Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division

Peter Victor Ayika
Docket No. A-14-34
March 28, 2014

DISMISSAL OF APPEAL

Peter Victor Ayika, Petitioner, appealed the decision of an Administrative Law Judge
sustaining the determination of the Inspector General (I.G.) to exclude Petitioner from
participation in Medicare, Medicaid, and all other federal health care programs for a
period of 30 years. Peter Victor Ayika, DAB CR3031 (2013). The I.G. excluded
Petitioner under sections 1128(a)(1) and (3) of the Social Security Act based on his
conviction in a United States district court for health care fraud.

On February 12, 2014, the United States Court of Appeals for the Fifth Circuit vacated
Petitioner’s conviction for health care fraud. By order dated March 5, 2014, I directed
the parties to comment in writing on how the court’s decision affects Petitioner’s appeal
before the Board.

Petitioner, by motion dated March 11, 2014, moved that his exclusion be dismissed. The
1.G., by letter dated March 18, 2014, notified Petitioner that his exclusion was withdrawn
retroactive to March 20, 2013, the effective date of the exclusion. The I.G., by motion
dated March 20, 2014, moved that the Board dismiss Petitioner’s appeal, and provided a
copy of the March 18, 2014 letter withdrawing the exclusion. In an accompanying
memorandum of law, the LG. stated that because Petitioner’s underlying conviction was
vacated on appeal, the I.G. is required to retroactively reinstate Petitioner, and that his
appeal was thus moot. The I.G. cited 42 C.F.R. § 1001.3005(a)(1), which states that
“Ta]n individual or entity will be reinstated into Medicare, Medicaid and other Federal
health care programs retroactive to the effective date of the exclusion when such
exclusion is based on— ... [a] conviction that is reversed or vacated on appeal[.]”

The regulations authorizing the exclusion of individuals based on convictions including
convictions for health care fraud provide appeal rights to “an individual or entity
excluded” thereunder. 42 C.F.R. § 1001.2007(a); see also 42 C.F.R. §§ 1005.2(a)
(providing the right to a hearing before an ALJ to “a party sanctioned” under part 1001 of
42 C.F.R. (implementing the statutory exclusion authority)), 1005.21 (providing for
review of the ALJ’s decision to the Board). As the I.G. has withdrawn Petitioner’s
exclusion, there is no basis for Petitioner’s appeal, and the appeal is moot.
Accordingly, Petitioner’s appeal is dismissed.

/s/

Sheila Ann Hegy
Presiding Board Member

*This document has been reformatted for publication.
Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Peter Victor Ayika,
(O.I. No. 6-07-40257-9),

Petitioner,
v.
The Inspector General.
Docket No. C-13-722
Decision No. CR3031
Date: December 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 pro se Peter Victor
Ayika from participation in Medicare, Medicaid, and all other federal health care
programs for a period of 30 years. The I.G.’s Motion and determination to exclude
Petitioner are based on sections 1128(a)(1) and (a)(3) of the Social Security Act (Act), 42
U.S.C. § 1320a-7(a)(1) and (a)(3). The undisputed material facts of this case demonstrate
that the minimum five-year exclusion must be imposed, and that the I.G.’s determination
to enhance that period to 30 years based on proof of the aggravating factors found at 42
C.F.R. § 1001.102(b)(1), (2), (5), (6) and (9) is supported in fact and law. Accordingly, I
grant the I.G.’s Motion for Summary Disposition.

I. Procedural Background

Petitioner was a pharmacist licensed in the State of Texas who owned and operated a
pharmacy called Najerausa International, Inc. d/b/a Continental Pharmacy of El Paso
located in El Paso, Texas. I.G. Ex. 2 at 4. On March 11, 2009, the Texas State Board of
Pharmacy revoked Petitioner’s pharmacist license. I.G. Ex. 8 at 1-2.
On December 1, 2009, the Texas Health and Human Services Commission, Office of the
Inspector General, excluded Petitioner from participation in the Texas Medicaid and
other federally funded health care programs due to the revocation of Petitioner’s
pharmacist license. I.G. Ex. 9 at 1.

On August 24, 2011, the Federal Grand Jury sitting for the United States District Court
for the Western District of Texas, El Paso Division, handed up a three-count Indictment
charging that between October 1, 2004, and March 11, 2009, Petitioner Peter Victor
Ayika did knowingly and willfully execute a scheme to defraud a health care benefit
program by submitting false and fraudulent claims to the Medicaid program, the Federal
Employees Health Benefits program and various other health care insurers. The
Indictment charged Petitioner with Health Care Fraud, in violation of 18 U.S.C. § 1347,
Mail Fraud, in violation of 18 U.S.C. § 1341 and Wire Fraud, in violation of 18 U.S.C.
§ 1343, for submitting false and fraudulent claims to the aforementioned health care
programs and insurers for medications and other pharmaceuticals that were never
distributed or dispensed to the insured. LG. Ex. 4.

On October 19, 2011, in a separate proceeding, Petitioner was found guilty by jury
verdict of one count of processing with intent to distribute hydrocodone by a practitioner
and one count of distributing a listed chemical with knowledge, or reason to know, of its
wrongful use, both counts in violation of 21 U.S.C. § 841. LG. Ex. 10 at 1. On June 12,
2012, the United States District Court for the Western District of Texas, El Paso
Division, sentenced Petitioner to 60 months of incarceration for Count One to be served
concurrently with 170 months of incarceration for Count Two, followed by three years of
supervised release. 1.G. Ex. 10 at 2-3.

Petitioner and his counsel negotiated a Plea Agreement with prosecutors in the health
care fraud case. By the terms of that Agreement, signed by Petitioner on March 13, 2012,
Petitioner agreed to plead guilty to the August 24, 2011 Indictment’s first count, Health
Care Fraud, in violation of 18 U.S.C. § 1347. Included with the Plea Agreement,
incorporated by reference, was Petitioner’s factual recitation of his scheme to commit
health care fraud. Petitioner specifically acknowledged that his criminal activity began
on or about August 1, 2006, and continued until March 11, 2009. I.G. Ex. 5.

On May 2, 2012, in the United States District Court for the Western District of Texas, El
Paso Division, Petitioner pleaded guilty to Count One of the Indictment, Health Care
Fraud, in violation of 18 U.S.C. § 1347. The Court dismissed the other two counts listed
in the Indictment on motion by the prosecutor. I.G. Ex. 7 at 1. On September 11, 2012,
Petitioner was sentenced to 63 months of incarceration followed by 24 months of
supervised release. Petitioner was also ordered to pay $2,498,586.86 in restitution. I.G.
Ex. 7 at 2-3, 7.
On February 28, 2013, the LG. wrote to Petitioner giving notice of his exclusion for a
period of 30 years pursuant to the terms of sections 1128(a)(1) and (a)(3) of the Act. The
1.G.’s letter told Petitioner that the mandatory minimum five-year period of exclusion
was to be enhanced by an additional 25 years based on the presence of five aggravating
factors. I.G. Ex. 1.

Acting pro se, Petitioner timely requested a hearing by letter (Req. for Hr’g.) dated April
8, 2013, seeking review of the I.G.’s determination. This letter was received by the Civil
Remedies Division on April 24, 2013. In order to discuss the issues presented by this
case and procedures for addressing those issues, I convened a telephonic prehearing
conference on June 6, 2013, pursuant to 42 C.F.R. § 1005.6. By Order of June 6, 2013, I
established those procedures and a schedule for the submission of documents and briefs.

On July 30, 2013, the Civil Remedies Division received Petitioner’s motion for extension
of time to serve and file his brief dated July 19, 2013. By Order of August 1, 2013, I
granted that motion and amended the schedule for submission of documents and briefs.

On August 27, 2013, the Civil Remedies Division received Petitioner’s August 19, 2013
pleading entitled “Motion to Dismiss Imposed Exclusion on Jurisdictional Grounds.” I
denied Petitioner’s motion (P. Mot. to Dismiss) by Order dated August 27, 2013.

By Order dated October 29, 2013, I closed the record in this case for purposes of 42
CFR. § 1005.20(c) effective October 25, 2013.

The evidentiary record on which I decide the issues before me contains 13 exhibits, all
proffered by the I.G. and marked I.G. Exs. 1-13. In the absence of objection, I have
admitted all proffered exhibits as marked.

II. 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(a)(1) and (a)(3) of the Act; and

b. Whether the 30-year length of the proposed period of exclusion is
unreasonable.

For all of the reason set out below, the first issue is resolved in favor of the I.G.’s
position. Petitioner’s predicate conviction is established in the record before me and both
section 1128(a)(1) and (a)(3) of the Act mandate Petitioner’s exclusion. A five-year
period of exclusion is the minimum period established by section 1128(c)(3)(B) of the
Act, 42 U.S.C. § 1320a-7(c)(3)(B). The enhancement of that period to 30 years is
authorized and supported because the five aggravating factors relied on by the I.G. and
found at 42 C.F.R. § 1001.102(b)(1), (2), (5), (6) and (9) are established in the record and
the 30-year period is within a reasonable range. Petitioner has demonstrated no
mitigating factors that would reduce the proposed period of his exclusion.

Ill. Controlling Statutes and Regulations

Section 1128(a)(1) of the Act, 42 U.S.C. § 1320a-7(a)(1), requires the exclusion from
participation in Medicare, Medicaid, and all other federal health care programs of any
individual or entity convicted of a criminal offense related to the delivery of an item or
service under Title XVIII of the Act (the Medicare program) or any state health care
program (the Medicaid program). The terms of section 1128(a)(1) of the Act are restated
in similar language at 42 C.F.R. § 1001.101(a).

Section 1128(a)(3) of the Act, 42 U.S.C. § 1320a-7(a)(3), requires the exclusion from
participation in Medicare, Medicaid, and all other federal health care programs of any
individual or entity convicted, under federal or state law, of a felony offense relating to
fraud, theft, embezzlement, breach of fiduciary responsibility , or other financial
misconduct which occurred after August 21, 1996, in connection with the delivery of a
ealth care item or service. The terms of section 1128(a)(3) of the Act are restated in
similar language at 42 C.F.R. § 1001.101(c).

The Act defines “conviction” as including those circumstances “when a judgment of
conviction has been entered against the individual . . . by a Federal . . . court, regardless
of... whether the judgment of conviction or other record relating to criminal conduct has
been expunged,” section 1128(i)(1) of the Act; “when there has been a finding of guilt
against the individual . . . by a Federal . . . court,” section 1128(i)(2) of the Act; “when a
plea of guilty or nolo contendere by the individual . . . has been accepted by a Federal .. .
court,” section 1128(i)(3) of the Act; or “when the individual . . . has entered into
participation ina... deferred adjudication ... program where judgment of conviction
has been withheld,” section 1128(i)(4) of the Act. 42 U.S.C. §§ 1320a-7(i)(1)-(4). These
definitions are repeated at 42 C.F.R. § 1001.2.

An exclusion based on section 1128(a)(1) or (a)(3) of the Act is mandatory and the LG.
must impose it for a minimum period of five years. Act § 1128(c)(3)(B), 42 U.S.C.

§ 1320a-7(c)(3)(B). The regulatory language of 42 C.F.R. § 1001.102(a) affirms the
statutory provision.

The mandatory minimum period of exclusion may be enhanced in some limited
circumstances, but only on the L.G.’s proof of certain narrowly-defined aggravating
factors listed at 42 C.F.R. § 1001.102(b). In this case, the I.G. relies on five aggravating
factors set out at 42 C.F.R. § 1001.102(b)(1), (2), (5), (6) and (9) to enhance the period of
Petitioner’s exclusion to 30 years. The aggravating factor set out at 42 C.F.R.

§ 1001.102(b)(1) is present when “[t]he acts resulting in conviction, or similar acts, that
caused or were intended to cause, a financial loss to a [g]overnment program or to one or
more entities of $5,000 or more.” The aggravating factor set out at 42 C.F.R.

§ 1001.102(b)(2) is present when “acts that resulted in the conviction, or similar acts,
were committed over a period of one year or more.” The aggravating factor set out at 42
C.F.R. § 1001.102(b)(5) is present when the “sentence imposed by the court included
incarceration.” The aggravating factor set out at 42 C.F.R. § 1001.102(b)(6) is present
when “[t]he convicted individual or entity has a prior criminal, civil or administrative
sanction record.” The aggravating factor set out at 42 C.F.R. § 1001.102(b)(9) is present
when “the individual or entity was convicted of other offenses besides those which
formed the basis for the exclusion, or has been the subject of any other adverse action by
any Federal, State or local government agency or board, if the adverse action is based on
the same set of circumstances that serves as the basis for imposition of the exclusion.”

In cases when the I.G. proposes to enhance the period of exclusion by relying on one or
more aggravating factors, a petitioner may attempt to limit or nullify the proposed
enhancement through proof of certain mitigating factors, carefully defined at 42 C.F.R.

§ 1001.102(c)(1)-(3). The petitioner who claims the mitigating factor or factors bears the
burden of proving any mitigating factors claimed. 42 C.F.R. § 1005.15(b)(1).

IV. Findings and Conclusions

Based on the undisputed material facts in the record before me, I find and conclude as
follows:

1. On May 2, 2012, as noted in the September 11, 2012 Judgment in a Criminal Case, in
the United States District Court for the Western District of Texas, El Paso Division,
Petitioner Peter Victor Ayika pleaded guilty to one count of Health Care Fraud, in
violation of 18 U.S.C. § 1347. I.G. Ex. 7.

2. On September 11, 2012, a finding of guilt and a judgment of conviction based on that
plea were entered against Petitioner. The District Court sentenced Petitioner to serve 63
months of imprisonment; to pay restitution in the amount of $2,498,586.86; and after his
release from imprisonment, to serve two years of supervised release. I.G. Ex. 7.

3. The finding of guilt and judgment of conviction based on Petitioner’s accepted guilty
plea described above in Findings 1 and 2 constitute a “conviction” within the meaning of
sections 1128(a)(1) and 1128(i)(1), (2) and (3) of the Act, and 42 C.F.R. § 1001.2.

4. A nexus and a common-sense connection exist between the criminal offenses of which
Petitioner was convicted, as noted above in Findings 1, 2 and 3, and the delivery of an

item or service under the Medicare and Medicaid programs. I.G. Exs. 5, 7; Berton Siegel,
D.O., DAB No. 1467 (1994).

5. By reason of Petitioner’s conviction, a basis exists for the 1.G.’s exercise of authority,
pursuant to section 1128(a)(1) and (a)(3) of the Act, 42 U.S.C. § 1320a-7(a)(1) and
(a)(3), to exclude him from participation in Medicare, Medicaid, and all other federal
health care programs.

6. Because the acts resulting in Petitioner’s conviction caused a financial loss to a
government program and other entities of over $5,000, the aggravating factor set out at
42 C.F.R. § 1001.102(b)(1) is present.

7. Because the acts resulting in Petitioner’s conviction were committed over a period of
one year or more, the aggravating factor set out at 42 C.F.R. § 1001.102(b)(2) is present.

8. Because Petitioner was sentenced to a term of incarceration, the aggravating factor set
out at 42 C.F.R. § 1001.102(b)(5) is present.

9. Because Petitioner has a prior administrative sanction record, the aggravating factor
set out at 42 C.F.R. § 1001.102(b)(6) is present.

10. Because Petitioner was convicted of other offenses besides those which formed the
basis for his exclusion, the aggravating factor set out at 42 C.F.R. § 1001.102(b)(9) is
present.

11. None of the mitigating factors set out at 42 C.F.R. § 1001.102(c)(1)-(3) is present.

12. The I.G.’s exclusion of Petitioner for an enhanced period of 30 years is supported by
fact and law and is within a reasonable range. See Findings 1-11 above.

13. There are no disputed issues of material fact and summary disposition is appropriate
in this matter. 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 parties do not debate the Secretary’s authority to exclude Petitioner from
participation in Medicare, Medicaid, and all other federal health care programs pursuant
to section 1128 of the Act. However, Petitioner repeatedly challenges the I.G.’s authority
— as distinct from that of the Secretary herself — to impose such an exclusion on him.
Petitioner argues that “[t]he Secretary has no power to confer power to the Inspector
General in undertaking statutory exclusion proceeding or judicial proceeding. The power
to award process is conferred by Congress. Rice v. Ames, 180 U.S. 371 (1905).” P. Br.
at 8; P. Mot. to Dismiss at 2; P. Rep. Br. at 7. As I noted in my August 27, 2013 Order
denying Petitioner’s motion, and notwithstanding Petitioner’s repeated insistence to the
contrary, that proposition is directly refuted by the well-settled and longstanding
principles announced by the Departmental Appeals Board (Board) in, inter alia, Jack W.
Greene, DAB No. 1078 (1989); Vincent Baratta, M.D., DAB No. 1172 (1990); Joyce
Faye Hughey, DAB No. 1221 (1991); and Michael Travers, M.D., DAB No. 1237
(1991). The latter three decisions are based in turn on 48 Fed. Reg. 21,662 (May 13,
1983). As I wrote in my August 27, 2013 Order, Petitioner’s argument on this point is
frivolous and warrants no further discussion here. In addition, under 42 C.F.R.

§ 1001.2007(a)(1), an excluded individual or entity may file a request for a hearing
before an Administrative Law Judge only on the issues of whether the basis for the
exclusion exists and whether the length of the exclusion is unreasonable. Accordingly,
these issues are addressed below.

1. Petitioner’s exclusion is mandated by section 1128(a)(1) of the Act because
Petitioner was convicted of a criminal offense related to the delivery of an item
or service under a state health care program (the Medicaid program).

The two essential elements necessary to support an exclusion based on section 1128(a)(1)
of the Acts are: (1) the individual to be excluded must have been convicted of a criminal
offense; and (2) the criminal offense must have been related to the delivery of an item or
service under Title XVIII of the Act (the Medicare program) or any state health care
program (the Medicaid program). Tamara Brown, DAB No. 2195 (2008); Thelma
Walley, DAB No. 1367; Boris Lipovsky, M.D., DAB No. 1363 (1992); Lyle Kai, R.Ph.,
DAB CR1262 (2004), rev'd on other grounds, DAB No. 1979 (2005). See Russell Mark
Posner, DAB No. 2033, at 5-6 (2006).

The United States District Court’s records clearly show that the first issue before me is
resolved in the I.G.’s favor. As noted in the September 11, 2012 Judgment in a Criminal
Case, I.G. Ex. 7, Petitioner pleaded guilty to the criminal offense of Health Care Fraud, in
violation of 18 U.S.C. § 1347, on May 2, 2012. Petitioner’s guilty plea and the District
Court’s subsequent actions constitute a conviction within the meaning of sections
1128(a)(1) and 1128(4)(1), (2)and (3) of the Act. Thus, the first essential element is
established by the record.

The evidence also establishes that Petitioner’s conviction satisfies the second essential
element since it is related to the delivery of an item or service under the Medicaid
program. In his Plea Agreement, Petitioner admitted that he electronically submitted
materially false claims for reimbursement from Medicaid and various other insurance
providers between August 1, 2006, and March 11, 2009. Petitioner admits to using
patient insurance information to bill Medicaid and other insurance providers for
reimbursement for prescription drugs and other pharmaceuticals that were never provided
to, or on behalf of, patients or customers. I.G. Ex. 5 at 11-17. The submission of false

claims to the Medicaid or Medicare programs has consistently been held to be a program-
related crime within the reach of section 1128(a)(1). Douglas Schram, R.Ph., DAB No.
1372 (1992); Dewayne Franzen, DAB No. 1165 (1990); Jack W. Greene, DAB No. 1078
(1989), aff'd sub nom. Greene v. Sullivan, 731 F. Supp. 835 (E.D. Tenn. 1990). Thus, the
second essential element is also established by the record.

In his submissions in this case, Petitioner does not challenge these assertions and, in fact,
concedes that there is a factual basis for his exclusion under the Act. Petitioner admits
that the Secretary has “the factual basis to exclude Petitioner from participation in any
Federal health care programs because of his conviction.” P. Br. at 6. Petitioner also
begins his arguments by stating “[a]lthough the Secretary has a basis for the imposition of
the exclusion sanction....” P. Br. at 7. In the absence of a challenge from Petitioner
and based on the record before me, I find that the facts fully establish the evidentiary
foundation necessary for Petitioner’s exclusion pursuant to section 1128(a)(1) of the Act.

The LG. also cites a separate and independent legal basis for Petitioner’s exclusion,
section 1128(a)(3) of the Act. The four essential elements necessary to support an
exclusion based on section 1128(a)(3) of the Act are: (1) the individual to be excluded
must have been convicted of a felony offense; (2) the felony offense must have been
based on conduct relating to fraud, theft, embezzlement, breach of fiduciary
responsibility, or financial misconduct; (3) the felony offense must have been for conduct
in connection with the delivery of a health care item or service or the felony offense must
have been with respect to any act or omission in a health care program operated by or
financed in whole or in part by any federal, state, or local government agency; and (4) the
felonious conduct must have occurred after August 21, 1996. Andrew D. Goddard, DAB
No. 2032 (2006); Kenneth M. Behr, DAB No. 1997 (2005); Erik D. DeSimone, R.Ph.,
DAB No. 1932 (2004); Jeremy Robinson, DAB No. 1905 (2004); Breton Lee Morgan,
M.D., DAB CR1913 (2009); Morganna Elizabeth Allen, DAB CR1479 (2006); Theresa
A. Bass, DAB CR1397 (2006); Michael Patrick Fryman, DAB CR1261 (2004); Golden
G. Higgwe, D.P.M., DAB CR1229 (2004); Thomas A. Oswald, R.Ph., DAB CR1216
(2004); Katherine Marie Nielson, DAB CR1181 (2004).

While the record before me also supports an exclusion based on section 1128(a)(3) of the
Act, no extended discussion of this legal basis is necessary since the basis for Petitioner’s
exclusion has already been established pursuant to section 1128(a)(1) of the Act.

2. Based on the aggravating factors in this case and the absence of any mitigating
factors, the 30-year exclusion falls within a reasonable range.

The LG. relies on five aggravating factors to support Petitioner’s proposed 30-year
exclusion period. The aggravating factor set out at 42 C.F.R. § 1001.102(b)(1) is present
when there is a showing of financial loss to a government program or certain other
entities of more than $5,000. This factor has been proven here. The District Court
records show that Petitioner was ordered to pay restitution in the amount of
$2,498,586.86 to the Texas Medicaid program and various other entities. I.G. Ex. 7 at 7.
The actual amount of restitution ordered is considered a reasonable measure of program
losses. See Jason Holladay, M.D., DAB No. 1855 (2002). Petitioner’s crimes caused the
Texas Medicaid program and other insurance entities financial losses almost 500 times
the $5,000 threshold required for aggravation. The Board has characterized amounts
substantially greater than the statutory standard as “an exceptionally aggravating factor”
entitled to significant weight. Jeremy Robinson, DAB No. 1905 (2004); Donald A.
Burstein, Ph.D., DAB No. 1865 (2003). The extensive loss to the programs targeted by
Petitioner’s crimes justifies a significant increase in the period of exclusion.

The aggravating factor set out at 42 C.F.R. § 1001.102(b)(2) is present when “[t]he acts
that resulted in the conviction, or similar acts, were committed over a period of one year
or more.” Count One of the Indictment, to which Petitioner pleaded guilty, describes the
time span of Petitioner’s crimes from October 1, 2004, through March 11, 2009. LG. Ex.
4 at 1. The written factual basis, incorporated by reference into the Plea Agreement and
signed by Petitioner, sets the time span of Petitioner’s crimes from August 1, 2006,
through March 11, 2009. LG. Ex. 5 at 16-17. Regardless of this discrepancy, Petitioner’s
factual basis admits that his crimes spanned much more than the threshold one year
period required under this aggravating factor and much more than just a “short-lived
lapse of integrity” to which the Board alluded in Burstein, DAB No. 1865, at 8. The
duration of Petitioner’s illegal conduct shows the need to protect federally-funded
programs from Petitioner for a substantial period of time and supports the enhancement
of the period of exclusion.

The aggravating factor set out at 42 C.F.R. § 1001.102(b)(5) is present when “[t]he
sentence imposed by the court included incarceration.” In this case, Petitioner was
sentenced to prison for 63 months. I.G. Ex. 7 at 2. Thus, this aggravating factor is
present. It is significant to note that Petitioner is serving his lengthy sentence in a federal
correctional institution and not in some less-severe setting; that fact, alone, is evidence of
the District Court’s serious view of Petitioner’s crimes. As I recently wrote in Raymond
Lamont Shoemaker, DAB CR2993, at 16-19 (2013), the length of Petitioner’s prison term
has intrinsic importance to my evaluation of the weight to be given this factor, and I have
no difficulty in concluding that the length of Petitioner’s incarceration is sufficient to
justify an increase in the period of exclusion.

The aggravating factor set out at 42 C.F.R. § 1001.102(b)(6) is present when “[t]he
convicted individual or entity has a prior criminal, civil or administrative sanction
record.” Here, the Texas State Board of Pharmacy revoked Petitioner’s pharmacist
license on March 11, 2009. I.G. Ex. 8. Petitioner was indicted by the Federal Grand Jury
sitting for the United States District Court for the Western District of Texas on August
24, 2011, 1.G. Ex. 4, and the District Court accepted Petitioner’s guilty plea on May 2,
2012. LG. Ex. 7 at 1. It is this conviction that serves as the basis for this exclusion
10

action. I.G. Ex. | at 1. Therefore, the decision of the Texas State Board of Pharmacy to
revoke Petitioner’s pharmacist license is an administrative sanction that occurred prior to
Petitioner’s conviction. Additionally, on December 1, 2009, in response to Petitioner’s
loss of his pharmacist license, the Texas Health and Human Services Commission Office
of the Inspector General excluded Petitioner from the Texas Medicaid and other federally
funded health care programs. I.G. Ex. 9 at 1. This administrative sanction also occurred
prior to Petitioner’s conviction. Thus, this aggravating factor is present and justifies an
increase in the exclusion period.

The aggravating factor set out in 42 C.F.R. § 1001.102(b)(9) is present when an
“individual or entity was convicted of other offenses besides those which formed the
basis for the exclusion... .” On October 19, 2011, Petitioner was found guilty by jury
verdict of one count of processing with intent to distribute hydrocodone by a practitioner,
in violation of 21 U.S.C. § 841, and one count of distributing a listed chemical with
nowledge, or reason to know of its wrongful intended use, also in violation of 21 U.S.C.
§ 841. 1G. Ex. 10 at 1. Neither of these criminal offenses formed the basis for
Petitioner’s exclusion. Petitioner’s exclusion action is based on his conviction for Health
Care Fraud, in violation of 18 U.S.C. § 1347. I.G. Ex. 1. Transcripts from Petitioner’s
jury trial document witness testimony describing how Petitioner provided the witness and
others hydrocodone without a valid prescription. IG. Ex. 11 at 22-31. The transcripts
also document a Drug Enforcement Agency agent’s testimony that Petitioner provided
im with large quantities of pseudoephedrine, and that Petitioner knew of the agent’s
purported intent to use the pseudoephedrine in the manufacture of methamphetamine.
1.G. Ex. 12 at 37, 60-68. The facts clearly show that Petitioner used his pharmacist
license in an egregious manner to perpetrate criminal acts for his own personal financial
gain. This aggravating factor is not only present, but Petitioner’s conviction for these
criminal offenses demonstrates a persistence in criminal conduct exploiting his
ealthcare-related professional position that further supports the I.G.’s decision to
increase Petitioner’s exclusion well beyond the five-year minimum.

Petitioner does not deny the existence of these aggravating factors. In fact, Petitioner
explicitly concedes the existence of the five aggravating factors. P. Br. at 6, 17. Instead,
Petitioner claims that his ““63-month prison sentence and $2,529,945.81 in restitution are
mitigating circumstances requiring a shorter period of exclusion.” P. Br. at 16; P. Rep.
Br. at 14. The regulations consider only three factors to be mitigating: (1) that a
petitioner was convicted of three or fewer misdemeanor offenses and the resulting
financial loss to the program was less than $1, 500; (2) that the record in the criminal
proceedings demonstrates that a petitioner had a mental, physical, or emotional condition
that reduced his culpability; and (3) that a petitioner’s cooperation with federal or state
officials resulted in others being convicted or excluded, or additional cases being
investigated, or a civil money penalty being imposed. 42 C.F.R. § 1001.102(c). The
Board has characterized a mitigating factor as being “in the nature of an affirmative
defense” and has ruled that Petitioner has the burden of proving any mitigating factor by

11

a preponderance of the evidence. Barry D. Garfinkel, M.D., DAB No. 1572, at 8 (1996).
In the present case, Petitioner failed to allege the elements of any of the three mitigating
factors that may be considered when the I.G. sets forth aggravating factors to justify an
exclusion period longer than five years.

Petitioner argues there is a “lack of mathematical objectivity method in the calculation”
of his exclusion period and that while “there are five aggravating factors that govern how
the exclusion period shall be determined[,] [t]he calculation showing how these five
factors, when computed, sum up to equate 30 years is not clear to any reasonable person.”
P Br. at 17. Petitioner goes on to argue that since the “aggravating factors are not
assigned numerical weight or numbers . . . the weight of the aggravating factors [is]
arbitrarily assigned.” P. Br. at 17. However, the Board has held that “the assessment of
aggravating and mitigating factors is qualitative, focusing on the circumstances of the
case at hand, rather than quantitative or a matter of mathematical formulas ....” Sushil
Aniruddh Sheth, M.D., DAB No. 2491 at 8 (2012). In addition, the Secretary has stated
that “[t]he weight accorded to each mitigating and aggravating factor cannot be
established according to a rigid formula, but must be determined in the context of the
particular case at issue.” 57 Fed. Reg. 3315 (January 29, 1992). The Board has
previously declared that “‘a holding that the exclusion period chosen by the I.G. was
unreasonable must be based on an analysis of those [aggravating] factors, considering the
particular circumstances and according them appropriate weight.” Robinson, DAB No.
1905 at 7 (2004)(emphasis added).

Additionally, Petitioner argues that “[t]he statutory sanction of the exclusion as applied to
Petitioner, is punitive and not remedial” and that if the purpose of his exclusion is
punitive then it violates the “Double Jeopardy Clause.” P. Br. at 12. However, the Board
as held that “[i]t is well-established that section 1128 exclusions are remedial in nature,
rather than punitive, and are intended to protect federally-funded health care programs
from untrustworthy individuals.” Burstein, DAB No. 1865 at 12 (2003), citing Patel v.
Thompson, 319 F.3d 1317 (11th Cir. 2003), cert denied, 123 S.Ct. 2652 (2005);
Mannocchio v. Kusserow, 961 F.2d 1539, 1543 (11th Cir. 1992). In the present case, I
find that Petitioner’s crimes have shown him to be particularly untrustworthy, and that
the I.G.’s assessment that federally-funded health care programs should be protected

from Petitioner for a period of 30 years is completely reasonable.

Petitioner also appears to argue that the period of exclusion in his case should be
governed by “[s]ection 1320a-7(c)(3)(D)” which mandates a three-year exclusion for
offenses “under paragraph (1), (2) or (3) of subsection (b).” P. Br. at 16. When this
statement is cross-referenced with Petitioner’s April 8, 2013 Request for Hearing, it
appears that Petitioner is arguing that his exclusion should fall under section
1128(b)(1)(B) of the Act. Req. for Hr’g. at 4. Section 1128(b) of the Act states the
following:
12

Permissive Exclusion.—The Secretary may exclude the following individuals and

entities from participation in any Federal health care program . . .

(1) Conviction relating to fraud.—Any individual or entity that has been convicted
for an offense . . . under Federal or State law—

(B) of a criminal offense relating to fraud, theft, embezzlement, breach of
fiduciary responsibility, or other financial misconduct with respect to any act
or omission in a program (other than a health care program) operated or
financed in whole or in part by any Federal, State or local government agency.
(emphasis added)

This provision of the Act governs permissive exclusions for convictions related to fraud
for criminal offenses relating to government programs other than health care programs.
Petitioner’s exclusion is based on his conviction for health care fraud where Petitioner
fraudulently billed the Texas Medicaid program, a government health care program, and
other health care insurance programs. As detailed above, the I.G. has proven that a legal
basis exists to exclude Petitioner under section 1128(a)(1) of the Act. And once a
conviction is shown to be within the ambit of section 1128(a), the mandatory operation of
that section bars any petitioner, including this one, from demanding that other more
lenient, more discretionary, or more favorable exclusionary provisions of sections
1128(b) should be applied instead. Even in situations where the underlying conviction
could plausibly be argued to fall within section 1128(a) and one or more of the
permissive exclusions or three-year mandatory minimum periods of sections 1128(b)(1)-
(15), the rule is clear: if section 1128(a) fits, then the mandatory exclusion and at least the
mandatory minimum period prescribed by section 1128(a) must be imposed. Neither the
1.G. nor the Administrative Law Judge may choose to proceed otherwise. Stacy Ann
Battle, D.D.S., DAB No. 1843 (2002); Tarvinder Singh, D.D.S., DAB No. 1752 (2000);
Lorna Fay Gardner, DAB No. 1733; Douglas Schram, R.Ph., DAB No. 1372 (1992);
Niranjana B. Parikh, M.D., DAB No. 1334 (1992); David S. Muransky, D.C., DAB No.
1227 (1991); Leon Brown, M.D., DAB No. 1208 (1990); Napoleon S. Maminta, M.D.,
DAB No. 1135 (1990); Charles W. Wheeler, DAB No. 1123 (1990); Jack W. Greene,
DAB No. 1078 , aff'd sub nom. Greene v. Sullivan, 731 F. Supp. 835.

I note that Petitioner appears here pro se. Because of that, I have been guided by the
Board’s reminders that pro se litigants should be offered “‘some extra measure of
consideration” in developing their records and their cases. Louis Mathews, DAB No.
1574 (1996); Edward J. Petrus, Jr., M.D., et al., DAB No. 1264 (1991). I have searched
all of Petitioner’s pleadings for any arguments or contentions that might raise a valid,
relevant defense to the I.G.’s Motion, but have found nothing that could be so construed.

Resolution of a case by summary disposition is fitting when settled law can be applied to
undisputed material facts. Michael J. Rosen, M.D., DAB No. 2096; Thelma Walley,
13

DAB No. 1367. Summary disposition is authorized by the terms of 42 C.F.R.

§ 1005.4(b)(12). This forum looks to FED. R. CIV. P. 56 for guidance in applying that
regulation. Robert C. Greenwood, DAB No. 1423 (1993). The material facts in this case
are undisputed and unambiguous. They support summary disposition as a matter of
settled law. This Decision issues accordingly.

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 Peter Victor Ayika from
participation in Medicare, Medicaid, and all other federal health care programs pursuant
to the terms of section 1128(a)(1) of the Act, 42 U.S.C. § 1320a-7(a)(1) is SUSTAINED.
Based on the provisions of 42 C.F.R. § 1001.102(b)(1), (2), (5), (6) and (9), the period of
Petitioner’s exclusion is 30 years.

/s/
Richard J. Smith
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Center for Tobacco Products,
Complainant
v.

Energy Marketing 245, LLC
d/b/a Energy Express/Phillips 66,

Respondent.

Docket No. C-13-1401
FDA Docket No. FDA-2013-H-1196

Decision No. CR3026

Date: December 12, 2013

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint
(Complaint) against Respondent, Energy Marketing 245, LLC d/b/a Energy
Express/Phillips 66, that alleges facts and legal authority sufficient to justify the
imposition of a civil money penalty of $2,000. 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 $2,000.

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 and
repeatedly sold cigarettes to minors and failed to verify that a cigarette purchaser
was 18 years of age or older, thereby violating the Federal Food, Drug, and
Cosmetic Act (Act), 21 U.S.C. § 301 ef seq., and its implementing regulations,
Cigarettes and Smokeless Tobacco, 21 C.F.R. Part 1140 (2012). CTP seeks a civil
money penalty of $2,000.

On October 22, 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.

Additionally, on October 30, 2013, I issued an Initial Order Establishing
Procedures to both Respondent and CTP. In that Order, I instructed the parties
that Respondent’s answer was due no later than November 21, 2013. I informed
Respondent that if it failed to answer the Complaint, I would decide this matter
without a hearing. On November 14, 2013, the United States Postal Service
(USPS) returned to my office a copy of the Initial Order Establishing Procedures
that staff had sent to Respondent. USPS had marked the returned copy as
“Refused.” The copy my office received was one of two copies mailed to the
Respondent, the other of which USPS did not return.

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 Energy Express/Phillips 66, an establishment that sells
tobacco products and is located at 733 South Vandeventer, Saint Louis,
Missouri 63110. Complaint { 3.

e¢ On March 6, 2012, an FDA-commissioned inspector observed a violation
of 21 C.F.R. Part 1140 at Respondent’s establishment. The inspector
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 Newport cigarettes .
. . at approximately 7:30 PM CT.” Complaint § 12.

© On April 19, 2012, CTP issued a Warning Letter to Respondent regarding
the inspector’s observations from March 6, 2012. The letter explained that
the observations constituted a violation of a regulation found at 21 C.F.R.
§ 1140.14(a), and that the named violation was 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,
regulatory action by the FDA or a civil money penalty action could occur
and that Respondent is responsible for complying with the law. Complaint
q 12.

Clay Bawne, Respondent’s District Manager, replied to the Warning Letter
in a May 7, 2012 telephone call. “Mr. Bawne stated that all employees
were retrained to card customers who appear to be under the age of 40 and
to not sell tobacco products to anyone under the age of 18.” Complaint

q 13.

On June 19, 2012, FDA-commissioned inspectors documented an
additional violation of 21 C.F.R. Part 1140 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 cigarettes . . . at approximately 3:11 PM.” Complaint § 10.

CTP initiated a civil money penalty action, CRD Docket number C-13-372,
against Respondent on February 8, 2013, as a result of the violations. An
Administrative Law Judge closed the matter on March 12, 2013, after
Respondent paid the penalty. Complaint 10-11.

On April 25, 2013, FDA-commissioned inspectors documented additional
violations of 21 C.F.R. Part 1140 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 cigarettes . . . at approximately 7:57 PM[.]” The inspectors
also 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.

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

Taking the above alleged facts as true, Respondent had four violations of
regulations contained in 21 C.F.R. Part 1140 within a fourteen-month period.
Specifically, Respondent had a violation on March 6, 2012, a violation on June 19,
2012, and two violations on April 25, 2013. Respondent’s actions on each
occasion violated the prohibition against selling cigarettes to persons younger than
18 years of age. 21 C.F.R. § 1140.14(a). Respondent’s actions on April 25, 2013,
also violated the requirement that retailers verify, by means of photo identification
containing a purchaser’s date of birth, that no cigarette 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.

The regulations require me to impose a civil money penalty in an 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 fourteen-month
period, 21 C.F.R. § 17.2, and CTP has requested a fine in that amount. Therefore,
I find that a civil money penalty of $2,000 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

Gail Ray Dignam,
Petitioner,
v.
The Inspector General.
Docket No. C-13-285
Decision No. CR3024

Date: December 20, 2013

DECISION

The Inspector General (1.G.) of the Department of Health and Human Services notified
Gail Ray Dignam (Petitioner) that she was being excluded from participation in
Medicare, Medicaid, and all other federal health care programs for ten years. Petitioner
appealed. For the reasons stated below, I conclude that Petitioner is subject to mandatory
exclusion and that the ten-year exclusion is not unreasonable.

I. Background

From July 2004 until September 2007, Petitioner was the director of the Governor’s
Program on Abstinence (GPA) in the state of Louisiana. I.G. Exhibit (Ex.) 5, at 5. Based
on her conduct in that position, Petitioner was found guilty, in the United States District
Court, Middle District of Louisiana (District Court), of violating 18 U.S.C. § 1341. LG.
Ex. 2, at 1. In a November 30, 2012 letter, the I.G. notified Petitioner that, under

42 U.S.C. § 1320a-7(a)(1), she was being excluded from participation in Medicare,
Medicaid, and all federal health care programs for a period of ten years. I.G. Ex. 1. The
1.G. based the exclusion on Petitioner’s conviction of a criminal offense related to the
delivery of an item or service under Medicare or a State health care program, including
the performance of management or administrative services relating to the delivery of
items or services, under any such program.
Petitioner, proceeding pro se, filed a request for hearing with the Departmental Appeals
Board, Civil Remedies Division (CRD). The CRD Director assigned this case to me and,
on February 13, 2013, I convened a telephonic prehearing conference, the substance of
which is summarized in my February 15, 2013 Order and Schedule for Filing Briefs and
Documentary Evidence (Order). Pursuant to the Order, the I.G. filed a brief (IG. Br.) on
March 26, 2013, with LG. Exs. 1 through 6. Petitioner filed an unopposed request for an
extension of time to file her prehearing brief and proposed exhibits, which I granted.
Petitioner subsequently filed a timely brief (P. Br.) with three exhibits marked as P. Exs.
A through C. On July 16, 2013, the I.G. filed a reply brief (I.G. July 16 Reply Br.). On
or about July 21, 2013, Petitioner requested leave to file an addendum to her brief and
exhibits. I granted this motion and, on September 23, 2013, Petitioner filed a
supplemental brief (P. Supp. Br.) with seven exhibits attached.’ On October 24, 2013,
the I.G. submitted a reply (1.G. Oct. 24 Reply Br.) along with an unredacted copy of P.
Ex. D-1.

II. Evidentiary Rulings

The L.G. objected to P. Exs. A and B, which are excerpts from the Federal Sentencing
Guidelines Manual, as irrelevant because they do not relate to any mitigating factor
cognizable under the regulations. I.G. July 16 Reply Br. at 4. The I.G. also objected to
P. Exs. A-1, B-3, C-4, D-1, E-18, G-8, and K-1 because the I.G. believes that the only
purpose of these exhibits is to collaterally attack the validity of Petitioner’s conviction.
(1.G. Oct. 24 Reply Br. at 5-6).

Petitioner’s Exs. A and B are related to Petitioner’s argument that the length of her
incarceration should not be the basis for increasing her exclusion. P. Br. at 2-3. Because
the I.G. relies on Petitioner’s incarceration as an aggravating factor in this case, P. Exs. A
and B are not irrelevant. Further, I consider Petitioner’s other exhibits to provide
background information related to the GPA and the criminal conviction. Therefore, I
admit P. Exs. A, B, C, A-1, B-3, C-4, D-1, E-18, G-8, and K-1 into the record.

Petitioner objected to all of the I.G.’s exhibits because “the evidence does not establish
that the exclusion range is reasonable.” P. Br. at 2. The I.G.’s exhibits include the I.G.’s
exclusion letter, Petitioner’s judgment of conviction, Petitioner’s indictment, the

' Petitioner, somewhat confusingly, marked these exhibits as follows: A-1, B-3, C-4,
D-1, E-18, G-8, and K-1.

> As the I.G. points out, Petitioner references “attachment I — 1” as proof that Petitioner
made arrangements to pay restitution. P. Supp Br. at 7. The I.G. never received this
document (I.G. Oct 24 Reply Br. at 6) and neither did CRD. However, as the I.G. argues,
payment of restitution is not relevant to this case. See 42 C.F.R. § 1001.201(b)(2)(i).
transcript of Petitioner’s sentencing hearing, and documents related to the program she
administered in the state of Louisiana. All of these documents are relevant to the I.G.’s
basis for excluding Petitioner and to his decision to lengthen the term of exclusion to ten
years. Therefore, I admit I.G. Exs. 1-6 into the record.

III. Decision on the Record

The L.G. offered no witnesses and indicated that an in-person hearing is unnecessary.
1.G. Br. at 6. Petitioner did not offer any witnesses to testify at a hearing. Therefore, an
in-person hearing is not necessary and I issue this decision on the basis of the written
record.

IV. Issues

1. Whether the LG. has a basis to exclude Petitioner from participating in all federal
health care programs under 42 U.S.C. § 1320a-7(a)(1); and

2. Whether the length of the exclusion is unreasonable.
V. Jurisdiction

I have jurisdiction over this case and to decide the issues stated above. 42 U.S.C.
§ 1320a-7(f); 42 C.F.R. §§ 1001.2007(a), 1005.2(a).

VI. Findings of Fact, Conclusions of Law, and Analysis*

A, Petitioner was found guilty of two felony counts of mail fraud related to a
scheme to improperly obtain funds for Petitioner and Petitioner’s family
JSrom the Louisiana Governor’s Program on Abstinence, in violation
18 U.S.C. § 1341.

On February 17, 2010, an indictment was filed in the District Court charging Petitioner
with two-counts of mail fraud in violation of 18 U.S.C. § 1341. LG. Ex. 3. The
indictment alleged that Petitioner:

devised and intended to devise a scheme and artifice to defraud the State of
Louisiana and to obtain money from the GPA by means of materially false
and fraudulent pretenses, representations, and promises. — [Petitioner]
directed a substantial amount of the money obtained from the GPA to...
her son.

> My findings of fact and conclusions of law are set forth in italics and bold font.
1G. Ex. 3, at 2. Petitioner pled not guilty to the charges and the District Court held a jury
trial. LG. Ex. 2, at 1; see also 1.G. Ex. 6, at 4, 8. Petitioner was found guilty on both
counts. I.G. Ex. 2, at 1. The District Court sentenced Petitioner to 70 months
incarceration, and ordered Petitioner to pay a $200 assessment and $4,500 in restitution.
LG. Ex. 2, at 2, 5.

B. Petitioner’s conviction requires exclusion under 42 U.S.C. § 1320a-7(a)(1)
because her criminal conduct related to the delivery of an item or service
under a State health care program.

An individual must be excluded from participation in any federal health care program, as
defined in 42 U.S.C. § 1320a-7b(f), if the individual was convicted under federal or state
law of a criminal offense related to the delivery of an item or service under Medicare or a
state health care program. 42 U.S.C. § 1320a-7(a)(1). Petitioner disagrees that her
conviction requires exclusion under section 1320a-7(a)(1). P. Br. at 1-2.

I. Petitioner was convicted of a criminal offense for the purposes of
42 U.S.C. § 1320a-7(a)(1).

Individuals are considered “convicted” of an offense “when a judgment of conviction has
been entered against the individual or entity by a Federal, State, or local court, regardless
of whether there is an appeal pending . . . [.]” 42 U.S.C. § 1320a-7(i)(1). In the present
matter, the District Court issued a Judgment in Criminal Case indicating Petitioner was
found guilty of two counts of Mail Fraud under 18 U.S.C. § 1341. LG. Ex. 2, at 1.
Petitioner does not dispute that she was convicted of a criminal offense. P. Br. at 1.
Therefore, I conclude that Petitioner was convicted of a criminal offense for the purposes
of exclusion under 42 U.S.C. § 1320a-7(a)(1).

2. Petitioner’s criminal offense related to the delivery of an item or
service under a State health care program.

In order for Petitioner’s conviction to support her exclusion, Petitioner’s conviction must
be “related to the delivery of an item or service . . . under any State health care program.”
42 U.S.C. § 1320a-7(a)(1). The term “related to” means that there must be a “nexus”
between Petitioner’s conduct and the delivery of an item or service under a State health
care program. See, e.g., James O. Boothe, DAB No. 2530, at 5 (2013).’ However,
Petitioner appears to dispute that her criminal conviction relates to the delivery of items
or services under a State health care program. P. Br. at 2. A review of the record
indicates otherwise.

* Administrative decisions cited in this decision are accessible on the internet at:
http://www.hhs.gov/dab/decisions/index.html.
“To perform its mission, the GPA relied on contractors to provide abstinence education
services in Louisiana” who were “hired . . . to design, create and distribute educational
materials, conduct training sessions and workshops for teachers, and conduct abstinence-
related programs for school-age children, among other things.” I.G. Ex. 3, at 1; see also
1.G. Ex. 5, at 7. Petitioner executed an elaborate scheme that involved awarding
contracts to an entity she created, called Friends 4 Teens (F4T), and arranging for
invoices from F4T to be submitted to and paid by the GPA, even though work had not
been performed. L.G. Exs. 3, at 2-4; 5, at 9-13; 6, at 16, 27. Petitioner’s son was paid by
FAT. LG. Ex. 3, at 5; 5, at 11-12; see also LG. Ex. 6, at 17 (referring to this activity as
helping her son to get a job). Therefore, there is a nexus between the criminal offense of
mail fraud and the services that the GPA paid for, but F4T did not provide.

Further, it is beyond doubt that the GPA was a State health care program for purposes of
42 U.S.C. § 1320a-7(a)(1). The GPA was a program established and funded under

42 U.S.C. § 710, which is part of title V of the Social Security Act. I.G. Exs. 4; 5, at 7;
see also I.G. Ex. 3, at 1; P. Ex. E-18; see also P. Ex. G-8. Petitioner admits this. P. Br. at
1. For purposes of exclusion, any program receiving funds under title V of the Social
Security Act is a “State health care program.” 42 U.S.C. § 1320a-7(h)(2); 42 C.F.R.

§ 1001.2 (definition of State health care program). Therefore, the GPA is a State health
care program under the exclusion statute.

Based on the foregoing, I conclude that the I.G. proved that Petitioner’s exclusion from
Medicare, Medicaid, and all other federal health care programs is required under
42 U.S.C. § 1320a-7(a)(1).

C. The ten-year period of exclusion imposed on Petitioner is not unreasonable.

Because I have concluded that a basis exists to exclude Petitioner pursuant to 42 U.S.C.

§ 1320a-7(a)(1), Petitioner must be excluded for a minimum period of five years.

42 U.S.C. § 1320a-7(c)(3)(B). However, an individual may be excluded for a period in
excess of the minimum if the I.G. proves by a preponderance of evidence that there is one
or more aggravating factors present as specified in 42 C.F.R. § 1001.2(b). If Petitioner
proves the existence of one or more mitigating factors as specified in 42 C.F.R.

§ 1001.2(c), then the length of exclusion may be reduced, but not to less than five years.*

I determine the existence of aggravating and mitigating factors de novo. However, I must
uphold the length of exclusion imposed by the LG. if it is not unreasonable. 42 C.F.R.

§ 1001.2007(a)(1)(ii).

> In exclusion cases brought under 42 U.S.C. § 1320a-7(a) and 42 C.F.R. § 1001.101, the
administrative law judge assigns the burden of proof. See 42 C.F.R. § 1005.15(c). I
notified the parties of their respective burdens related to aggravating and mitigating
factors at the prehearing conference. Order at 2.

I. The I.G. proved the existence of the aggravating factor at 42 C.F.R.
§ 1001.102(b)(5) (sentence imposed by the court included
incarceration).

In its letter excluding Petitioner, the I.G. indicated that he was lengthening Petitioner’s
exclusion to ten years because Petitioner was sentenced to a 70-month period of
incarceration. The record demonstrates, and Petitioner does not dispute, that the District
Court sentenced Petitioner to 70 months of imprisonment. I.G. Exs. 2, at 2; 6, at 25.
Therefore, I conclude that the I.G. proved the aggravating factor at 42 C.F.R.

§ 1001.102(b)(5).

Petitioner argues that “[s]ince petitioner’s conviction does not meet the pre-requisite of
fraud crimes in connection with delivery of a service[,] [s]ection 1001.102 is
inapplicable.” P. Br. at 2. However, nowhere in 42 C.F.R. § 1001.102 does it state that
an individual must be convicted of fraud for an exclusion to last more than the statutory
minimum five-year duration.

2. Petitioner failed to prove the existence of any mitigating factors under
42 CF.R.§ 1001.102(c).

Because I found that an aggravating factor is present in this case, I must consider whether
there are any mitigating factors under 42 C.F.R. § 1001.102(c) to offset the aggravating
factor. In her brief, Petitioner asserts that “mitigating factors exist within the meaning of
section 1001.102(c)(3)(ii)” with a citation to P. Ex. C. The mitigating circumstance at
section 1001.102(c)(3)(ii) states that “[t]he [excluded] individual’s . . . cooperation with
Federal or State officials resulted in . . . [a]dditional cases being investigated or reports
being issued by the appropriate law enforcement agency identifying program
vulnerabilities or weaknesses.”

Petitioner has not proven that there is a basis for finding that this mitigating circumstance
exists. Petitioner’s Ex. C is a letter from the director of the Office of Community
Programs for the state of Louisiana to the Louisiana Legislative Auditor reviewing the
GPA. The letter indicates that many changes were made to the GPA following
Petitioner’s tenure as director; however, the document does not indicate that Petitioner
cooperated with the appropriate law enforcement agency to identify program
vulnerabilities and weaknesses. To the contrary, when the Louisiana Legislative Auditor
determined that Petitioner had acted improperly related to the contracts Petitioner
approved as director of the GPA, Petitioner “would not meet with Louisiana legislative
auditor (LLA) representatives to discuss these findings.” I.G. Ex. 5, at 10. In a June 12,
2009 letter, the Louisiana Legislative Auditor requested Petitioner’s comments on his
draft report concerning the investigation into the GPA. Petitioner merely stated that: “I
do not agree with your findings or your allegations.” I. G. Ex. 5, at 24. Therefore, I
conclude that Petitioner has not met her burden of proving that a mitigating factor exists
in this case.

3. The evidence of records shows that Petitioner is untrustworthy and
that a ten-year exclusion is not unreasonable.

After determining the existence of aggravating and mitigating factors, an administrative
law judge must conduct the following evaluation in order to determine whether to uphold
the length of exclusion:

The evaluation does not rest on the specific number of aggravating or
mitigating factors or any rigid formula for weighing those factors, but
rather on a case-specific determination of the weight to be accorded each
factor based on a qualitative assessment of the circumstances surrounding
the factors in that case.... The protective purpose of the exclusion statute
is an overarching consideration when assessing the factors: ‘It is well-
established that section 1128 exclusions are remedial in nature, rather than
punitive, and are intended to protect federally-funded health care programs
from untrustworthy individuals’. ... An [administrative law judge’s] . . .
review of an exclusion period to determine whether it is unreasonable must
reflect the deference owed the LG . . . [and] [a]n [administrative law judge]
may not substitute his or her judgment for that of the LG. or determine a
“better” exclusion period.

Sushil Aniruddh Sheth, M.D., DAB No. 2491, at 5 (2012) (citations omitted).

In the present matter, the only aggravating factor to consider is that Petitioner will serve
70 months in prison. I.G. Ex. 2, at 2. The length of Petitioner’s incarceration is a
significant indicator that Petitioner’s crimes were particularly egregious. In exclusion
cases, a prison sentence of as little as nine months is considered to be relatively
substantial. Jason Hollady, M.D., DAB No. 1855, at 12 (2002). Petitioner’s sentence
was nearly eight times longer.

In addition to the length of sentence, it is important to consider the underlying reason for
the sentence. The District Court gave the following reasons for Petitioner’s sentence.

[The GPA] had very limited funds. And it was not appropriate by your
conduct to have diverted those funds away from programs to where they
were doing what they were supposed to do and to line up a job or money to
go into accounts which you controlled. You caused the state to lose money,
precious money for that particular project. And unfortunately, as the
Government pointed out, you have a track record of going in to Charitable
Institutions or groups and in diverting money from those groups and their
intended purposes and diverting it to you or your family’s bank accounts.
And the evidence at the trial was compelling that you did this knowingly
and that you understood what it was going to do. You created numerous
accounts to hide your activities, and it took serious investigation to uncover
that activity.

1.G. Ex. 6, at 27. The Court’s statements show that Petitioner knowingly engaged in the
fraud and created an elaborate scheme to steal public funds. See I.G. Ex. 3, at 2. Further,
as the District Court indicated, Petitioner previously engaged in improper conduct in
order to obtain funds from the GPA while working with a contractor for the GPA.
Petitioner’s previous misconduct, separate and apart from the conduct in the criminal
case, caused $189,026.32 in loss to the government; the District Court expressly
considered this loss when sentencing Petitioner. I1.G. Ex. 6, at 9-11; see also I.G. Exs. 5,
at 13-14; 6, at 23. There is no doubt that the duration of Petitioner’s sentence was
directly based on her misconduct.

Petitioner argues that there is little significance to the length of imprisonment because
“the federal criminal system is a system set up by points . . . [t]hus any defendant with the
same underlying facts and circumstances as petitioner would have received the same 70-
month sentence.” P. Br. at 2-3. Petitioner submitted as exhibits, copies of provisions
from the 2012 Federal Sentencing Guidelines Manual. P. Ex. A, B. Petitioner indicates
that the advisory range for her sentence under the Federal Sentencing Guidelines was
from 70 to 87 months.

Although it is true that the District Court sentenced Petitioner based on the Federal
Sentencing Guidelines and to “the lower end of the Guidelines sentence” (I.G. Ex. 6, at
27), this is not necessarily a reason to reduce the length of an exclusion, especially when
there is lengthy incarceration. See Dr. Frank R. Pennington, M.D., DAB No. 1786
(2001) (even when the lowest term of imprisonment is imposed under sentencing
guidelines, it is appropriate to “considering the fact and length of the incarceration as an
appropriate measure of the relative severity of the offense”); Gary Alan Katz, R.Ph.,
DAB No. 1842 n.5 (2002) (“the [exclusion] regulations making incarceration an
aggravating factor reasonably assume that a sentence of incarceration will be imposed
pursuant to the applicable laws and sentencing guidelines”).

Further, Petitioner argues, at length, that her conviction resulted from ignorance
regarding proper government contracting procedures and her decision to follow the
procedures used by the previous GPA director, as well as having “incorrect standards of
conduct and no internal control system in place at the time the questioned conduct
occurred.” P. Supp. Br. at 2-7, 10. Petitioner also asserts that Louisiana officials decided
not to prosecutor her, that she took appropriate corrective action, but that “it was not
considered quick enough by the Federal Prosecutors.” P. Supp. Br. at 9-10.

Petitioner’s argument goes to the merits of her criminal conviction and her culpability.
Petitioner attempts to recast herself simply as an individual who made mistakes and, but
for zealous federal prosecutors, she would not have been convicted. As indicated in the
regulations, I cannot consider such arguments.

When the exclusion is based on the existence of a criminal conviction .. .
imposing liability by Federal . . . court . . . the basis for the underlying
conviction is not reviewable [by the administrative law judge] and the
[excluded] individual may not collaterally attack it either on procedural or
substantive grounds in this appeal.

42 C.F.R. § 1001.2007(d).

Significantly, Petitioner made the same argument during her sentencing hearing. I.G. Ex.
6, at 15-16. In response to Petitioner’s assertion that she simply did not do a good job
managing the GPA, the District Court stated: “This trial was about . . . your active
creation of bank accounts and entities that took money from the program... .” LG. Ex. 6
at 16. The District Court further stated to Petitioner: “You must have realized that you
can’t forge people’s names, that you can’t set up and make documents that aren’t what
they’re represented to be. And even during this trial I am convinced that you were less
than truthful in your testimony.” I.G. Ex. 6, at 19.

Although Petitioner states that she “is taking full responsibility for the wrongdoing” (P.
Supp. Br. at 10), Petitioner’s stated view that her misconduct was simply that of
maladministration of the GPA’s contracts shows that she is unwilling to take
responsibility for her actions. It is particularly significant that the District Court did not
believe that Petitioner was truthful during her sworn testimony at the trial. Petitioner,
with her past history of fraud and abuse of public moneys, is clearly not trustworthy.

The criminal prosecutor summed Petitioner’s case well:

[T]his was a corruption case . . . at a pretty high level of state government.
And it went on for years. And it cost tens of thousands of dollars in actual
loss, not intended loss, but actual loss that was paid as a result of fraud that
was funneled to the [Petitioner’s] family members by the [Petitioner].

1.G. Ex. 6, at 22. There is ample evidence that Petitioner is an untrustworthy individual
who is a threat to federal programs. She should be excluded for a lengthy period.
Based on the evidence of record and with consideration of the I.G.’s original exclusion
determination, I conclude that a ten-year period of exclusion is not unreasonable.
10

VII. Conclusion

For the foregoing reasons, I affirm the I.G.’s determination to exclude Petitioner from
participating in Medicare, Medicaid, and all federal health care programs for ten years
pursuant to 42 U.S.C. § 1320a-7(a)(1).

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Cindy M. Cohen, APRN,
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-13-986
Decision No. CR3023

Date: December 5, 2013

DECISION

Palmetto GBA (Palmetto), an administrative contractor for the Centers for Medicare &
Medicaid Services (CMS), determined that the effective date of Medicare billing
privileges for Petitioner, Cindy M. Cohen, APRN, is December 19, 2012. Petitioner
appealed. For the reasons stated below, I affirm Palmetto’s determination.

I. Case Background

Petitioner is an advanced practice registered nurse (APRN) licensed in Hawaii. On or
around November 28, 2011, she joined a group practice of nonphysician practitioners
called Ocean View Family Health Clinic (Ocean View). On August 1, 2012, the Ocean
View clinic manager sent a letter to Palmetto’s Jurisdiction 11 office that said he sent a
CMS-855I form (one of several Medicare enrollment applications) to that Palmetto office
on December 1, 2011, seeking to change Petitioner’s practice location on file with
Palmetto. CMS Exhibit (Ex.) 1. The letter stated that “[a]pparently this form [the
December 1, 2011 CMS-855I] has been lost, so we are resubmitting the form, and
supporting documentation.” CMS Ex. 1. Petitioner purportedly signed the CMS-8551
included with the August 1, 2012 letter on November 28, 2011. CMS Ex. 3, at 15. By
letter dated August 21, 2012, Palmetto informed the Ocean View clinic manager that he
sent Petitioner’s CMS-855I to the wrong Palmetto jurisdiction; he needed to resend the
CMS-855I to Palmetto’s Jurisdiction | office, which processes enrollment applications
for Hawaii.' CMS Ex. 2.

The clinic manager subsequently sent Petitioner’s CMS-855] to the correct Palmetto
office. The exact date he sent the enrollment application is unclear from the record, but
by letter dated October 22, 2012, Palmetto informed the clinic manager that additional
information was needed to process Petitioner’s enrollment application. CMS Ex. 4.
Palmetto determined that Petitioner needed to submit a newly signed certification
statement as well as a CMS-855R enrollment application to reassign her Medicare
benefits to Ocean View. CMS Ex. 4, at 1. Petitioner sent a new certification and CMS-
855R, but the CMS-855R did not include a certification signature for Ocean View. CMS
Ex. 5, at 4. By letter dated November 28, 2012, Palmetto notified Petitioner that her
application was “being closed” because Palmetto “tried to contact [the clinic manager]
for additional information needed to process [the CMS-8551] application,” but did not
received an “appropriate response.” CMS Ex. 6, at 1. The notice also stated that the
CMS-855R that the Ocean View clinic manager sent had been rejected. CMS Ex. 6, at 1.

On December 19, 2012, Palmetto received a new CMS-855I enrollment application from
Petitioner (with a cover letter from the Ocean View clinic manager). CMS Ex. 7. On the
CMS-855I, Petitioner indicated that she was using that form to change her Medicare
information. CMS Ex. 7, at 3. By letter dated January 4, 2013, Palmetto again requested
additional information from the Ocean View clinic manager, including a completed
CMS-855R enrollment application to reassign Petitioner’s Medicare benefits to Ocean
View. CMS Ex. 8. Petitioner submitted the CMS-855R form, but, just as before, there
was no certification signature on behalf of Ocean View. CMS Ex. 9, at 2. The CMS-
885R sent to Palmetto also did not include Section 1, but rather started at Section 2.

CMS Ex. 9, at 1. On January 31, 2013, Palmetto sent a notice to Petitioner that requested
she submit Section | of the CMS-855R form along with the appropriate signatures within
30 days. CMS Ex. 10. Petitioner apparently did not respond because by notice dated
March 4, 2013, Palmetto advised Petitioner and the Ocean View clinic manager that
Petitioner’s enrollment application had again been “closed.” CMS Ex. 11, at 1.

Soon after, Palmetto received a third CMS-855] enrollment application from Petitioner.
On March 25, 2013, Palmetto again notified Petitioner that Palmetto needed a completed
CMS-855R enrollment application from Petitioner and Ocean View in order to approve
her application and reassign her Medicare billing privileges to Ocean View. See CMS
Ex. 12. Finally, Petitioner submitted a complete CMS-855R that included the appropriate
signatures. CMS Ex. 13, at 2. By notice dated April 9, 2013, Palmetto advised Petitioner

' Medicare administrative contractors (MACs) are divided into “jurisdictions” based on
the states that each MAC covers.
that her enrollment application had been approved and her Medicare billing privileges
were effective December 19, 2012. CMS Ex. 14, at 1.

Petitioner filed a corrective action plan requesting an earlier effective date for her billing
privileges, but Palmetto rejected it. CMS Ex. 16. On May 14, 2013, Petitioner requested
reconsideration from Palmetto, stating her initial enrollment application had been sent on
December 1, 2011, but was “denied for various reasons... .”” CMS Ex. 17. Petitioner
requested an effective date of December 1, 2011, based on her initial application and
because she had been treating Medicare beneficiaries at Ocean View since that time.
CMS Ex. 17. On June 3, 2013, Palmetto issued a reconsidered determination that upheld
the effective date for Petitioner’s billing privileges. CMS Ex. 18, at 1. One day later, on
June 4, 2013, Palmetto issued a letter that stated Petitioner’s “effective date” was
November 19, 2012, because this is “30 days from the receipt date of the [enrollment]
application, per Title 42 CFR § 424.521(a)(1).”” CMS Ex. 19.

On June 12, 2013, Petitioner requested a hearing to challenge the effective date of her
billing privileges. Following the directives in my Acknowledgement and Pre-hearing
Order dated July 10, 2013 (Order), the parties submitted their respective prehearing briefs
(CMS Br. and P. Br.). CMS filed a motion for summary judgment along with its
prehearing brief. CMS submitted 19 proposed exhibits (CMS Exs. 1-19), and Petitioner
submitted three proposed exhibits as attachments to her brief (P. Exs. 1-3).

II. Decision on the Record

Neither party has objected to any of the proposed exhibits submitted. Therefore, I admit
CMS Exhibits 1-19 and Petitioner Exhibits 1-3 into the record.

> It is not clear whether the June 4, 2013 letter was a revised initial determination or an
amendment to Palmetto’s reconsidered determination that granted Petitioner 30 days of
retrospective billing privileges. See CMS Ex. 19. In its brief, CMS treated the June 4
letter as simply granting retrospective billing privileges, but not amending the actual
“effective date” of her billing privileges. CMS Br. at 5. Indeed, the June 4 letter cites
only 42 C.F.R. § 424.521, which addresses retrospective billing, and does not cite the
regulation for the actual “effective date” of billing privileges, which is addressed in

42 C.F.R. § 424.520(d). CMS Ex. 19. Further, CMS’s interpretation is consistent with
the practice among CMS’s MACs to incorrectly label the date that retrospective billing
privileges begin as the “effective date.” See e.g., Rizwan Sadiq, M.D., DAB CR2401, at
5-6 (2011). Finally, Petitioner does not dispute this interpretation of the June 4 letter.
Accepting CMS’s interpretation of the June 4 letter, it appears that Palmetto permissibly
decided to provide Petitioner with 30-days of retrospective billing based on Palmetto’s
determination that Petitioner’s Medicare billing privileges were effective December 19,
2012.
Neither party offered the written direct testimony of any witnesses. Accordingly, the
record is closed and I will issue this decision based on the written record. See Order § 11.

III. Issue

The issue in this case is whether Palmetto, acting on behalf of CMS, properly determined
December 19, 2012 as the effective date for Petitioner’s Medicare billing privileges.

IV. Jurisdiction

I have jurisdiction to decide this issue. 42 C.F.R. §§ 498.3(b)(15), 498.5(1)(2); see also
42 U.S.C. § 1395cc(j)(8).

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

The Social Security Act authorizes the Secretary of Health and Human Services
(Secretary) to promulgate regulations governing the enrollment process for providers and
suppliers.* 42 U.S.C. §§ 1302, 1395cc(j). The Secretary promulgated enrollment
regulations for providers and suppliers at 42 C.F.R. Part 424, Subpart P. Under the
Secretary’s regulations, a provider or supplier that seeks Medicare billing privileges must
“submit enrollment information on the applicable enrollment application. Once the
provider or supplier successfully completes the enrollment process . . . CMS enrolls the
provider or supplier into the Medicare program.” 42 C.F.R. § 424.510(a). Upon
enrollment, the provider or supplier “receives billing privileges” so that it can receive
payment for covered Medicare items or services. Id. § 424.505. For suppliers who are
physicians or nonphysician practitioners, the effective date for billing privileges is based
on the date of filing of en enrollment application that a MAC subsequently approves. Id.
§ 424.520(d).

1. Palmetto received Petitioner’s CMS-855I Medicare enrollment
application that it subsequently approved on December 19, 2012.

After at least one unsuccessful attempt, the Ocean View clinic manager mailed a CMS-
8551 enrollment application to Palmetto, which Petitioner signed on December 16, 2012.
CMS Ex. 7, at 16. Palmetto received the CMS-855I form on December 19, 2012.
Petitioner does not dispute this date of receipt. CMS Br. at 3-4; P. Br. at 1 (unnumbered).
Because the CMS-855I was not able to be approved as received, Palmetto sent two letters
to the Ocean View clinic manager that requested more information (including a

> My numbered findings of fact and conclusions of law appear in bold and italics.

* For Medicare enrollment purposes, Petitioner is considered a “supplier.” See 42 U.S.C.
§§ 1395x(d); 42 C.F.R. §§ 400.202 (definition of Supplier), 410.75.
completed CMS-855R form) from Petitioner. CMS Exs. 9-10. By letter dated March 4,
2013, Palmetto notified the Ocean View manager that it “closed” Petitioner’s enrollment
application after not receiving sufficient responses to Palmetto’s request for more
information. CMS Ex. 11, at 1. However, after receiving a new CMS-855I enrollment
application on March 25, 2013, and after Petitioner submitted complete responses to
Palmetto’s request for more information, Palmetto apparently determined that it would
reopen the CMS-855I enrollment application Palmetto had received December 19, 2012,
and approve it.> See CMS Ex. 14, at 1; CMS Br. at 4-5. The initial determination
granting Petitioner Medicare billing privileges effective December 19, 2012, did not
explain why Palmetto determined to reopen Petitioner’s prior enrollment application,
although such action appears to be within Palmetto’s discretion.° See CMS Ex. 14.

Therefore, the evidence demonstrates that on December 19, 2012, Palmetto received
Petitioner’s CMS-855I enrollment application that it subsequently approved.

2. Palmetto properly concluded that the effective date for Petitioner’s
Medicare billing privileges was December 19, 2012.

By letter dated April 9, 2013, Palmetto notified Petitioner and the Ocean View clinic
manager that Petitioner’s Medicare enrollment application was approved. CMS Ex. 14.
Palmetto set December 19, 2012, as the effective date for Petitioner’s billing privileges,
which is when Palmetto received one of Petitioner’s incomplete CMS-855] from the
Ocean View clinic manager. CMS Ex. 14, at 1.

The relevant regulation concerning the effective date of Medicare enrollment states:

The effective date for billing privileges for physicians, nonphysician
practitioners, and physician and nonphysician practitioner organizations is
the later of the date of filing of a Medicare enrollment application that was
subsequently approved by a Medicare contractor or the date an enrolled

5 As explained above, the CMS-855I form received on March 25, 2013 was incomplete,
and Palmetto required more information from the Ocean View manager and Petitioner.
See CMS Ex. 12, at 1. It was Petitioner’s third CMS-855I that Palmetto received from
the Ocean View clinic manager that was incomplete.

® Tt is unclear what Palmetto meant when it said that it had “closed” the application it
received on December 19, 2012, though it referred to its authority to reject an enrollment
application under 42 C.F.R. § 424.525. CMS Ex. 11, at 1. To the extent that Palmetto’s
action was an unartfully worded rejection and subsequent reopening, it is not reviewable.
See 42 C.F.R. § 424.525(d) (“Enrollment applications that are rejected are not afforded
appeal rights.”).
physician or nonphysician practitioner first began furnishing services at a
new practice location.

42 C.F.R. § 424.520(d) (emphasis added). The “date of filing” is the date that the
Medicare contractor “receives” a signed provider enrollment application that the
Medicare contractor is able to process to approval. The effective date for enrollment is
the date the enrollment application was received. See Tri-Valley Family Medicine, Inc.,
DAB No. 2358, at 7 (2010).’ Because Palmetto received an enrollment application from
Petitioner on December 19, 2012, which it later approved, Palmetto properly considered
this date as the effective date for Petitioner’s Medicare billing privileges.

3. Petitioner’s equitable arguments are unavailing in this appeal.

In the current appeal, Petitioner raises a number of reasons why I should grant her billing
privileges effective November 28, 2011, nearly one year prior to the date Palmetto
established. P. Br. at 1. Petitioner claimed that the clinic manager who submitted the
incomplete enrollment applications was responsible for “credentialing, referrals to other
providers, prior authorization requests for diagnostic testing, services, durable medical
equipment and prescriptions, among many other things,” and was “doing the work of at
least five employees.” P. Br. at 1. She explains that the clinic manager effectively
enrolled Petitioner as a practitioner with “all the various insurance companies” in the fall
of 2011. P. Br. at 1. Further, Petitioner asserted that she provided services for several
months in “good faith” and for the benefit of Medicare beneficiaries while Petitioner’s
Medicare enrollment was still pending. P. Br. at 1-2. Finally, Petitioner requests that I
permit her to bill Medicare beginning November 28, 2011 to avoid “extreme financial
hardship on my family.” P. Br. at 2. Petitioner’s arguments, however, are not legal and
amount to an appeal to equity.

I do not have the authority to grant equitable relief. See US Ultrasound, DAB No. 2302,
at 8 (2010). I cannot grant an exemption to Petitioner under the regulation set forth at

42 C.F.R. § 424.520(d), which is binding on me. See 18661CPayday.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. ..”). Therefore, I cannot provide
Petitioner with the equitable relief she seeks.

7 Administrative decisions cited in this decision are accessible on the internet at:
http://www.hhs.gov/dab/decisions/index.html.
VI. Conclusion

For the reasons explained above, I affirm CMS’s determination that the effective date for
Petitioner’s Medicare billing privileges is December 19, 2012.

/s/
Scott Anderson
Administrative Law Judge