident’s perineum with soap and water after she urinated. Id. at 5.

On January 27, 2014 (during the January survey) a surveyor observed a nursing assistant
providing incontinence care for Resident # 7. The surveyor observed two Stage II
pressure sores on the resident’s buttocks. CMS Ex. 15 at 3-4. The nursing assistant did
not remark on the presence of these sores although she acknowledged that they were
present when questioned by the surveyor. The nursing assistant wiped the resident’s
inner buttocks with a wipe, but did not perform the perianal care directed by Resident #
7’s care plan. Id. Specifically, she did not wash the resident’s perineum with soap and
water as was directed by the care plan.

Petitioner does not rebut these asserted facts directly. Indeed, it does not confront them
at all in its response to CMS’s motion but, rather, refers to its pre-hearing brief as a fact
rebuttal to CMS’s findings. Response at 10.

I have looked closely at Petitioner’s pre-hearing brief (P. Ph. Br.) and it does not rebut
the material facts offered by CMS. The thrust of Petitioner’s argument in its pre-hearing
brief is that care provided by its staff to Resident # 7 prevented the resident from
developing avoidable pressure sores between July 2013 and January 26, 2014 and that
sores that the resident manifested on January 27, 2014 and thereafter were unavoidable.
But, CMS does not allege that the resident developed avoidable pressure sores as a result
of a failure of care by Petitioner’s staff. Had CMS alleged that, the likelihood is high that
CMS would have alleged immediate jeopardy level deficiencies. The deficiencies that
were identified at the January survey focus on something else, that being whether
Petitioner’s staff provided the perianal care that was mandated by Resident # 7’s care
plan and whether the failure by staff to provide such care establishes that the staff did not
comply with infection control requirements. Petitioner has offered nothing to rebut those
assertions by CMS. It does not deny that on January 27, 2014, the nursing assistant
providing care to Resident # 7 failed to wash the resident’s perineum as was required by
the resident’s care plan, nor does it offer any evidence to show that this failure was
harmless.

Petitioner contends that the resident did not develop a pressure sore between July 2013
and January 26, 2014, conceding that the resident did manifest two “small reddened
areas” on that latter date. P. Ph. Br. at 10. I accept that assertion as true, but that does
not respond to CMS’s contentions that Petitioner’s staff did not provide care plan-
directed care to the resident on January 27, 2014. Petitioner asserts also that the staff
protected the resident against the development of pressure sores by applying a barrier
cream to the resident’s buttocks. I also accept that assertion as true but, once again, it
begs the question of whether the staff provided the perianal care directed by the resident’s
care plan.

Thus, Petitioner does not rebut the facts offered by CMS. I find that these facts are
sufficient to establish noncompliance by Petitioner with regulatory requirements. First,
Petitioner failed to comply with the requirements of 42 C.F.R. § 483.25(c). The
undisputed material facts establish that Petitioner’s staff failed to follow the explicit
instructions contained in Resident # 7’s care plan in that they did not provide the perianal
care that is directed by that plan. Second, the facts show that Petitioner failed to comply
with the requirements of 42 C.F.R. § 483.65. Keeping Resident # 7’s perineum as germ-
free as possible by washing it with soap and water after the resident urinated was basic
infection control and Petitioner’s staff failed to comply with that requirement. Third, the
undisputed facts establish that Petitioner failed to comply with the requirements of 42
C.F.R. § 483.75(f). Being trained to carry out the requirements of a care plan is a basic
element of nursing assistant competence.

In the opening paragraph of this decision I recite two remedies that CMS imposed against
Petitioner: $6050 per-diem civil money penalties for each day of the period that ran from
December 18 through December 20, 2013; and $350 per-diem civil money penalties for
each day of the period that ran from December 21, 2013 through January 31, 2014.

These remedies are sustained, in duration and amount, by the undisputed material facts.

Although Petitioner denies that it was noncompliant it has offered no facts to show that,
assuming noncompliance, it abated its immediate jeopardy level deficiencies prior to
10

December 21, 2013. I have sustained those deficiencies and, consequently, the duration
of Petitioner’s immediate jeopardy level noncompliance is not an issue. As to the
reasonableness of the penalty amount, Petitioner has offered nothing to show that CMS’s
determination is unreasonable other than to deny its noncompliance.

The undisputed facts establish the penalty amount to be reasonable. Regulations
governing penalty amounts provide that immediate jeopardy level per-diem penalties
must fall within a range of from $3050 to $10,000. 42 CFR.

§ 488 .438(a)(1)(i). Factors which may be used to assess penalty amounts may include
the seriousness of a facility’s noncompliance, its compliance history, its culpability, and
its financial condition. 42 C.F.R. §§ 488.438(f)(1) — (4); 488.404 (incorporated by
reference into 42 C.F.R. § 488.438(f)(3)).

The immediate jeopardy level penalties that CMS imposed were at slightly more than 60
percent of the maximum allowed by regulation. CMS avers, and I agree that Petitioner’s
noncompliance was very serious. The failure to provide adequate care to Resident # |
certainly contributed to the accident he sustained and to his injuries. The likelihood of
additional harm to other residents, including Resident

#4, was very high. Moreover, Petitioner does not deny that it has a poor compliance
history. As CMS notes, Petitioner has been cited for noncompliance on nine occasions
since September 2010 and there have been four compliance enforcement actions against
Petitioner subsequent to that date.

I find also that the $350 daily penalty amounts for Petitioner’s non-immediate jeopardy
level noncompliance are reasonable. They constitute barely more than one-tenth of the
maximum allowable non-immediate jeopardy penalty amount. 42 C.F.R. §

488 .438(a)(1)(ii). That is an exceedingly modest penalty amount and it is amply justified
by the seriousness of Petitioner’s noncompliance.

Petitioner has not challenged the reasonableness of the non-immediate jeopardy level
penalty amount by offering facts to show it to be unreasonable. It has asserted that
CMS’s determination of the duration of its noncompliance is incorrect. According to
Petitioner, the Texas State agency certified that it had attained compliance on January 16,
2014, with the regulations cited at the December survey. Thus, according to Petitioner,
CMS may not impose civil money penalties for the period between January 16 and
January 27, even if it was noncompliant as of that latter date.

I disagree. First, Petitioner has not offered any facts to show that it actually abated all of
the deficiencies that were found at the December survey as of January 16, 2014. Rather,
it relies exclusively on its assertion that the Texas State agency told it that those
deficiencies were abated. Second, even if that assertion is true, CMS’s findings of
noncompliance take precedence over those made by the State. 42 C.F.R. §

488 .452(a)(2)(i). Therefore, what the State may have told Petitioner is irrelevant in the
11

absence of facts proving that Petitioner actually abated its deficiencies earlier than the
date determined by CMS.

Moreover, even if Petitioner abated its December survey deficiencies by January 16,
2014, that does not mean that the deficiencies that were found at the January survey
necessarily had as their beginning point January 27 or 28, 2014. The noncompliance that
the surveyor identified on January 27 was not simply that a nursing assistant failed to
perform perianal care on that date. The finding of noncompliance addressed a lack
understanding by the nursing assistant of her duties and responsibilities. That was a
fundamental failure of training and supervision and it is not reasonable to assume that this
failure commenced on January 27 and not at an earlier time.

CMS also imposed a denial of payment for new Medicare admissions effective January
24, 2014, as aremedy. That denial of payment remained in force through January 31,
2014. Petitioner argues that the denial of payment could not have been imposed between
January 24 and January 28, 2014, because its previous noncompliance had been
determined by the Texas State agency to be abated during that period. I disagree, for the
reasons that I discuss above. CMS may impose a denial of payment for any period of
substantial noncompliance. 42 C.F.R. § 488.417. As I have found, Petitioner was
noncompliant on January 24, 2014, and thereafter through January 31,2014. So, CMS is
authorized to impose a denial of payment on dates beginning January 24, 2014, and
continuing through January 31, 2014.

/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.

Kroger Texas L.P.,
d/b/a Kroger 570

Respondent.

Docket No. C-15-97
FDA Docket No. FDA-2014-H-1594

Decision No. CR3525

Date: December 22, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint)
against Respondent, Kroger Texas L.P., d/b/a Kroger 570 that alleges facts and legal
authority sufficient to justify the imposition of a civil money penalty of $5,000.
Respondent did not answer the Complaint, nor did Respondent request an extension of
time within which to file an answer. Therefore, I enter a default judgment against
Respondent and assess a civil money penalty of $5,000.

CTP began this case by serving the Complaint on Respondent and filing a copy of the
Complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The Complaint alleges that Respondent impermissibly sold cigarettes to
minors and failed to verify that cigarette purchasers were 18 years of age or older,
thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et
violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 301 et seq., and
its implementing regulations, Cigarettes and Smokeless Tobacco, 21 C.F.R.
pt. 1140 (2013). CTP seeks a civil money penalty of $5,000.

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

Respondent has not filed an answer within the time provided by regulation, nor has it
requested an extension. Pursuant to 21 C.F.R. § 17.11(a), 1 am 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 Kroger 570, an establishment that sells tobacco products and is
located at 5021 Teasley Lane, Denton, Texas 76210. Complaint 3.

e CTP previously initiated a civil money penalty action, CRD Docket Number C-13-
1292, FDA Docket Number FDA-2013-H-1098, against Respondent for three
violations of 21 C.F.R. pt. 1140 within a 24-month period. Specifically, those
violations included violations on February 10, 2013, when Respondent sold
tobacco products to a minor and failed to verify the age of the tobacco purchaser
by means of a photographic identification, and an unspecified violation on March
17, 2012. Complaint § 10.

e The previous civil money penalty action concluded when Rob Hamilton,
Respondent’s authorized representative, settled the claims on Respondent’s behalf.
On September 12, 2013, Mr. Hamilton signed an Acknowledgment Form
“admitting that the violations described in the Complaint filed in FDA Docket
Number FDA-2013-H-1098, CRD Docket Number C-13-1292 occurred, waiving
his ability to contest the violations in the future, and stating that he understood that
the violations may be counted in determining the total number of violations for
purposes of future enforcement actions.” The Administrative Law Judge closed
the case on October 11, 2013. Complaint 11.
e During a subsequent inspection of Respondent’s establishment conducted on April

12, 2014, at approximately 9:20 AM, F

DA-commissioned inspectors documented

that “‘a person younger than 18 years of age was able to purchase a package of
Camel Blue cigarettes . . . [.]” The inspectors also documented that the “minor’s

identification was not verified before the sale... .” Complaint § 1.

These facts establish that Respondent is liable

under the Act. The Act prohibits

misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is misbranded

if 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 of the U.S. Department of Health and Human Services issued the regulations at

21 C.F.R. pt. 1140 under section 906(d) of the

Act. 21 U.S.C. § 387a-1; see 21 U.S.C.

§ 387£(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). The regulations prohibit the

sale of cigarettes to any person younger than 1
The regulations also require retailers to verify,

8 years of age. 21 C.F.R. § 1140.14(a).
by means of photo identification

containing a purchaser’s date of birth, that no cigarette purchasers are younger than

18 years of age. 21 C.F.R. § 1140.14(b)(1).

Taking the above alleged facts as true, Respon
1140 within a 36-month period. Respondent vi

ent had six violations of 21 C.F.R. pt.
iolated the prohibition against selling

cigarettes to persons younger than 18 years of age, 21 C.F.R. § 1140.14(a), on March 17,

2012, February 10, 2013, and April 12, 2014.

On March 17, 2012, February 10, 2013,

and April 12, 2014, Respondent also violated the requirement that retailers verify, by
means of photo identification containing a purchaser’s date of birth, that no cigarette
purchasers are younger than 18 years of age. 21 C.F.R. § 1140.14(b)(1).

CTP has requested a civil fine of $5,000, which is a permissible fine for six violations of
the regulations found at 21 C.F.R. pt. 1140. 21 C.F.R. § 17.2. Therefore, I find that a
civil penalty of $5,000 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.

Thais Mini Market Inc.
d/b/a Land S Grocery Inc.,

Respondent.

Docket No. C-15-175
FDA Docket No. FDA-2014-H-1691

Decision No. CR3524

Date: December 22, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint)
against Respondent, Thais Mini Market Inc. d/b/a I and S Grocery Inc., alleging facts and
legal authority sufficient to justify imposing a civil money penalty of $10,000.
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
$10,000.

CTP began this case by serving a Complaint on Respondent and filing a copy of the
Complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The Complaint alleges that Respondent’s staff unlawfully sold individual
cigarettes to a minor, and failed to verify, by means of photo identification containing a
date of birth, that a tobacco purchaser was 18 years of age or older, thereby violating the
Federal Food, Drug, and Cosmetic Act (Act) and its implementing regulations, found at
21 C.F.R. pt. 1140. CTP seeks a civil money penalty of $10,000.

On October 29, 2014, CTP served the Complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and accompanying
cover letter, CTP explained that within 30 days Respondent should pay the penalty, file
an answer, or request an extension of time within which to file an answer. CTP warned
Respondent that if it failed to take one of these actions within 30 days an Administrative
Law Judge (ALJ) could issue an initial decision by default ordering Respondent to pay
the full amount of the proposed penalty. 21 C.F.R. § 17.11.

Respondent has not filed an answer or any other pleading within the time prescribed.
Therefore, pursuant to 21 C.F.R. § 17.11(a), I am required to issue an initial decision by
default if the Complaint is sufficient to justify a penalty. Accordingly, I must determine
whether the allegations in the Complaint establish violations of the Act.

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

e Respondent owns I and S Grocery Inc., an establishment that sells tobacco
products and is located at 490 Avon Avenue, Newark, New Jersey 07108.
Complaint § 3.

e CTP previously initiated a civil money penalty action, CRD Docket Number C-13-
588, FDA Docket Number FDA-2013-H-0367, against Respondent for four
violations of 21 C.F.R. pt. 1140 within a 24-month period. Specifically, those
violations included violations! on June 9, 2012, and three violations on January
17, 2013, when Respondent sold individual cigarettes to a minor and failed to
verify, by means of photographic identification, that the tobacco purchaser was 18
years of age or older. Complaint { 10.

e The previous civil money penalty action concluded on May 21, 2013, when the
ALJ issued an Initial Decision and Default Judgment finding the Respondent
liable for the violations. The decision became final and binding on June 20, 2013.
Complaint § 11.

' Tn the complaint, CTP describes the actions that took place at Respondent’s business
establishment on June 9, 2012, as both “a violation” and as “violations.” Complaint § 10.
In a previous administrative complaint initiated on April 1, 2013, and attached to the
present complaint, CTP described two discrete violations at Respondent’s business
establishment on June 9, 2012: a violation of 21 C.F.R. § 1140.14(a), and a violation of
21 C.F.R. § 1140.14(b)(1). Therefore, I will infer that CTP’s description in the present
complaint of “‘a violation” occurring on June 9, 2012, was a typographical error.
e During a subsequent inspection of Respondent’s establishment conducted on May
3, 2014, FDA-commissioned inspectors documented that “a person younger than
18 years of age was able to purchase two individual cigarettes . . . at
approximately 11:33 AM[.]” The inspectors also noted that “the minor’s
identification was not verified before the sale . . . [.]” Complaint § 1.

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

21 U.S.C. § 387c(a)(7)(B); 21 C.F.R § 1140.1(b). The regulations prohibit the sale of
cigarettes to any person younger than 18 years of age. 21 C.F.R. § 1140.14(a). The
regulations also require the verification, by means of photo identification containing a
purchaser’s date of birth, that no tobacco product purchasers are younger than 18 years of
age. 21 C.F.R. § 1140.14(b)(1). Finally, the regulations prohibit retailers from breaking
or otherwise opening a cigarette package in order to sell individual cigarettes. 21 C.F.R.
§ 1140.14(d).

Here, Respondent had seven violations of regulations found at 21 C.F.R. pt. 1140 within
a 48-month period. An ALJ imposed a civil money penalty of $2,000 against Respondent
on May 21, 2013, finding that Respondent previously committed four violations of the
Act. Most recently, on May 3, 2014, Respondent sold individual cigarettes to a person
younger than 18 years of age, in violation of 21 C.F.R. § 1140.14(a) and (d). On that
same date, Respondent violated the requirement that retailers verify, by means of photo
identification containing a purchaser’s date of birth, that no tobacco product purchaser is
younger than 18 years of age. 21 C.F.R. § 1140.14(b)(1). Therefore, Respondent’s
actions constitute violations of law that merit a civil money penalty.

CTP has requested a fine of $10,000, which is a permissible fine under the regulations.
21 C.F.R. § 17.2. Therefore, I find that a civil money penalty of $10,000 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,
(FDA No. FDA-2014-H-1595)

Complainant
v.

Zaref, Inc.
d/b/a Sunoco,

Respondent.
Docket No. C-15-98
Decision No. CR3523

Date: December 22, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Zaref, Inc. d/b/a Sunoco, at 942 Middlebelt Road, Inkster,
Michigan 48141, and by filing a copy of the complaint with the Food and Drug
Administration’s (FDA) Division of Dockets Management. The complaint alleges that
Sunoco impermissibly sold cigarettes to a minor, and failed to verify by means of photo
identification containing a date of birth, that a tobacco purchaser was 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, 21 C.F.R. pt. 1140. The complaint
likewise alleges that Respondent Sunoco previously admitted to three violations of
regulations found at 21 C.F.R. pt. 1140 and, therefore, CTP seeks to impose a $5,000
civil money penalty against Respondent Sunoco.

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

Respondent Sunoco has neither filed an answer within the time prescribed, nor requested
an extension of time within which to file an answer. Pursuant to 21 C.F.R. § 17.11,1
assume that the facts alleged in the complaint (but not its conclusory statements) are true.
Specifically:

e¢ CTP previously issued a warning letter to Respondent Sunoco on January 3, 2013,
citing violations! of 21 CFR. pt. 1140 on December 4, 2012, at Respondent’s
business establishment, 942 Middlebelt Road, Inkster, Michigan 48141;

¢ On November 26, 2013, CTP initiated a previous civil money penalty action, CRD
Docket Number C- 14-260, FDA Docket Number FDA-2013-H-1452, against
Respondent for three violations of 21 C.F.R. pt. 1140 within a twenty-four month
period. CTP alleged those violations to have occurred on December 4, 2012, and
June 1, 2013;

e The previous action concluded when Mohammad Adoure, Respondent’s
authorized representative, settled the claims on Respondent’s behalf. On
December 30, 2013, Mr. Adoure signed an Acknowledgment Form in which he
“admitt[ed] that the violations . . . occurred, waiv[ed] his ability to contest the
violations in the future, and stat[ed] that he understood that that violations may be
counted in determining the total number of violations for purposes of future
enforcement actions.” The Administrative Law Judge closed the case on January
24, 2014;

e At approximately 9:39 AM on April 12, 2014, at Respondent’s business
establishment, 942 Middlebelt Road, Inkster, Michigan 48141, FDA-
commissioned inspectors documented Respondent’s staff selling a package of
Newport Box 100s cigarettes to a person younger than 18 years of age.

' Tn the complaint, CTP describes the action or actions that took place at Respondent
Sunoco’s business establishment on December 4, 2012, as both “a violation” and as
“violations.” Complaint J 10. In a previous administrative complaint issued on
November 26, 2013, and attached to the present complaint, CTP described two discrete
violations at Respondent’s business establishment on December 4, 2012: a violation of
21 C.F.R. § 1140.14(a) and a violation of 21 C.F.R. § 1140.14(b)(1). Therefore, I will
infer that CTP’s description in the present complaint of “a violation” occurring on
December 4, 2012, was a typographical error.
The inspectors also documented that Respondent’s staff failed to verify, by means
of photo identification containing the bearer’s date of birth, that the purchaser of a
tobacco product was 18 years of age or older.

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

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

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

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

Under 21 C.FR. § 17.2,a $5,000 civil money penalty is permissible for five violations of
the regulations found at 21 C.F.R. pt. 1140.

Order

For these reasons, I enter default judgment in the amount of $5,000 against Respondent
Zaref, Inc. d/b/a Sunoco. Pursuant to 21 C.F.R. § 17.11(b), this order becomes final and
binding upon both parties after 30 days of the date of its issuance.

/s/
Catherine Ravinski
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

AI Traders, LLC / Aswad Janoo,
d/b/a Choice Tobacco,

Respondent.

Docket No. C-15-49
FDA Docket No. FDA-2014-H-1543

Decision No. CR3520

Date: December 17, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint)
against Respondent, A I Traders, LLC / Aswad Janoo, d/b/a Choice Tobacco that alleges
facts and legal authority sufficient to justify the imposition of a civil money penalty of
$500. Respondent did not answer the Complaint, nor did Respondent request an
extension of time within which to file an answer. Therefore, I enter a default judgment
against Respondent and assess a civil money penalty of $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 flavored
cigarettes, 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 CFR. pt. 1140 (2013). CTP seeks a civil money penalty of $500.

On October 16, 2014, CTP served the Complaint on Respondent by United Parcel
Service, pursuant to 21 C.F.R. §§ 17.5 and 17.7. In the Complaint and accompanying
cover letter, CTP explained that within 30 days, Respondent should pay the proposed
penalty, file an answer, or request an extension of time within which to file an answer.
CTP warned Respondent that if it failed to take one of these actions within 30 days, an
Administrative Law Judge could, pursuant to 21 C.F.R. § 17.11, issue an initial decision
ordering Respondent to pay the full amount of the proposed penalty.

Respondent has not filed an answer within the time provided by regulation, nor has it
requested an extension. Pursuant to 21 C.F.R. § 17.11(a), 1am required to “assume the
facts alleged in the [C]omplaint to be true” and, if those facts establish liability under the
Act, issue a default judgment and impose a civil money penalty. Accordingly, I must
determine whether the allegations in the Complaint establish violations of the Act.

Specifically, CTP alleges the following facts in its Complaint:

e Respondent owns Choice Tobacco, an establishment that sells tobacco products
and is located at 603 Broadway East, Seattle, Washington 98102. Complaint § 2.

e During an inspection of Respondent’s establishment on September 27, 2013, at an
unspecified time, an FDA-commissioned inspector observed a staff person at
Respondent’s establishment sell “Blunt Wrap Sweet Berry cigarettes [.]”
Complaint § 11.

¢ On November 21, 2013, CTP issued a Warning Letter to Respondent regarding the
inspector’s observation from September 27, 2013. The letter explained that the
observation constituted a violation of regulations found at 21 U.S.C.
§ 387g(a)(1 )(A). The Warning Letter stated that if Respondent failed to correct
the violations, regulatory action by the FDA or a civil money penalty action could
occur and that Respondent was responsible for complying with the law.
Complaint § 11.

e Aswad Janoo, who identified himself as the establishment’s owner, responded to
the Warning Letter by a December 5, 2013 letter. “Mr. Janoo stated that all the
“Blunt Wrap Sweet Berry Cigarettes’ were destroyed. He also stated that he had
all his employees check the displays to ensure compliance.” Mr. Janoo also
informed CTP that he “implemented a new policy of monthly checks of the
displays to prevent this violation in the future.” Complaint § 12.
e During a subsequent two-part inspection of Respondent’s establishment conducted
on February 18, 2014, and March 4, 2014, FDA-commissioned inspectors
documented the sale of “Blunt Wrap Sweet Berry 100’s,” “Milds,” and “Milds
100’s” Premium Flavored Cigarettes in the Respondent’s establishment.
Complaint§ 1.

These facts establish that Respondent is liable under the Act. The Act prohibits
misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco product is misbranded
if distributed or offered for sale in any state in violation of regulations issued under
section 906(d) of the Act. 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R. § 1140.1(b). The Act
also prohibits the receipt in interstate commerce of any tobacco product that is
adulterated, and the delivery or proffered delivery thereof for pay or otherwise. 21 U.S.C.
§ 331(c). The Secretary of the U.S. Department of Health and Human Services issued the
regulations at 21 C.F.R. pt. 1140 under section 906(d) of the Act. 21 U.S.C. § 387a-1;
see 21 U.S.C. § 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). The
regulations prohibit a cigarette or any of its component parts (including the tobacco,
filter, or paper) from containing, as a constituent (including a smoke constituent) or
additive, an artificial or natural flavor (other than tobacco or menthol) or an herb or spice
that is a characterizing flavor of the tobacco product or tobacco smoke. 21 U.S.C.

§ 387g(a)(1)(A).

Taking the above alleged facts as true, Respondent violated the prohibition against selling
cigarettes that contain a constituent, additive, artificial, natural flavor, herb or spice as a
characterizing flavor of the tobacco product or tobacco smoke. 21 U.S.C.

§ 387g(a)(1 )(A), on September 27, 2013, February 18, 2014, and March 4, 2014.

CTP has requested a civil fine of $500, which is a permissible fine under the regulations.
21 CFR. § 17.2. Therefore, I find that a civil 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,
(FDA No. FDA-2014-H-1537)

Complainant,
v.

Nabeel Mohamed Elzoffi
d/b/a Parkway Discount Grocery,

Respondent.
Docket No. C-15-45
Decision No. CR3518

Date: December 17, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Nabeel Mohamed Elzoffi, d/b/a Parkway Discount Grocery,
245 South Parkway West, Memphis, Tennessee 38109, and by filing a copy of the
complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The complaint alleges that Parkway Discount Grocery unlawfully sold
cigarettes to minors and failed to verify that the cigarette purchasers 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. pt. 1140. CTP seeks to impose a $500 civil money penalty against Respondent
Parkway Discount Grocery.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on October 16, 2014, CTP served the
complaint on Respondent Parkway Discount Grocery by United Parcel Service. In the
complaint and accompanying cover letter, CTP explained that, within 30 days,
Respondent should pay the penalty, file an answer, or request an extension of time in
which to file an answer. CTP warned Respondent that, if it failed to take one of these
actions within 30 days, the Administrative Law Judge could, pursuant to 21 C.F.R.

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

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

e At approximately 4:49 p.m. on July 13, 2012, at Respondent’s business
establishment, at 245 South Parkway West, Memphis, Tennessee 38109, an FDA-
commissioned inspector observed that a person younger than 18 years of age was
able to purchase a package of Marlboro cigarettes. The inspector also documented
that staff failed to verify, by means of photographic identification containing a
date of birth, that the purchaser was 18 years of age or older;

e Ina warning letter dated September 20, 2013, CTP informed Respondent of the
inspector’s July 13, 2012 observations, and that such actions violate federal law,
21 CFR. § 1140.14(a) and (b)(1). The letter further warned that Respondent’s
failure to correct its violations could result in a civil money penalty or other
regulatory action;

e At approximately 3:45 p.m. on May 30, 2014, at Respondent’s business
establishment, at 245 South Parkway West, Memphis, Tennessee 38109, FDA-
commissioned inspectors observed that a person younger than 18 years of age was
able to purchase a package of Marlboro cigarettes. The inspectors also
documented that staff failed to verify, by means of photographic identification
containing a date of birth, that the purchaser was 18 years of age or older.

These facts establish Respondent Parkway Discount Grocery’s liability under the Act.
The Act prohibits misbranding of a tobacco product. 21 U.S.C. § 331(k). A tobacco
product is misbranded if sold or distributed in violation of regulations issued under
section 906(d) of the Act. 21 U.S.C. § 387f(d); see 21 U.S.C. § 387c(a)(7)(B); 21 C.F.R.
§ 1140.1(b). The Secretary of the U.S. Department of Health and Human Services issued
the regulations at 21 C.F.R. pt. 1140 under section 906(d) of the Act. 21 U.S.C.

§ 387a-1; see 21 U.S.C. § 387f(d)(1); 75 Fed. Reg. 13,225, 13,229 (Mar. 19, 2010). The
regulations prohibit the sale of cigarettes to any person younger than 18 years of age.

21 CFR. § 1140.14(a).
The regulations also require retailers to verify, by means of photo identification
containing a purchaser’s date of birth, that no cigarette purchasers are younger than
18 years of age. 21 C.F.R. § 1140.14(b)(1).

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

Order

For these reasons, I enter default judgment in the amount of $500 against Respondent
Nabeel Mohamed Elzoffi, d/b/a Parkway Discount Grocery. Pursuant to 21 C.F.R.

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

/s/
Catherine Ravinski
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division
Bayou Shores, SNF, LLC d/b/a Rehabilitation Center of St. Petersburg,
(CCN: 10-5772),
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-1643
ALJ Ruling No. 2015-6
Date: December 16, 2015
RULING ON MOTION FOR PARTIAL SUMMARY JUDGMENT
This case revisits the well-settled propositions that the Centers for Medicare & Medicaid
Services (CMS) may terminate the Medicare participation of a long-term care facility that
is not in substantial compliance with program requirements and that CMS need not afford
the deficient facility an opportunity to correct first.
Petitioner, Bayou Shores, SNF, LLC, d/b/a Rehabilitation Center of St. Petersburg, is a

long-term-care facility, located in St. Petersburg, Florida, that apparently continues to
participate in the Medicare program pursuant to a court order.' A survey conducted from

' But see Blossom South, LLC v. Sebelius, 2014 WL 204201 at *4 (W.D.N.Y. January
17, 2014) (“[T]he case law is almost uniformly against plaintiff, in holding that a nursing
home has no due process right to a pretermination hearing.”), citing Cathedral Rock of
North College Hill, Inc. v. Shalala, 223 F.3d 354, 366 6" Cir. 2000); Northlake Comm.
Hosp. v. United States, 654 F.2d 1234, 1242 qr Cir. 1981); Geriatrics, Inc. v. Harris,
640 F.2d 262, 265 co" Cir. 1981); THI of Kansas at Highland Park, LLC v. Sebelius,
No. 2013 WL 4047570 at *8 (D. Kan. August 9, 2013); GOS Operator, LLC v. Sebelius,
843 F. Supp.2d 1218, 1233 (S.D. Ala. 2012); Case v. Weinberger, 523 F. 2d 602, 606-08
(2d Cir. 1975).
July 8 through 11, 2014, revealed a significant number of deficiencies, seven of which
posed immediate jeopardy to resident health and safety. Because the facility was not in
substantial compliance with Medicare program requirements, CMS imposed remedies: it
terminated the facility’s Medicare participation effective August 3, 2014; it denied
payment for new admissions effective July 24, 2014; and it imposed a civil money
penalty (CMP) of $3,050 per day effective June 21, 2014. Petitioner’s Hearing Request
(P. Hrg. Req.), Exhibit (Ex.) C. Petitioner appealed.? CMS now moves for partial
summary judgment.

Petitioner concedes that it was not in substantial compliance at the time of the survey, but
challenges the termination, arguing that the facility subsequently corrected its
deficiencies. P. Hrg. Req. (July 31, 2014).

As discussed below, I find that the facility had a significant number of serious
deficiencies, any one of which put it out of substantial compliance with program
requirements. CMS may therefore impose a penalty — including termination. Federal
regulations preclude me from reviewing the penalty imposed or CMS’s determination to
reject the facility’s plan of correction. I therefore grant CMS’s Motion for Partial
Summary Judgment.

Background

The Social Security Act (Act) sets forth requirements for nursing facility participation in
the Medicare program and authorizes the Secretary of Health and Human Services to
promulgate regulations implementing those statutory provisions. Act §1819. The
Secretary’s regulations are found at 42 C.F.R. Part 483. To participate in the Medicare
program, a nursing facility must maintain substantial compliance with program
requirements. To be in substantial compliance, a facility’s deficiencies may pose no
greater risk to resident health and safety than “the potential for causing minimal harm.”
42 CFR. § 488.301.

The Secretary contracts with state survey agencies to conduct periodic surveys to
determine whether skilled nursing facilities are in substantial compliance. Act § 1864(a);
42 C.F.R. § 488.20. The regulations require that each facility be surveyed once every
twelve months and more often, if necessary, to ensure that identified deficiencies are
corrected. Act § 1819(g)(2)(A); 42 C.F.R. §§ 488.20(a); 488.308.

> This ruling does not resolve the case. I must still consider whether the amount of the
penalty imposed is reasonable. See 42 C.F.R. § 488.428(e). See briefing schedule at the
end of this ruling.
Here, following its annual survey, completed July 11, 2014, CMS determined that the
facility was not in substantial compliance with the following Medicare participation
requirements:

42 C.F.R. § 483.13(c) (Tag F224 — staff treatment of residents) at scope and
severity level J (isolated instance of noncompliance that poses immediate jeopardy
to resident health and safety);

42 C.F.R. § 483.13(c)(1)(ii)-(iii), (c)(2)-(4) (Tag F225 — staff treatment of
residents: employee histories of abuse/neglect/mistreatment; reporting and
investigating violations) at scope and severity level J;

42 C.F.R. § 483.13(c) (Tag F226 — staff treatment of residents: anti-abuse and
neglect policies and procedures) at scope and severity level J;

42 C.F.R. § 483.20(k)(3)(ii) (Tag F282 — comprehensive care plans/qualified
persons) at scope and severity level D (isolated instance of noncompliance that
causes no actual harm with the potential for more than minimal harm);

42 C.F.R. § 483.25(h) (Tag F323 — quality of care: accident prevention) at scope
and severity level J;

42 C.F.R. § 483.35(i) (Tag F371 — dietary services: sanitary conditions) at scope
and severity level E (pattern of noncompliance that causes no actual harm with the
potential for more than minimal harm);*

42 C.F.R. § 483.65 (Tag F441 — infection control) at scope and severity level D;
42 C.F.R. § 483.75 (Tag F490 — administration) at scope and severity level J;

42 C.F.R. § 483.75(d)(1)-(2) (Tag F493 — administration: governing body) at

scope and severity level K (pattern of noncompliance that poses immediate
jeopardy to resident health and safety);

42 C.F.R. § 483.75(0)(1) (Tag F520 — administration: quality assessment and
assurance) at scope and severity level J.

> In the statement of deficiencies, Tags F371 and F441 are cited out-of-sequence,
following the other health survey findings and prior to the Life Safety Code (LSC)
findings. P. Hrg. Req. Ex. A. Unfortunately, Petitioner did not number the pages of this
exhibit.
P. Hrg. Req. Ex. A.*

Pursuant to its authority under the statute and regulations, CMS terminated the facility’s
program participation. Act §§ 1819(h)(2); 1866(b)(2)(A) (authorizing the Secretary to
terminate the provider agreement if she finds substantial noncompliance with program
requirements); 42 C.F.R. § 488.412; see also, Shalala v. Illinois Council on Long Term
Care, Inc., 529 U.S. 1, 21 (2000).

In a notice letter dated July 22, 2014, CMS advised the facility of the survey findings and
penalties. P. Hrg. Req. Ex. C. Petitioner timely requested a hearing.

CMS has moved for partial summary judgment asking that I affirm its determination to
terminate the facility’s program participation. Petitioner opposes.

Discussion

1. Because the facility was not in substantial compliance with program
requirements, CMS was authorized to impose a remedy — including termination.
CMS’s choice of remedy is not reviewable.

Petitioner does not challenge any of the survey findings, which are final and binding.
42 C.F.R. 498.20 (b).° The facility was therefore not in substantial compliance with
Medicare program requirements, and its deficiencies posed immediate jeopardy to
resident health and safety. 42 C.F.R. § 488.301 (providing that a facility is not in
substantial compliance if its deficiencies pose the potential for causing more than
minimal harm).

* At the same time, the state conducted an annual LSC survey and found multiple
deficiencies. Those deficiencies were cited at scope and severity levels D and E. CMS
did not terminate based on the LSC deficiencies. P. Hrg. Req. Exs. B and C.

> Immediate jeopardy represents the most serious level of deficiency, and this facility
had a whopping number of them — seven — stemming largely from the facility’s failure to
identify and protect residents who wandered or presented elopement risks. One mentally-
impaired resident left the facility on a hot Florida day, wandered through traffic and was
later found “at a bus stop.” P. Hrg. Req. Ex. A. His departure was not documented, not
investigated, and not reported to his physician. Nor were the non-jeopardy-level
deficiencies trivial. Among other problems, kitchen personnel and nurse aides, as well as
a nurse supervisor, did not follow adequate hand washing techniques, which poses a
serious risk of infection among a vulnerable population.
The Medicare statute and regulations allow CMS to terminate a facility’s program
participation whenever that facility is not in substantial compliance with program
requirements. Act §§ 1819(h)(2); 1866(b)(2)(A); 42 C.F.R. § 488.402(b) (providing that
remedies are applied based on “noncompliance found during surveys . . .”); see Blossom
South, LLC v. Sebelius and cases cited therein, 987 F.Supp. 2d 289, 300 (W.D.N.Y.
2013) (holding that the Secretary may terminate a provider when even one condition of
participation is not met); Beverly Health & Rehab. Servs., Inc., v. Thompson, 223 F.
Supp. 73, 111 (D.D.C. 2002) (holding that the agency’s authority to terminate “may span
all noncompliant facility behavior.”). Where, as here, CMS finds that deficiencies pose
immediate jeopardy to resident health and safety, it either terminates the provider
agreement or appoints a temporary manager. 42 C.F.R. § 488.410(a).

The regulations unambiguously limit my jurisdiction. I may review CMS’s finding of
noncompliance that results in its imposing a remedy. 42 C.F.R. § 498.3(b)(13). I may
not review CMS’s choice of remedy nor the factors it considered in determining the
remedy. 42 C.F.R. §§ 488.408(g)(2); 498.3(d)(14); Beverly Health & Rehab. Servs., Inc.
v. Thompson, 223 F. Supp. 73, 111 (D.D.C. 2002) (holding that the “determination of
what remedy to seek is beyond challenge.”)

2. CMS need not afford a deficient facility the opportunity to correct its substantial
noncompliance before it terminates program participation. I have no authority
to review CMS’s rejection of the facility’s plan of correction.

Petitioner nevertheless argues that CMS is not entitled to summary judgment because the
facility submitted a plan of correction on July 28, 2014, prior to the scheduled
termination date. According to Petitioner, CMS should have accepted its plan of
correction, and I must deny summary judgment and consider evidence that the facility
corrected its deficiencies.

First, it is well-settled that, when a provider’s Medicare participation is terminated
because of alleged noncompliance, “the critical date for establishing compliance is the
survey date, not the subsequent effective date of the termination.” Carmel Convalescent
Hosp., DAB No. 1584 at 12 (1996); Rosewood Living Ctr., DAB No. 2019 at 11 (2006).
A provider’s efforts to bring itself into compliance after the date of a survey is
“completely irrelevant to the facility’s appeal of [CMS’s] determination to terminate.”
Carmel, DAB No. 1584 at 13.

Moreover, once a facility has been found out of substantial compliance, it remains so
until it affirmatively demonstrates that it has corrected its deficiencies and achieved
substantial compliance. Ridgecrest Healthcare Ctr., DAB No. 2493 at 2-3 (2013); Taos
Living Ctr., DAB No. 2293 at 20 (2009); Premier Living & Rehab. Ctr., DAB No. 2146
at 3 (2008); Lake City Extended Care, DAB No. 1658 at 12-15 (1998). The burden is on
the facility to prove that it is back in compliance, not on CMS to prove that deficiencies
continued to exist. Asbury Care Ctr. at Johnson City, DAB No. 1815 at 19-20 (2002). It
must show that “the incidents of noncompliance have ceased” and that it has
implemented appropriate measures to insure that similar incidents will not recur.”
Libertywood Nursing Ctr. , DAB No. 2433 at 15, citing Life Care Ctr. of Elizabethton,
DAB No. 2367 at 16 (2011).° A facility’s return to substantial compliance usually must
be established through a resurvey. 42 C.F.R. § 488.454(a); Ridgecrest, DAB No. 2493 at
2-3.

In any event, CMS is not required to afford a provider the opportunity to correct its
substantial noncompliance before terminating program participation. Oaks of Mid City
Nursing and Rehab. Ctr., DAB 2375 at 29-30 (2011). This is a matter wholly within
CMS’s discretion and I have no authority to review it. A provider dissatisfied with an
initial determination — which includes a finding of noncompliance that results in CMS’s
imposing a remedy — may request a hearing. But only initial determinations are
appealable. The regulations list actions that are initial determination and thus subject to
appeal. The determination to reject a provider’s plan of correction is not listed as an
initial determination and is therefore not reviewable in this forum. 42 C.F.R. § 498.3(b);
see Blossom South, 987 F. Supp. at 302 (acknowledging that CMS has the authority to
order immediate termination, without giving the facility an opportunity “to rectify
matters, once that decision had been made.”); Hermina Traeye Memorial Nursing Home,
DAB No. 1810 at 13 (2002) (finding that the ALJ lacked the authority to adjudicate the
question of whether [CMS] abused its discretion in deciding to reject the plan of
correction).

Conclusion

Petitioner acknowledges that the facility had multiple deficiencies and was not in
substantial compliance with program requirements. CMS was therefore authorized to
impose remedies — including termination — and I have no authority to review the remedy
imposed. CMS was not required to accept Petitioner’s plan of correction, and I have no
authority to review that rejection.

° Here, Petitioner’s plan of correction is based largely on promises of future conduct.

See, e.g., P. Hrg. Reg. Ex. D at 1-3 (promising that the facility will assess new admissions
for their elopement risk; that staff wil/ comply with elopement policies because they have
now been trained in them; that staff will accompany visitors to the secured unit; that new
admissions will be audited periodically; that investigations wil/ be completed timely).
Such promises do not establish that the cited deficiencies have been corrected. The
facility will not achieve substantial compliance until it shows that it has implemented the
promised changes and that they have, in fact, corrected the problems. See Libertywood
Nursing Ctr., CR2388 at 16 (2011), aff'd DAB No. 2433 (2011); Premier Living and
Rehab. Ctr., DAB CR1602 (2007), aff'd DAB No. 2146 (2008). This takes time.

I therefore grant CMS’s Motion for Partial Summary Judgment.

Briefing Schedule. No later than February 28, 2015, CMS will submit its brief, and
accompanying exhibits (marked in accordance with Civil Remedies procedures)
addressing the issue remaining in this case: whether the CMP imposed — $3,050 per day
—is reasonable. Petitioner will submit its brief and exhibits (marked in accordance with
Civil Remedies procedures) no later than April 7, 2015. CMS may submit a reply brief
and exhibits no later than April 28, 2015.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Betty A. Jetawo, d/b/a Golden Hawk Medical
(Supplier No. 6523760001),

Petitioner,
v.
Centers for Medicare & Medicaid Services
Docket No. C-14-1325
Decision No. CR3514
Date: December 15, 2014
DECISION

Palmetto GBA National Supplier Clearinghouse (NSC), an administrative contractor
acting on behalf of the Centers for Medicare & Medicaid Services (CMS), determined
that Petitioner, Betty A. Jetawo, d/b/a Golden Hawk Medical, failed to be accessible and
staffed during posted hours of operation. Based on these findings, NSC revoked
Petitioner’s Medicare billing privileges. Petitioner requested a hearing before an
administrative law judge to dispute NSC’s determination. For the reasons stated below, I
uphold CMS’s determination to revoke Petitioner’s Medicare billing privileges, but I
establish a new effective date of April 13, 2014.

I. Background

Petitioner was enrolled in the Medicare program as a supplier of durable medical
equipment, prosthetics, orthotics, and supplies (DMEPOS). On January 14 and 22, 2014,
an NSC inspector attempted to conduct site inspections at the address CMS had on file
for Petitioner’s place of business. CMS Ex. 1, at 3. The inspector could not complete an
inspection on either date and, on March 14, 2014, NSC issued an initial determination
revoking Petitioner’s Medicare supplier number and related billing privileges because
Petitioner was not operational (42 C.F.R. § 424.535(a)(5)(ii)) and not accessible or
staffed during posted hours of operation (42 C.F.R. § 424.57(c)(7)). CMS Ex. 4. On the
notice, NSC stated that the revocation was retroactive to January 22, 2014, the date CMS
determined that Petitioner’s practice location was not operational. NSC advised
Petitioner that it was barred from re-enrolling in the Medicare program for two years
from the effective date of the revocation. CMS Ex. 4, at 1.

Petitioner filed a timely request for reconsideration with NSC. CMS Ex. 5. On April 25,
2014, an NSC hearing officer issued an unfavorable reconsidered determination
upholding the revocation of Petitioner’s Medicare billing privileges. CMS Ex. 6. The
reconsidered determination upheld revocation based on Petitioner’s failure to be
accessible and staffed during posted hours of operation (42 C.F.R. § 424.57(c)(7)). CMS
Ex. 6, at 2-4. The reconsidered determination did not specify that revocation was based
on Petitioner being non-operational (42 C.F.R. § 424.535(a)(5)(ii)) or state the effective
date of the revocation.

On June 18, 2014, Petitioner timely filed a request for hearing (RFH) before an
administrative law judge. On June 26, 2014, I issued an Acknowledgement and
Pre-hearing Order (Order). In response to the Order, CMS filed a motion for summary
judgment (CMS Motion) with six exhibits (CMS Exs. 1-6), which included the written
direct testimony of one witness. Petitioner did not file an opposition to the CMS Motion
or a prehearing exchange in accordance with my Order. I issued an Order to Show Cause
(OSC) why I should not dismiss the RFH for abandonment. Petitioner responded to the
OSC (P. Response to OSC) and included supporting documents/exhibits (P. Supporting
Documents).

II. Decision on the Record

Although Petitioner did not explain why Petitioner failed to file the prehearing exchange,
Petitioner responded to the OSC and continues to dispute the revocation. Accordingly, I
conclude that Petitioner has not abandoned the RFH and I will decide this case on the
merits.

I admit CMS exhibits (CMS Exs. 1-6) and Petitioner’s Supporting Documents because
neither party objects to them. Order § 7.

CMS offered written direct testimony for one witness and Petitioner did not request to
cross-examine that witness. Petitioner offered no witnesses. Consequently, there is no
need for an in-person hearing. Order §§ 8-11. I issue this decision based on the written
arguments submitted by the parties and the evidence admitted into the record.
III. Issues

1) Whether CMS had a legitimate basis for revoking Petitioner’s Medicare billing
privileges for failing to be accessible and staffed during posted hours of operation,
in violation of the requirements of Supplier Standard 7 (42 C.F.R. § 424.57(c)(7)).

2) If CMS had a legitimate basis for revoking Petitioner’s Medicare billing privileges
under 42 C.F.R. § 424.57(c)(7), but CMS cannot rely on its previous finding of a
violation under 42 C.F.R. § 424.535(a)(5)(ii) as a basis for revocation, ! does the
effective date of Petitioner’s revocation need to be adjusted.

IV. Jurisdiction

Ihave jurisdiction to decide the issues in this case. 42 C.F.R. §§ 498.3(b)(17),
498 .5(1)(2); see also 42 U.S.C. § 1395cc(j)(8).

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

In order for a DMEPOS supplier to receive Medicare payments for items furnished to a
Medicare beneficiary, the Secretary of Health and Human Services (Secretary) must first
issue a supplier number to that supplier. 42 U.S.C. § 1395m(j)(1)(A). The Social
Security Act establishes as a basic requirement that a DMEPOS supplier must maintain a
physical facility on an appropriate site, but further authorizes the Secretary to create other
DMEPOS supplier requirements. Id. § 1395m(j)(1)(B)(Gi). The Secretary promulgated
regulations establishing DMEPOS supplier enrollment standards that a DMEPOS
supplier must meet to enroll and maintain to remain enrolled. 42 C.F.R. § 424.57(c).
DMEPOS suppliers must also periodically revalidate their enrollment. See id.

§ 424.57(e).

To obtain a supplier number, a prospective supplier must complete the applicable Form
CMS-855S enrollment application, which requires disclosure of the supplier’s address.
See id. § 424.510(a). Once enrolled, a DMEPOS supplier must maintain a physical

' Although the reconsidered determination defined the term “operational” and indicated
that Petitioner was not open, the NSC hearing officer did not expressly uphold the initial
determination’s finding that Petitioner was not operational under 42 C.F.R.

§ 424.535(a)(5)(ii). Based on recent Departmental Appeals Board (DAB) decisions
indicating review of any issue not stated in the reconsidered determination is precluded, I
will not consider whether the initial determination’s finding that Petitioner was not
operational is a basis for revocation.

> My numbered findings of fact and conclusions of law appear in bold and italics.
facility on an appropriate site which is in a location that is accessible to the public, staffed
during posted hours of operation, and maintained with a visible sign and posted hours of
operation. Id. § 424.57(c)(7).

CMS may conduct on-site reviews and inspections to ascertain a supplier’s compliance
with enrollment requirements and supplier standards, and to determine if the supplier is
operational. 42 C.F.R. §§ 424.57(c)(8), 424.510(d)(8), 424.515(c), 424.517(a). If CMS
or a CMS contractor determines that a supplier is not operational, then CMS or the CMS
contractor may revoke the supplier’s Medicare billing privileges retroactive to the date
that CMS or the CMS contractor determined that the supplier was not operational.

42 CFR. § 424.535(a)(5)(ii), (g). CMS may revoke the billing privileges of a DMEPOS
supplier that has not complied with the supplier standards in 42 C.F.R. § 424.57(b) and
(c) and such revocation will be effective 30 days from CMS’s revocation notice.

42 CR. § 424.57(e) (2010). The failure by the supplier to comply with even one
supplier standard is a sufficient basis for CMS or the CMS contractor to revoke the
supplier’s billing privileges. 1866ICPayday.com, DAB No. 2289, at 13 (2009).

1. An NSC inspector attempted two site inspections on January 14 and 22,
2014, at the address on file for Petitioner’s business location; however, the
location was not accessible or staffed as required by 42 C.F R.

§ 424.57(c)(7).

To determine whether Petitioner was currently in compliance with Medicare enrollment
standards, on January 14, 2014, at approximately 3:14 p.m., and then on January 22,
2014, at approximately 11:11 a.m., an inspector with NSC attempted to conduct
unannounced site inspections of Petitioner’s business at 4402 Broadway Boulevard, Suite
2, in Garland, Texas, during Petitioner’s hours of operation. CMS Ex. 1, at 3. There is
no dispute that 4402 Broadway Boulevard was Petitioner’s address on file with CMS on
January 14 and January 22, 2014, or that its posted hours of operation, as relevant here,
were Tuesdays from 9:00 a.m. to 4:00 p.m. and Wednesdays 9:00 a.m. to 3:00 p.m. CMS
Ex. 3, at 3,7. In his written declaration, the NSC inspector testified that on January 14,

> Recent DAB decisions applying 42 C.F.R. § 424.57(e) (2010) do not expressly cite the
year of the Code of Federal Regulations that the DAB references when citing 42 C.F.R.

§ 424.57(e) as the authority to set the effective date of a revocation. The 2010 volume of
the Code of Federal Regulations is the only one in which 42 C.F.R. § 424.57(e) provides
text related to the effective date for revocations based on supplier standards violations.
The DAB continues to apply this provision to cases arising after 2010. See e.g., Benson
Ejindu, d/b/a Joy Medical Supply, DAB No. 2572 (2014). Therefore, I reference the year
when citing this regulation because from 2011 to the present, 42 C.F.R. § 424.57(e) only
discusses revalidation of DMEPOS suppliers.
the glass entry door was locked, that he knocked several times, but no one responded. He
could see through the glass entry door that the lights were off, but could see a Christmas
wreath on one of the display shelves that contained medical supplies. He did not see a
sign on the door or windows indicating why the business was closed during its posted
hours of operation. CMS Ex. 1, at 3. The NSC inspector further testified that during his
second attempt, the glass entry door was locked, that he knocked several times, but no
one responded. He stated that “the display shelves appeared to be unchanged from the
first attempted site visit.” CMS Ex. 1, at 3. Finding that Petitioner was not open for
business and there were no staff present during both site inspections, the inspector
determined that Petitioner was “non-operational.” CMS Ex. 1, at 4. The photographs the
NSC inspector took on these two occasions support his representation of the events.
CMS Ex. 3.

In its reconsideration request, Petitioner did not dispute that its business location was
closed during the time of the inspections and admits that the owner was out of the
country. Petitioner states that it had a part-time staff come in around her school schedule
to check the mail and do minor paperwork “but it was extreme ‘part-time.”” CMS Ex. 5,
at 1, 3-4. In its RFH, Petitioner appears to admit that personnel were not at its location
for the inspections, but appears to further assert that Petitioner had provided for coverage
during the owner’s absence. In Petitioner’s Response to the OSC, Petitioner explains that
coverage was by a “work-study student” who visited the office daily. P. Response to
OSC at 2. At no point, however, does Petitioner contend that it had staff (work-study
student or other) present to keep Petitioner’s office open for all hours of operation. I find
that Petitioner’s business location was closed on the two dates and times in which the site
inspector attempted visits. CMS Exs. 1-3.

DMEPOS suppliers must be open to the public for a minimum of 30 hours per week and
those hours must be posted. 42 C.F.R. §§ 424.57(c)(7)(D), 424.57(c)(30)(i).. The
inspector attempted two visits during Petitioner’s posted hours of operation. CMS Ex. 1,
at 3; CMS Ex. 2, at 1; CMS Ex. 3, at 3, 7. Therefore, even if Petitioner had a student
present some of the time each day Petitioner’s owner was absent, this would not be
sufficient to show Petitioner’s location was accessible and staffed during the posted hours
of operation. Accordingly, I conclude that the record supports CMS’s determination that
Petitioner was not accessible and staffed during posted hours of operation in violation of
42 CFR. § 424.57(c)(7)(C).

Petitioner does not suggest that its office was accessible and staffed at the times of the
attempted site visits. Rather, Petitioner asserts that its owner was absent during the
attempted site visits due to the passing of the owner’s father, and that this resulted in
Petitioner’s owner travelling outside the United States. CMS Ex. 5, at 1. Petitioner
submitted significant documentation in support of her assertion. Petitioner’s owner
submitted a copy of her father’s death certificate showing that he passed on December
28, 2013, and a copy of her flight itinerary showing an international flight departing
January 13, 2014 and returning January 24, 2014. CMS Ex. 5, at 1, 3-4. Petitioner
characterizes this as “an uncontrollable life experience” and “uncontrollable

absence.” RFH. Petitioner asserts that there should be an exception to the requirement
that a DMEPOS supplier be accessible and staffed during posted hours of operation when
a DMEPOS owner suffers a death in the family. P. Response to OSC at 2.

When promulgating the regulations, the Secretary contemplated allowing facilities to
temporarily close during posted hours of operation, but the Secretary chose to emphasize
that a supplier’s place of business must remain publicly accessible during posted hours of
operation. Complete Home Care Inc., DAB No. 2525, at 6 (2013). In the preamble to
the final rule, the Secretary provided the following in response to a question concerning
temporary absences: “We note that we have always made exceptions concerning posted
hours for disasters and emergencies and Federal and State holidays.” 75 Fed. Reg.
52,629, 52,637 (Aug. 27, 2010) (emphasis added). Therefore, CMS will make an
exception to the requirements of 42 C.F.R. § 424.57(c)(7) on legal holidays and when a
DMEPOS supplier is not staffed due to a disaster or emergency.

However, when modifying the supplier standards, the preamble to the final rule
responded to public comments concerning personnel emergencies in the following way:

We note that we have always made exceptions concerning
posted hours for disasters and emergencies and Federal and
State holidays. However, while we recognize that personal
emergencies do occur, we believe that suppliers should be
available during posted business hours. Moreover, we
believe that a DMEPOS supplier should do its best to plan
and staff for temporary absences.

75 Fed. Reg. 52,629, 52,636 (Aug. 27, 2010). Further, the preamble stated the following:

While we recognize that emergencies do occur, it is the
responsibility of the DMEPOS supplier to establish staff
contingencies to ensure that their business remains open to
the public in spite of a personal emergency.

75 Fed. Reg. at 52,643.

In this case, Petitioner’s emergency, although tragic, was one of a personal nature. The
Secretary was clear that DMEPOS suppliers were tasked with establishing “staff
contingencies to ensure that their business remains open to the public in spite of a
personal emergency.” Id. Although I understand Petitioner’s personal emergency and
the financial limitations of a small business, the regulations do not allow me to make an
exception for personnel emergencies.
Petitioner’s owner asserts that she was told (presumably by an NSC representative) that,
based on the reason she was absent from the office, another inspector would be sent to
conduct another site visit; however, this never happened. RFH; P. Response to OSC at
2. It is true that NSC has the authority to do this. As stated in the preamble to the final
tule:

While we understand that unexpected or emergency business
closings can occur, we believe that it is essential that
DMEPOS suppliers establish practices and procedures to
address unexpected or emergency situations. In addition, we
understand the nature of unforeseen emergencies and when
warranted, the NSC will conduct an unannounced follow-up
visit prior to denying or revoking billing privileges.

75 Fed. Reg. at 52,637. Although Petitioner’s circumstances appear to warrant another
opportunity to show compliance with the supplier standards, I am without authority to
review CMS’s discretion as to whether it should provide such an opportunity.

The facts in this case show that, on the two dates the NSC inspector attempted to perform
site visits, Petitioner was not accessible and staffed during its posted hour of operation.
Petitioner was not accessible and staffed when the NSC inspector attempted to conduct
the site inspections at the 4402 Broadway Boulevard location on file with CMS. I must
uphold a revocation based on such circumstances and may not grant Petitioner relief
based on equitable considerations.* See US Ultrasound, DAB No. 2302, at 8 (2010);
1866ICPayday.com, L.L.C., DAB No. 2289, at 14 (2009) ((“[a]n ALJ is bound by
applicable laws and regulations and may not invalidate either a law or regulation on any
ground ...”).

2. Because revocation is premised only on the violation of a supplier standard
and not a finding that Petitioner was not operational, the retroactive effective
date of the revocation imposed by CMS in the initial determination is no
longer appropriate, and the effective date must be changed from January 22,
2014, to April 13, 2014, which is 30 days after the date CMS mailed its initial
determination to revoke Petitioner’s billing privileges in this case.

NSC’s March 14, 2014 initial determination imposed an effective date of revocation that
was retroactive to January 22, 2014, the date that Petitioner was found not to be
operational. CMS Ex. 4, at 1. This is appropriate under 42 C.F.R. § 424.535(g) when
CMS has made a finding that a supplier is not operational pursuant to 42 C.F.R.

* The term “equitable” in this context refers to what is just, based on fairness and not
legal technicalities.
§ 424.535(a)(5)(ii). However, because the reconsidered determination in this case failed
to make a finding that Petitioner was not operational, there is no longer a valid reason to
impose a retroactive effective date of revocation.

As stated in the most recent DAB decision on this issue:

Because the sole basis for revocation properly decided by the
ALJ and affirmed by the Board in this appeal is [Petitioner’s]
noncompliance with Supplier Standard 7, the effective date of
revocation should be determined in accordance with section
424.57(e) [(2010)]’s effective-date provision . . . . Applying
that rule here, we conclude that the proper effective date of
the revocation is . . . 30 days from the date of NSC’s letter
notifying [Petitioner] of the revocation.

Orthopaedic Surgery Associates, DAB No. 2594, at 8 (2014).

Having found that Petitioner was not in compliance with Supplier Standard 7 (42 C.F.R.
§ 424.57(c)(7)), I uphold CMS’s revocation of Petitioner’s Medicare billing privileges,
but the new effective date should be April 13, 2014. This is 30 days from the date of the
March 14, 2014 initial determination in this case. 42 C.F.R. § 424.57(e) (2010).

VI. Conclusion

For the reasons stated above, I affirm CMS’s revocation of Petitioner’s Medicare billing
privileges, but modify the effective date of the revocation to April 13, 2014.

/s/
Scott Anderson
Administrative Law Judge