Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Center for Tobacco Products,

(FDA No. FDA-2014-H-1321)
Complainant,

v.

Perry Sunoco Inc.
d/b/a Sunoco,

Respondent.
Docket No. C-14-1828
Decision No. CR3448

Date: November 10, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Perry Sunoco Inc., d/b/a Sunoco, at 1144 North Perry Street,
Pontiac, Michigan 48340 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 unlawfully sold cigarettes to minors, and failed to verify, by means of photo
identification containing a date of birth, 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 et seq., and its implementing regulations, 21 C.F.R. pt. 1140. CTP seeks to impose
a $500 civil money penalty against Respondent Sunoco.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on September 10, 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, L assume that the facts alleged in the complaint (but not its conclusory
statements) are true. Specifically:

e At approximately 5:33 p.m. on April 26, 2013, at Respondent’s business
establishment, at 1144 North Perry Street, Pontiac, Michigan 48340, an FDA-
commissioned inspector observed a person younger than 18 years of age enter the
establishment and purchase a package of Newport Box 100s cigarettes;

e Ina warning letter dated May 9, 2013, CTP informed Respondent of the
inspector’s April 26, 2013 observation, and that such actions violate federal law,
21 CFR. § 1140.14(a). 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 12:31 p.m. on March 8, 2014, at Respondent’s business
establishment, at 1144 North Perry Street, Pontiac, Michigan 48340, FDA-
commissioned inspectors observed a person younger than 18 years of age enter the
establishment and purchase a package of Newport Box 100s 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 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 or smokeless tobacco to any person younger
than 18 years of age. Under 21 C-F.R. § 1140.14(b)(1), retailers must verify, by means of
photographic identification containing a purchaser’s date of birth, that no cigarette
purchasers are younger than 18 years of age.

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
Perry Sunoco 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

Amanda Marie Brune,
(OI File No.: H-14-4-0513-9),

Petitioner,
v.

The Inspector General.

Docket No. C-14-1335

Decision No. CR3447

Date: November 7, 2014
DECISION

Petitioner, Amanda Marie Brune, a.k.a. Amanda Marie Zwack, is excluded from
participating in Medicare, Medicaid, and all federal health care programs pursuant to
section 1128(a)(1) of the Social Security Act (Act) (42 U.S.C. § 1320a-7(a)(1)), effective
June 19, 2014. There is a proper basis for Petitioner’s exclusion based upon her
conviction of a criminal offense related to the delivery of an item or service under a state

health care program. Petitioner’s exclusion for a minimum period of five years is
required by section 1128(c)(3)(B) of the Act (42 U.S.C. § 1320a-7(c)(3)(B)).!

' Pursuant to 42 C.F.R. § 1001.3001, Petitioner may apply for reinstatement only after
the period of exclusion expires. Reinstatement is not automatic upon completion of the
period of exclusion.
I. Background

The Inspector General (I.G.) of the U.S. Department of Health and Human Services
notified Petitioner by letter dated May 30, 2014, that she was excluded from participation
in Medicare, Medicaid, and all other federal health care programs for a period of five
years. The L.G. cited section 1128(a)(1) of the Act as the basis for Petitioner’s exclusion
based on her conviction in the District Court of Dubuque County, Iowa, of a criminal
offense related to the delivery of an item or service under Medicare or a state health care
program.

Petitioner timely requested a hearing on June 10, 2014 (RFH). On June 24, 2014, the
case was assigned to me to hear and decide. On July 16, 2014, I convened a prehearing
telephone conference, the substance of which is memorialized in my July 17, 2014 Order
to Show Cause, Prehearing Conference Order, and Schedule for Filing Briefs and
Documentary Evidence (Prehearing Order). On September 2, 2014, the LG. filed a
motion for summary judgment, a brief in support of summary judgment (I.G. Br.), and
1.G. Exs. 1 through 3. Petitioner filed a brief in opposition (P. Br.) on September 4, 2014,
with no exhibits. The I.G. waived a reply on September 15, 2014. Petitioner did not
object to my consideration of I.G. Exs. 1 through 3 and they are admitted as evidence.

IL. Discussion
A. Applicable Law

Section 1128(f) of the Act (42 U.S.C. § 1320a-7(f)) establishes Petitioner’s right to a
hearing by an administrative law judge (ALJ) and judicial review of the final action of
the Secretary of Health and Human Services (the Secretary).

Pursuant to section 1128(a)(1) of the Act, the Secretary must exclude from participation
in any federal health care program any individual 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. The Secretary has promulgated regulations implementing these
provisions of the Act. 42 C.F.R. § 1001.101(a).”

Section 1128(c)(3)(B) of the Act provides that an exclusion imposed under section
1128(a) of the Act will be for a period of not less than five years. 42 C.F.R.

> References are to the 2013 revision of the Code of Federal Regulations (C.F.R.), unless
otherwise indicated.
§ 1001.102(a). Pursuant to 42 C.F.R. § 1001.102(b), the period of exclusion may be
extended based on the presence of specified aggravating factors. Only if the aggravating
factors justify an exclusion of longer than five years are mitigating factors considered as a
basis for reducing the period of exclusion to no less than five years. 42 C.F.R.

§ 1001.102(c).

The standard of proof is a preponderance of the evidence, and there may be no collateral
attack of the conviction that provides the basis of the exclusion. 42 C.F.R.

§ 1001.2007(c), (d). Petitioner bears the burden of proof and the burden of persuasion on
any affirmative defenses or mitigating factors, and the I.G. bears the burden on all other
issues. 42 C.F.R. § 1005.15(b).

B. Issues
The Secretary has by regulation limited my scope of review to two issues:
Whether the I.G. has a basis for excluding an individual or entity from
participating in Medicare, Medicaid, and all other federal health care programs;
and
Whether the length of the proposed exclusion is unreasonable.
42 C.F.R. § 1001.2007(a)(1). If the 1.G. imposes the minimum period of exclusion
authorized for a mandatory exclusion under section 1128(a) of the Act, then there is no
issue of whether the period of exclusion is unreasonable. 42 C.F.R. § 1001.2007(a)(2).
Here, the I.G. has proposed to exclude Petitioner for the minimum authorized exclusion
period, so the length of the proposed exclusion is not at issue.

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

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

1. Petitioner timely filed her request for hearing and I have
jurisdiction.

2. Summary judgment is appropriate.

There is no dispute that Petitioner timely requested a hearing and that I have jurisdiction
pursuant to section 1128(f) of the Act and 42 C.F.R. pt. 1005.

Pursuant to section 1128(f) of the Act, a person subject to exclusion has a right to
reasonable notice and an opportunity for a hearing. The Secretary has provided by
regulation that a sanctioned party has the right to hearing before an ALJ, and both the
sanctioned party and the LG. have a right to participate in the hearing. 42 C.F.R.

§§ 1005.2-.3. Either or both parties may choose to waive appearance at an oral hearing
and to submit only documentary evidence and written argument for my consideration.
42 C.F.R. § 1005.6(b)(5). An ALJ may also resolve a case, in whole or in part, by
summary judgment. 42 C.F.R. § 1005.4(b)(12).

Summary judgment is appropriate, and no hearing is required, where either: there are no
disputed issues of material fact and the only questions that must be decided involve
application of law to the undisputed facts; or, the moving party prevails as a matter of law
even if all disputed facts are resolved in favor of the party against whom the motion is
made. A party opposing summary judgment must allege facts which, if true, would
refute the facts relied upon by the moving party. Deciding a case on summary judgment
differs from deciding a case on the merits after a hearing. An ALJ does not assess
credibility or weigh conflicting evidence when deciding a case on summary judgment.
Bartley Healthcare Nursing and Rehab., DAB No. 2539 at 2-3 (2013); Senior Rehab. &
Skilled Nursing Ctr., DAB No. 2300 at 3 (2010); Holy Cross Village at Notre Dame, Inc.,
DAB No. 2291 at 5 (2009).

There are no genuine issues of material fact in dispute in this case. Petitioner does not
deny that she entered a guilty plea to tampering with records in exchange for a deferred
judgment. Petitioner does not deny that the records were related to the delivery of a
health care item or service under a state health care program. Petitioner does not deny
that the court entered an order of deferred judgment and sentenced her to pay restitution,
a penalty, and expenses. RFH; P. Br. at 2-4. Petitioner argues that in January 2015 her
record of this misdemeanor offense will be expunged. P. Br. at 3, 7. Petitioner also
raises an issue as to whether she was “convicted” for purposes of section 1128(a) of the
Act. All the issues raised by Petitioner must be resolved against her as a matter of law.
Accordingly, summary judgment is appropriate.

3. Section 1128(a)(1) of the Act requires Petitioner’s exclusion from
participation in Medicare, Medicaid, and all other federal health care
programs.

The L.G. cites section 1128(a)(1) of the Act as the basis for Petitioner’s mandatory
exclusion. The statute provides:

(a) MANDATORY EXCLUSION. - The Secretary shall
exclude the following individuals and entities from
participation in any Federal health care program (as defined
in section 1128B(f)):
(1) Conviction of program-related crimes. — Any
individual or entity that has been convicted of a criminal
offense related to the delivery of an item or service under
title XVIII or under any State health care program.

Act § 1128(a)(1). Thus, the plain language of section 1128(a)(1) of the Act requires that
the Secretary exclude from participation in Medicare, Medicaid, and all federal health
care programs, any individual or entity: (1) convicted of a criminal offense; (2) where
the offense is related to the delivery of an item or service; and (3) the delivery of the item
or service was under Medicare or any state health care program. The definition of a
“{s]tate health care program” includes state Medicaid plans. Act § 1128(h) (42 U.S.C.

§ 1320a-7(h)).

On August 27, 2013, an Assistant Iowa Attorney General filed an information charging
Petitioner with one count of fraudulent practices in the second degree and one count of
tampering with records. I.G. Ex. 2. The tampering with records count alleged violation
of Iowa Code § 715A.5, in that Petitioner created at least 38 fraudulent records that
purported to show Petitioner provided Medicaid services, an aggravated misdemeanor.
1G. Ex. 2 at 2. On November 19, 2013, Petitioner signed an agreement to plead guilty to
the tampering with records charge. I.G. Ex. 3.

On January 10, 2014, the judge in the criminal case accepted Petitioner’s guilty plea to
the tampering with records charge. Consistent with Petitioner’s plea agreement, the
judge granted Petitioner a deferred judgment and probation. Petitioner was ordered to
pay $3,000.20 restitution; $1,348.88 investigative expenses; a $625 civil penalty; $100
court costs; and other surcharges of $125. I.G. Ex. 1 at 1. The court also placed
Petitioner on probation for 12 months. I.G. Ex. | at 2.

Petitioner disputes whether or not she was convicted within the meaning of section
1128(a) of the Act. The term “convicted” as used in section 1128(a) and (b) of the Act is
defined at section 1128(i) of the Act. An individual or entity is convicted of a criminal
offense when any of the following occur:

(1) 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 or whether
the judgment of conviction or other record relating to criminal
conduct has been expunged;

(2) when there has been a finding of guilt against the
individual or entity by a Federal, State, or local court;
(3) when a plea of guilty or nolo contendere by the individual
or entity has been accepted by a Federal, State, or local court;
or

(4) when the individual or entity has entered into participation
in a first offender, deferred adjudication, or other arrangement
or program where judgment of conviction has been withheld.

Act § 1128(i) (42 U.S.C. § 1320a-7(i)). In this case, Petitioner’s guilty plea to the
tampering with records charge was accepted by the trial judge and Petitioner was granted
a deferred adjudication under Iowa law pursuant to the terms of her plea agreement.
Accordingly, I conclude that Petitioner was convicted within the meaning of section
1128(a)(1) of the Act.

Petitioner does not dispute that the tampering with records charge to which she pled
guilty related to the delivery of a health care item or service under the Medicare or
Medicaid programs. The charge that she fraudulently created 38 records claiming that
she provided services under Medicaid clearly shows a nexus between her conduct and the
Iowa Medicaid program. I conclude that the criminal offense of which Petitioner was
convicted was related to the delivery of an item or service under a state health care
program, in this case the Iowa Medicaid program. Accordingly, I conclude that all three
elements of section 1128(a)(1) of the Act have been met and there is a basis for
Petitioner’s exclusion.

Petitioner asserts in her request for hearing that she was charged with a misdemeanor not
a felony offense. Although Petitioner is correct that the offense of which she was
convicted was a misdemeanor, section 1128(a)(1) of the Act is triggered by any
conviction of a program related crime whether a felony or a misdemeanor. Petitioner
also argues that her misdemeanor conviction will ultimately be expunged. RFH; P. Br.
at 3, 7. Whether or not her record of the misdemeanor conviction is ultimately expunged
has no impact upon mandatory exclusion under section 1128(a)(1) of the Act. Act

§ 1128(i)(1).

Petitioner also argues that, although she pled guilty, she was innocent of the crime. P. Br.
at 2,4. Petitioner explains that she cared for her mother in her home. She was able to
bill Medicaid for care and services she provided to her mother through a state program.
During the period she cared for her mother, Petitioner also worked as a counselor at New
Directions where she billed Medicaid for services. Petitioner asserts that it was her
understanding that so long as she provided the care and services she claimed to her
mother, it was not important to be accurate about the times she claimed that the care and
services were provided. Petitioner states that she provided care to her mother but she did
not keep records of the time when the care and services were provided, so she just
guessed as to the times so she could file her claims with Medicaid. Unfortunately for
Petitioner, Medicaid discovered that time billed as services to Petitioner’s mother was
also time billed to Medicaid for services Petitioner claimed to be delivering to her clients
at New Directions. Petitioner also alludes to allegations that she did not meet with a
client at a time she claimed, and that she claimed to have met a client at a time she was
nown to have made purchases at Target. RFH; P. Br. at 2-6. Petitioner’s exclusion is
based on her conviction of a misdemeanor criminal offense to which she pled guilty.
Petitioner’s argument is a collateral attack on her conviction. The regulation is clear that
Petitioner may not collaterally attack the conviction either on substantive or procedural
grounds before me and I have no authority to review the conviction. 42 C.F.R.

§ 1001.2007(d).

Petitioner argues that it is unfair that she continues to be punished for a crime for which
she was already punished. Petitioner argues that she has taken responsibility for her
criminal actions, she pays restitution on time, yet, she continues to be punished. RFH;

P. Br. at 3, 5-7. Petitioner’s argument is not a basis for relief. The I.G. is required to
consider whether or not the elements of section 1128(a)(1) of the Act are satisfied. If the
elements are met, Congress mandates that the Secretary exclude the person or entity
convicted. Congress granted the Secretary, the I.G., and me no authority to consider any
other factors or to decide not to exclude when the elements of section 1128(a)(1) of the
Act are met.* Further, exclusions imposed by the I.G. are civil sanctions that have been
found to be remedial in nature, and not punitive and criminal. Because exclusions are
remedial sanctions, they do not violate either the double jeopardy clause or the
prohibition against cruel and unusual punishment. Manocchio v. Kusserow, 961 F.2d
1539 (11th Cir. 1992); Greene v. Sullivan, 731 F. Supp. 838 (E.D. Tenn. 1990); W. Scott
Harkonen, MD, DAB No. 2485 at 22 (2012) aff'd Harkonen v. Sebelius, No. C13-0071
PJH, 2013 WL5734918 (N.D. cal. Oct. 22, 2013); Joann Fletcher Cash, DAB No. 1725
(2000); Douglas Schram, R.Ph., DAB No. 1372 (1992); Janet Wallace, L.P.N., DAB No.
1126 (1992).*

> There is limited authority for the Secretary to waive some mandatory exclusions based
on very specific facts not present in this case. Act § 1128(c)(3)(B).

* The exclusion remedy serves twin purposes of Congress: the protection of federal
funds and program beneficiaries from untrustworthy individuals and the deterrence of
health care fraud. S. Rep. No. 100-109, at 1-2 (1987), reprinted in 1987 U.S.C.C.A.N.
682, 686 (“clear and strong deterrent”); Joann Fletcher Cash, DAB No. 1725 at 18
(discussing trustworthiness and deterrence).
4. The minimum period of exclusion under section 1128(a) is five
years.

5. Petitioner’s exclusion for five years is not unreasonable as a matter
of law.

I have concluded that there is a basis to exclude Petitioner pursuant to section 1128(a)(1)
of the Act. Therefore, Petitioner must be excluded for a minimum period of five years
pursuant to section 1128(c)(3)(B) of the Act. The LG. has no discretion to impose a
lesser period and I may not reduce the period of exclusion below five years.

II. Conclusion

For the foregoing reasons, Petitioner is excluded from participation in Medicare,
Medicaid, and all other federal health care programs for the minimum statutory period of
five years, effective June 19, 2014.

/s/
Keith W. Sickendick
Administrative Law Judge


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

Arnold Roth,
(O.I. File Number H-14-40426-0),

Petitioner,
v.

The Inspector General,
Department of Health and Human Services.

Docket No. C-14-1377
Decision No. CR3446
Date: November 6, 2014
DECISION

The request for hearing of Petitioner, Arnold Roth, is dismissed pursuant to 42 C.F.R.
§ 1005.2(e)(4),” for failure to raise any issue that may properly be addressed in a hearing.

I. Background
The Inspector General of the Department of Health and Human Services (1.G.) notified

Petitioner by letter dated May 30, 2014, that he was excluded from participation in
Medicare, Medicaid, and all federal health care programs for the minimum statutory

* References are to the 2013 revision of the Code of Federal Regulations (C.F.R.), unless
otherwise stated.

The provisions of the Social Security Act cited in this decision are available at
www.ssa.gov/OP_Home/ssact/ssact-toc.htm.

period of five years pursuant to section 1128(a)(4) of the Social Security Act (the Act)
(42 U.S.C. § 1320a-7(a)(4)). The basis for Petitioner’s exclusion was his felony
conviction in the Dutchess County Court of the State of New York, of a criminal offense
related to the unlawful manufacture, distribution, prescription, or dispensing of a
controlled substance as defined under federal or state law.

Petitioner timely requested a hearing (RFH) by letter dated June 9, 2014, and postmarked
on June 13,2014. The case was assigned to me on June 27, 2014, for hearing and
decision. On July 21, 2014, I convened a prehearing conference by telephone, the
substance of which is memorialized in my Prehearing Conference Order and Schedule for
Filing Briefs and Documentary Evidence (Prehearing Order) issued on July 21, 2014.
Petitioner did not waive an oral hearing. The I.G. requested the opportunity to file a
motion to dismiss prior to further development of the case and I set a briefing schedule.

On August 20, 2014, the I.G. filed a motion to dismiss with a supporting brief (I.G. Br.)
and one exhibit marked I.G. Exhibit (Ex.) 1. On September 30, 2014, Petitioner filed a
response in opposition to the I.G.’s motion to dismiss with three unmarked attachments
consisting of a copy of the I.G.’s brief, a copy of LG. Ex. 1, and Petitioner’s hearing
request (P. Br.). The LG. filed a reply brief (1.G. Reply) on October 20, 2014. On
October 29, 2014, Petitioner filed a letter dated October 27, 2014, which I treat as a
sur-reply (P. Reply). The parties have not objected to my consideration of I.G. Ex. | or
the documents submitted by Petitioner, and all are considered.

II. Findings of Fact, Conclusions of Law, and Analysis
My conclusions of law are set forth in bold, followed by the pertinent facts and analysis.

1. Petitioner has no right to a hearing on the issue of whether or not his five-
year period of exclusion under section 1128(a)(4) of the Act is unreasonable.

2. Petitioner’s request for hearing raises no issue that I may review,
therefore, 42 C.F.R. § 1005.2(e)(4) requires that I dismiss his request for
hearing.

Petitioner conceded in his request for hearing that he cannot contest the basis for the
1.G.’s decision to exclude him, that is, his conviction. Petitioner specifically requested
review as to the five-year period of exclusion. Petitioner argues that he should be
released from custody no later than about September 22, 2015, but the period of his
exclusion will run beyond his maximum release date of September 22, 2016. Petitioner
argues that because the exclusion will extend beyond his release from prison he will be
deprived of his livelihood. RFH at 1. Petitioner argues in his opposition to the I.G.’s
motion to dismiss that his sentence to confinement will be complete on September 22,
2016, but his exclusion will not be complete until June 2019. He argues that the
exclusion is unreasonable because it runs from June 2014 to June 2019, rather than from
the date of his sentencing on September 26, 2013, to September 26, 2018. P. Br. at 1-2.

Petitioner argues in his sur-reply that the June 20, 2014 effective date of his exclusion is
unreasonable. Petitioner argues that I should have authority to review whether or not his
exclusion is unreasonable. P. Reply.

Congress has directed that the Secretary of Health and Human Services (the Secretary)
exclude from participation in any federal health care program any individual convicted
after August 21, 1996, of a felony related to the unlawful manufacture, distribution,
prescription or dispensing a controlled substance. Act § 1128(a)(4). Congress directed
that an exclusion would be “effective at such time and upon such reasonable notice to the
public and to the individual or entity excluded as may be specified in regulations” issued
by the Secretary. Act § 1128(c)(1) (42 U.S.C. § 1320a-7(c)(1)). Congress has further
directed that the period of exclusion for any of the reasons specified under section
1128(a) of the Act will be not less than five years, subject to waiver on facts not present
in this case. Act § 1128(c)(3)(B) (42 U.S.C. § 1320a-7(c)(3)(B)). Congress specified
that an individual or entity that is subject to exclusion has a right to notice and
administrative and judicial review. Act § 1128(f) (42 U.S.C. § 1320a-(7)(f)).

The Secretary has issued regulations implementing section 1128 of the Act. 42 C.F.R.
pts. 1001-1005. The regulations provide that an individual or entity excluded under
section 1128 of the Act has the right to request an Administrative Law Judge (ALJ)
hearing, but only on the issues of:

Whether there is a basis for the exclusion; and
Whether the length of exclusion is unreasonable.

However, the regulations further provide that when the I.G. excludes an individual or
entity for the minimum five-year period authorized for a mandatory exclusion under
section 1128(a) of the Act, there is no right to request review as to whether or not the
period of exclusion is unreasonable. 42 C.F.R. § 1001.2007(a)(1)-(2). The limitation on
the right to review is consistent with the fact that Congress mandated a minimum five-
year period for mandatory exclusions and the Secretary, ALJs, and the courts have no
authority to impose a lesser period of exclusion. Because Petitioner was excluded
pursuant to section 1128(a)(4) of the Act for the minimum five-year period authorized by
Congress, he has no right to request ALJ review of the reasonableness of the period of his
exclusion. An ALJ is bound to comply with the Act and regulations. 42 C.F.R.

§ 1005.4(c)(1). A request for hearing that does not raise an issue that may be properly
addressed in a hearing must be dismissed. 42 C.F.R. § 1005.2(e)(4). Accordingly,
Petitioner’s request for hearing must be dismissed.

Even if I concluded that I have jurisdiction to grant Petitioner the review he requests, I
have no ability to adjust the effective date of his period of exclusion. Petitioner argues
that his exclusion should begin no later than the date of his sentencing. However, the Act
and regulations are clear in this regard. The Act provides that exclusion “shall be
effective at such time and upon such reasonable notice to the public and to the individual
... excluded as may be specified in regulations.” Act § 1128(c). The Secretary has
provided by regulation that exclusion is effective 20 days from the date of the I.G.’s
written notice of exclusion to the affected individual or entity. 42 C.F.R. § 1001.2002(b).
Iam bound to follow the Secretary’s regulations. 42 C.F.R. § 1005.4(c)(1).

Furthermore, the Departmental Appeals Board (Board) has consistently held that the
applicable statute and regulations give an ALJ and the Board no authority to adjust the
beginning date of an exclusion period by ruling that the effective date was some date
prior to 20 days following the issuance of the notice of exclusion. Randall Dean Hopp,
DAB No. 2166, at 3 (2008); Lisa Alice Gantt, DAB No. 2065, at 2-3 (2007); Thomas
Edward Musial, R.Ph., DAB No. 1991 (2005), citing Douglas Schram, R.Ph., DAB No.
1372, at 11(1992) (“Neither the ALJ nor this Board may change the beginning date of
Petitioner’s exclusion.”); David D. DeFries, DAB No.1317 (1992) (“The ALJ cannot...
decide when [the exclusion] is to begin.””); Richard D. Phillips, DAB No. 1279 (1991)
(An ALJ does not have “discretion . . . to adjust the effective date of an exclusion, which
is set by regulation.”). The Board’s rationale in its prior decisions is sound and Petitioner
offers me no justification for a departure. I conclude that I have no authority to change
the effective date of Petitioner’s exclusion as Petitioner requests. Accordingly,
Petitioner’s mandatory exclusion must remain effective June 19, 2014, twenty days after
the May 30, 2014 IG. notice of exclusion. 42 C.F.R. § 1001.2002(b).

III. Conclusion

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

/s/
Keith W. Sickendick
Administrative Law Judge


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

Center for Tobacco Products,
(FDA No. FDA-2014-H-1419)

Complainant,
v.

Seetaram LLC / Daya Singh
d/b/a Twin Stop,

Respondent.
Docket No. C-14-1937
Decision No. CR3445

Date: November 6, 2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) filed an Administrative Complaint (Complaint)
against Respondent, Seetaram LLC / Daya Singh d/b/a Twin Stop, alleging facts and
legal authority sufficient to justify the imposition of a civil money penalty of $250.
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 $250.

CTP began this case by serving the Complaint on Respondent and filing a copy of the
Complaint with the Food and Drug Administration’s (FDA) Division of Dockets
Management. The complaint alleges that Respondent impermissibly sold tobacco
products to a minor, thereby violating the Federal Food, Drug, and Cosmetic Act (Act),
21 USC. § 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 $250.
On September 24, 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 Twin Stop, an establishment that sells tobacco products located

at 2 Grove Street, Putnam, Connecticut 06260. Complaint § 2.

e During an inspection of Respondent’s establishment on October 29, 2013, an

FDA-commissioned inspector observed “multiple customer-accessible shelves and

unlocked display cabinets containing cigarette tobacco and smokeless tobacco
throughout the sales floor. The establishment was open to the general public
during business hours.” Complaint § 9.

e¢ On January 2, 2014, CTP issued a Warning Letter informing Respondent of the
inspector’s October 29, 2013 observation. The letter explained that the

observation constituted a violation of regulations found at 21 C.F.R. § 1140.16(c),
and that the named violation was not necessarily intended to be an exhaustive list
of all violations at the establishment. The letter further warned that Respondent's

failure to correct its violation could result in a civil money penalty or other
regulatory action. Complaint § 9.

e Based on UPS records, the Warning Letter was received by “Gaw” on January 4,

2014. Complaint § 9.

e During a subsequent two-part inspection of Respondent’s establishment conducted
on March 14 and 25, 2014, FDA-commissioned inspectors documented the use of
a self-service display in a non-exempt facility. Specifically, on March 14, 2014,
“a person younger than 18 years of age was able to access cigarette tobacco from

one of these displays. The facility is open to the general public during business
hours.” Complaint § 1.
These facts establish Respondent Seetaram LLC / Daya Singh d/b/a Twin Stop’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. § 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.

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

§ 1140.14(c) a retailer may sell cigarettes or smokeless tobacco only in a direct, face-to-
face exchange without the assistance of any electronic or mechanical device (such as a
vending machine or a self-service display). Also, under 21 C.F.R. § 1140.16(c), self-
service displays of cigarettes and smokeless tobacco are a prohibited method of sale,
except where no minors are present or permitted to enter the establishment at any time.
21 CFR. § 1140.16(c)(2)(ii).

Taking the above alleged facts as true, Respondent impermissibly used a self-service
display in a non-exempt facility, in violation of 21 C.F.R. § 1140.16(c) on October 29,
2013 and March 14, 2014. Therefore, Respondent’s actions constitute violations of law
that merit a civil money penalty.

CTP has requested a fine of $250, which is a permissible fine under the regulations.
21 C.F.R. § 17.2. Therefore, I find that a civil money penalty of $250 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

81 Home Health Care Corporation
(CCN: 05-8306),

Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-13-931
Decision No. CR3444
Date: November 5, 2014

DECISION

The Centers for Medicare & Medicaid Services (CMS) terminated Petitioner’s provider
agreement as a home health agency (HHA) effective May 28, 2013, because it found
Petitioner in violation of multiple conditions of participation. Petitioner requested a
hearing before an administrative law judge. The parties filed prehearing exchanges,
which included briefs and proposed exhibits. Based on these submissions, I issued an
order notifying the parties that I was considering whether to enter summary judgment and
gave the parties an opportunity to respond whether summary judgment was appropriate.
The parties responded and consented to summary judgment. Because the application of
the law to the undisputed facts in this case supports CMS’s termination of Petitioner’s
provider agreement, I affirm CMS’s determination.

I. Background and Procedural History

Petitioner is a HHA that was enrolled as a provider of services to Medicare beneficiaries
in the state of California. Following a March 27, 2013 survey, CMS terminated
Petitioner’s provider agreement based on a finding that Petitioner was deficient with
regard to multiple conditions of participation requirements for HHAs including:

42 CFR. §§ 484.10 (patient rights), 484.14 (organization, services, and administration),
484.18 (acceptance of patients, plan of care, and medical supervision), and 484.30
(skilled nursing services). CMS Exhibit (Ex.) 1. CMS notified Petitioner that it
2

terminated its participation agreement effective May 28, 2013. CMS Ex. 2. Petitioner
timely filed a request for hearing (RFH) before an administrative law judge. I issued a
prehearing order and established a briefing schedule. The parties filed prehearing briefs
(CMS Br. and P. Br.) and supporting exhibits (CMS Exs. 1-35 and P. Exs. 1-7).

II. Issue

Whether CMS’s determination to terminate Petitioner’s provider agreement should be
affirmed because Petitioner has failed to contest several of the condition level
deficiencies identified in CMS’s determination.

III. Findings of Fact, Conclusions of Law, and Analysis’

The Social Security Act (Act) sets forth requirements for HHAs participating in the
Medicare and Medicaid programs, and authorizes the Secretary of Health and Human
Services (Secretary) to promulgate regulations implementing the statutory provisions.
42 USC. §§ 1395x(m), (0), 1395bbb. The Secretary’s regulations governing HHA
participation in the Medicare program are found at 42 C.F R. Part 484.

In order to participate in the Medicare program and obtain reimbursement for its services
a HHA must be in compliance with all applicable conditions as specified in 42 C.F.R.
Part 484. 42 C.F.R. § 488.3(a)(2). Periodic review of compliance with the conditions of
participation is required and such reviews or surveys are generally conducted by the state
agency. Based upon its survey, the state agency either certifies compliance or
noncompliance of the surveyed provider. 42 C.F.R. §§ 488.20, 488.24, 488.26.

The state agency certifies that a HHA is not in compliance with the conditions of
participation when the deficiencies are “of such character as to substantially limit the
providers .. . capacity to furnish adequate care or which adversely affect the health and
safety of patients.” 42 C.F.R. § 488.24(b). Whether or not there is compliance with a
condition of participation depends upon “the manner and degree to which the provider
. .. Satisfies the various standards within each condition.” 42 C.F.R. § 488.26(b).
Surveyors are required to “directly observe the actual provision of care and services to
residents, and the effects of that care, to assess whether the care provided meets the
needs of individual residents ....” 42 C.F.R. § 488.26(c)(2).

CMS is authorized to terminate a provider agreement when the provider no longer meets
the requirements of the Act or fails to meet the conditions of participation, among other

' My findings of and conclusions of law are in bold and italics.
3

grounds listed in the regulation. 42 U.S.C. §§ 1395x(0)(6), 1395cc(b)(2)(B), 1395bbb(e);
42 CFR. § 489.53(a)(3). Notably, CMS is authorized to terminate a HHA’s provider
agreement if the HHA has a single condition level deficiency and such a decision is
discretionary. United Medical Home Care, DAB No. 2194, at 13-14 (2008).

1. Summary judgment is appropriate because there are no
disputed issues of material fact.

When appropriate, administrative law judges may decide a case arising under 42 C.F.R.
pt. 498 by summary judgment. See Civil Remedies Division Procedures (CRDP) § 7;
Livingston Care Ctr. v. U.S. Dep’t of Health & Human Servs. , 388 F.3d 168, 172 (6th
Cir. 2004) (citing Crestview Parke Care Ctr. v. Thompson, 373 F.3d 743 (6th Cir. 2004).
Summary judgment is appropriate and an in-person hearing is not required if the record
shows that there is no genuine dispute of any material fact and the moving party is
entitled to judgment as a matter of law. Senior Rehab. & Skilled Nursing Ctr., DAB No.
2300, at 3 (2010). To determine whether there are genuine issues of material fact for an
in-person hearing, the administrative law judge must view the evidence in the light most
favorable to the non-moving party, drawing all reasonable inferences in that party’s
favor. Id.

In considering summary judgment, I am procedurally and substantively guided by Rule
56 of the Federal Rules of Civil Procedure (FRCP). CRDP § 7; see also Livingston Care
Ctr., 388 F.3d at 172. Under paragraph (f) of Rule 56, I may consider summary
judgment on my own motion if I identify the material facts not in dispute, and give the
parties notice and an opportunity to respond.

In its request for hearing and prehearing exchange, Petitioner asserted that it is permitted
to serve patients in the Blythe, California, area and disputed the condition of participation
evel citation at 42 C.F.R. § 484.10 regarding patient rights. RFH; P. Br. at 9-20.
However, Petitioner did not dispute the condition level deficiencies at 42 C.F.R.

§§ 484.14, 484.18, or 484.30 (organization, services, and administration; acceptance of
patients, plan of care, and medical supervision; and skilled nursing services).

On June 18, 2014, I issued an order notifying the parties that I may consider summary
judgment on my own motion in this case. I explained the material facts not in dispute
and gave the parties an opportunity to respond. I explained that if I find that a legitimate
basis exists for the termination, I must affirm CMS’s determination to terminate
Petitioner’s agreement. See Comprehensive Professional Home Visits, DAB CR1097
(2003), aff'd DAB No. 1934, at 3-4 (2004). Specifically, because Petitioner did not
dispute the conditional level deficiencies at 42 C.F.R. §§ 484.14, 484.18, and 484.30, I
warned that summary judgment may be appropriate in this matter.

4

In its response, CMS argued that Petitioner failed to dispute the cited condition level
deficiencies and that summary judgment in its favor is warranted. CMS Response (CMS
Resp.) However, in Petitioner’s response, rather than dispute the cited condition level
deficiencies, Petitioner remained silent. Petitioner Response (P. Resp.) Instead,
Petitioner responded that it agreed that summary judgment was appropriate. P. Resp.

2. The undisputed material facts support a finding that Petitioner
failed to comply with a condition of participation.

On April 25, 2011, the state agency completed a complaint validation survey that
found Petitioner not in compliance with seven conditions of participation: 42 C.F.R.
§§ 484.12 (compliance with Federal, State, and local laws, disclosure and ownership
information, and accepted professional standards and principles), 484.14
(organization, services, and administration), 484.18 (acceptance of patients, plan of
care, and medical supervision), 484.30 (skilled nursing services), 484.32 (therapy
services), 484.48 (clinical records), and 484.55 (comprehensive assessment of
patients). The state agency conducted a follow-up survey on January 18, 2012, but
found Petitioner out of compliance with one condition of participation: 42 C.F.R.

§ 484.14 (organization, services, and administration). The state agency conducted a
second follow-up survey on May 27, 2013. The May 27, 2013 survey determined
that Petitioner failed to comply with the following HHA conditions of participation:

1) 42 CFR. § 484.10: Patient rights;
2) 42 CFR. § 484.14: Organization, services, and administration;

3) 42 CFR. § 484.18: Acceptance of patients, plan of care, and medical
supervision; and

4) 42 CFR. § 484.30: Skilled nursing services.
CMS Exs. 1-2.

Based on its review of the May 27, 2013 survey, CMS determined to terminate
Petitioner’s provider agreement, effective May 28, 2013. CMS Ex. 2.

Petitioner argues that the surveys were biased, that they were a result of a personal
disagreement, and that it was unfairly targeted. Although the delays in conducting the
follow-up surveys are peculiar, these contentions are not relevant to issues before me as
described. As I explained to Petitioner in my notice, if I find Petitioner out of compliance
with a single condition of participation, that noncompliance is a legitimate basis for
termination, and I must uphold CMS’s determination to terminate.
5

In this case, CMS has put forth evidence, and Petitioner does not contest the following
condition-level deficiencies: 42 C.F.R. §§ 484.14, 484.18, or 484.30 (organization,
services, and administration; acceptance of patients, plan of care, and medical
supervision; and skilled nursing services); each citation a repeat violation.

A HHA needs to have proper coordination of patient services. 42 C.F.R. § 484.14.
Petitioner’s policy explains that “coordination of care is a critical element for improving
the patient’s health care and its delivery system.” Petitioner’s staff must communicate
with the patient, the patient’s family, the patient’s doctors, and among each other. All of
this must be documented in the patient’s record. CMS Ex. 25 at 16-18. A HHA must
assure that its plans of care are accurate, complete, up-to-date, and reflect the physician’s
orders. 42 C.F.R. § 484.18. The condition of participation at 42 C.F.R. § 484.30 requires
that a HHA furnish skilled nursing services by or under the supervision of a registered
nurse and in accordance with the plan of care. HHA’s provide nursing care and act as the
eyes and ears of their patients’ physicians. The record reflects a number of circumstances
that represent violations of more than one or all of these conditions of participation.

One example is evident in Petitioner’s care of Patient 17. In this case, the diagnoses in
the patient’s plan of care did not match the corresponding nursing assessments. One of
Patient 17’s assessments listed the diagnoses as hypertension, general pain, and benign
prostate hyperplasia. However, the plan of care did not reflect these diagnoses. Instead,
the plan of care indicated a number of unlisted diagnoses, such as depression and obesity.
Only in a different nursing assessment and plan of care for Patient 17 did it list a peptic
ulcer in the assessment. In a different certification period, the plan of care listed Patient
7’s primary diagnosis as a urinary tract infection (UTI). Yet the assessment makes no
mention of a UTI and the clinical records did not reflect that Patient 17 was being treated
or a UTI during that period. If Patient 17 did not have a UTI during that certification
period, Patient 17 should have been reassessed to determine why he required home health
services. CMS Ex. 21 at 12-18, 20, 23, 45-58, 73-89, 93-110, 122.

Patient 18’s plan of care did not list congestive heart failure as a diagnosis, despite his
hospital discharge papers listing it only two days earlier. Additionally, Patient 18’s plan
of care listed a diagnosis of bacterial pneumonia; however, Patient 18 did not have
bacterial pneumonia. The nurse surveyor investigated and learned that Petitioner’s staff
was choosing the diagnosis based on his interpretation of the patient’s medications. In
this case, Petitioner’s staff determined that Patient 18 was hypertensive because Patient

8 was on metoprolol. CMS Ex. 22 at 31-43; CMS Ex. 30. Petitioner’s staff was
liagnosing patients based on their medications, treating diseases they did not possess, and
ailing to treat diseases that they did. They were not reviewing the medical record or
communicating with the physician.

6

Nursing notes from a visit with Patient 20 on February 18, 2013, described edema on
both of her ankles and states that Patient 20’s caregiver expressed concern about the
swelling. The note, however did not describe the severity of the swelling or whether it
was pitting or non-pitting edema. CMS Ex. 24 at 14. Petitioner’s nursing OASIS
assessment of February 25, 2013, documented pedal edema on both of Patient 20’s
ankles. Yet, the assessment, like the nursing note, did not describe the degree of edema
that Patient 20 exhibited. CMS Ex. 24 at 74. In addition to the incomplete assessments,
there is no evidence that Petitioner’s nursing staff timely consulted Patient 20’s physician
regarding the edema. Nor did the nursing staff communicate his changes in condition to
Patient 20’s physician including fatigue, weakness, poor appetite, intolerance to cold,
stomach pains, not taking medications as ordered, insomnia, hypotonic bowel sounds,
low blood pressure, and assessments describing Patient 20 as pale and clammy. CMS Ex.
24; see CMS Ex. 32 (written declaration describing the importance of proper nursing
assessments in relation to Patient 20’s condition.).

These examples show a serious lacking in coordination of services, of care documented
in medical records, plan of care, medical supervision, conformance with physician orders,
skilled nursing services, duties of the registered nurse and appropriate counseling with
patients and family, and all reflect a need for more effective governance. Petitioner does
not dispute these assertions and has pointed to no evidence to the contrary. Accordingly,
I conclude that Petitioner failed to meet the conditions of participation required that
substantially limited Petitioner’s capacity to furnish adequate care. Petitioner was not in
substantial compliance with all required conditions of participation at the time of the
March 27, 2013 survey.

3. CMS was authorized to terminate Petitioner ’s provider agreement
because Petitioner no longer met the requirements of the Act for
participation as a HHA.

CMS is authorized to terminate an HHA’s provider agreement if the HHA has a condition
level deficiency. 42 U.S.C. §§ 1395x(0)(6), 1395cc(b)(2)(B), 1395bbb(e); 42 C.F.R.

§ 489.53(a)(3). CMS’s decision to terminate a provider agreement is discretionary.
United Medical Home Care, DAB No. 2194, at 13-14. Petitioner simply does not dispute
the condition level deficiencies at 42 C.F.R. §§ 484.14, 484.18, or 484.30 (organization,
services, and administration; acceptance of patients, plan of care, and medical
supervision; and skilled nursing services). Accordingly, I affirm CMS’s determination to
terminate Petitioner’s provider agreement.

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Muhammad Saleem Choudhry, M.D.,
Petitioner,
v.
The Inspector General.
Docket No. C-14-1126
Decision No. CR3443

Date: November 5, 2014

DECISION

The Inspector General (1.G.) of the U.S. Department of Health and Human Services
(HHS) notified Petitioner, Muhammad Saleem Choudhry, M.D., that he was being
excluded from participation in Medicare, Medicaid, and all other federal health care
programs for a minimum period of five years under 42 U.S.C. § 1320a-7(a)(3). Petitioner
requested a hearing before an administrative law judge to dispute the exclusion. For the
reasons stated below, I conclude that the I.G. has a basis for excluding Petitioner from
program participation and that the five-year exclusion is mandated by law.

I. Background

By letter dated March 31, 2014, the I.G. notified Petitioner that he was being excluded
from Medicare, Medicaid, and all federal health care programs for a minimum period of
five years pursuant to 42 U.S.C. § 1320a-7(a)(3). The I.G. advised Petitioner that the
exclusion was based on his conviction in the Court of Common Pleas, Franklin County,
Ohio, of a criminal offense related to fraud, theft, embezzlement, breach of fiduciary
responsibility, or other financial misconduct in connection with the delivery of a health
care item or service. I.G. Exhibit (Ex.) 1.
Petitioner timely filed a request for hearing (RFH) and this case was assigned to me for
hearing and decision. On June 11, 2014, I convened a prehearing conference by
telephone, the substance of which is summarized in my Order and Schedule for Filing
Briefs and Documentary Evidence (Order), dated June 16, 2014. See 42 C.F.R. § 1005.6.
Pursuant to the Order, the I.G. filed a brief (I.G. Br.) and 11 exhibits (I.G. Exs. 1-11).
Petitioner filed a response brief with a supplemental letter (P. Br., P. Supp. Ltr).

II. Decision on the Record

Petitioner did not object to the I.G.’s proposed exhibits. See Order § 4b. Therefore, I
admit I.G. Exs. 1-11 into the record. Because both parties indicated that a hearing is not
necessary in this case and that they did not have any witnesses to offer, I decide this case
on the basis of the written record. I.G. Br. at 9; P. Br. at 2 (unnumbered pages).

III. Issue

The sole issue before me is whether the I.G. has a basis for excluding Petitioner from
participating in Medicare, Medicaid, and all other federal health care programs for five
years pursuant to 42 U.S.C. § 1320a-7(a)(3). See 42 C.F.R. § 1001.2007(a)(1)-(2).

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

HHS must exclude an individual from participation in Medicare, Medicaid, and all other
federally-funded health care programs if that individual:

has been convicted for an offense which occurred [after
August 21, 1996,] under Federal or State law, in connection
with the delivery of a health care item or service or with
respect to any act or omission in a health care program (other
than those specifically described in [section 1320a-7(a)(1)])
operated by or financed in whole or in part by any Federal,
State, or local government agency, of a criminal offense
consisting of a felony relating to fraud, theft, embezzlement,
breach of fiduciary responsibility, or other financial
misconduct.

42 USC. § 1320a-7(a)(3).

' My findings of fact and conclusions of law are set forth in italics and bold font.
A. Petitioner pleaded no contest in an Ohio court to one count of Worker’s
Compensation Fraud, the court adjudged him guilty, and the court sentenced
Petitioner to community control and ordered Petitioner to pay restitution of
$78,573.16 to the Ohio Bureau of Workers’ Compensation (BWC ).

Petitioner is a psychiatrist who was licensed to practice in the states of Illinois and Ohio.
From 1995 through 2009, Petitioner worked at Nehal Psychiatric Group, Inc., located in
Columbus, Ohio. LG. Ex. 4 at 4; 1.G. Ex. 5 at 4. Petitioner’s practice in Ohio focused
exclusively on workers’ compensation patients. I.G. Ex. 4 at 4; 1.G. Ex. 5 at 8. In 2000,
Petitioner relocated to Chicago, Illinois, and, from 2004 through 2006, practiced in both
Illinois and Ohio. I.G. Ex. 4 at 4; 1G. Ex. 5 at 11. Petitioner regularly traveled to Ohio
one week per month and would see approximately 100 patients over the course of a week.
IG. Ex. 4 at 4; 1G. Ex. 5 at 8.

The Ohio BWC Special Investigations Department investigated Petitioner’s Ohio medical
practice and found evidence of improper billing practices. The investigation concluded
that Petitioner billed BWC for services not rendered, upcoded services, and falsified
treatment and progress notes sent to BWC and managed care organizations. I.G. Ex. 6.

An indictment filed on August 19, 2010, in the Common Pleas Court, Franklin County,
Ohio, charged Petitioner with: two counts of Workers’ Compensation Fraud, a felony of
the fourth degree, in violation of Ohio Rev. Code § 2913.48; two counts of Theft, a
felony of the fourth degree, in violation of Ohio Rev. Code § 2913.02; and one count of
Tampering with Records, a felony of the third degree, in violation of Ohio Rev. Code

§ 2913.42. LG. Ex.7. The relevant portion of Count One of the indictment stated:

[F]rom on or about August 2, 2004 to on or about May 18,
2006, [Petitioner] . . . with purpose to defraud, or knowing
that he was facilitating a fraud, did make or present, or cause
to be made or presented[,] a false or misleading statement
with the purpose to secure payment for goods or services
rendered [to workers’ compensation recipients] . . . , and/or
did alter, falsify, destroy, conceal[,] or remove any record or
document that is necessary to fully establish the validity of
any claim filed with, or necessary to establish the nature and
validity of all goods and services for which reimbursement or
payment was received or requested from, the bureau of
workers’ compensation, . . . and the value of the goods,
services, property, or money stolen is five thousand dollars
($5,000.00) or more, and less than one hundred thousand
dollars ($100,000.00) ....

LG. Ex. 7 at 1-2; see Ohio Rev. Code § 2913.48(A)(2) and (3).
On June 6, 2011, Petitioner entered a plea of no contest to a stipulated lesser included
offense of Count One, Workers’ Compensation Fraud, a felony of the fifth degree, in
violation of Ohio Rev. Code § 2913.48. I.G. Exs. 8,9; see I.G. Ex. 5 at 10. On June 8,
2011, the Franklin County Court accepted Petitioner’s plea and adjudged him guilty of
the charge. I.G. Ex. 9 at 1. The court entered a nolle prosequi as to Counts Two through
Five of the indictment. I.G. Exs. 8-10.

The court sentenced Petitioner to five years of community control and payment of
$78,573.16 in restitution to BWC ($19,643.29 of which represented overpayment
resulting from Petitioner’s fraudulent billings and $58,929.87 of which represented
investigative costs). I.G. Ex. 8 at 12 Based on Petitioner’s conviction, on April 11,
2012, the State Medical Board of Ohio permanently revoked Petitioner’s medical license.
1.G. Exs. 2,4. A consent order between Petitioner and the Hlinois Department of
Financial and Professional Regulation indicates that, effective December 24, 2012, the
state suspended Petitioner’s license as a physician and surgeon for at least a three-year
period, also based on Petitioner’s felony conviction. I.G. Ex. 3; 1.G. Ex. 11 at 2-4.

B. Petitioner was convicted of a felony for the purposes of 42 U.S.C. § 1320a-
7(a)(3) and the conviction occurred after August 21, 1996.

Under 42 U.S.C. § 1320a-7(a)(3), Petitioner must be “convicted . . . [after August 21,
1996,] .. . of a criminal offense consisting of a felony . . .” before he can be excluded.
An individual is considered “convicted” when a judgment of conviction has been entered
by a federal, state, or local court or a plea of guilty or no contest has been accepted in a
federal, state, or local court. 42 U.S.C. § 1320a-7(i)(1), (3). In the present matter,
Petitioner entered a plea of no contest to a reduced charge of Workers’ Compensation
Fraud, a felony of the fifth degree, in violation of Ohio Rev. Code § 2913.48, and that
plea was accepted by the state court. I.G. Ex. 5 at 3,5; LG. Ex. 8 at 1; 1G. Ex. 9 at 1.
The state court issued a judgment of conviction in which it “found [Petitioner] guilty” of
violating Ohio Rev. Code § 2913.48. I.G. Ex. 8 at 1; I1.G. Ex. 9 at 1. Based on these
facts, and Petitioner’s admission that he was convicted (P. Br. at 1 (unnumbered)), I
conclude that Petitioner was convicted of a criminal offense. 42 U.S.C. § 1320a-7(i)(1),

(3).

Further, the felony conviction occurred after August 21, 1996. As stated in Count One of
the indictment, the criminal conduct on which Petitioner’s no contest plea was based
occurred “from on or about August 2, 2004 to on or about May 18, 2006.” LG. Ex. 7 at
1. Petitioner himself concedes that he was convicted of a felony that was committed after
August 21, 1996. P. Br. at 1 (unnumbered). Therefore, I conclude that Petitioner was
convicted of a felony for purposes of 42 U.S.C. § 1320a-7(a)(3).

> Tf Petitioner violated the terms of the community control, he was to receive an eight-
month term of incarceration. I.G. Exs. 9, 10.
C. Petitioner’s felony conviction for workers’ compensation fraud requires
exclusion under 42 U.S.C. § 1320a-7(a)(3) because it involves theft,
embezzlement, or fraud in connection with the delivery of a health care item
or service.

In order for Petitioner to be excluded under 42 U.S.C. § 1320a-7(a)(3), his conviction
must involve fraud, theft, embezzlement, breach of fiduciary responsibility, or other
financial misconduct “in connection with the delivery of a health care item or service.”
In his request for hearing, Petitioner argues that his conviction was not related to patient
care, or to Medicare or Medicaid fraud. He contends that he is innocent and it was his
office manager who deposited an overpayment check from the Ohio BWC to his bank
instead of informing him or the Ohio BWC. RFH. Petitioner contends that he “took the
responsibility by pleading guilty and refunded the money right away.” RFH.

I conclude that Petitioner was convicted of fraud in connection with the delivery of health
care items or services. Petitioner was convicted of violating Ohio Rev. Code § 2913.48,
which is entitled “Workers Compensation Fraud.” The substance of the charge as
defined by the Ohio statute alleged that from on or about August 2, 2004 to on or about
May 18, 2006, Petitioner, “with purpose to defraud, or knowing that he was facilitating a
fraud,” made or caused to be made, “a false or misleading statement with the purpose to
secure payment for goods or services rendered” to recipients of workers’ compensation
benefits, “and/or did alter, falsify, destroy, conceal or remove” documents necessary to
“establish the . . . .validity of all goods and services for which reimbursement or payment
was received or requested from” the Ohio BWC. I.G. Ex. 7 at 1-2; see Ohio Rev. Code

§ 2913.48(A)(2) and (3). As stated above, Petitioner entered a no contest plea to a
modified version of Count One; thus, the facts stated in that count can be used to provide
the underlying factual basis of his offense, which clearly involved fraud?

Moreover, Petitioner’s conviction arose from his improper billing practices during the
course of his Ohio psychiatric practice. An investigation by the Ohio BWC found that
Petitioner treated workers’ compensation patients and routinely billed the BWC for
psychotherapy services in excess of the time he actually spent with the patient. I.G. Ex.
6. According to the investigative report, Petitioner submitted claims to BWC for over 16
hours’ worth of psychotherapy services provided in one day, and at times, billed BWC
for over 24 hours’ worth of psychotherapy services purportedly provided in one day. LG.
Ex. 6 at 1. The investigation also found that, in addition to upcoding services, Petitioner
falsified treatment and progress notes. I.G. Ex. 6 at 3. The submission of fraudulent
billings for upcoded office visits or services not rendered bears a direct connection to the

> The only difference between the Count One charged in the original indictment and the
modified version of Count One is that the modified version is a 5" degree felony and the
originally charged version was a 4" degree felony. I.G. Ex. 8 at 1; see also I.G. Ex. 4 at 3
n.l.
delivery of a health care item or service. Accordingly, I find that the required connection,
rational link, or nexus exists between Petitioner’s criminal conduct and the delivery of a
health care item or service.’ See Charice D. Curtis, DAB No. 2430, at 5 (2011).

Further, the record shows that Petitioner admitted to having overbilled the Ohio BWC by
$19,643.29 from August 2004 through May 2006 for his medical services. I.G. Ex. 4 at 5
§ 10; 1.G. Ex. 5 at 3, 6, 8-9. Petitioner was ordered to pay restitution of $78,573.16 to the
Ohio BWC. IG. Ex. 9 at 2; 1.G. Ex. 10. The order of restitution provides further
evidence that Petitioner’s crime involved financial misconduct and related to providing
health care items or services.

To the extent that Petitioner suggests in his request for hearing that he was not really
guilty of any criminal conduct, I consider such an argument to constitute an
impermissible collateral attack upon his conviction.” I may not review the basis of a
conviction, or consider a collateral attack on that conviction on procedural or substantive
grounds. 42 C.F.R. § 1001.2007(d).

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

Five years is the minimum authorized period for a mandatory exclusion pursuant to
42 USC. § 1320a-7(a). 42 U.S.C. § 1320a-7(c)(3)(B). Because I have concluded that a
basis exists to exclude Petitioner pursuant to 42 U.S.C. § 1320a-7(a)(3), Petitioner must

* In his brief, the I.G. notes that Petitioner was also convicted of fraud with respect to an
act in a health care program operated or financed by a federal, state, or local government
agency. I.G. Br. at 8n.1. The I.G. explains that the BWC is an Ohio governmental entity
and that Petitioner fraudulently billed a health care program administered by the BWC.
1G. Br. at 8n.1. As argued by the I.G., 42 U.S.C. § 1320a-7(a)(3) covers two different
categories of felonies relating to “fraud, theft, embezzlement, breach of fiduciary
responsibility, or other financial misconduct”: those “in connection with the delivery of a
health care item or service” and those “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].” Erik D. DeSimone, R.Ph., DAB No. 1932, at 4 (2004). Because I
find that Petitioner’s conviction for fraud falls in the former category and thus, sustain the
exclusion on that ground, it is not necessary for me to examine whether Petitioner’s
conviction also falls under the second category.

> Petitioner also appeared to suggest he was innocent at a 2012 hearing before the State
Medical Board of Ohio, for he testified that his secretary was responsible for submitting
bills to the Ohio BWC and choosing the billing code to use, and he “never asked her what
she was billing.” I.G. Ex. 5 at 11.
be excluded for a minimum period of five years. 42 U.S.C. § 1320a-7(c)(3)(B);
42 CFR. §§ 1001.102(a), 1001.2007(a)(2).

E. I do not have the authority to change the effective date of the exclusion.

Petitioner asserts that his Medicare billing privileges have already been revoked for three
years, starting from the date of his conviction in June 2011, and that “[e]xcluding [him]
for five more years will duplicate the Medicare exclusion.”® P. Supp. Ltr; see RFH.
Petitioner essentially requests credit for the three years his billing privileges have been
revoked. Further, Petitioner raises the issue that the I.G exclusion determination was not
made until 2014, although he was convicted in 2011. Petitioner complains that it took
several years for the state to “forward the case to Washington” and that he “should not be
penalized for their slow process.” P. Supp. Ltr.

The revocation of Petitioner’s Medicare billing privileges and the statutory exclusion
under 42 U.S.C. § 1320a-7(a)(3) are “distinct remedial tools” that HHS may take against
individuals and entities. Ahmed v. Sebelius, 710 F. Supp. 2d 167, 175 (D. Mass. 2010).
The revocation of Petitioner’s Medicare billing privileges is an action by CMS that
precludes Petitioner from billing Medicare for items and services provided to Medicare
beneficiaries. 42 C.F.R. § 424.535(a)(3). In contrast, an exclusion imposed by the LG. is
significantly broader in scope than a revocation and “extends beyond Medicare to
Medicaid and all other federal health care programs.” Ahmed, 710 F. Supp. at 176.
While a revocation action results in a Medicare re-enrollment bar ranging from one to
three years, depending on the circumstances, the minimum required duration of an
exclusion will depend on whether the exclusion is mandatory or permissive and on the
crime committed. See Id. at 175; compare 42 C.F.R. § 424.535(c) and 42 U.S.C.

§ 1320a-7(a)-(b). Although Petitioner has been subjected to both a revocation and an
exclusion based on the same set of circumstances, they are different actions. The years
during which his Medicare billing privileges have been revoked cannot be used to reduce
or act as a “credit” towards the term of a mandatory exclusion.

I am without authority to change the effective date of Petitioner’s exclusion. The
exclusion is effective from the date stated in the I.G.’s notice of exclusion, and the
effective date of the exclusion must be 20 days from the date on the exclusion notice.

42 U.S.C. § 1320a-7(c)(1); 42 C.F.R. § 1001.2002(b).’ Administrative law judges do not
have the authority to overturn or disregard this statute or regulation. 42 C.F.R.

§ 1005.4(c)(1). Although it is regrettable that the exclusion commenced in 2014 for a

® Although Petitioner refers to being “excluded” by Medicare for three years effective
from the date of his conviction, he appears to be referring to the revocation of his
Medicare billing privileges, which was effective from the date of his conviction.

7 The statutory exceptions to this rule are not applicable to this case. See 42 U.S.C.

§ 1320a-7(c)(2)(B), (f)(2).
conviction that occurred in 2011, I have no authority to alter the effective date or shorten
the length of the exclusion.

Finally, Petitioner states that he is seeking to vacate his felony conviction and have it
expunged from his record, and if he is successful, he requests the termination of the
exclusion since the conviction was the basis of the exclusion. P. Supp. Ltr.; see RFH.
Contrary to Petitioner’s argument, he would still be considered to be convicted of a
criminal offense, for exclusion purposes, even if the state court vacated and expunged the
conviction. The statute explicitly defines the term “convicted” to include entry of a
judgment of conviction by any court whether or not an appeal is taken or the conviction is
later expunged. 42 U.S.C. § 1320a-7(i)(1); 42 C.F.R. § 1001.2 (definition of Convicted).

V. 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 the statutory
five-year minimum period pursuant to 42 U.S.C. § 1320a-7(a)(3), (c)(3)(B).

/s/
Scott Anderson
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Marcia M. Snodgrass, APRN,
Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-14-1542
Decision No. CR3442

Date: November 5, 2014

DECISION

An administrative contractor for the Centers for Medicare & Medicaid Services (CMS)
denied the December 2013 Medicare enrollment application of Petitioner, Marcia M.
Snodgrass, APRN, because she did not meet the regulatory requirements for a nurse
practitioner. The CMS contractor upheld its determination on reconsideration. Petitioner
requested a hearing before an administrative law judge to challenge that determination.
CMS now moves for summary judgment, which Petitioner opposes.

For the reasons explained below, I grant summary judgment in favor of CMS, affirming
that it had the authority to deny Petitioner’s December 2013 enrollment application.

I. Case Background

Petitioner is a professional nurse licensed as a nurse practitioner in Kansas.’ Petitioner
originally enrolled in Medicare as a nurse practitioner effective October 1, 2002.

' Petitioner designated herself as an APRN, or “advance practice registered nurse,”
which is the functional equivalent of a nurse practitioner. In Kansas, the applicable
license does not distinguish between the two: “APRN/NP (Nurse Practitioner).” See
Petitioner’s Exhibit (P. Ex.) 3, at 1.
CMS Exhibit (Ex.) 1. While Petitioner has remained licensed in Kansas, she does not
deny that a national certifying body that has established standards for nurse practitioners
has not certified her as a nurse practitioner.

As part of the revalidation process, Petitioner submitted a Medicare enrollment
application to the Medicare contractor in September 2010. See 42 C.F.R. § 424.515
(providing the procedures for revalidation of enrollment information, including the
required submission of a Medicare enrollment application). The contractor denied that
application. Petitioner filed a new enrollment application on December 30, 2013. By
letter dated February 28, 2014, the contractor notified Petitioner that her December 2013
enrollment application was denied pursuant to 42 C.F.R. § 424.530(a)(1) because she did
not satisfy the regulatory requirement that a national certifying body certify her as a nurse
practitioner. CMS Ex. 2. The contractor provided Petitioner an opportunity to submit a
corrective action plan (CAP) within 30 days of the notice of the denial. CMS Ex. 2.
There is no record of Petitioner having submitted a CAP. Instead, Petitioner requested
reconsideration by submitting a letter to United States Senator Jerry Moran, whose office,
in turn, forwarded that letter to the CMS contractor. CMS Ex. 3, at 1. On June 9, 2014,
the contractor issued its reconsidered determination, which upheld the denial of
Petitioner’s December 2013 enrollment application because Petitioner had not shown that
a national certifying body had certified her as a nurse practitioner. CMS Ex. 3.
Petitioner then requested a hearing (P. Req. for Hrg.) challenging that determination.

CMS subsequently moved to dismiss Petitioner’s hearing request and, alternatively, for
summary judgment. CMS filed a brief in support of its motion for summary judgment
(CMS Br.). It also filed three proposed exhibits that are identified as CMS Ex. 1 - CMS
Ex. 3. Petitioner opposed CMS’ motion to dismiss and filed a separate brief opposing the
motion for summary judgment (P. Br.) along with six proposed exhibits.” Petitioner did
not properly label her exhibits; however, the exhibit numbers for each set of documents
that Petitioner filed are clear from her description and labeling of the documents in the
Departmental Appeals Board’s electronic filing (DAB E-File) system. Therefore, I refer
to Petitioner’s proposed exhibits as P. Ex. 1 — P. Ex. 6, consistent with the labeling of the
documents in the DAB E-File system.

Petitioner did not object to CMS’ proposed exhibits, and I admit them. CMS did not
object to Petitioner’s proposed exhibits. Ordinarily, 42 C.F.R. § 498.56(e) governs the
admission of new documentary evidence at this level of review. However, because the
determinations issued by the contractor did not warn Petitioner that she could not offer
new documentary exhibits if she did not offer them at the reconsideration level, and
because CMS did not object to their admission, I admit P. Ex. | — P. Ex. 6.

> Upon consideration of CMS’ motion to dismiss and Petitioner’s opposition, I find that
Petitioner has perfected her hearing request and I deny the motion. The remainder of this
decision only addresses CMS’ motion for summary judgment and Petitioner’s opposition.
II. Issue

The issue here is whether the applicable regulations authorize CMS or its contractor to
deny Petitioner’s Medicare enrollment application based on her qualifications at the time
she submitted that enrollment application.

III. Findings of Fact and Conclusions of Law

1. Petitioner did not meet the regulatory qualifications for a nurse practitioner
at the time of her enrollment application.

Medicare Part B pays for certain services that a nurse practitioner provides to program
beneficiaries. 42 C.F.R. § 410.75(c)-(e). The regulation establishes the following
qualifications for nurse practitioners who seek Medicare coverage for their services:

(b) Qualifications. For Medicare Part B coverage of his or her services, a
nurse practitioner must be a registered professional nurse who is authorized
by the State in which the services are furnished to practice as a nurse
practitioner in accordance with State law, and must meet one of the
following:

(1) Obtained Medicare billing privileges as a nurse practitioner for the
first time on or after January 1, 2003, and meets the following
requirements:

(i) Be certified as a nurse practitioner by a recognized national
certifying body that has established standards for nurse practitioners.

(ii) Possess a master’s degree in nursing or a Doctor of Nursing
Practice (DNP) doctoral degree.
(2) Obtained Medicare billing privileges as a nurse practitioner for the
first time before January 1, 2003, and meets the standards in paragraph
(b)(1)(i) of this section.

(3) Obtained Medicare billing privileges as a nurse practitioner for the
first time before January 1, 2001.

42 CFR. § 410.75(b) (italics in original).

It is undisputed that Petitioner does not meet either of the requirements stated in section
410.75(b)(1). She is not certified as a nurse practitioner by a recognized national
certifying body that has established standards for nurse practitioners. P. Br. at 15; P. Req.
for Hrg. at 1; see also P. Ex. 1 at §§ 9-12. She also does not hold a master’s degree in
nursing or a DNP doctoral degree. See P. Br. at 2-3; P. Ex. 1 at§9. At the time of her
2010 enrollment application, only the qualification stated in subsection 410.75(b)(1)(i)
applied to her because she first obtained her Medicare billing privileges as a nurse
practitioner on October 1, 2002, prior to the deadline established in section 410.75(b)(2).
However, neither party addressed in their briefs the legal quandary of whether section
410.75(b)(2) still applied to Petitioner after the contractor denied her 2010 enrollment
application and Petitioner did not further challenge that denial. I need not resolve that
issue because, regardless of whether section 410.75(b)(2) applied to Petitioner’s
December 2013 enrollment application, which is the only application subject to review in
this proceeding, Petitioner needed to comply with at least the certification requirement
listed in section 410.75(b)(1)(i), which she clearly did not.

2. The regulations authorize CMS or its contractor to deny Petitioner’s
enrollment as a nurse practitioner because she did not comply with all of the
applicable enrollment requirements.

CMS or its administrative contractor may deny the enrollment of a provider or supplier if,
among other reasons:

(1) Compliance. The provider or supplier at any time is found not to be in
compliance with the Medicare enrollment requirements described in this
section or on the applicable enrollment application to the type of provider
or supplier enrolling, and has not submitted a plan of corrective action as
outlined in part 488 of this chapter.

42 C.F.R. § 424.530(a)(1) (italics in original). The requirements for a nurse practitioner
to receive Medicare Part B payment for his or her services include those in 42 C.F.R.

§ 410.75(b), which I have outlined above. That regulatory provision does not expressly
state that it is an “enrollment requirement” for nurse practitioners. However, any
alternative interpretation of that regulation is unreasonable. A nurse practitioner who
cannot receive Medicare Part B coverage for the services he or she provides to
beneficiaries has no purpose being enrolled as a supplier in the Medicare program. In
addition, 42 C.F.R. § 424.502 defines enrollment as the process for establishing
eligibility to submit claims for payment to Medicare, and 42 C.F.R. § 424.505 requires
that a supplier be enrolled before submitting claims for payment. Logically, a supplier
who does not meet the specific requirements for submitting a claim for payment to
Medicare may be denied enrollment. Therefore, while section 410.75(b) addresses the
requirements for payment for services that a nurse practitioner provides, the
qualifications of a nurse practitioner in that section must be construed as an enrollment
requirement referred to in section 424.530(a)(1).
Petitioner argues that the regulation setting forth the qualifications of nurse practitioners
only applies to new applicants seeking enrollment in the Medicare program, not those
recertifying enrollment. P. Br at 13-14. I disagree. Section 410.75(b)(1)(i) provides a
categorical standard — national certification — for all nurse practitioners enrolled after
January 1, 2001. See 42 C.F.R. § 410.75(b)(2)-(3). Had the Secretary intended to limit
this standard to only those nurse practitioners newly enrolling in the Medicare program,
she would have said so. I cannot create a new standard for some nurse practitioners or
add a “grandfathering” provision to an unambiguous regulation.

It is undisputed that at the time of her December 2013 enrollment application Petitioner
did not meet all of the Medicare payment qualifications for a nurse practitioner stated in
42 CFR. § 410.75(b)(1). Petitioner, therefore, did not meet all of the enrollment
requirements for a nurse practitioner. The regulations authorized the CMS contractor to
deny Petitioner’s enrollment application. 42 C.F.R. § 424.530(a)(1). The contractor
complied with regulatory procedures for denying an enrollment application by providing
Petitioner an opportunity to submit a CAP within 30 days of the denial notice letter, but
she did not do so. See CMS Ex. 2.

3. Petitioner’s additional arguments are not relevant in this proceeding because
I do not have equitable authority to ignore or not follow an applicable
regulation or declare the Secretary’s regulations ultra vires the Social
Security Act.

Petitioner makes several additional arguments about her case, all of which, however, seek
equitable relief. After laying out the statutory and regulatory history, she argues that the
final regulation at 42 C.F.R. § 410.75 is inconsistent with CMS’ own assertions in the
preamble and with various amendments to the Social Security Act and therefore should
not be enforced against her. P. Br. at 4-7,9. Petitioner also argues that CMS’ contractor
erred in its handling of her enrollment status and information when CMS implemented
the Provider Enrollment Chain and Ownership System (PECOS), resulting in her not ever
being listed in the “original” PECOS. She argues that if CMS had properly advised her
of the national certification requirement prior to 2010, she could have sat for that
certification exam. Finally, Petitioner emphasizes that she poses no risk to the Medicare
program or its beneficiaries. P. Br. at 10-12, 15-16.

Iam without authority to carve out equitable exceptions to the regulatory requirements.
Petitioner’s assertion that the regulation is inconsistent with the Act means that for me to
take any action in Petitioner’s favor, I must declare the regulation ultra vires the Act.

I do not have the authority to do so. Also, as explained above, while there is no dispute
that Petitioner previously participated in the Medicare program without incident, the
regulations do not permit CMS or me to “grandfather in” an individual who does not
meet the regulatory criteria for a nurse practitioner, even if she was an enrolled
practitioner before. Moreover, to the extent Petitioner blames CMS and its contractor for
not properly handling her enrollment in PECOS, she has not demonstrated that there was
any affirmative misconduct on the part of CMS. Any equitable estoppel claims,
therefore, must, and do, fail.

I should note that I have no doubts that Petitioner is a well-respected and capable health
care provider in Kansas. However, the regulatory qualifications for nurse practitioners
establish a basic level of consistency across the Medicare program, and Petitioner does
not meet those qualifications. The level of care she provides and necessity of her services
in her geographic area simply do not permit me to subvert the regulatory standards that
Iam bound to follow. I can only encourage Petitioner to obtain the qualifications she
needs to meet the regulatory standards and later apply to enroll as a nurse practitioner in
the Medicare program so that beneficiaries will soon again benefit from her services.

I grant summary judgment in favor of CMS because, as discussed above, there is no
genuine dispute of any material facts and CMS is entitled to judgment as a matter of law.
See CRDP § 7 (rev. 2009); Fed. R. Civ. P. 56(a). I uphold the denial of Petitioner’s
December 2013 Medicare enrollment application.

/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-1259)

Complainant,
v.

Leaf Cafe, LLC / Pierre Estopey and Tim May
d/b/a Leaf Cafe,

Respondent.
Docket No. C-14-1783
Decision No. CR3441

Date: October 31,2014

INITIAL DECISION AND DEFAULT JUDGMENT

The Center for Tobacco Products (CTP) began this matter by serving an administrative
complaint on Respondent, Leaf Cafe, LLC / Pierre Estopey and Tim May

d/b/a Leaf Cafe, at 15 Beaufain Street, Charleston, South Carolina 29401, and by filing a
copy of the complaint with the Food and Drug Administration’s (FDA) Division of
Dockets Management. The complaint alleges that Leaf Cafe sold regulated tobacco
products through a vending machine in a non-exempt facility, unlawfully sold cigarettes
to a minor, and failed to verify, by means of photo identification containing a date of
birth, that the cigarette 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. CTP seeks to impose a $2,000 civil
money penalty against Respondent Leaf Cafe.

As provided for in 21 C.F.R. §§ 17.5 and 17.7, on September 2, 2014, CTP served the
complaint on Respondent Leaf Cafe 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 Leaf Cafe 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 Atan unspecified time on September 30, 2013, at Respondent’s business
establishment, at 15 Beaufain Street, Charleston, South Carolina 29401, an FDA-
commissioned inspector observed the use of a vending machine in a non-exempt
facility. During the inspection the owner of Leaf Café told the inspector that
minors were allowed to enter the establishment before 10:00 p.m.;

e Ina warning letter dated November 21, 2013, CTP informed Respondent of the
inspector’s September 30, 2013 observation, and that such actions violate federal
law, 21 C.F.R. § 1140.14(c). 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 6:26 p.m. on January 31, 2014, at Respondent’s business
establishment, at 15 Beaufain Street, Charleston, South Carolina 29401, FDA-
commissioned inspectors observed a person younger than 18 years of age enter the
establishment and purchase a package of Parliament cigarettes from a vending
machine. 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 Leaf Cafe’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 USC. § 387£(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.

§ 387£(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 or smokeless tobacco to any person younger
than 18 years of age. Under 21 C.F.R. § 1140.14(c) a retailer may sell cigarettes or
smokeless tobacco only in a direct, face- to-face exchange without the assistance of any
electronic or mechanical device (such as a vending machine or a self-service display).
Lastly, under 21 C.F.R. § 1140.16(c), self-service displays of cigarettes and smokeless
tobacco are a prohibited method of sale, except where no minors are present or permitted
to enter the establishment at any time. 21 C.F.R. § 1140.16(c)(2)(ii).
A $2,000 civil money penalty is permissible under 21 C.F.R. § 17.2.

Order

For these reasons, I enter default judgment in the amount of $2,000 against Respondent
Leaf Cafe, LLC / Pierre Estopey and Tim May d/b/a Leaf Cafe. 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